Affordability Complaint Letter/Email advice

Exhibit07

hello is the below email ok to send to updraft regarding an affordability complaint?

Dear Updraft Complaints Team,

I am writing to make a formal complaint regarding the affordability of five loans that Updraft provided to me.

I believe the lending decisions did not adequately take into account my actual financial circumstances at the time. I ask Updraft to carry out a full review of the affordability of each loan individually, as well as the pattern and cumulative effect of the lending.

In doing so, I ask that Updraft considers its responsibilities as a responsible lender and whether the checks carried out before each loan were reasonable and proportionate to the circumstances, including the amount and duration of the borrowing, my income, expenditure, existing commitments and the information available through Open Banking. I appreciate that the Financial Conduct Authority’s expectations do not require a lender to predict the future or guarantee that borrowing will remain affordable, but they do require appropriate consideration of whether repayments were likely to be sustainably affordable at the time of lending.

Income and Open Banking

Updraft had access to my financial information through Open Banking. This meant you had visibility of my actual income and expenditure and, importantly, were able to see that my income fluctuated from month to month.

My basic annual salary is approximately £37,000, with commission averaging around £1,800 per month. However, this commission is not guaranteed and fluctuates.

Given the Open Banking information available to you, I would expect the affordability assessment to have identified that my income was variable rather than treating the commission as guaranteed or automatically sustainable income. In line with responsible lending principles and relevant FCA expectations, I would also expect the assessment to have considered whether the income used was sufficiently reliable for the proposed repayments, rather than relying on an optimistic or unrepresentative figure.

I was not asked to provide any further evidence or clarification regarding my income, despite the information available to you showing that my monthly earnings could fluctuate. I recognise that the FCA does not prescribe one particular method of verifying income in every case. However, where income is variable, I ask Updraft to explain why the checks it carried out were considered proportionate and sufficient.

I therefore want you to explain precisely how my income was calculated for each of the five loans, including:

● What basic salary was used;

● What amount of commission was included;

● Whether commission was treated as guaranteed income;

● Whether the variability of my commission was taken into account;

● What information from my Open Banking data was considered;

● Whether the income figure used reflected a representative period rather than a particularly favourable month; and

● Whether any further verification of my income was undertaken or considered necessary.

Living circumstances and expenditure

When applying for the loans, I stated that I was living with my parents.

I am concerned that this may have resulted in my expenditure being assessed on the basis of unusually low housing costs without sufficient consideration of whether those circumstances could change.

Living with parents at a particular point in time does not necessarily mean that those circumstances will remain unchanged throughout the duration of borrowing. I would therefore like Updraft to explain how my living circumstances were taken into account and what consideration was given to the possibility that my housing and living costs could increase.

I would also like to understand what expenditure figure was used for each affordability assessment and how that figure was established. Please explain whether my actual transaction history was reviewed, whether any standard or benchmark expenditure figures were used, and how essential living costs and other regular commitments were accounted for.

I appreciate that affordability assessments may involve reasonable estimates and that lenders are not necessarily required to obtain documentary evidence for every item of expenditure. However, I ask Updraft to explain why the checks undertaken were proportionate in light of the information available and whether the resulting assessment gave a realistic picture of my disposable income.

Five loans and cumulative lending

I ask that Updraft considers the five loans as a sequence of lending decisions, rather than simply assessing each loan in isolation.

The provision of repeated borrowing should, in my view, have prompted consideration of my overall financial position, existing commitments and whether further borrowing remained sustainably affordable. The FCA’s responsible lending expectations are relevant not only to the initial decision to lend but also to whether further lending, in the context of existing borrowing, was likely to remain affordable.

I am not suggesting that repeated borrowing is automatically evidence of irresponsible lending. However, I ask Updraft to consider whether the pattern, timing and increasing cumulative commitments should have prompted additional checks or a more cautious assessment before further loans were approved.

Please therefore provide a detailed explanation of the affordability assessment undertaken before each of the five loans was approved, including:

● The information available to Updraft at each stage;

● My income and expenditure as assessed at each stage;

● My existing Updraft commitments and any other relevant commitments identified;

● The total monthly repayment burden after each loan;

● Whether the pattern of borrowing was considered;

● Whether any additional or enhanced checks were carried out before later loans; and

● How the decision to provide further lending was reached.

My experience when seeking support

I also want to raise a serious concern about my experience when I contacted Updraft approximately three weeks ago through your customer support chat.

At that time, I was trying to seek support because I was experiencing financial difficulty and was concerned about the affordability of the loans.

I found the chat system extremely difficult and, more importantly, I did not feel that the seriousness of my circumstances was recognised or that I received meaningful or constructive support.

I specifically explained that the financial pressure was having a significant impact on my mental health. Despite making this clear, I did not feel that there was any meaningful consideration of the impact this was having on me or that I was being appropriately supported.

I find this particularly disappointing when a customer is actively attempting to seek help with financial difficulty. I would expect a lender to have appropriate processes for recognising and supporting customers who may be experiencing financial difficulty or vulnerability. The FCA’s expectations regarding the fair treatment of vulnerable customers are relevant here, including the need to take reasonable care to understand a customer’s circumstances and respond appropriately where vulnerability or financial difficulty is disclosed.

I am not suggesting that disclosure of a mental-health impact automatically determines the outcome of the affordability complaint. However, I do ask Updraft to review whether my disclosure was properly recognised, recorded and acted upon, and whether I was given appropriate support and clear information about available options.

I am therefore asking that you also review how my interaction was handled and confirm what procedures Updraft has in place where a customer discloses financial difficulty and explains that this is having a significant impact on their mental health.

I am not seeking special treatment. I am asking that my circumstances are treated with appropriate care and consideration, consistent with the FCA’s expectations concerning responsible lending, financial difficulty and vulnerability, and that my concerns are properly investigated.

Resolution requested

I ask that Updraft conducts a full affordability review of all five loans, taking into account the information that was available to you at the time each lending decision was made.

In particular, I would like your final response to address:

1. The income used for each loan;

2. How my variable commission was treated;

3. The Open Banking information available to you;

4. Why no further evidence or clarification of my fluctuating income was requested;

5. The expenditure figures used for each assessment;

6. How my stated living arrangements were taken into account;

7. My existing financial commitments at each stage;

8. The cumulative effect of providing five loans;

9. Whether any additional checks were carried out before later loans;

10. Whether the checks undertaken were reasonable and proportionate in the circumstances; and

11. Whether, with appropriate and proportionate checks, the loans would have been considered sustainably affordable.

If you conclude that any of the loans were unaffordable, I expect appropriate redress, including the refund of interest and charges applied to any lending that should not have been provided, together with any appropriate adjustment to the outstanding balance and consideration of any adverse credit-file information arising from that lending.

I also ask that you acknowledge the concerns I have raised regarding the handling of my request for support, including my disclosure of financial difficulty and the impact the situation has had on my mental health. Please explain whether this was handled in accordance with your procedures for customers experiencing financial difficulty or vulnerability.

Please treat this correspondence as a formal complaint and confirm receipt, provide me with a complaint reference number and investigate the matter in accordance with your complaints procedure.

I hope this can be resolved directly with Updraft. However, if my complaint is not upheld or I do not receive a satisfactory response, I intend to refer the matter to the Financial Ombudsman Service for independent review. I understand that the Ombudsman will consider the circumstances of the lending and the information available to Updraft at the relevant time, rather than applying hindsight.

I look forward to receiving your substantive response.

Yours faithfully,

ManyWays

Looks well argued.

A few points:

I would therefore like Updraft to explain how my living circumstances were taken into account and what consideration was given to the possibility that my housing and living costs could increase.
I do not think lenders are expected to take that sort of thing into account.

The variability of your income: you could make those points stronger by saying how much your income varied in the three months before each loan.

If any of the loans were for consolidation, did you actually use the loan for that? If you did not, you could perhaps argue that Updraft should have seen this on the earlier loans and stopped lending because of it.

Exhibit07

https://forums.moneysavingexpert.com/discussion/comment/82129695#Comment_82129695

this makes sense thank you

Exhibit07

does this sound better:

Dear Updraft Complaints Team,

I am writing to make a formal complaint regarding the affordability and suitability of the five loans that Updraft provided to me.

I believe that Updraft failed to carry out adequate and proportionate affordability checks before approving these loans and, particularly in relation to the later lending, failed to take proper account of the information available to you regarding my deteriorating financial position and increasing reliance on credit.

My concern is not simply that my financial circumstances subsequently became difficult. My concern is that there were indicators available to Updraft at the time of the lending which should have prompted further investigation into whether I could genuinely afford the repayments sustainably.

My salary was fluctuating, yet there appears to have been no meaningful attempt to establish why this was the case or to verify my income properly. A fluctuating income should, in my view, have been a reason to undertake further checks rather than simply relying on the income figure provided.

Similarly, the fact that I was living at home should not, in itself, have been treated as evidence that I had sufficient disposable income to sustain significant borrowing. There should have been consideration of my actual expenditure and the possibility that my circumstances could change.

More importantly, my credit history should have provided increasingly clear indicators about my financial position.

I was and am using credit cards to meet ordinary monthly outgoings and subsequently taking further borrowing to deal with existing credit commitments. This pattern of increasing reliance on credit should have been visible from my credit file. The fact that I was continuing to require further borrowing was a significant indication that my finances were not improving as a result of the earlier lending.

The first loan was stated to be for debt consolidation. However, subsequent credit activity should have demonstrated that the underlying debt had not, in reality, been resolved. Rather than viewing each subsequent application in isolation, I believe Updraft should have considered the overall pattern of borrowing and whether the previous lending had actually achieved its stated purpose.

A credit check at the time of the subsequent applications would have shown that my financial position had deteriorated since the first loan. This should have raised questions about whether further lending was sustainable.

The amount of borrowing involved was also significant given my existing credit profile. You were aware that I had a poor credit history, and this should have increased the need for appropriate and proportionate checks into my income, expenditure and existing financial commitments.

Had those checks been properly carried out, I do not believe the later loans would have been approved.

I want to make clear that, at the time, I did not understand that a lender was expected to assess whether I could repay borrowing sustainably without needing to take on further borrowing. I relied on the lending being approved as an indication that Updraft had assessed my circumstances and considered the repayments to be affordable.

I now understand that affordability is not simply a question of whether I could technically make a loan repayment at a particular point in time. The assessment should consider whether the borrowing could be repaid sustainably without causing financial difficulty or requiring further borrowing.

That distinction is particularly important in my case. I was and am increasingly relying on credit cards to support my monthly expenditure, and the cumulative level of debt and borrowing placed me under significant financial pressure. This has had a serious impact on my wellbeing and mental health.

I also wish to raise concerns about my recent experience when attempting to seek support from Updraft regarding my financial difficulties. I contacted Updraft approximately three weeks ago regarding concerns about the affordability of the loans, but I had not received a meaningful response addressing the underlying issue.

I found the online chat experience particularly concerning. When someone is experiencing financial difficulty and is trying to communicate that they are struggling, I would expect the process to be supportive, appropriate and sensitive to the potential impact that financial difficulties can have on a person’s wellbeing. Instead, I found the experience extremely frustrating and felt that there was very little consideration of the seriousness of the situation.

I appreciate that this is separate from the underlying affordability complaint, but I believe it is important that you understand the impact that the situation and the subsequent handling of my concerns have had on me.

I am therefore asking Updraft to conduct a full review of all five loans, including the circumstances in which each loan was approved, the affordability checks undertaken, the information obtained from my credit file, my existing credit commitments, my income and expenditure information, and the pattern of borrowing between each application.

In particular, I ask that you explain:

• What affordability checks were carried out for each of the five loans.
• What information was obtained from my credit file at each stage.
• Whether the increasing use of credit and further borrowing was identified.
• Why further lending was considered appropriate despite evidence that my financial position had deteriorated.
• What consideration was given to the fact that the first loan was intended to consolidate existing debt, when subsequent borrowing indicated that this had not resolved the underlying financial position.
• Whether my fluctuating income was verified and, if not, why further verification was not considered necessary.
• What assessment was made of my actual disposable income and ability to sustain the repayments without relying on further credit.

I would ask that you assess the lending cumulatively rather than treating each loan as an entirely separate transaction. The progression from the first loan to the subsequent borrowing is an important part of my complaint and, in my view, demonstrates why the later lending should have prompted much greater scrutiny.

I am seeking appropriate redress in relation to any loans that you determine were unaffordable or irresponsibly granted, including the refund of interest and charges and any consequential correction to my credit file where appropriate.

Please treat this as a formal complaint and provide your final response in accordance with the applicable complaints procedure.

If my complaint is not upheld, or if I am not satisfied with your response, I reserve the right to refer the matter to the Financial Ombudsman Service.

I look forward to receiving your acknowledgement and a full response addressing each of the issues raised above.

Yours faithfully