Mobile Money Limited · DRN-3964869

Complaint Mrs T has complained about a logbook loan Mobile Money Limited (“Mobile Money”) provided to her. She says affordability checks weren’t undertaken and her over-indebtedness wasn’t considered. Background One of our adjudicators reviewed what Mrs T and Mobile Money had told us. And she thought that Mobile Money hadn’t done anything wrong or treated her unfairly. So she didn’t uphold Mrs T’s complaint. Mrs T disagreed and asked for an ombudsman to look at her complaint. My findings I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. We’ve explained how we handle complaints about unaffordable and irresponsible lending on our website. And I’ve used this approach to help me decide Mrs T’s complaint. Having carefully considered everything, I’ve not been persuaded to uphold Mrs T’s complaint. I’ll explain why in a little more detail. Mobile Money needed to make sure that it didn’t lend irresponsibly. In practice, what this means is Mobile Money needed to carry out proportionate checks to be able to understand whether Mrs T could afford to repay before providing this loan. Our website sets out what we typically think about when deciding whether a lender’s checks were proportionate. Generally, we think it’s reasonable for a lender’s checks to be less thorough – in terms of how much information it gathers and what it does to verify it – in the early stages of a lending relationship. But we might think it needed to do more if, for example, a borrower’s income was low or the amount lent was high. And the longer the lending relationship goes on, the greater the risk of it becoming unsustainable and the borrower experiencing financial difficulty. So we’d expect a lender to be able to show that it didn’t continue to lend to a customer irresponsibly. Mobile Money provided Mrs T with a logbook loan for £2,000.00 in April 2019. The loan had an APR of 189.90% and was to due be repaid in 18 instalments of £223.63, which meant the total amount to be repaid was £4,187.34. Mobile Money says it agreed to Mrs T’s application after she provided evidence of her monthly income and details of her monthly expenditure. It says it cross-checked this against information on a full credit search which it carried out on Mrs T.

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The information Mrs T provided about her income and expenditure showed she’d be able to make the repayments she was committing to. Mobile Money says, in these circumstances it was reasonable to lend to Mrs T. On the other hand, Mrs T has said she was in financial difficulty and already over-indebted. I’ve carefully thought about what Mrs T and Mobile Money have said. The first thing for me to say is that this was Mrs T’s first loan with Mobile Money. The information provided suggests Mrs T was asked to evidence her income. And in terms of Mrs T’s expenditure, the credit search carried out does show that Mrs T had had previous difficulties with credit. However, Mobile Money conducted a line by line assessment of each and every entry on Mrs T’s credit file with her. Mrs T was asked about a county court judgement (“CCJ”) and she said that she was in the process of challenging this. She was also asked about another CCJ which was in someone else’s name and she confirmed that she wasn’t paying anything to this as it wasn’t hers. Indeed having listened to the call Mrs T had plausible reasons for each of the entries she was questioned about. She also had a plausible explanation on the loan purpose too. So I don’t think that it was a case of Mobile Money simply accepting an over optimistic declaration of her disposable here. Furthermore, while I’ve seen what Mrs T has said it being irresponsible to have provided a loan with payments that took up over 50% of a customer’s disposable income, it is not immediately apparent to me why this is the case, as this was Mrs T’s disposable income here not her actual monthly income. And this was what she had left over after a detailed assessment of her expenditure took place. I accept Mrs T’s actual circumstances at the time might have been worse than she let on and I know that she did struggle to make payments months afterwards as a result of a change in circumstances. But the key here is that it’s only fair and reasonable for me to uphold a complaint in circumstances where a lender did something wrong. In this case, I don’t think that Mobile Money did anything wrong in deciding to lend to Mrs T - it obtained enough information to be able to make an informed decision on whether to provide this loan, but it sounds like the information it was provided with might not have told the whole story. Nonetheless Mobile Money reasonably relied on this information and given the veracity of its checks and its lack of any previous history with Mrs T, I don’t think it was unreasonable for Mobile Money to provide this loan. So overall I’m not persuaded that Mobile Money did act unfairly towards Mrs T given all the circumstances and I’m not upholding this complaint. I appreciate this will be very disappointing for Mrs T. But I hope she’ll understand the reasons for my decision and that she’ll at least feel her concerns have been listened to. My final decision My final decision is that I’m not upholding Mrs T’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs T to accept or reject my decision before 10 April 2023. Jeshen Narayanan

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Ombudsman

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