DRN-6278763

The complaint Mr M complains that Gain Credit LLC trading as Drafty lent to him by approving a line of credit for him in April 2025 with a limit of £1,690. What happened This was not a loan. Drafty offered a credit facility which began with a limit being decided and then the customer was able to draw down the amounts he or she required. The credit was unsecured and had no fixed duration. The limit for Mr M was £1,690. The credit agreement for Mr M set out the total cost of the credit based on some assumptions to illustrate the likely regular cost to him. On the assumption that Mr M drew down the full £1,690 on the first day and then repaid it (plus interest and charges) over 12 months in equal instalments then the total amount payable would have been just under £2,325 (rounded). This would have equated to about £194 a month (this is Clause 5 in the agreement). In its final response letter (FRL) Drafty said that the monthly cost to him of borrowing £1,690 would have been £52. I’ve used the higher figure in my decision as its set out in the agreement. The arrangement did include a ‘Billing Cycle’ which meant that a statement was produced ten days before Mr M’s salary payment, and it gave the minimum payment needed for that cycle. It had to be the higher of certain calculations - they are in the agreement at Clause 6 which I have not set out here. A Continuous Payment Authority was used to take the minimum payments on or near Mr M’s monthly salary date. Other ways of payment were also made available. After Mr M had referred his complaint to the Financial Ombudsman Service, one of our investigators considered it all and came to a view that Drafty had done the right checks before approving the line of credit. She considered it had monitored the account satisfactorily as well. Mr M disagreed and the unresolved complaint was passed to me to decide. A February 2026 Statement of Account (SOA) shows me that Mr M’s account is still open and has an outstanding balance of just over £1,438 to repay. Records sent to me show that Mr M has agreed to an arrangement to repay at £6.26 a month and from July 2026 will be £107 a month until the end of 2027. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Before lending money to a consumer or approving a credit limit a lender should take proportionate steps to understand whether the consumer will be able to repay what they are borrowing in a sustainable manner without it adversely impacting on their financial situation. A lender should gather enough information for it to be able to make an informed decision on the lending. Although the guidance and rules themselves did not set out compulsory checks, they did list several things a lender could consider before agreeing to lend. The key element

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was that any checks needed to be proportionate and had to consider several different things, including how much was being lent and when the sum being borrowed was due to be repaid. I need to explain to Mr M that upon first approaching Drafty in April 2025 it would not be expected, and would not be proportionate, for Drafty to carry out a full and comprehensive financial review. Mr M was a new customer. Having said that, Drafty did verify his income and carried out a credit check and cross referred his declared expenditure figures to be satisfied that Mr M could afford its line of credit. I explain in the following paragraphs. Mr M had declared an income of £2,601 (rounded) each month after tax and Drafty seems to have verified that. Mr M gave a figure of £800 a month for his expenditure which, having done its own checks, Drafty seems to have accepted as about right – in fact, it reduced it a little to £770. Mr M has said that this £770 a month was not realistic but he has not provided evidence to show what was the realistic figure for him when he applied for this line of credit. He declared £800 and this reduction is a small one. Drafty carried out its own credit search, a summary of which I have been sent and reviewed. Drafty determined that Mr M’s credit commitments each month were around £1,013 a month (not £400 a month as Mr M had said) and so the total expenditure for all usual costs plus Mr M’s credit commitment costs added up to around £1,783. With an income of £2,602 that left him with around £819 a month left over. The credit search summary showed that Mr M had around £32,400 of debt. Mr M has suggested that sheer volume of debt ought to have prompted Drafty to do further checks. But I disagree in Mr M’s circumstances. I say a bit more about this in the following paragraphs. Information supplied by Mr M suggests that around £14,400 of that £32,400 debt was for a hire purchase (HP) agreement which places the debt level in context. And by that I mean HP agreements are for vehicles and usually viewed as the purchase of an asset. I accept that the HP balance was likely to have reduced by April 2025 but would still have been a high proportion of the overall debt. Plus, vehicles often are needed for usual daily lifestyle activities and/or commuting to work. So, a large part of the debt was for that sort of credit agreement and has a different complexion to say a large loan. Plus, there were no indicators presented to us of Mr M having difficulty keeping up with his existing credit commitments. So, I do not agree that further checks were called for. The adverse data Drafty saw when it did the credit search was a default from 70 months ago (almost six years before) and as its current value was entered as £0 it looks to have been paid off. This was historic. The other item of adverse data was it had been 16 months since the most recent delinquent entry. That was far enough in the past not to have been a concern to Drafty. Mr M makes a valid point that the regulatory structure for irresponsible lending does not always mean that reliance on statistical data to cross refer a consumer’s declared expenditure figure is the right approach. But here, Drafty had seen that Mr M had over £800 a month in disposable income even after it had used the higher figure for Mr M’s credit commitment monthly costs. There were no recent payment problems - so he presented as being on top of his finances and no reason for Drafty to doubt the figures it had generated. And so – it was reasonable for it not to do further checks as its figures showed that Mr M was able to absorb the cost of the credit plus his existing outgoings and still have money left.

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And bearing in mind the credit limit granted and the monthly payments needed to repay the facility within a reasonable period, Drafty was entitled to rely on the information given to it and from its own research which suggested that Mr M had enough disposable income to service a credit facility with a limit of £1,690. I do not uphold the initial approval of the credit facility. After the initial approval of the credit account, Drafty did have to monitor Mr M’s use of the account and it has explained to us how it did that. It looked at Mr M’s credit report from a CRA each month and it asked Mr M how things were going each six months. With Mr M it did that in September 2025 when Mr M confirmed that his income had not changed and his expenses were £800 a month. Drafty said: ’We saw that you were using the account as expected - making regular payments and keeping your borrowing within your credit limit.’ I have looked at several documents to review this part – the individual SOAs issued each month which shows me the expected minimum payments and balances. And the spreadsheet data giving me the pattern of how often Mr M drew down on the facility. This credit facility was being used as I would have expected it to have been used. He was leaving gaps between draw downs and having paid towards the account, Mr M did not re-draw for about 10 days and this seemed to have been the pattern. That was not suggestive of a person being over indebted. Mr M was repaying much more than the expected minimum monthly repayments for the first few months. He paid the minimum payments expected in July, August and September 2025. These were £148, £172 and around £222, respectively. These were around the minimum repayment figures set out in Clause 5 of the agreement as I outlined at the beginning of the decision. In October 2025 Mr M missed a payment which led to him owing around £390 in November 2025, his balance was over the credit limit and, quite fairly, Drafty suspended his account. So, I consider that Drafty monitored the account satisfactorily and acted as soon as it saw Mr M was not able to make a payment. Mr M has referred us to other complaints he has brought to the Financial Ombudsman Service which, he says, led to differing outcomes to this. He did not understand why. One complaint was not upheld and so I discount that. The other I have looked at. It related to a £3,000 loan approved in October 2024 repayable over 36 months. It was upheld by the investigator and the lender did not challenge it and so it did not go to decision. Looking at the circumstances of the other complaints (and this one), the outcomes appear broadly correct but there are always differences with other cases. Each complaint is viewed on its own merits and within the context of its own circumstances. Applications for credit of differing values, and nature, and to different lenders and at varying times are not going to result in the same information about the applicant . Each lender would carry out checks and may have discovered differing details. So, Mr M’s suggestion that because one complaint was upheld does not necessarily lead to another having the same outcome. I’ve also considered whether Drafty acted unfairly or unreasonably in any other way and whether the relationship might have been unfair under section 140A of the Consumer Credit Act 1974.

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However, for the reasons I’ve already given, I don’t think it lent irresponsibly to Mr M or otherwise treated him unfairly in relation to this matter. I haven’t seen anything to suggest that Section 140A would, given the facts of this complaint, lead to a different outcome here. My final decision My final decision is I do not uphold the complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 26 May 2026. Rachael Williams Ombudsman

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