DRN-6321716

The complaint Plata Finance Limited provided Miss F with an £8,000 loan in June 2023. Miss F says the credit was provided irresponsibly. What happened The details of this complaint are well-known to both parties, so I won’t repeat them again here. The facts aren’t in dispute, so I’ll focus on giving the reasons for my decision. My provisional conclusions I issued a provisional decision not upholding this complaint. While this was the same outcome to that provided by our investigator, I included additional reasoning. The details of my provisional decision are set out below. We’ve set out our general approach to complaints about unaffordable or irresponsible lending on our website, and I’ve taken this into account in deciding Miss F’s case. I’ve decided the credit was provided fairly because: • I don’t think the checks Plata Finance did before providing the credit were reasonable and proportionate given the credit it offered and what it knew about Miss F’s financial situation. The credit check showed Miss F had £35,117 of outstanding debts and had taken out an £8,000 loan around four months prior to this application. Her monthly credit repayments for existing commitments were around £1,400 (around 64% of her monthly income) although I note this loan was intended for debt consolidation. I think the credit check raised concerns that Miss F may be becoming reliant on credit and I think that Plata Finance should have carried out a full income and expenditure assessment to check this loan would be sustainably affordable. • If Plata Finance had done proportionate checks, I don’t think it’s likely these would have shown it was unfair to provide the credit to Miss F. Miss F declared she was employed and her net monthly income of £2,171 was verified using an industry tool. Plata Finance wasn’t required to request copies of Miss F’s bank statements, but I have used these to assess what proportionate checks would likely have identified. These show Miss F receiving an average income from one source of around £1,740 and then additional payments from other sources. Therefore, I think the £2,171 income figure used was reasonable. • Miss F’s existing credit commitments of £1,400 are shown in her accounts. She was also paying overdraft fees. However, this loan was intended for debt consolidation. Miss F’s revolving credit balances at the time were around £7,806. This loan could have been used to repay these. This would leave the loan and hire purchase repayments of around £914 plus the new loan repayments of around £241, giving total credit costs of around £1,155 (around 53% of Miss F’s income). This would put Miss F in a better financial position.

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• Miss F was living with parents and had limited other regular expenses. Her general living costs from her statements appear to be slightly less than the £298 that Plata Finance included in its calculations, although I note she made several payments to an online payment provider and these may include some essential spending. Deducting the credit costs post consolidation (£1,155) along with her other regular costs (£298) would leave sufficient funds to cover the payments being made to the online payment provider and leave funds for unforeseen costs. Therefore, I do not find that I have enough to say that additional checks would have shown this loan to be unaffordable for Miss F. • Based on the information Miss F has provided about her circumstances at the time, there was nothing to suggest Miss F was likely to be unable to sustainably repay what she was being lent. • I don’t think Plata Finance acted unfairly in any other way. This means I don’t think Plata Finance did anything wrong when it provided the loan to Miss F. I’ve also considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, for the reasons I’ve already given, I don’t think Plata Finance lent irresponsibly to Miss F or otherwise treated her unfairly. I haven’t seen anything to suggest that s.140A or anything else would, given the facts of this complaint, lead to a different outcome here. Plata Finance made an offer to reduce Miss F’s balance by £3,226.98. Should Miss F wish to accept this she will need to contact Plata Finance directly. Miss F didn’t accept my provisional decision. She didn’t agree that had proportionate checks taken place they would have supported the lending decision. Miss F said the available evidence clearly showed she was in financial difficulty at the time the loan was given with high amounts of debt and monthly repayments. She noted she had recently taken out an £8,000 loan and was reliant on her overdrafts. She said persistent overdraft usage was an indicator of financial strain and dependency on credit. She thought that given this further credit shouldn’t have been issued. Miss F disputed that her financial situation was improved by the debt consolidation. She said her bank statements showed that she continued to use her credit facilities after the loan and remained reliant on credit. She thought that allocating 53% of her income to credit repayments wasn’t sustainable and contributed to her continued reliance on borrowing. She also thought her living costs had been underestimated stating that while she was living with parents, she was paying rent and other essential costs. 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. I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I have considered the comments Miss F has made in response to my provisional decision, but my conclusions haven’t changed. I set out in my provisional decision that Plata Finance’s credit checks showed that Miss F had £35,117 of outstanding debts and had taken out an £8,000 loan around four months prior to this application. I note Miss F believes that this

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should have meant further credit wasn’t provided. But noting that her credit report recorded no county court judgements, defaults or delinquent accounts and she was up to date with her active accounts with no recent missed payments recorded, I do not find the credit check showed Miss F was struggling to maintain her existing commitments. However, given her level of debt and the new debt taken out I think a full income and expenditure assessment should have been carried out to ensure the new lending would be sustainably affordable. Having looked through the information provided, I find that the income figure used by Plata Finance was reasonable. I note Miss F’s comment about her expenses being underestimated; however, she didn’t declare an amount for rent and having looked through Miss F’s account statements, I think the estimated expenses figure was reasonable. Miss F has said that she didn’t benefit from the debt consolidation. However, as she said this was the purpose of the loan, I find it reasonable that Plata Finance would have taken this into account. The Plata Finance loan was sufficient to repay Miss F’s revolving credit balances, and this would have left her with her hire purchase and loan repayments, along with the new Plata Finance loan repayments. As I set out in my provisional decision, I find this would have reduced her monthly credit costs. I can see from Miss F’s account statements that she was making use of her overdraft, but she was clearing this with her income, and her credit report didn’t raise issues with her management of this. While I understand my decision will be disappointing for Miss F, for the reasons I set out in my provisional decision and those noted above, I do not find I can uphold this complaint. My final decision My final decision is that I’m not upholding Miss F’s complaint about Plata Finance Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss F to accept or reject my decision before 26 May 2026. Jane Archer Ombudsman

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