Everyday Lending Limited · DRN-3720333

The complaint Mr J complins that Everyday Lending Limited, trading as Everyday Loans, lent to him irresponsibly. What happened Mr J was approved for one loan in July 2012, for 60 months – the loan was for £8,000 which Mr J told Everyday Lending at the time was for a ‘bike and leathers’ so I take it from that it was motor bike. The documentation fee was £480 so the total loan was for £8,480. And the total interest charged was £9,711.46. the monthly repayments were just over £305 for 60 months. The account was passed to a third party debt collection agency in early 2014. Mr J complained to Everyday Loans in March 2022. It responded in its final response letter (FRL) to say that the complaint was out of time. One of our ombudsmen decided that the complaint could proceed as it was made in time. That part has been resolved and I say no more about it. One of our adjudicators looked at the complaint and thought that Everyday Lending had not done anything substantially wrong. Mr J disagreed. On his complaint form, Mr J said ‘I have…complained that the company should have known I was struggling due to having multiple payday loans at the same time along with a lot of other credit I was using at the time just to try to make ends meet.’ Since receiving our adjudicator’s view Mr J has said: - companies lending where interest rates are as high as these loan companies that ‘know they are lending money to people they possibly shouldn’t be’ - the company check on his work situation was done incorrectly as he was the supervisor at the time and so the person Everyday Lending spoke to was a colleague not his own supervisor - he had payday loans and doorstep loans at the time - he was buying things from a catalogue and selling them to make ends meet - he was aware of the rate and agrees he took the loan knowing this rate - if he’d had any other option he said he would not have taken that loan The unresolved complaint was passed to me to decide. 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. We’ve set out our general approach to complaints about unaffordable/irresponsible lending - including all the relevant rules, guidance and good industry practice - on our website.

-- 1 of 4 --

Considering the relevant rules, guidance and good industry practice, I think the overarching questions I need to consider in deciding what’s fair and reasonable in the circumstances of this complaint are:  Did Everyday Lending , each time it lent, complete reasonable and proportionate checks to satisfy itself that Mr J would be able to repay in a sustainable way?  If not, would those checks have shown that Mr J would have been able to do so?  Did Everyday Lending act unfairly or unreasonably in some other way? The rules and regulations in place required Everyday Lending to carry out a reasonable and proportionate assessment of Mr J’s ability to make the repayments under this agreement. This assessment is sometimes referred to as an “affordability assessment” or “affordability check”. The checks had to be “borrower-focused” – so Everyday Lending had to think about whether repaying the loan would be sustainable. In practice this meant that the business had to ensure that making the repayments on the loan wouldn’t cause Mr J undue difficulty or significant adverse consequences. That means he should have been able to meet repayments out of normal income without having to borrow to meet the repayments, without failing to make any other payment he had a contractual or statutory obligation to make and without the repayments having a significant adverse impact on his financial situation. In other words, it wasn’t enough for Everyday Lending to simply think about the likelihood of it getting its money back, it had to consider the impact of the loan repayments on Mr J. Checks also had to be “proportionate” to the specific circumstances of the loan application. In general, what constitutes a proportionate affordability check will be dependent upon a number of factors including – but not limited to – the particular circumstances of the consumer (e.g. their financial history, current situation and outlook, and any indications of vulnerability or financial difficulty) and the amount/type/cost of credit they are seeking. Even for the same customer, a proportionate check could look different for different applications. Considering this, I think that a reasonable and proportionate check ought generally to have been more thorough:  the lower a consumer’s income (reflecting that it could be more difficult to make any loan repayments to a given loan amount from a lower level of income);  the higher the amount due to be repaid (reflecting that it could be more difficult to meet a higher repayment from a particular level of income);  the greater the number and frequency of loans, and the longer the period of time during which a customer has been given loans (reflecting the risk that repeated refinancing may signal that the borrowing had become, or was becoming, unsustainable). I’ve carefully considered all the arguments, evidence and information provided in this context and what this all means for Mr J’s complaint. For a loan of this size and to be repaid over five years I would have expected a full financial review to have been carried out by Everyday Lending. And having reviewed all it did I think that Everyday Lending did do all I would have expected it to do. It checked his payslips and P60s, it carried out an income and expenditure assessment, it reviewed some of Mr J’s bank

-- 2 of 4 --

account statements and obtained a credit search for his credit history. I can’t see what else Everyday Lending could have done. So, I have drilled into the detail to review what information Everyday Lending discovered and how it applied it to the decision to lend. Mr J had not asked Everyday Lending for a loan to consolidate debts. It was for a specific purchase and so the starting point for Mr J’s application was different to say a consumer asking for a debt-consolidation loan. And I can see that the full £8,000 was paid to Mr J. For Mr J’s income it obtained two payslips and two P60s in 2012 being months and year leading up to the loan. I have seen from some of the Everyday Lending account notes it did that to ensure that his overtime payments were regular and to show consistency monthly. The annual pay figures averaged out and translated into monthly pay came to £2,389 which is the income figure it appeared to use. The detailed assessment of Mr J’s income I consider to have been correct. Everyday Lending did a credit search and the list it made of the outstanding balances and the monthly repayments seemed accurate when I cross reference the debt table it created and the credit search it carried out, a copy of which has been sent to us. That covered three credit cards, a loan Mr J said was for a car, a mail order agency with a balance of only £459 whereas that limit on that mail order account was £3,100. All these added up to minimum repayments or scheduled repayments of around £293 a month. These repayments would not have led to much of a monthly reduction on the overall balances on the three credit cards. I have accounted for that. The mortgage was £674 a month on top of this figure. And as for the mail-order – Mr J’s own explanation was that he was using those goods purchased with that account to resell to make some money. I do not have any details. But that account does not appear to have been an issue. The account was well under the £3,100 limit and had a relatively low balance. Mr J gave an explanation to Everyday Lending at the time that his partner paid the £171 a month for the car, or helped pay for the car. Everyday Lending had noted that information but seem to have accounted for that £171 a month cost by factoring it into the budget it was calculating anyway. That showed a realistic approach as the car debt was in Mr J’s name. Mr J’s bank statements were viewed. Usually where we expect a full and financial review to be carried out, one of the most convenient ways to do this was by reviewing bank statements. Everyday Lending did that. Mr J’s bank statements did show that he had two loan payments on there for two well known (at the time) high cost lenders. One was a payment for £414 and the other was for £100. I have no details of those loans but my own knowledge leads me to think that the larger one likely was a payday loan and that very particular sum was a one off payment. The other at £100 likely was a more regular payment and I have factored that into my deliberations. But balanced against this is an annotation on the bank statement copy showing that he received a £1,495.45 tax refund by cheque on 28 May 2012. The bank statement showed that Mr J’s account was in credit at the end of the month (2 June 2012) even after the regular payments had been paid, the two payday loans were paid and Mr J had removed £1,000 in cash from the account. In my view, the overall picture was not one of a person in financial difficulties. Everyday Lending used a formula to calculate what it considered to have been Mr J’s living expenses which for Mr J it came to £836.15 a month on top of the mortgage and the regular

-- 3 of 4 --

credit commitments of £293. And having got Mr J’s bank statements, and seeing the sort of other living expense payments he made, I think that was likely on the generous side. So, I do not consider that was incorrect. Using all this information, and removing from its income and expenditure calculations, Everyday Lending concluded that Mr J would have been left with £280.67 a month. So, it concluded that Mr J could afford this loan. I agree and I am not upholding Mr J’s complaint about the loan. Other points raised by Mr J Mr J has made a comment recently in which he said that companies lending where interest rates are as high as these loans are companies that ‘know they are lending money to people they possibly shouldn’t be’. Commercial lending rates are not something that the Financial Ombudsman Service looks into and so I make no comment on the rates. And in any event Mr J has told us that he knew the rates at the time and agreed to take the loan. So, the fact it was an expensive loan was something that Mr J knew at the time. And Everyday Lending is aware that it is a lender for customers who may be finding it difficult to find credit elsewhere. But the regulations to carry out a creditworthiness assessment to the appropriate degree still apply. The name Mr J has given us being the contact name at his place of work appears on the account notes Everyday Lending has sent to us. So, it shows that it did contact that person in July 2012 and again in 2014 when Mr J had lost his job. We have no details as to the role that person played in the company. But the notes indicate that the person knew Mr J. and Mr J gave that name knowing that Everyday Lending was going to contact the person and so it seems that Mr J was content for this contact to be made. And where Mr J says - if he’d had any other option he would not have taken that loan – that does not fit with the fact he was approaching Everyday Lending to buy a motorbike. So, I am not persuaded Mr J was at a stage in his life that he was desperate for the £8,000 loan to solve a financial crisis he may have been in. His own explanations do not provide that picture when combined with the financial details I have seen from 2012 and analysed above. Overall, I consider that Everyday Lending carried out proportionate checks, read the information it had correctly and was not irresponsible for approving the loan. And I do not think that it did anything else unfairly or unreasonably at the time. My final decision My final decision is that I do not uphold Mr J’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr J to accept or reject my decision before 7 November 2022. Rachael Williams Ombudsman

-- 4 of 4 --