The financial Ombudsman rejected the majority of peer-to-peer lending cases that were referred to the body last year.
P2P lending makes up a small proportion of complaints to the Ombudsman and Peer2Peer Finance News analysis shows that out of nine cases that ended up being referred by complainants, seven were rejected.
This is separate to complaints dealt with by platforms internally and not referred to the Ombudsman. The main theme of the Ombudsman complaints was borrower suitability, with more issues raised by those who have taken loans rather than investors.
In one case, a RateSetter borrower complained that the terms of a loan were unclear after he paid more than £13,000 for valuation of a property development but then found the finance was unstainable as it would be divided into tranches. RateSetter had said it provided no guarantees that the funding arrangement would be entered into but the complaint was upheld and it had to cover the costs and pay compensation to the borrower.
The platform was also ordered to write-off the outstanding balance of another £10,000 loan and pay compensation to a borrower after his family complained he was a vulnerable customer suffering from bipolar disorder, depression and generalised anxiety disorder. RateSetter had said the borrower passed its credit checks but initially said it would suspend the loan.
Zopa had a complaint from a borrower that they shouldn’t have been approved for a £10,000 loan due to a gambling problem, but the Ombudsman rejected this on the grounds there was insufficient evidence that would have helped the platform identify this.
The Ombudsman also cleared Zopa in another case where a borrower was scammed into applying for a £25,000 loan on someone else’s behalf after they gained access to his account. The Ombudsman said it was a cruel scam but that Zopa shouldn’t have to bear the loss. A Funding Circle borrower complained that a redemption statement did not make it clear that they would be liable for the final monthly payment.
The Ombudsman rejected the complaint as the platform had agreed to waive the interest that was payable. In cases involving investors, a Funding Circle customer complained about the platform’s shift to auto-lending and wanted access under the old terms, but the Ombudsman rejected this grievance. A separate complaint about Funding Circle’s login system was also rejected. A complaint against LendingCrowd was rejected after an investor wanted redress for the platform lending to a sole trader who eventually went bankrupt.
The investor argued that the borrower had applied for bankruptcy before the loan was granted but LendingCrowd said there was no public record when it approved the loan and said the accounts showed sufficient cashflow. The Ombudsman also rejected a complaint against Lendy prior to its collapse, from an investor who said it was unclear how long a 180-day interest bonus scheme would last.