Logbook Lending Limited · DRN-6158879

The complaint Mr F is complaining that Logbook Lending Limited (LBL) lent to him under a pawnbroking agreement – he said the lending was irresponsible. What happened In April 2023, Mr F applied to LBL for a logbook loan secured on a vehicle he’d recently acquired. LBL approved a loan of £1,500, for which Mr F needed to make 78 weekly payments of £53.38 each. Mr F made payments sporadically and accrued some arrears. Then, in August 2023, he asked LBL if he could pawn the vehicle. He said he wanted to borrow around £10,000 and said he was struggling because he’d just had to pay a large sum for unexpected repairs to the vehicle. LBL agreed to the pawnbroking arrangement. They lent him £12,000, of which around £2,000 was used to settle the first loan whilst the remainder was paid to him. The agreement said if Mr F didn’t settle it by early March 2024, LBL would be allowed to sell the car to cover what was due to them. LBL sold the car in May 2024. From the proceeds they kept the amounts due under the loan, as well as costs associated with selling the vehicle. And they paid the remainder to Mr F. In June 2025 Mr F complained to LBL. He said they shouldn’t have allowed him to borrow the £12,000. He said this was irresponsible because it was evident he couldn’t even manage the payments of £53 per week for the loan they’d previously approved. He also complained about the way the sale of the car was handled and said this had resulted in it being undervalued. LBL investigated but didn’t uphold Mr F’s complaint. They said a pawnbroking agreement doesn’t have the same regulatory requirements as other loans. They said they’d checked that Mr F owned the car and that the value of the vehicle would be enough to repay the loan if necessary. And they said that the price achieved at auction is deemed to be market value and that they’d offered Mr F the opportunity to sell the vehicle himself. LBL later offered Mr F £300 as a goodwill gesture to settle the complaint, but he didn’t accept this and brought his complaint to the Financial Ombudsman Service where one of our investigators looked into it. Our investigator’s view was that LBL hadn’t done anything wrong. So she didn’t uphold the complaint. Mr F accepted our investigator’s view in relation to the sale and valuation of his car. But he didn’t agree that LBL had acted fairly in lending to him. In summary, he made the following points: • LBL had carried out detailed affordability checks in April 2023 which showed he had a poor credit history and was compulsively spread betting at the time. He described this as a form of gambling and said LBL should have been aware that lending to him would cause foreseeable harm.

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• LBL also knew that he was experiencing difficulties keeping up repayments on an active loan with them at the time he asked for the pawnbroking loan. • Redemption of the agreement relied on anticipated future income which then did not materialise. Mr F said the security provided by the pledged asset doesn’t remove the need for the lender to consider fairness and foreseeable harm. He asked for an ombudsman, and the matter’s come to me. Because Mr F accepted our investigator’s view in relation to the sale and valuation of the car, I’ve not considered this part of the complaint - my decision is only about the irresponsible lending aspect. 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. Having done so, and acknowledging that it’ll be disappointing for Mr F, I’m not upholding his complaint for broadly the same reasons as our investigator. I’ll explain more below. My role is to decide whether LBL have acted fairly in the context of the complaint, taking into account the relevant laws, regulations and good industry practice in place at the time. As Mr F is aware, pawnbroking agreements are not subject to the same regulations as other loans. In particular, lenders aren’t required to assess whether a consumer is likely to be able to make the repayments required to avoid the sale of the asset. However, the lender is expected to abide by the Financial Conduct Authority’s (FCA’s) Principles. Among other things, these require a firm to pay due regard to the interests of its customers, treat them fairly, and avoid foreseeable harm. In considering Mr F’s complaint, I’ve thought about whether LBL acted in line with these Principles when agreeing to lend to him. Mr F’s position focuses on what LBL knew from the checks they’d carried out several months prior, in April 2023, as well as from the arrears on his existing loan. And it’s fair to say LBL did need to take into consideration what they already knew about Mr F. But I’m not persuaded they acted unfairly. In saying this I’ve considered the following: • The FCA doesn’t require firms to protect consumers from risks they understand and accept. The potential sale of an asset under a pawnbroking agreement is an expected feature of the product and it’s clear Mr F understood the agreement. So, even if the sale of the car was foreseeable, I wouldn’t be able to say LBL had breached the FCA’s requirements in relation to avoiding foreseeable harm in this respect. • Mr F says he spent the proceeds of the loan on gambling. Whilst this might in some circumstances be considered foreseeable harm, I’m not persuaded LBL should have anticipated it. During their affordability checks in April 2023, LBL asked Mr F about transactions he’s now describing as compulsive gambling and he described them at the time as investing transactions. He signed a statement to say that he wasn’t gambling. And his proceeds from the transactions over the preceding few months had significantly outweighed his outgoings, adding weight to his statement that he was investing rather than gambling. I can’t say LBL should have investigated this further. • The April 2023 checks also showed that Mr F had high levels of income and high affordability. Whilst his credit history wasn’t perfect, the most recent default had been well over two years prior, and he wasn’t heavily indebted.

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• Whilst Mr F was in some arrears on his existing loan, he’d made most of the payments for the first two months and was only six weeks in arrears. During the phone calls that took place between Mr F and LBL in the lead up to the loan being approved, Mr F explained that he needed the money because of unexpected and costly repairs to his car. In saying this, he provided a plausible explanation for the arrears. • Mr F added this was a short-term problem as he was generally paid dividends once a quarter and expected to receive £15,000 - £20,000 within the next couple of months. In the second call, he added that his accountant had confirmed this amount and the timing. So, it was reasonable for LBL to believe Mr F would receive an amount sufficient to redeem the agreement well within its six-month term. • I’m satisfied the information LBL gathered during these calls was enough to satisfy themselves that the agreement wasn’t likely to cause Mr F foreseeable harm. Instead, it appeared the arrangement was being used as pawnbroking agreements are intended – to address a short-term cashflow problem. In summary, then, I’m satisfied that LBL acted fairly and reasonably when lending to Mr F under the pawnbroking agreement. So I’m not upholding his complaint. My final decision As I’ve explained above, I’m not upholding Mr F’s complaint about Logbook Lending Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr F to accept or reject my decision before 7 April 2026. Clare King Ombudsman

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