The ombudsman's case manager believed the finance company did not obtain all the relevant information about Betty's financial situation, prior to entering into the loan.
"For example, Betty had not listed any expenses for transport in the income and expenses form," the IFSO said.
"She said she owned a house, but there were no rates payments listed. The case manager also believed the bank statement the credit provider relied on did not provide sufficient transactions to verify Betty's income and expenses."
The complaint was one highlighted by the Insurance & Financial Services Ombudsman's annual report.
The report, released today, says there were 320 complaints in the 12 months to June - the highest number in 20 years.
"The increase in complaints could reflect an increase in awareness about our free and independent service, and the right to complain about insurance or financial services, Insurance & Financial Services Ombudsman Karen Stevens said.
Stevens said the most complaints were about general insurance, followed by health, life and disability insurance.
There were 206 general insurance complaints (64 per cent of all complaints), which includes house (85), travel (46), vehicle (35), and contents insurance (21).
Nearly 100 complaints (or 31 per cent) were about health, life and disability insurance - 36 were about health, 25 life, 21 income protection, and 13 trauma insurance.