Partially upheld: Irresponsible lending complaint against Mallard Leasing Limited
Financial Ombudsman decision DRN-3502074 of 2022-07-08T00:00:00+00:00. Irresponsible lending complaint against Mallard Leasing Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-3502074 |
|---|---|
| Decision date | 2022-07-08T00:00:00+00:00 |
| Firm | Mallard Leasing Limited |
| Product | Motor finance (PCP / HP) |
| Claim type | Irresponsible lending |
| Outcome | Partially upheld |
| Remedy | End the agreement. Refund all payments made by Mr W less £365 for fair usage (calculated at £73 per month for 5 months of use). If Mr W paid more than £365, refund overpayments with 8% simple interest per year from date of each overpayment. If Mr W paid less than £365, arrange an affordable and sustainable repayment plan for the outstanding balance. Once fair usage amount received, remove any adverse credit file information regarding the agreement. |
Summary
Mr W complained that a used car supplied via hire purchase was not of satisfactory quality due to a suspension noise issue, and that Mallard Leasing irresponsibly lent to him without proper affordability checks. The ombudsman found the satisfactory quality complaint not upheld, as the suspension wear was consistent with normal wear and tear for the car's age and mileage. However, the irresponsible lending complaint was upheld because despite conducting credit checks and reviewing bank statements, Mallard Leasing failed to adequately investigate Mr W's financial circumstances given clear indicators of previous financial difficulty (two defaults and an active IVA). Mr W's bank statements showed only approximately £245 monthly disposable income, which after the £140 car payment left insufficient funds for fuel and other essential costs. Mallard Leasing was directed to refund all payments less £365 for fair usage, plus interest on any overpayments.
The Ombudsman's reasoning
While Mallard Leasing gathered proportionate evidence including credit checks and bank statements, the presence of two defaults and an active IVA should have prompted deeper investigation. The bank statements showed Mr W had only approximately £245 monthly disposable income after committed expenditure. After accounting for the £140 monthly car payment, this left only £105 per month, which did not adequately cover fuel costs or potential insurance increases. Given the limited disposable income, the 47-month term, and the final £340 payment, the agreement was not sustainably affordable. Regarding satisfactory quality, while the repair did not fully resolve the noise issue, the car's age, mileage, and average condition at supply, combined with the MOT pass, meant the suspension wear was consistent with normal wear and tear rather than a defect at point of supply.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Mallard Leasing Limited, all decisions | 38 | 58% |
| Irresponsible lending, all decisions | 30,675 | 37% |
| Motor finance (PCP / HP), all decisions | 19,840 | 38% |
Source
Read the original decision on the Financial Ombudsman Service website