Not upheld: Irresponsible lending complaint against Conister Bank Limited

Decision detail

Summary

Mr M complained that Conister Bank Limited failed to properly analyse his financial circumstances before approving a Hire Purchase Agreement for a £9,600 car in August 2019, requiring £223.28 monthly repayments over 60 months. Mr M argued he was on a low wage, had significant outgoings including a mortgage, existing debt arrears, and was dealing with debt management companies. While the ombudsman found CBL did not conduct proportionate affordability checks, the ombudsman applied a counterfactual test using Mr M's bank statements and determined that proper checks would have revealed approximately £160 in monthly disposable income after essential expenditure, sufficient to support the repayment. The ombudsman noted the net increase to Mr M's expenditure was only £46 monthly (as the new agreement replaced an existing HPA) and that Mr M had been managing his existing HPA without issue. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that CBL did not complete proportionate affordability checks, particularly failing to adequately assess Mr M's essential expenditure despite the relatively lengthy 60-month term and significant monthly commitment. However, the ombudsman applied a counterfactual test, examining what proportionate checks would have revealed using Mr M's bank statements. The ombudsman calculated that Mr M would have had approximately £384 in monthly disposable income after essential expenditure (mortgage £593, existing credit commitments £100, groceries £109, utilities £28, car/travel £63), leaving approximately £160 after the new £224 monthly repayment. The ombudsman found this disposable income sufficient to support the agreement, particularly as it was replacing an existing HPA Mr M had been repaying without issue, and therefore concluded the lending decision would have been fair even with proper checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website