Not upheld: Irresponsible lending complaint against Evolution Lending Limited

Decision detail

Summary

Mr R complained that Evolution Lending mis-sold him a third charge mortgage for £9,000 taken out less than a month after purchasing his property. He argued he was not properly informed the loan was secured against his home, that Evolution should have identified his vulnerable financial position, and that the affordability assessment was inadequate as it failed to account for all secured debt and future help-to-buy loan payments. The ombudsman found that Evolution's affordability assessment was reasonable under MCOB rules, with Mr R's income exceeding expenditure even when accounting for anticipated help-to-buy payments from year six. The ombudsman also found the loan terms were clearly communicated and rejected arguments about vulnerability based on recent property purchase. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied MCOB 11.6 responsible lending rules and found that Evolution's affordability assessment was reasonable. Although Evolution overstated expenditure by including a repaid hire purchase payment, it should have included anticipated help-to-buy loan payments from year six. However, no stress test was required on the help-to-buy loan as payments were not due within five years. The first charge mortgage was fixed for more than five years, so no stress test was required on that either. Taking all factors into account, Mr R's expenditure was less than his income with a reasonable cushion. The loan terms were clearly communicated in the mortgage offer and legal charge. The ombudsman rejected arguments about vulnerability based on recent property purchase and found that lending at 100% LTV was a risk decision for Evolution to make.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website