Not upheld: irresponsible lending - inadequate affordability checks complaint against MARKS AND SPENCER FINANCIAL SERVICES PLC

Decision detail

Summary

Mr B complained that Marks and Spencer irresponsibly lent to him by failing to complete adequate affordability checks for two fixed sum loans (£12,500 in July 2021 and £12,712 in May 2022). Mr B argued that proper checks would have revealed the loans were unaffordable and that he was financially vulnerable. The ombudsman found that Marks and Spencer completed fair and proportionate affordability checks, verified Mr B's income of £65,000, made reasonable expenditure estimations, and found no signs of financial distress from credit checks showing good management of existing borrowing. Even accounting for all identified commitments including mortgage payments, substantial monthly buffers remained (£1,834 and £1,390 respectively), supporting sustainable affordability. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the proportionality test for affordability checks, considering the loan amount, repayment size, cost of credit, purpose, and consumer circumstances. For both loans, Marks and Spencer verified income, made reasonable expenditure estimations, and found no signs of financial distress. Even using the full mortgage payment figure, substantial monthly buffers remained (£1,834 for loan one and £1,390 for loan two), demonstrating sustainable affordability. The fact that Mr B had external borrowing and had re-mortgaged was not concerning given the credit check showed good management of existing debts.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website