Not upheld: irresponsible lending complaint against Secure Trust Bank Public Limited Company

Decision detail

Summary

Mr H complained that Secure Trust irresponsibly provided him with a hire purchase agreement for £11,995 in January 2020 that he could not afford to repay sustainably. Secure Trust acknowledged it did not carry out adequate checks, particularly given adverse markings on Mr H's credit file. However, the ombudsman found that based on Mr H's stated monthly income of approximately £1,600 and committed spending of approximately £1,140, he would have had sufficient disposable income of around £460 to afford the monthly payments of £312.89. Although Mr H demonstrated overdraft dependency and had difficulties with repayments after the agreement started, the ombudsman concluded the lending decision was not unfair. The complaint was not upheld and no remedy was ordered.

The Ombudsman's reasoning

Although Secure Trust failed to carry out proportionate checks given the adverse markings on Mr H's credit file, the ombudsman concluded that even with better checks, the agreement would likely have been found affordable. Based on Mr H's stated income of approximately £1,600 monthly and committed spending of approximately £1,140, he would have had around £460 disposable income remaining. The ombudsman acknowledged Mr H's overdraft dependency and use of short-term finance but concluded these did not necessarily render the agreement unaffordable. The ombudsman also considered the firm's post-agreement support and found no unfairness under section 140A of the Consumer Credit Act 1974.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website