Not upheld: irresponsible lending / unaffordable credit complaint against Specialist Motor Finance Limited t/a Specialist Motor Finance

Decision detail

Summary

Mr A complained that Specialist Motor Finance Limited lent to him irresponsibly when providing a 60-month car finance agreement in June 2023 with an APR of 30.9% and total repayable of £24,958, arguing that SMF failed to undertake sufficient affordability checks. Mr A disclosed that he had become unemployed in April 2023, prior to the June 2023 application, and claimed SMF had not verified his actual financial position. SMF and the FOS investigator both concluded that SMF had completed reasonable and proportionate checks using declared income verified through credit reference agency data, statistical expenditure assessments, and credit history analysis, resulting in a calculated disposable income of £988.49. The ombudsman upheld this position, finding that SMF was not required to verify actual employment status and that the lending decision was fair and compliant with FCA Consumer Credit Sourcebook guidance. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied FCA CONC guidance on responsible lending, which requires reasonable and proportionate affordability checks. The ombudsman found that SMF's approach of using declared income verified through CRA data, assessing housing costs with a future-proof buffer, using statistical data for essential living expenses, and applying a £100 buffer was reasonable and proportionate given the circumstances. The resulting disposable income of £988.49 was ample to cover the finance agreement repayments and day-to-day expenses. The credit search showed Mr A was managing existing credit well with only historic defaults. The ombudsman rejected the argument that SMF should have verified Mr A's actual employment status, noting that the applicable rules do not require full evidence of income in every case and that SMF had discretion in how to conduct checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website