Not upheld: irresponsible lending - adequacy of affordability checks complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr A complained that HSBC lent irresponsibly by failing to carry out adequate affordability checks before providing three personal loans between February 2021 and September 2023. HSBC conducted income verification, credit checks, and affordability assessments for each loan, calculating disposable income of approximately £1,500, £600, and £182 respectively. The ombudsman found the checks were proportionate to the credit provided and showed the loans were affordable. Although all three loans subsequently defaulted, the ombudsman upheld HSBC's lending decisions and found no evidence of irresponsible lending or unfair treatment under consumer credit law.

The Ombudsman's reasoning

The ombudsman found that HSBC's affordability checks were proportionate to the type and amount of credit provided. For each loan, the checks showed Mr A had sufficient disposable income to afford the repayments on a sustainable basis. The ombudsman noted that even if better checks had been carried out, the outcome would not have changed. The ombudsman also found that Mr A was made aware of how Loan 3 would repay Loan 2 before agreeing to it. While sympathetic to the impact of the defaults, the ombudsman found no evidence of unfair lending or breach of Section 140A of the Consumer Credit Act 1974.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website