Not upheld: irresponsible lending / inadequate affordability checks complaint against First Response Finance Limited

Decision detail

Summary

Mr T complained that a hire purchase agreement for a £3,999 motorbike with 48 monthly payments of £115.54 was unaffordable. First Response Finance had conducted an affordability assessment but failed to make reasonable and proportionate checks despite Mr T's credit file showing his account had been exceeded in January, June and December 2023. The ombudsman found that if First Response Finance had obtained more detailed information about Mr T's expenditure, it would have discovered he had disposable income of £621.91 monthly, sufficient to afford the payments. Although the firm's checks were inadequate, the underlying lending decision was not irresponsible, and the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that First Response Finance did not complete reasonable and proportionate checks given the red flags on Mr T's credit file (multiple overlimit instances). However, the ombudsman found that if the firm had obtained more detailed information about Mr T's expenditure through proper enquiries, it would likely have discovered he had sufficient disposable income (£621.91 monthly) to sustainably afford the £115.54 monthly payment. The ombudsman rejected arguments about gambling and overdraft use, finding these would not have prevented the lending decision. Therefore, despite the inadequate checks, the ultimate lending decision was not irresponsible.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website