Upheld: irresponsible lending - inadequate affordability checks complaint against BMW Financial Services (GB) Limited trading as Alphera Financial Services

Decision detail

Summary

Mr C complained that Alphera lent to him irresponsibly when he entered into a hire purchase agreement for a car in July 2020. Alphera conducted only basic checks of employment status and existing debt levels without verifying income or assessing outgoings. The ombudsman found that given Mr C's mortgage, multiple credit cards, a loan, and a partner and three dependents, proportionate checks should have included income verification and expenditure estimation. Bank statements showed Mr C had only approximately £12 monthly disposable income after existing commitments, making the £205 monthly car payment unsustainable. The complaint was upheld and Alphera was ordered to refund overpayments above the original cash price with interest and remove adverse credit file information.

The Ombudsman's reasoning

The ombudsman applied CONC rules requiring lenders to complete reasonable and proportionate checks before offering credit. Given Mr C's existing commitments (mortgage, credit cards, loan) and four-year debt term, Alphera should have taken reasonable steps to estimate his income and non-discretionary spending. Bank statements showed Mr C had only approximately £12 disposable income monthly after existing commitments, making the additional £205 monthly payment unsustainable. The checks were not borrower-focused as they failed to consider the impact of repayment on Mr C himself. Although Mr C later maintained payments, the decision is based on what was evident at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website