Not upheld: irresponsible lending - inadequate affordability checks complaint against Mercedes-Benz Financial Services UK Limited

Decision detail

Summary

Mr F complained that MBFS unfairly entered into a hire purchase agreement for a £25,252.67 vehicle in July 2019, claiming the monthly payments of £361.62 were unaffordable. MBFS had obtained Mr F's income and employment details and conducted credit searches showing no recent adverse information, but did not obtain details of his non-credit related committed expenditure. The ombudsman found that whilst MBFS's checks were not fully proportionate, had proportionate checks been conducted, MBFS would likely still have lent to Mr F based on the information he provided showing sufficient funds after accounting for living costs and credit commitments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that MBFS failed to carry out fully proportionate checks by not obtaining information about Mr F's non-credit related committed expenditure, which would have been prudent given the loan amount, term length, and presence of a historic default. However, the ombudsman concluded that the key question was not what Mr F's actual financial position was, but what MBFS would likely have concluded had it obtained further information. Based on the information Mr F provided about his finances, his substantial deposit (exceeding a year's monthly payments), and lack of recent adverse credit information, the ombudsman was satisfied that MBFS would likely still have lent to Mr F even with proportionate checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website