Not upheld: irresponsible lending - affordability of hire-purchase agreement complaint against Advantage Finance Limited

Decision detail

Summary

Miss W complained that Advantage Finance unfairly entered into a hire-purchase agreement for a car in July 2022, claiming the monthly payments of £245.92 were unaffordable. Advantage Finance had conducted an income and expenditure assessment and credit searches, which revealed previous adverse credit information. The ombudsman found that while Advantage Finance's checks were not sufficiently proportionate given the credit history, further reasonable checks would have shown Miss W had sufficient funds to make sustainable repayments at the time of lending. The ombudsman did not uphold the complaint, noting that Miss W's later financial difficulties, including rent increases and council tax arrears, could not have been foreseen at the time of the lending decision.

The Ombudsman's reasoning

The ombudsman found that while Advantage Finance's initial checks were not sufficiently proportionate given the adverse credit history shown, reasonable and proportionate checks would have revealed that Miss W had sufficient funds to make sustainable repayments at the time of lending. The ombudsman considered what further information Advantage Finance should have obtained about living expenses and existing commitments, and concluded that even with such information, the lending would have been justified. Miss W's later financial difficulties could not have been foreseen or taken into account.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website