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

Decision detail

Summary

Mr T complained that Blue Motor Finance Limited irresponsibly lent to him by entering into a hire-purchase agreement for a used car with unaffordable monthly payments of £285.41. BMF had conducted credit searches revealing historic defaults and relied on Mr T's stated income and statistical estimates for living expenses. The ombudsman found that while BMF's checks were insufficiently thorough and should have obtained actual living expense information given Mr T's previous credit difficulties, the ombudsman concluded that even with more thorough checks, the payments would have appeared affordable based on Mr T's actual identifiable expenditure relative to his income. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that BMF's checks were not sufficiently thorough, particularly in relying on statistical estimates for living costs rather than actual figures given Mr T's previous credit difficulties. However, the ombudsman concluded that even had BMF conducted more thorough checks and obtained actual expenditure information, the identifiable actual payments Mr T was making towards living costs, when added to his active credit commitments and deducted from his income, would have left him with enough to repay the agreement. The ombudsman also noted that Mr T's current submissions were made in support of a compensation claim and were unlikely to reflect what he would have disclosed at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website