Not upheld: irresponsible lending - inadequate affordability checks complaint against Blue Motor Finance Ltd

Decision detail

Summary

Mrs G complained that Blue Motor Finance Ltd unfairly entered into a hire-purchase agreement for a £10,000 car with unaffordable monthly payments of £225. BMF had obtained Mrs G's income and employment details and conducted credit checks showing no adverse history, but did not assess her living costs. The ombudsman found BMF's checks were not sufficiently proportionate as they failed to understand Mrs G's regular living expenses. However, upon retrospective analysis of bank statements, the ombudsman concluded that sufficient disposable income appeared to exist after committed expenses to sustain the payments, and that it was unlikely Mrs G would have voluntarily disclosed unaffordability. Therefore, the complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while BMF's proportionality checks were insufficient as they did not assess Mrs G's living costs, retrospective analysis of bank statements showed sufficient disposable income remained after committed expenses to make the payments sustainable. The ombudsman considered it unlikely Mrs G would have voluntarily disclosed unaffordability when seeking credit, and that BMF was not required to request bank statements. Therefore, proportionate checks would likely have shown affordability and BMF would not have declined to lend.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website