Not upheld: irresponsible lending - insufficient affordability checks complaint against HSBC UK Bank Plc

Decision detail

Summary

Miss A complained that HSBC irresponsibly lent her £5,000 in March 2023 and £7,020 in March 2024, arguing that insufficient affordability checks would have revealed unaffordable repayments. HSBC and the investigator rejected the complaint. The ombudsman found that while HSBC should have enquired about Miss A's new rental costs when she mentioned moving out during the March 2023 call, a proper reassessment would have shown sufficient disposable income after accounting for shared living expenses. For the second loan, HSBC could not have known the stated salary was inflated by wage advances. The ombudsman concluded that based on information available at the time, HSBC carried out reasonable and proportionate affordability assessments and did not lend irresponsibly, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for reasonable and proportionate affordability assessments that are borrower-focused and consider the impact on the consumer. While acknowledging that HSBC missed an opportunity to discuss Miss A's new rental costs during the March 2023 call, the ombudsman undertook a hypothetical reassessment incorporating the £200 increased rent contribution. However, the ombudsman found that HSBC would have offset this by reducing essential living expenses estimates (as costs would be shared with a partner), resulting in no indication of financial difficulty. For loan two, the ombudsman found HSBC could not have known about the wage advances inflating the stated salary, as its verification checks validated the declared monthly figure. The ombudsman concluded that based on information available at the time, HSBC did not lend irresponsibly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website