Not upheld: irresponsible lending / unaffordable credit complaint against Shogun Finance Limited (trading as Shogun Financial Services)

Decision detail

Summary

Miss W complained that Shogun Finance Limited unfairly entered into a hire-purchase agreement for a used car in February 2020, arguing the monthly payments of £94.87 were unaffordable. Shogun Financial had obtained Miss W's declared income of £25,000 annually, cross-checked it against bank deposits, conducted credit checks showing no adverse information, and considered her existing indebtedness and substantial deposit. The ombudsman found the lender's checks were proportionate and the information suggested affordability, and concluded that even more thorough checks would not have prevented the lending. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Shogun Financial's checks were reasonable and proportionate given the circumstances. The declared income of £25,000, cross-checked against actual bank deposits, combined with the lack of adverse credit information and the substantial deposit paid, suggested Miss W could afford the £94.87 monthly payments. Even if more thorough checks had been conducted into living expenses, the ombudsman concluded it was unlikely Miss W would have disclosed information suggesting unaffordability, particularly as she had an incentive to present herself as creditworthy. The ombudsman also noted that Miss W's subsequent analysis was made with hindsight and in support of a compensation claim, making it less reliable than information that would have been available at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website