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

Decision detail

Summary

Mr N complained that HSBC lent irresponsibly by failing to conduct sufficient affordability checks before approving a £22,010 home improvement loan in November 2022. Mr N argued that proper checks would have revealed he was living with an extensive overdraft and was increasingly reliant on credit with signs of financial distress. HSBC validated Mr N's income of £54,960 through account turnover data, reviewed his credit file which showed no adverse findings or missed payments, and used ONS modelling combined with actual data to assess affordability. The ombudsman found the checks were reasonable and proportionate, the calculated disposable income supported sustainable repayments, and there was no evidence of ongoing financial difficulties, therefore not upholding the complaint.

The Ombudsman's reasoning

The ombudsman found that HSBC's checks were reasonable and proportionate given the size and term of the loan. The combination of validated income, positive credit file with no adverse findings, and calculated disposable income based on actual and ONS data supported the conclusion that the lending was affordable and sustainable. The ombudsman rejected Mr N's argument that ONS data was unreliable, finding no evidence to suggest it was inapplicable in this case. The lack of adverse credit file findings and positive disposable income calculations indicated no ongoing financial difficulties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website