Not upheld: unaffordable lending / unfair credit relationship complaint against Volkswagen Financial Services (UK) Limited trading as Audi Finance

Decision detail

Summary

Miss C complained that VWFS provided her with an unaffordable hire purchase agreement in September 2016 to finance a car, claiming VWFS had not completed proportionate affordability checks. The complaint was made in January 2025, over six years after the lending event, and was considered under section 140A of the Consumer Credit Act 1974 as a complaint about an unfair credit relationship. The ombudsman reviewed Miss C's bank and credit card statements from the three months preceding the lending and found evidence of regular income and reasonable disposable income after accounting for her existing commitments. Notably, Miss C's practice of paying credit card balances in full each month indicated higher disposable income than standard affordability calculations would assume. The ombudsman concluded that proportionate checks would have shown the lending was affordable and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied section 140A-C of the Consumer Credit Act 1974 to assess whether the credit relationship was unfair. Although VWFS had not provided detailed information about its pre-lending checks, the ombudsman used Miss C's bank statements as a proxy to determine what proportionate checks would likely have revealed. The statements showed Miss C had regular income, identifiable non-discretionary expenditure, and existing credit commitments. Critically, Miss C's practice of paying credit card balances in full each month (rather than minimum payments) meant her actual disposable income was higher than VWFS's affordability calculation would have assumed. Based on this analysis, proportionate checks would reasonably have led VWFS to conclude Miss C could afford the repayments. The ombudsman found no evidence of unfair treatment in any other aspect of the relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website