Not upheld: irresponsible lending / unaffordable lending complaint against Volkswagen Financial Services UK Limited (trading as Audi Financial Services)

Decision detail

Summary

Ms J complained that Audi unfairly entered into a hire-purchase agreement for a used car in January 2020 on the basis that it was unaffordable. Audi had conducted an income and expenditure assessment and credit searches but did not verify Ms J's income or obtain information about her living costs. The ombudsman found that while Audi's checks were not fully proportionate, a retrospective analysis of Ms J's bank statements showed sufficient funds would have remained after committed expenses to make the monthly repayments of £284.64 sustainably. The ombudsman rejected Ms J's own analysis as including discretionary rather than committed expenditure and noted her current claims were made in hindsight for compensation purposes. The complaint was not upheld as the ombudsman was satisfied that proportionate checks would not have prevented Audi from lending.

The Ombudsman's reasoning

While Audi's initial checks were not fully proportionate as they did not verify income or obtain living cost information, the ombudsman conducted a retrospective analysis using bank statements to determine what proportionate checks would likely have revealed. The bank statements showed that after deducting committed regular living expenses and existing credit commitments from Ms J's income, sufficient funds remained to sustainably make the repayments. The ombudsman rejected Ms J's own analysis as it included all expenditure rather than just committed expenditure, and noted that Ms J's current submissions were made in support of a compensation claim rather than reflecting her position at the time of sale when she wanted the car. Therefore, it was unlikely that proportionate checks would have prevented Audi from lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website