Upheld: irresponsible lending - inadequate affordability assessment complaint against Equifinance Limited
Financial Ombudsman decision DRN-6282591 of 2026-05-07T00:00:00+00:00. irresponsible lending - inadequate affordability assessment complaint against Equifinance Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6282591 |
|---|---|
| Decision date | 2026-05-07T00:00:00+00:00 |
| Firm | Equifinance Limited |
| Product | mortgage |
| Claim type | irresponsible lending - inadequate affordability assessment |
| Outcome | Upheld |
| Remedy | Equifinance must: (1) recalculate mortgage balance removing all fees, charges and interest, treating all payments as capital repayment; (2) agree suitable repayment plan if balance remains outstanding; (3) remove adverse credit file information; (4) remove broker fee if evidence shows it would not have been payable if application declined; (5) retain charge on property until recalculated balance repaid. |
Summary
Mr and Mrs F obtained a second charge mortgage of £10,000 from Equifinance in December 2021 to consolidate debts and purchase a car. Their first charge mortgage was in arrears, their revolving credit was maxed out, and they were on a payment arrangement involving interest-only payments. Equifinance's affordability assessment used incomplete expenditure information and calculated substantial disposable income. However, the Ombudsman found that the credit report contained sufficient red flags that should have prompted further enquiries, and full bank statements would have revealed actual spending far exceeding the figures used, including £500 monthly family support and £600 monthly debt repayment. The Ombudsman upheld the complaint, finding the mortgage was unaffordable, and ordered Equifinance to recalculate the balance removing all fees, charges and interest.
The Ombudsman's reasoning
The Ombudsman found that while Equifinance was entitled to rely on declared expenditure, the credit report showed sufficient red flags (prolonged mortgage arrears, maxed-out revolving credit, and knowledge of interest-only payment arrangement) that should have prompted further enquiries. Had full bank statements been requested, they would have revealed actual spending significantly exceeding both declared and modelled figures, including £500 monthly family support and £600 monthly debt repayment to family members. The Ombudsman concluded that discretionary spending of this nature, combined with the history of financial difficulties, meant Mr and Mrs F would unlikely have reduced spending to affordable levels, making the mortgage unaffordable and unsustainable.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Equifinance Limited, all decisions | 18 | 50% |
Source
Read the original decision on the Financial Ombudsman Service website