Not upheld: irresponsible lending / unaffordable lending complaint against Black Horse Limited

Decision detail

Summary

Ms J complained that Black Horse unfairly entered into a hire-purchase agreement for a £10,699 car with unaffordable monthly payments of £184.35, claiming she was under financial pressure with limited disposable income. Black Horse had verified her income through bank deposits, conducted credit checks showing no adverse information, and assessed affordability by deducting her declared living expenses and existing credit commitments. The ombudsman found Black Horse's checks were proportionate and that the payments were objectively affordable based on the information obtained, and that even enhanced checks would not have revealed unaffordability given Ms J's low non-discretionary expenditure from living with parents. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, requiring proportionate affordability checks. Black Horse's checks were proportionate given the circumstances: it verified income against bank deposits, conducted credit checks, and assessed affordability by deducting committed expenses and existing credit from monthly income. The ombudsman found that even if Black Horse should have done more to verify living expenses, the bank statements confirmed Ms J's non-discretionary expenditure was extremely low due to living with parents, so further checks would not have changed the lending decision. The ombudsman also noted that Ms J's current claims of unaffordability, made in support of a compensation claim, were less reliable than her original application representations made when she considered it reasonable to purchase the vehicle.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website