Not upheld: irresponsible lending - affordability of hire-purchase agreement complaint against Black Horse Limited

Decision detail

Summary

Mr F complained that Black Horse unfairly lent to him by entering into a hire-purchase agreement for a £10,859.32 vehicle loan with monthly payments of £227.95 over 60 months, which he claimed were unaffordable. Black Horse defended its decision based on proportionate checks showing Mr F's declared income exceeded his committed expenses plus the new loan payment. The ombudsman found Black Horse's checks were proportionate and showed the lending was sustainable at the time, rejecting Mr F's retrospective analysis of his bank transactions as unreliable and made in support of a compensation claim rather than reflecting his actual circumstances at the time of lending.

The Ombudsman's reasoning

The ombudsman found that Black Horse's proportionate checks at the time of lending showed Mr F had sufficient disposable income to sustain the monthly payments when committed expenses and existing credit were deducted from his income. While Mr F's subsequent line-by-line bank analysis suggested insufficient funds for emergencies, the ombudsman noted this analysis included all expenditure rather than just committed expenditure, and was made retrospectively in support of a compensation claim rather than reflecting what Mr F would have disclosed at the time. The ombudsman concluded that even if further checks had been conducted, they would not have prevented Black Horse from lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website