Not upheld: irresponsible lending / unaffordable lending complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr U complained that HSBC provided four loans between November 2011 and April 2015 that were unaffordable and granted during financial pressure. The ombudsman found the complaint could be considered under Section 140A as concerning an unfair lending relationship and was referred in time. However, while HSBC did not retain affordability check records, the available evidence including bank statements and credit reports did not demonstrate that Mr U was in clear financial difficulty at the time of each lending decision. Although Mr U had defaulted on accounts before loans one and two, his income appeared adequate relative to identifiable expenditure, and the ombudsman could not conclude HSBC acted unfairly without complete evidence of his financial circumstances. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Section 140A unfair relationship test, finding the complaint was referred in time as it concerned the entire lending relationship which ended in November 2020. The key issue was whether HSBC carried out proportionate affordability checks and whether lending was irresponsible. While HSBC's failure to retain records meant the ombudsman could not confirm proportionate checks were done, the available evidence (bank statements and credit reports) did not demonstrate clear financial difficulty. Mr U's income appeared adequate relative to identifiable expenditure, he was not reliant on overdraft during loan one, and no adverse credit information was reported on credit cards opened later. Without contemporaneous evidence of his full financial situation (including other accounts he maintained), the ombudsman could not conclude HSBC acted unfairly.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website