Not upheld: irresponsible lending - affordability complaint against Blue Motor Finance Limited

Decision detail

Summary

Mr C complained that Blue Motor Finance Limited irresponsibly lent to him by entering into a hire-purchase agreement for a £9,900 car loan with unaffordable monthly payments of £266.16. BMF had conducted credit searches and obtained Mr C's income details but relied on statistical estimates for living expenses rather than actual figures. The ombudsman found BMF's checks were not sufficiently thorough given the significant portion of Mr C's income already committed to existing credit, but concluded that had BMF obtained actual living expense details, it would likely still have approved the lending as Mr C appeared to have sufficient disposable income. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that BMF's affordability checks were not sufficiently thorough, particularly in relying on statistical estimates for living expenses given the significant portion of income already committed to existing credit. However, the ombudsman concluded that had BMF conducted more thorough checks and obtained actual details of Mr C's living expenses, the identifiable actual payments combined with active credit commitments would still have left sufficient disposable income to service the agreement. The ombudsman also considered that Mr C's current submissions for compensation are less reliable than explanations he would have provided at the time of lending, and that Mr C's substantial deposit (equivalent to over four monthly payments) suggested genuine commitment to the purchase.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website