Not upheld: irresponsible lending complaint against Black Horse Limited

Decision detail

Summary

Mr S complained that Black Horse Limited irresponsibly lent him £25,000 through a hire purchase agreement in May 2022 with monthly repayments of £519.17, which he claimed was unaffordable and led to him returning the car. Black Horse verified Mr S's self-employed income of £50,000 annually and assessed his disposable income at around £1,540 before the loan repayments, concluding the lending was affordable. The FOS investigator upheld the complaint, finding further checks including bank statements would have revealed the lending was unaffordable and identified gambling activity. However, the ombudsman disagreed, finding that Black Horse's income verification through an industry tool was reasonable and supported by subsequent bank statement review, and that Mr S's total credit commitments of approximately £1,020 monthly were sustainable relative to his net income of £3,138 with a reasonable buffer remaining. The ombudsman rejected the need for bank statement verification at the time of lending and found Black Horse could not reasonably have been aware of gambling activity, ultimately not upholding the complaint.

The Ombudsman's reasoning

The ombudsman found that Black Horse's checks were proportionate to the type and amount of credit being provided. While the agreement was for a large amount with significant monthly repayments, the income verification through an industry tool was reasonable and supported by bank statements. The ombudsman concluded that Mr S's total credit repayments (including the new HPA) of around £1,020 compared to his net monthly income of £3,138, with housing costs of £550 and an estimated buffer of around £1,000 for other costs, meant the agreement was not unsustainable. The ombudsman rejected the need for bank statement verification at the time of lending and found that Black Horse could not reasonably have been aware of Mr S's gambling activity. The ombudsman also noted that each case must be decided on its individual merits and declined to compare this case to other upheld complaints from the same period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website