Upheld: irresponsible lending - inadequate affordability assessment complaint against Oodle Financial Services Limited (trading as Oodle Car Finance)

Decision detail

Summary

Miss L complained that Oodle lent to her irresponsibly when she acquired a car through a hire purchase agreement for £12,814 in March 2022. Oodle relied on Miss L's declared income of £25,920 and an affordability assessment showing £377 monthly disposable income, but this left only £50 for non-essential expenses over the 5-year term. The ombudsman found that Oodle should have performed further checks given Miss L's recent default and tight affordability position. Bank statements revealed Miss L's actual income was only around £1,000 monthly and her committed expenditure was higher than estimated, making the lending unaffordable. The ombudsman upheld the complaint and ordered Oodle to refund overpayments with interest and remove adverse credit file information.

The Ombudsman's reasoning

The ombudsman applied the regulatory requirement for a reasonable and proportionate, borrower-focused affordability assessment. The assessment must consider whether repayments would cause difficulties or adverse consequences for the consumer, not merely whether the lender would recover funds. Given Miss L's recent default and the tight affordability position (only £50 monthly buffer over 5 years), proportionate checks required further investigation. Bank statements would have revealed actual income was around £1,000 monthly, not £25,920 annually, and committed expenditure was higher than estimated, making the lending unaffordable and unsustainable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website