Not upheld: irresponsible lending / unaffordable credit complaint against Volkswagen Financial Services UK Limited (trading as Audi Financial Services)

Decision detail

Summary

Miss R complained that Audi unfairly entered into a hire-purchase agreement for a used car in November 2023, claiming the agreement was unaffordable. Audi had conducted an income and expenditure assessment and credit searches showing well-maintained existing credit, but did not verify Miss R's income or assess her living costs. The ombudsman found Audi's initial checks were not fully proportionate given the 60-month term and substantial amount lent. However, when retrospectively assessing what proportionate checks would have revealed using Miss R's bank statements, the ombudsman found sufficient funds remained after deducting committed expenses and existing credit commitments to make the monthly payments sustainable. The ombudsman rejected Miss R's alternative analysis as including discretionary rather than committed expenditure, and concluded it was unlikely Audi would have declined to lend had it obtained further information. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that Audi's initial checks were not fully proportionate as they failed to verify income and obtain information about living costs, which would have been expected given the 60-month term and substantial amount lent. However, when retrospectively determining what proportionate checks would have revealed using bank statements, the ombudsman found that Miss R's committed regular living expenses and existing credit commitments, when deducted from her income, left sufficient funds for sustainable repayment. The ombudsman rejected Miss R's alternative analysis as it included all expenditure rather than just committed expenditure, and noted that Miss R's submissions were made in support of a compensation claim rather than reflecting her position at the time of sale when she clearly wanted the car. The ombudsman concluded it was unlikely Miss R would have disclosed information making the agreement unaffordable, and therefore unlikely Audi would have declined to lend had it carried out proportionate checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website