Partially upheld: Irresponsible lending complaint against First Response Finance Limited
Financial Ombudsman decision DRN-6342284 of 2026-06-25T00:00:00+00:00. Irresponsible lending complaint against First Response Finance Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-6342284 |
|---|---|
| Decision date | 2026-06-25T00:00:00+00:00 |
| Firm | First Response Finance Limited |
| Product | Motor finance (PCP / HP) |
| Claim type | Irresponsible lending |
| Outcome | Partially upheld |
| Remedy | FRF must: (1) Calculate total payments made by Miss S and deduct fair usage of £175 per month for the period the car was in her possession; (2) Refund any overpayments with simple interest at Bank of England base rate plus 1% per annum from date of overpayment; (3) If underpaid, agree an affordable and sustainable repayment plan for the outstanding balance; (4) Remove any relevant adverse information from Miss S's credit file once any sum due has been paid. |
Summary
Miss S complained that FRF irresponsibly provided three hire purchase agreements for cars when the credit was unaffordable. She was a university student on benefits with two dependants, existing CCJs, and other debts. The ombudsman found Agreements one and two were fair lending decisions but upheld the complaint regarding Agreement three. FRF's affordability checks for Agreement three were inadequate; their own calculations showed only £130.81 monthly disposable income after payments, and proper checks would have revealed insufficient funds for essential living. FRF must refund overpayments with interest, allow fair usage of £175 monthly, and remove adverse credit file information.
The Ombudsman's reasoning
The ombudsman found that while FRF carried out some affordability checks for Agreement three, these were not reasonable and proportionate given Miss S's circumstances. FRF's own calculations showed net monthly disposable income of only £130.81 after the £284.79 monthly payment, which was insufficient for essential living expenses. Had FRF conducted proper checks by reviewing Miss S's actual income and expenditure, they would have discovered her true net disposable income was £315.70, which when reduced by the £284.79 payment would leave insufficient funds for emergencies. The ombudsman concluded Agreement three was unaffordable and FRF failed to make a fair lending decision.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| First Response Finance Limited, all decisions | 75 | 29% |
| Irresponsible lending, all decisions | 30,675 | 37% |
| Motor finance (PCP / HP), all decisions | 19,840 | 38% |
Source
Read the original decision on the Financial Ombudsman Service website