Not upheld: irresponsible lending / unaffordable finance complaint against CA Auto Finance UK LTD

Decision detail

Summary

Miss C complained that CA Auto irresponsibly lent her £37,000 for a hire purchase agreement with monthly payments of £620, which she could not afford. She claimed CA Auto failed to conduct adequate affordability checks and should have declined her application based on her existing borrowing. CA Auto relied on Miss C's declared income of £2,500 monthly and existing credit obligations of £1,590, calculating she had approximately £1,000 disposable income. The ombudsman found that while more detailed checks would have been prudent, CA Auto's lending decision was reasonable based on the information available. Bank statements later provided showed Miss C's actual income was significantly higher at £7,400 monthly, supporting the affordability of the loan. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that CA Auto carried out reasonable and proportionate checks given the circumstances. While the ombudsman acknowledged that more detailed income and expenditure analysis would have been prudent given the £37,000 loan amount and multiple existing credit lines, the checks CA Auto did conduct were not unreasonable. The bank statements later provided by Miss C showed her actual income was significantly higher than declared (£7,400 vs £2,500 monthly), making the agreement affordable. The ombudsman accepted CA Auto's reliance on the information provided by Miss C and the dealer, as there was no reason to doubt its accuracy. The ombudsman also found that CA Auto's decision to continue collections activity was fair given Miss C continued to use the car until she sold it.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website