Not upheld: irresponsible lending - inadequate affordability checks complaint against Advantage Finance Limited

Decision detail

Summary

Mr E complained that Advantage Finance unfairly lent to him for a £2,986 hire-purchase agreement for a motorbike in May 2023, claiming the monthly payments of £121.24 were unaffordable. Advantage Finance had conducted credit searches revealing Mr E had defaulted accounts and CCJs, but relied on statistical living expense data rather than obtaining Mr E's actual expenditure. The ombudsman found that while Advantage Finance's checks were insufficiently thorough given Mr E's adverse credit profile, the available evidence did not demonstrate that further checks would have revealed unaffordability or changed the lending decision. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that Advantage Finance's checks were insufficient given Mr E's adverse credit history, which indicated he fell outside the average borrower profile. However, the ombudsman found that the information Mr E provided did not demonstrate that his actual living expenses were significantly different from Advantage Finance's estimates, or that proper checks would have revealed unaffordability. The ombudsman also noted that Mr E's post-complaint bank analysis was less reliable than explanations he would have given at the time of application, and that even with proper checks, Advantage Finance would likely have reached the same lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website