Upheld: Irresponsible lending complaint against BMW Financial Services (GB) Limited trading as ALPHERA Financial Services

Decision detail

Summary

Mr F complained that Alphera irresponsibly lent to him by approving a hire purchase agreement for a £35,500 car with £761.11 monthly repayments without conducting adequate affordability checks. Alphera obtained bank statements and conducted manual review but incorrectly included irregular third-party loan repayments as reliable income. The ombudsman upheld the complaint, finding that proportionate checks would have revealed Mr F lacked sufficient disposable income after accounting for his employment earnings, existing credit commitments, non-discretionary expenditure, and car-related costs. Alphera was ordered to limit Mr F's liability to the original cash price of £35,500, refund any excess payments with interest, and remove adverse credit file information once the balance is repaid.

The Ombudsman's reasoning

Although Alphera obtained bank statements and conducted manual review which would normally be considered thorough, the statements did not provide a full picture of Mr F's finances. The firm incorrectly treated irregular third-party loan repayments as reliable income without seeking further explanation from Mr F. When properly assessed, Mr F's employment income, existing credit commitments, non-discretionary expenditure, and the new monthly repayment of £761.11 would not have left him with sufficient disposable income. Additionally, the costs of running a car (insurance, tax, petrol) would have further strained his finances. Proportionate checks would have revealed the lending was unaffordable and unsustainable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website