Not upheld: Irresponsible lending complaint against Advantage Finance Ltd

Decision detail

Summary

Miss D complained that Advantage Finance Ltd lent to her irresponsibly without proper affordability checks when approving a Hire Purchase agreement for a £9,995 car loan in July 2020 with repayments of just over £284 per month. The investigator found Advantage's checks were insufficient but concluded more thorough checks would not have changed the lending decision. The ombudsman upheld the investigator's view, finding that while Advantage should have conducted more in-depth checks given red flags in Miss D's circumstances, her bank statements showed she had multiple income sources, significant discretionary spending, and only modest overdraft use, making the borrowing affordable. The complaint was not upheld and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman agreed with the investigator that Advantage's checks were insufficient and disproportionate given red flags in Miss D's circumstances. However, examining Miss D's bank statements from the months preceding the lending decision, the ombudsman found that Miss D had multiple reliable income sources, significant discretionary spending capacity (evidenced by spending on non-essential items), and only modest and short-lived overdraft use. The ombudsman concluded that more thorough checks would not have revealed information that should have led Advantage to conclude the borrowing was unaffordable, particularly given Miss D's ability to pay a £2,000 cash deposit and her demonstrated disposable income.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website