Not upheld: irresponsible lending complaint against BMW Financial Services (GB) Limited trading as Alphera Financial Services

Decision detail

Summary

Mr B complained that Alphera irresponsibly provided a hire purchase agreement for a £32,000 vehicle in June 2021 with monthly repayments of £506.08. Alphera had conducted detailed checks in April 2020 when providing an earlier agreement with £251.58 monthly payments, but in June 2021 relied only on automated checks. The ombudsman found that although Alphera's June 2021 checks were not proportionate, a proper proportionate check would likely have shown the lending was sustainably affordable, given Mr B's income of £5,360 per month, essential expenditures of approximately £1,075, absence of financial distress in 2021, and successful repayment history. The complaint was not upheld.

The Ombudsman's reasoning

Although Alphera failed to conduct proportionate checks in June 2021 (relying only on automated checks rather than updating Mr B's circumstances), the ombudsman concluded that if proportionate checks had been conducted, they would likely have shown the lending was sustainably affordable. The ombudsman relied on: (1) the detailed April 2020 checks showing Mr B had sufficient income after essential expenditures; (2) the absence of material change in circumstances over the year; (3) the modest nature of the repayment increase (from £251.58 to £506.08); (4) the absence of any financial distress indicators in 2021; and (5) Mr B's successful repayment history. The ombudsman rejected Mr B's argument that increasing indebtedness alone should have triggered more detailed checks, finding this would require disproportionate investigation beyond what regulators' rules require.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website