Not upheld: irresponsible lending / inadequate affordability assessment complaint against Zenauto Limited trading as ZenAuto

Decision detail

Summary

Mr R complained that ZenAuto failed to conduct adequate affordability checks before entering into a 36-month vehicle hire agreement requiring £296 monthly payments. ZenAuto assessed affordability based on three months of bank statements and a credit search, concluding Mr R could afford the rentals. Mr R argued the assessment should have considered additional vehicle costs such as insurance (over £300 monthly), which resulted in him spending nearly 50% of his income on vehicle-related costs. The ombudsman upheld ZenAuto's assessment, finding that reasonable enquiries appropriate for a hire agreement (rather than proportionate affordability checks for credit) had been conducted, and that with Mr R's £1,300 monthly income and minimal other committed expenditure, the rental payments were affordable.

The Ombudsman's reasoning

The ombudsman distinguished between regulated hire agreements (requiring reasonable enquiries) and regulated credit agreements (requiring proportionate affordability checks). Given Mr R's monthly income of approximately £1,300, minimal committed expenditure, and no adverse credit history, ZenAuto's assessment based on bank statements was sufficient to establish affordability of the £296 monthly rentals. While additional vehicle-related costs (insurance, fuel) were foreseeable, the ombudsman found that with low other committed expenditure, there was no reason to believe Mr R could not manage these costs, and spending close to 50% of income on vehicle costs was not inherently problematic in his circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website