Not upheld: irresponsible lending - insufficient affordability checks complaint against Oodle Financial Services Limited trading as Oodle Car Finance

Decision detail

Summary

Miss C complained that Oodle irresponsibly lent to her in July 2019 for a car finance agreement without conducting appropriate affordability checks. Oodle asked about her income (£26,640 gross annually) and housing situation, checked her credit file, and estimated her living costs using ONS data, but did not verify her income or provide details of their expenditure assessment. The ombudsman found that while Oodle's checks were not proportionate, had they carried out proportionate checks by verifying her income through bank statements and asking about her expenditure, they would have discovered she had approximately £900 monthly disposable income after the £340 hire purchase repayment, making the lending affordable. Although Miss C's actual financial situation was worse than what proportionate checks would have revealed, the ombudsman concluded Oodle would not have known this and therefore did not lend irresponsibly.

The Ombudsman's reasoning

The ombudsman found that while Oodle failed to carry out proportionate checks by not verifying Miss C's income and not providing details of their expenditure assessment, this does not automatically mean the lending was irresponsible. The key question is what Oodle would have discovered had they carried out proportionate checks. Based on review of Miss C's bank statements, the ombudsman determined that had Oodle verified her income (approximately £1,808 monthly) and asked about her non-discretionary expenditure (approximately £350 monthly), they would have found disposable income of around £900 after the hire purchase repayments, making the lending affordable. The ombudsman was satisfied that Oodle had no reason to question the credit reference agency data and therefore would not have discovered the additional debts Miss C was repaying that appeared in her statements but not on the credit check.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website