Not upheld: irresponsible lending - unaffordable payments complaint against Advantage Finance Limited

Decision detail

Summary

Ms M complained that Advantage Finance unfairly provided her with a hire-purchase agreement for a £3,250 car in September 2019, claiming the monthly payments of £142.64 were unaffordable. Advantage Finance had conducted an income and expenditure assessment and credit searches, which revealed Ms M had previous credit difficulties but showed she could afford the payments after deducting existing debts and living expenses. The ombudsman found that while Advantage Finance's checks should have been more thorough given the adverse credit history, reasonable and proportionate checks would not have prevented the lender from providing the finance, as the evidence suggested Ms M had sufficient funds to make sustainable repayments at the time of the agreement.

The Ombudsman's reasoning

The ombudsman acknowledged that Advantage Finance's initial checks were not sufficiently thorough given Ms M's adverse credit history, and that further verification of living costs should have been obtained. However, the ombudsman concluded that even with reasonable and proportionate checks, the available evidence suggested Ms M had sufficient funds to sustainably make the repayments at the time of the agreement. The ombudsman noted that Ms M's later analysis included more than committed expenditure and was made with hindsight in support of a compensation claim, making it less reliable than explanations that would have been provided at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website