Not upheld: irresponsible lending complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr C complained that HSBC irresponsibly lent him three personal loans (£5,000, £10,160, and £12,140) between February 2022 and March 2023, which he claimed were unaffordable. HSBC and the FOS investigator initially rejected the complaint, but the ombudsman found that HSBC failed to evidence proportionate affordability checks for loans one and three. However, applying the standard approach to irresponsible lending complaints, the ombudsman reconstructed Mr C's financial circumstances using available bank statements and credit file information and concluded that all three loans would have been found affordable had proper checks been conducted. The ombudsman therefore did not uphold the complaint, finding no unfair or unreasonable treatment by HSBC.

The Ombudsman's reasoning

The ombudsman applied the FCA's CONC requirements, which require lenders to conduct proportionate checks to ensure customers can afford repayments without borrowing further or defaulting on other obligations. Although HSBC failed to evidence proportionate checks, the ombudsman applied the longstanding approach of determining what HSBC would have found had they conducted such checks. Based on reconstruction of Mr C's financial circumstances using available bank statements and credit file information, the ombudsman concluded that all three loans would have been found affordable, with Mr C retaining sufficient disposable income after accounting for expenses and loan repayments. The ombudsman rejected Mr C's argument that failure to evidence checks automatically means unfair lending, distinguishing between procedural failure and substantive unfairness.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website