Not upheld: irresponsible lending - affordability of hire-purchase agreement complaint against Billing Finance Limited

Decision detail

Summary

Mr P complained that Billing Finance unfairly entered into a hire-purchase agreement for a used car worth £6,900.99 with total repayments of £12,430.00 over 50 months, claiming the monthly payments were unaffordable. Billing Finance had conducted credit searches revealing Mr P's defaulted accounts and used statistical data to estimate living expenses. The ombudsman found that while Billing Finance's checks were not sufficiently thorough given Mr P's adverse credit history, the available evidence suggested that even with more thorough checks, the lender would likely have reached the same lending decision. The ombudsman noted that Mr P's bank statements revealed significant gambling activity, but concluded that proportionate checks would not have extended to obtaining bank statements and that Mr P bore responsibility for disclosing his true circumstances. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that Billing Finance's checks were not sufficiently proportionate given Mr P's adverse credit history, which indicated he fell outside the average borrower profile and should not have been assessed using statistical living expense data. However, the ombudsman concluded that even if further checks had been conducted, the available evidence did not demonstrate that Mr P's actual committed living costs and existing credit commitments would have shown the payments to be unaffordable. While Mr P's bank statements revealed significant gambling, the ombudsman determined that proportionate checks would not have extended to obtaining bank statements and identifying gambling activity, and that Mr P bore responsibility for disclosing his true circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website