Not upheld: irresponsible lending - inadequate affordability checks complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Mrs D complained that Halifax lent to her irresponsibly by failing to make adequate affordability checks before granting five loans between January 2019 and December 2024, totalling £71,663. She argued the short duration between loans and pattern of refinancing demonstrated lack of scrutiny, and that loan repayments significantly reduced her disposable income. Halifax maintained it had conducted appropriate checks and assessments showing sustainable repayments at each decision. The ombudsman found Halifax's checks were reasonable and proportionate for loans 1-4 based on positive credit history and sufficient disposable income. For loan 5, while checks could have been more thorough given emerging adverse credit markers, verification of actual expenditure confirmed the lending decision was fair. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied FCA regulations requiring lenders to ensure credit is affordable and sustainable. For loans 1-4, Halifax's checks were found reasonable and proportionate based on positive credit history, validated income, and sufficient disposable income (£450+ for loan 1; £664-£1,041 for loans 2-4). For loan 5, while the ombudsman found the checks were not fully reasonable and proportionate due to emerging adverse credit markers and lower disposable income (£330), verification of actual expenditure using available current account records showed sufficient disposable income existed to make the lending decision fair. The ombudsman rejected Mrs D's arguments that modelled data was unreliable and that Halifax should have proactively accessed current accounts, finding such checks would not have been proportionate for this level of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website