Not upheld: Irresponsible lending complaint against Volkswagen Financial Services (UK) Limited

Decision detail

Summary

Mr L complained that VW unfairly entered into a hire purchase agreement for a £28,001 vehicle in February 2024, arguing the £399.98 monthly payments were unaffordable. VW had conducted credit checks showing low existing balances and no recent credit difficulties, and Mr L had declared he was living at home with parents. The ombudsman found VW's checks were reasonable and proportionate, noting the absence of obvious financial difficulty indicators and that Mr L's three months of employment tenure did not warrant automatic decline. The complaint was not upheld, with the ombudsman concluding that even more detailed enquiries would not have revealed unaffordability.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, considering whether VW's checks were proportionate. Given the lack of obvious indicators of difficulty in the information obtained, Mr L's declaration that he was living at home with parents, and the absence of a significantly impaired credit history, the ombudsman concluded that detailed analysis of Mr L's financial circumstances was not required. The ombudsman also noted that even if VW had sought more information about living expenses, Mr L would likely not have disclosed information demonstrating unaffordability, as he entered the agreement willingly at the time. The ombudsman rejected arguments about short employment tenure and overdraft usage as grounds for automatic decline.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website