Not upheld: irresponsible lending - inadequate affordability checks complaint against BMW Financial Services (GB) Limited (trading as Alphera Financial Services)

Decision detail

Summary

Mr S complained that Alphera unfairly entered into a hire purchase agreement for a £20,850 car with unaffordable monthly payments of £342.42 over 49 months. The ombudsman found that Alphera did not carry out proportionate affordability checks as it failed to obtain information about Mr S's income. However, the ombudsman concluded that even if such checks had been conducted, they would not have prevented the lending, as Mr S would likely have provided information suggesting he could afford the payments. The ombudsman noted that Mr S's actual repayment record—making all payments on time and settling the agreement early—supported the conclusion that the agreement was affordable for him, contradicting his later financial analysis.

The Ombudsman's reasoning

The ombudsman acknowledged that Alphera failed to carry out proportionate affordability checks by not obtaining information about Mr S's income. However, the ombudsman concluded that even if proportionate checks had been conducted, Mr S would likely have provided information suggesting he could afford the payments, particularly given his positive repayment history. The ombudsman was not persuaded that Mr S would have voluntarily disclosed unaffordability when seeking credit, and noted that his subsequent bank statement analysis was not representative of what a proportionate check would have shown at the time of lending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website