Not upheld: Irresponsible lending complaint against BMW FINANCIAL SERVICES (GB) LIMITED

Decision detail

Summary

Mr H complained that BMW irresponsibly lent to him by failing to conduct adequate affordability checks before providing a hire purchase agreement for a £38,817 car in December 2019. The ombudsman found that BMW should have verified Mr H's income and enquired about his essential expenditure but acknowledged the evidence did not clearly show what checks were actually completed. However, using Mr H's bank statements, the ombudsman calculated that Mr H's monthly income of £1,706 would have been sufficient to sustainably afford the £425 monthly repayments after accounting for housing costs (£500), bills (£170), existing credit commitments (£130), fuel (£81), and insurance (£73), leaving approximately £386 for food and emergencies. The ombudsman rejected Mr H's arguments that secondary income from a relative should be counted as regular and that the remaining funds were inadequate. The complaint was not upheld as the ombudsman concluded that proportionate checks would have found the borrowing affordable.

The Ombudsman's reasoning

The ombudsman found that while BMW failed to complete reasonable and proportionate affordability checks (such as verifying income and enquiring about essential expenditure), the evidence from Mr H's bank statements demonstrated that the borrowing would have been found sustainably affordable had such checks been completed. With monthly income of £1,706, fixed commitments of approximately £1,170 (housing £500, bills £170, credit commitments £130, new loan £425, fuel £81, insurance £73), Mr H would have had approximately £386 remaining monthly for food and emergency spending, which the ombudsman considered reasonable. The ombudsman rejected Mr H's argument that the secondary income from his relative should be counted as regular, finding the payments too irregular and inconsistent. The ombudsman also rejected arguments that £540 was insufficient for variable expenses, finding it a reasonable buffer for food and unforeseen spending.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website