DRN-6318253

The complaint Mr S was provided with a hire purchase agreement (HPA) by Black Horse Limited in May 2022 to finance the acquisition of a car. Mr S said the lending was irresponsible. What happened Mr S entered into a HPA with Black Horse in May 2022. The credit provided was £25,000 and Mr S was required to make monthly repayments over the 60-month term of £519.17. Mr S said the lending was unaffordable and he had to return the car. He raised a complaint with Black Horse. Black Horse issued a final response to Mr S’s complaint dated 28 August 2025. It didn’t uphold Mr S’s complaint. It said that as part of the application it gathered information about Mr S’s employment, income and expenses and it verified Mr S’s income. It said that based on its checks Mr S’s net monthly disposable income was around £1,764 which meant the HPA repayments of around £519 were affordable. It said that Mr S was provided with the information he needed to decide whether to enter into the agreement and the costs of doing so. Mr S referred his complaint to this service. Our investigator upheld this complaint. He thought that Black Horse should have carried out further checks before issuing the agreement given the term and size of the repayments and noting Mr S’s existing credit commitments. He thought it reasonable in this case that Mr S’s income and expenses would be verified. Our investigator looked through Mr S’s bank statements to assess what would have been identified through further checks and found that these would have shown the agreement to be unaffordable and not sustainable for Mr S. He further noted that additional checks would likely have identified Mr S’s gambling. Black Horse didn’t agree with our investigator’s view. It reiterated the information it gathered at the time of lending about Mr S’s income and expenses. It said Mr S’s application was referred to its Lending and Underwriting Department for review and they were satisfied that the lending was affordable. It noted that the HPA replaced a previous car finance agreement. Black Horse didn’t find that bank statements needed to be requested at the time of lending, but it reviewed these as part of its complaint investigation. It found the statements supported Mr S’s declared monthly income and showed Mr S made payments above the minimum to his credit cards. It said the lending was provided responsibly. As a resolution wasn’t agreed, this complaint was passed to me, an ombudsman, to issue a decision. My provisional conclusions I issued a provisional decision not upholding this complaint. The details of my decision are set out below.

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Our general approach to complaints about unaffordable or irresponsible lending – including the key rules, guidance and good industry practice – is set out on our website. The rules don’t set out any specific checks which must be completed to assess creditworthiness. But while it is down to the firm to decide what specific checks it wishes to carry out, these should be reasonable and proportionate to the type and amount of credit being provided, the length of the term, the frequency and amount of the repayments, and the total cost of the credit. Before the HPA was provided, Black Horse gathered information about Mr S’s income and rent and carried out a credit check. Mr S said he was self-employed with an annual income of £50,000, giving a net monthly income of £3,138. This was verified using an industry tool. Mr S declared his rent as £550 and his repayments for his existing credit commitments were taken from his credit file. An estimate was then used for his living costs. This resulted in Mr S having a net disposable income before the loan repayments of around £1,540. Mr S’s credit check showed he had nine active accounts and total outstanding balances of £24,800. The credit check recorded no county court judgments or missed payments in the previous six months. Mr S’s accounts were recorded as being up to date. Mr S’s application was referred for review by Black Horse’s underwriters and no concerns were raised. Having looked through the credit checks, I do not find these raised concerns that Mr S was struggling with his finances. I do not think his outstanding debts compared to his income were at a level that suggested he was overindebted and noting the monthly repayments due on his existing credit commitments compared to his income, I do not think this should have raised concerns. That said, the Black Horse agreement was for a large amount with monthly repayments that would significantly increase his commitments. While I do not think this meant the agreement shouldn’t have been provided, I think it was important that Black Horse was confident in Mr S’s income verification. While I note our investigator thought that a verification of income and expenses was required, I only find that further checks of the expenses would have been needed had the income checks raised concerns. I do not think that bank statements needed to be requested as additional income verification could have happened through other documentation. However, I have looked through the bank statements to see what further checks would have shown. These support the income figure Black Horse used in its calculation. Based on Mr S’s monthly income, I do not think that Mr S’s total payments to his credit commitments (including his existing costs and the Black Horse agreement) were at a level that meant the agreement should have been considered unsustainable. As Mr S declared his rent and deducting this, his credit commitments and an estimate for his living costs, left around £1,000 for any additional costs, I find this was a reasonable buffer and do not think that the agreement should have been identified as unaffordable. While I do not find that further verification of Mr S’s expenses was needed, having looked through the statements I do not think that further questions about these would have raised concerns about the affordability of the agreement. I note our investigator’s reference to Mr S’s gambling, and this can be seen in his bank statements. However, as I do not think in this case that Black Horse needed to request bank statements before lending, and I have nothing to show that Mr S raised his gambling with Black Horse, I do not find it should have been reasonably aware of this at the time it provided the agreement. While I understand this decision will be disappointing for Mr S, and I can see that he did struggle with his repayments, based on the information available at the time of lending and

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the checks that I think would have been reasonable, I do not think that Black Horse was wrong to provide this agreement. I’ve also considered whether Black Horse acted unfairly or unreasonably in some other way given what Mr S has complained about, including whether its relationship with Mr S might have been unfair under Section 140A of the Consumer Credit Act 1974. However, for the reasons I’ve already given, I don’t think Black Horse lent irresponsibly to Mr S or otherwise treated him unfairly in relation to this matter. I haven’t seen anything to suggest that Section 140A would, given the facts of this complaint, lead to a different outcome here. Mr S didn’t accept my provisional decision. He explained he was self-employed which meant his income wasn’t guaranteed and depended on the project that he was working on. He said that he applied for the finance over the phone and while he did provide some information, he wasn’t the person who submitted the application and he was surprised when it was approved. Mr S said that he was declined for other finance around the time of the Black Horse lending which showed that he didn’t meet the affordability criteria and as the declined finance was for less credit than Black Horse provided, he didn’t think it right that the Black Horse HPA could be considered affordable. He said the declined applications used the same credit file data and the searches on his credit file could be seen by Black Horse. Mr S also noted that his credit file would have shown his other outstanding debts including credit cards and an overdraft. He didn’t accept that the checks carried out before the HPA was issued were proportionate noting he had never taken out credit of this size before. Mr S said that other lenders from the time had accepted that they had provided credit irresponsibly and he wanted it to be explained how this could be the case and the Black Horse lending still found to be responsible. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I am sorry that Mr S was disappointed by my provisional decision. I have considered all of his comments and the additional evidence submitted. While I may not have commented on everything Mr S has raised, this doesn’t mean that I haven’t considered it, but that I have focussed on addressing the points I believe are materially relevant to this decision. I note Mr S’s comment about having other cases upheld from the same time period. However, each case is decided on its individual merits, and my decision is based on the information that was available to Black Horse at the time of lending and the checks I think it would have been proportionate to have carried out. Mr S declared he was self-employed with an annual income of £50,000. As I noted in my provisional decision I think that Black Horse needed to be confident about Mr S’s income and that further verification should have taken place. I don’t think bank statements were needed as verification could have happened through other sources. However having looked through Mr S’s banks statements, these support the net monthly income figure of around £3,138. I note Mr S’s comment about the nature of his work and the uncertainty of his income but his statements show a regular income and while this varies the average is in line with the income figure used. Additional to the regular income there are other payments into his account. Therefore, I think it reasonable that the net monthly income figure of £3,138 was relied on.

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Mr S’s payments for existing credit commitments were taken from his credit file. These totalled around £501. Adding the Black Horse HPA repayments increased his repayments to creditors to around £1,020. While this was a significant increase, I do not think the total repayments were at a level, compared to Mr S’s income, that mean the HPA should have been considered unsustainable. Mr S declared his housing costs as £550 and, in this case, noting Mr S’s disposable income after deducting the credit repayments (including the new HPA) and housing costs, I think it reasonable that estimates were used for Mr S’s other costs. However, as I noted in my provisional decision, I do not think that further questions about Mr S’s living costs would have raised concerns about the affordability of the agreement. Mr S has said that his credit file showed that he was struggling financially and that based on a review of this, other lenders had declined his applications for credit. Mr S has provided a screenshot of a finance provider saying it couldn’t help with his motor loan proposal in May 2022. I cannot say why this was declined and can only comment on the checks I think that Black Horse should have undertaken and the outcome of these. The other screenshots of declined applications were from August 2022, after the Black Horse HPA had been provided. Mr S has also noted that his credit file showed his other debts and that credit searches had been undertaken prior to his application to Black Horse. I accept this but I do not think the results of the credit check meant further questions were needed or that the HPA shouldn’t have been provided. This is because while the credit check showed three searches in the previous three months, it also showed that Mr S had no county court judgements and his active accounts were all up to date with no adverse data recorded in the previous six months. I understand that Mr S will find my decision disappointing, and I can understand why he is upset that a default has been recorded on his credit file that will remain for six years, but for the reasons I set out in my provisional decision and above, I do not find I can uphold this complaint. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 26 May 2026. Jane Archer Ombudsman

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