affordability complaint

Superkitten76

Is it generally worth appealing the first decision made by the financial ombudsman if they do not uphold your complaint? Specifically they state the lender could have considered transfers into my account I identified as my partners income and child maintenance as income, which raised my total income by 2300.

Should my partners income have been included in the affordability if the credit was solely in my name, we were not married at the time and the accounts were all in my name, including the NW current account the money was transferred into, if they did not verify the source of the income? Child maintenance was not through CMS and no details of time left for it to run were provided etc.

I struggle to follow the numbers in the format they have written it in their response, perhaps someone more number savvy can interpret for me? It seems to say that NW considered my total expenditure as £4072 which is more than my payslip shows £4019 as my wages/income, though I accept there was other income shown in my account which increases this, but then later says expenditure is £2650? It also says NW did not complete reasonable checks, but they are not upholding? Its a very confusing format

From their decision:
I can see from the evidence that you declared you were employed, earning £6,450 net income a month. You were a homeowner with two financial dependents.

The credit check NatWest completed showed you had nine active accounts, with no defaults, County Court Judgements or bankruptcies. All of the accounts were up-to-date.

You had opened two accounts in the previous three months, but these were a low value, and I don’t think they should have impacted NatWest’s decision to lend.

However, the credit check indicated that your total debt balance was £41,200, which is quite high, though NatWest’s data isn’t detailed enough to show me if this was disproportionately impacted by a large loan for example.

NatWest calculated your repayments to your unsecured debts were around £1,332 a month from the credit reference data, with an additional mortgage repayment too.

NatWest also went on to consider the sustainable affordability of the new finance to you, using information you had declared, data from the credit reference agencies, and data from third party sources.

With declared net income of £6,450, NatWest concluded your total monthly essential expenditure was £4,072. As such, this would have left you £2,378 to afford the new repayment of £271 to the total credit limit of this facility and any other essential expenditure not identified.

As such, NatWest approved this credit card.

However, I don’t think NatWest completed reasonable and proportionate checks for this finance.

I say this where it hadn’t verified your net income and you had significant existing committed expenditure. And in light of your debts and the limit being considered, I’m not persuaded that the use of average statistical data was appropriate here either.

As such, I think it would have been reasonable and proportionate for NatWest to verify your income, and subject to that, assess your expenditure too to ensure it lent fairly.

I can’t be sure exactly what NatWest would have found out if it had asked. In the absence of anything else, I think it would be reasonable to place significant weight on the information contained in your payslips and bank statements as to what would most likely have been disclosed.

Having reviewed these, I’m satisfied that they show that this credit card was sustainably affordable in January 2023.

Your consumer-facing credit file supports the picture of you that NatWest found – you were managing your existing liabilities well with no indications of financial difficulties. Your total debt and repayments were slightly lower than NatWest identified but I’ll use the higher figure to consider if NatWest lent fairly or not.

Your payslips show that your net income from employment averaged £4,019 a month. You also received an additional £700 of regular monthly income through child maintenance.

Further, the statements show a minimum of £1,600 being transferred into your account each month which you identified was from your partner.

And your total average monthly non-discretionary expenditure, excluding your existing debt liabilities, was around £2,650. NatWest had calculated this at around £2,740.

Whilst NatWest considered the sustainable repayments to the total credit limit, if used, would be £271 I think a 5% repayment can be considered fair as it would allow for capital and interest to be repaid.

Bearing this in mind shows that you could be expected to pay around £387.50 per month to service this total credit limit if utilised.

As such, using your employed income and maintenance, with disposable income of £350 to afford any other non-discretionary costs not considered I think showed NatWest you could reasonably afford to sustain this credit facility.

And this disposable income would increase further with your partner’s monthly contribution to household costs reasonably included.

Affordability here would mean that you would be able to maintain your essential non-discretionary commitments (rent, debts, bills, insurance, essential food etc) even if you needed to reduce your discretionary spending (entertainment, non-essential food, non-essential clothes etc) to zero.

I appreciate you feel that NatWest shouldn’t have lent to you, where your debts were becoming unsustainable. But as above, the evidence didn’t support you were in financial difficulties and couldn’t sustain the new facility.

DE_612183

Isn't the FOS decision final?

I guess you don't have to accept it, but the only option is to go down a private court route.

Superkitten76

DE_612183 said:

Isn't the FOS decision final?

I guess you don't have to accept it, but the only option is to go down a private court route.

It seems to suggest there is a further stage? 

Next steps I think this is a fair outcome in the circumstances, for the reasons I’ve explained. If you don’t want to take things further, there’s no need to do anything and we’ll close your case on 27 June 2025. But if you decide that you don't accept what I’ve said – and want an Ombudsman to make a final decision on your complaint – you must provide any further evidence or representations by 27 June 2025. Requests for more time must also be made by that date. If I don’t hear from you by 27 June 2025 we might not be able to look at your complaint again.

DE_612183

ok, so you have a chance to add more evidence - in that case why not?

You've got nothing to lose.

DullGreyGuy

DE_612183 said:

Isn't the FOS decision final?

I guess you don't have to accept it, but the only option is to go down a private court route.

The first decision is made by an Investigator or Adjudicator - same role they just changed the titles at some point. Both the customer and FS company can disagree with it, if either do it then goes to an ombudsman (not The Ombudsman).

Once an ombudsman has made a decision the FS Company cannot agree or disagree to it; if the customer agrees to it then it becomes legally binding on the FS company. If the customer still doesnt agree well thats the end of the FOS journey and the remaining option is court. 

Superkitten76 said:

Is it generally worth appealing the first decision made by the financial ombudsman if they do not uphold your complaint? Specifically they state the lender could have considered transfers into my account I identified as my partners income and child maintenance as income, which raised my total income by 2300.

Should my partners income have been included in the affordability if the credit was solely in my name, we were not married at the time and the accounts were all in my name, including the NW current account the money was transferred into, if they did not verify the source of the income? Child maintenance was not through CMS and no details of time left for it to run were provided etc.

I struggle to follow the numbers in the format they have written it in their response, perhaps someone more number savvy can interpret for me? It seems to say that NW considered my total expenditure as £4072 which is more than my payslip shows £4019 as my wages/income, though I accept there was other income shown in my account which increases this, but then later says expenditure is £2650? It also says NW did not complete reasonable checks, but they are not upholding? Its a very confusing format

From their decision:
I can see from the evidence that you declared you were employed, earning £6,450 net income a month. You were a homeowner with two financial dependents.

The credit check NatWest completed showed you had nine active accounts, with no defaults, County Court Judgements or bankruptcies. All of the accounts were up-to-date.

You had opened two accounts in the previous three months, but these were a low value, and I don’t think they should have impacted NatWest’s decision to lend.

However, the credit check indicated that your total debt balance was £41,200, which is quite high, though NatWest’s data isn’t detailed enough to show me if this was disproportionately impacted by a large loan for example.

NatWest calculated your repayments to your unsecured debts were around £1,332 a month from the credit reference data, with an additional mortgage repayment too.

NatWest also went on to consider the sustainable affordability of the new finance to you, using information you had declared, data from the credit reference agencies, and data from third party sources.

With declared net income of £6,450, NatWest concluded your total monthly essential expenditure was £4,072. As such, this would have left you £2,378 to afford the new repayment of £271 to the total credit limit of this facility and any other essential expenditure not identified.

As such, NatWest approved this credit card.

However, I don’t think NatWest completed reasonable and proportionate checks for this finance.

I say this where it hadn’t verified your net income and you had significant existing committed expenditure. And in light of your debts and the limit being considered, I’m not persuaded that the use of average statistical data was appropriate here either.

As such, I think it would have been reasonable and proportionate for NatWest to verify your income, and subject to that, assess your expenditure too to ensure it lent fairly.

I can’t be sure exactly what NatWest would have found out if it had asked. In the absence of anything else, I think it would be reasonable to place significant weight on the information contained in your payslips and bank statements as to what would most likely have been disclosed.

Having reviewed these, I’m satisfied that they show that this credit card was sustainably affordable in January 2023.

Your consumer-facing credit file supports the picture of you that NatWest found – you were managing your existing liabilities well with no indications of financial difficulties. Your total debt and repayments were slightly lower than NatWest identified but I’ll use the higher figure to consider if NatWest lent fairly or not.

Your payslips show that your net income from employment averaged £4,019 a month. You also received an additional £700 of regular monthly income through child maintenance.

Further, the statements show a minimum of £1,600 being transferred into your account each month which you identified was from your partner.

And your total average monthly non-discretionary expenditure, excluding your existing debt liabilities, was around £2,650. NatWest had calculated this at around £2,740.

Whilst NatWest considered the sustainable repayments to the total credit limit, if used, would be £271 I think a 5% repayment can be considered fair as it would allow for capital and interest to be repaid.

Bearing this in mind shows that you could be expected to pay around £387.50 per month to service this total credit limit if utilised.

As such, using your employed income and maintenance, with disposable income of £350 to afford any other non-discretionary costs not considered I think showed NatWest you could reasonably afford to sustain this credit facility.

And this disposable income would increase further with your partner’s monthly contribution to household costs reasonably included.

Affordability here would mean that you would be able to maintain your essential non-discretionary commitments (rent, debts, bills, insurance, essential food etc) even if you needed to reduce your discretionary spending (entertainment, non-essential food, non-essential clothes etc) to zero.

I appreciate you feel that NatWest shouldn’t have lent to you, where your debts were becoming unsustainable. But as above, the evidence didn’t support you were in financial difficulties and couldn’t sustain the new facility.

It is rare but not unheard of for the ombudsman to come to a different decision to the adjudicator/investigator and ultimately you have nothing to lose. Someone else posted something earlier on the same so had a quick search on the FOS site for Tesco on the same topic. Of the most recent 20 cases to the ombudsman 17 were not upheld and 3 were, but all three of those were cases where the investigator had upheld the case and Tesco's had disagreed so actually 20 out of 20 were no change.

Obviously this is a tiny sample, there are 199 cases in total for Tesco, so doesnt mean it's a waste of time to appeal but maybe realistic about your prospects. 

Given some lenders have asked in the past what the household income is and use it for lending decisions I dont think it's unreasonable. If you can evidence that despite being a couple that lived together there was absolutely no sharing of monies and they would have left you to starve to death rather than buy you a sandwich because their money was theirs then maybe there is an argument that you were in a very weird relationship and so normal considerations shouldn't apply. 

MattMattMattUK

Based on the above I am of the opinion that you have no chance of success, but as it does not actually cost you anything more than a few minutes of time I do not think you have anything too loose by requesting the Ombudsman review the decision. That being said behaviour like that wastes the time of everyone involved and increases the cost of financial services for everyone else, so I am generally against it (as I am for the whole "irresponsible lending" complaint in general).

ManyWays

The investigstor seems to agree that Natwest didnt make good checks, but has decided that the debt was actually affordable.
I think it makes a difference if the payments into your account were regular. If your partner is helping you out with odd sums when you were short, thats very different from £300 arriving in your account mid month every month. 
If you were making regular mortgage overpayments, that would suggest you didn't have financial problems. 
Is there anything big that you don't think the FOS investigator has taken into account?

Rob5342

I had a Nationwide complaint where the investigator found against me. I asked for it to be escalated to an Ombudsman and then Nationwide decided to make an offer to refund £15,000 of interest. I don't understand why they suddenly decided to make an offer when the ombudsman would probably have found in their favour but I'm glad i escalated it.

I think it's unlikely the ombudsman will decide any differently but for the sake of writing a few emails you might as well push it as far as you can. They try and pit you off escalating it but its your right to do.so.

Hoenir

Superkitten76 said:

Should my partners income have been included in the affordability if the credit was solely in my name, we were not married at the time and the accounts were all in my name, including the NW current account the money was transferred into,

As the money was deposited into account in your sole name you had total control over it. The source is irrespective. It forms part of the money at your disposal every month. To use as you wished.