Santander Consumer (UK) Plc · DRN-5783096

The complaint Mr C complains Santander Consumer (UK) Plc (Santander) irresponsibly lent to him because it did not carry out reasonable and proportionate checks to ensure the lending was affordable for him. What happened Mr C entered into a conditional sale personal contract purchase agreement with Santander on 30 September 2023 in order to acquire a used car. The cash price of the car was £23,990 and he made an advance payment of £2,000. The total amount payable under the agreement was £30,788.68. Mr C was to pay 48 consecutive payments of £335.91 followed by a final payment of £12,665. Mr C complained about Santander’s decision to lend to him on 16 November 2024. He said appropriate affordability checks had not been undertaken. Santander provided a copy of its final response dated 4 December 2024 which explained why it felt the checks carried out were reasonable and proportionate. It felt it had made a fair lending decision based on the information obtained. Mr C remained unhappy and asked our service to investigate. Our Investigator looked into things and explained why he didn’t feel the complaint should be upheld. Mr C didn’t agree. In summary, he said: • There was a car finance agreement already on his credit file with repayments of £491.55 per month. There were no questions about whether this agreement would be settled at the time. He doesn’t think the payments have been properly considered by our Investigator because he stopped paying for them due to mechanical faults – but he was still liable for the agreement. This meant his total outlay would be £827 just on vehicles and this wouldn’t be affordable for someone with his income and two dependents. Even when considering household income, his partner also had her own car finance agreement. • Additionally, the income on his statements was made up of a lot of uncontracted overtime. This was never guaranteed and he was only contracted to take home £2,150 per month. • There was never any spare money, and they were borrowing money in order to bridge the gap. This would have been a huge red flag if it had been properly reviewed by underwriters. • His credit score was low due to numerous refinancing applications, a recent new mortgage and actually displayed a few late/missed payments from small credit cards, this would have also indicated brewing financial problems. As Mr C didn’t agree, the complaint has been passed to me to decide.

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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. Our approach to complaints about irresponsible and unaffordable lending is set out on our website. In summary, I need to consider whether Santander completed reasonable and proportionate checks to satisfy itself Mr C would be able to repay the agreement in a sustainable way. If it did, I need to decide whether it made a fair lending decision. However, if appropriate checks weren’t completed, I need to consider what checks were likely to have shown. As explained by our Investigator, there are no set list of checks that it had to do, but it could take into account several different things such as the amount and length of the credit, the amount of the monthly repayments and the overall circumstances of the borrower. Did Santander complete reasonable and proportionate checks to satisfy itself Mr C would be able to repay the agreement in a sustainable way? Santander have explained Mr C was automatically approved for the finance as it identified Mr C had a good credit score and he met their internal scoring system. It said no concerns were found in respect of how Mr C was managing his existing finance. As Mr C was automatically accepted, I understand it didn’t ask any further questions about his financial circumstances. From the evidence I’ve been provided, I can’t reasonably conclude Santander obtained sufficient information to make a fair lending decision. I’m mindful of the terms of the agreement here including the duration and size of the loan, as well as the amount of the monthly repayments. Whilst I appreciate it has confirmed it didn’t find any adverse information, I don’t think the information it had was enough to demonstrate Mr C could sustainably afford to make payments of £335.91 throughout the term of the agreement. In particular, I can’t see it verified income or asked Mr C about his specific expenditure. Would reasonable and proportionate checks have shown that he would be able to repay the agreement in a sustainable way? Although I don’t think reasonable and proportionate checks were carried out, this doesn’t automatically mean the complaint should be upheld. I must now go on to consider what Santander were likely to have discovered had it carried out appropriate checks. To do this, I’ve considered bank statements provided by Mr C for the period leading up to the lending. I want to clarify that I’m not saying Santander needed to go as far as to obtain bank statements. However, the statements do give me a clear picture of what was more likely than not to have been discovered by Santander had it sought to obtain further information about Mr C’s specific financial circumstances. I’m also mindful Mr C wanted to be approved for the finance at the time and so it is in this light he would have presented his circumstances. It’s important to note Mr C handled his finances jointly and the key income and expenditure is visible on the joint account statements. He has told us he was responsible for an estimated 70% of the expenditure from the joint account. However, both salaries were being paid into the account and there was other income including child benefit. I note credit commitments and household expenditure was also being paid from the account. Businesses are able to consider household income and expenditure where it’s reasonable for it to do so. Whilst the agreement was in Mr C’s name, his finances were combined with those of his

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partner and he handled them jointly. So, I’ve thought about household income and expenditure when considering the affordability of the agreement. Mr C has questioned the level of income referred to by our Investigator. I have thought about all the income which I can see was received into the account. I understand Mr C worked some overtime and I can see fluctuations in his income. There are no payslips available, but I’ve considered his statements over the course of a longer period, and I can see it wasn’t unusual for him to work overtime. Whilst overtime isn’t necessarily guaranteed, I don’t think this means it ought to be excluded altogether from an affordability assessment where it seems to have been carried out on a regular basis. Mr C has said he had a basic salary of £35,000 and recalls he might have declared a gross annual salary of around £42,000. I’ve taken this all into account when thinking about what reasonable and proportionate checks were likely to have shown. I haven’t included payments from his uncle as I agree this was an informal arrangement and not likely to have been sustainable. Additionally, Mr C is very concerned about the existing car finance agreement. The repayments for this were £491.55 per month. This agreement wasn’t being settled and the car which had been acquired had suffered catastrophic engine failure. I agree reasonable and proportionate checks would have discovered Mr C was still liable for the repayments under this agreement and it wasn’t being settled. So, I think these payments should be included when thinking about the affordability of the agreement. I do understand this would have meant a fair proportion of Mr C’s income would be dedicated towards repaying car finance agreements. However, I’m not satisfied this is a reason in itself to conclude Santander shouldn’t have lent providing the lending seemed affordable. In addition to this, I’ve thought about the other committed expenditure I can see. This includes (but isn’t limited to) other credit commitments, mortgage, food, utilities and so on. Having done so, I’m satisfied it was likely Santander would have discovered there was sufficient income to cover existing commitments and the new monthly repayments. Additionally, it would have seemed to Santander that the disposable income remaining would be sufficient to cover other reasonably foreseeable expenditure including costs associated with running the car. Therefore, proportionate checks were likely to have shown the agreement was affordable and sustainable for Mr C. There isn’t anything else in the information I’ve seen which persuades me Santander ought reasonably to have discovered the lending would be irresponsible or unaffordable for Mr C. Mr C has told us that his credit score was low due to numerous refinancing applications, a recent new mortgage, and actually displayed a few late/missed payments from small credit cards. However, I don’t think this in itself would have been a reason for the application to have been declined particularly where proportionate checks were likely to have shown the agreement was affordable. Whilst Mr C already had an existing car finance agreement which was in dispute because the car had broken down, he seemed generally to be managing the payments towards his credit. Overall, I’m not persuaded Santander carried out reasonable and proportionate checks. However, had it done so, I don’t think it was likely to have discovered the lending was irresponsible and unaffordable for Mr C. There isn’t anything else which persuades me Santander ought to have discovered the lending was irresponsible. I’ve also considered whether the relationship 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 Santander lent irresponsibly to Mr C or otherwise treated him unfairly in relation to this matter. I haven’t seen anything to suggest the Section 140A would, given the facts of this complaint, lead to a different outcome here.

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My final decision For the reasons outlined above, I’m not upholding this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 21 April 2026. Laura Dean Ombudsman

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