Advantage Finance Limited · DRN-6222357

Complaint Miss W complains that Advantage Finance Limited (“Advantage Finance”) unfairly entered into a hire-purchase agreement with her. She’s effectively said that the payments to the agreement were unaffordable and so it shouldn’t have been provided to her. Background In July 2022, Advantage Finance provided Miss W with finance for a used car. The cash price of the vehicle was £8,045.00. Miss W received a part exchange of £500 for her previous vehicle and applied for finance to cover the remaining £7,545.00. As a result, Miss W entered into a 60-month hire purchase agreement with Advantage Finance to complete her purchase. The loan had interest, fees and total charges of £7,410.00 (comprising of interest of £6,885.20, an acceptance fee of £325 and an option to purchase fee of £200), and the balance to be repaid of £14,955.20 (which does not include Miss W’s part exchange) was due to be repaid in 59 monthly instalments of £245.92 and one final payment of £445.92. Miss W’s complaint was considered by one of our investigators. She didn’t think that Advantage Finance had done anything wrong or treated Miss W unfairly. So she didn’t recommend that Miss W’s complaint should be upheld. Miss W disagreed with our investigator and the complaint was passed to an ombudsman for a final decision. My findings I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. We’ve explained how we handle complaints about irresponsible and unaffordable lending on our website. And I’ve used this approach to help me decide Miss W’s complaint. Having carefully considered everything, I’ve decided not to uphold Miss W’s complaint. I’ll explain why in a little more detail. Advantage Finance needed to make sure that it didn’t lend irresponsibly. In practice, what this means is that Advantage Finance needed to carry out proportionate checks to be able to understand whether Miss W could make her payments in a sustainable manner before agreeing to lend to her. And if the checks Advantage Finance carried out weren’t sufficient, I then need to consider what reasonable and proportionate checks are likely to have shown. Our website sets out what we typically think about when deciding whether a lender’s checks were proportionate. Generally, we think it’s reasonable for a lender’s checks to be less thorough – in terms of how much information it gathers and what it does to verify that information – in the early stages of a lending relationship.

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But we might think it needed to do more if, for example, a borrower’s income was low, the amount lent was high, or the information the lender had – such as a significantly impaired credit history – suggested the lender needed to know more about a prospective borrower’s ability to repay. Having carefully thought about everything I’ve been provided with, I’m not upholding Miss W’s complaint. I’d like to explain why in a little more detail. Advantage Finance says it agreed to this application after it completed an income and expenditure assessment on Miss W. During this assessment, Miss W provided details of her monthly income and which was verified with copies of payslips. Advantage Finance says it also carried out credit searches on Miss W which showed some previous adverse credit information (including a County Court Judgment (“CCJ” and defaulted accounts) and outstanding balances. But when the amount Miss W already owed plus a reasonable amount for Miss W’s living expenses, based on statistical data, were deducted from her monthly income the monthly payments were still affordable. On the other hand, Miss W says she was already struggling at the time and that these payments were unaffordable. I’ve thought about what Miss W and Advantage Finance have said. The first thing for me to say is that unlike our investigator, I don’t think that the checks Advantage Finance carried out did go far enough. Advantage Finance’s searches showed that Miss W had had previous difficulties with credit. In my view, Advantage Finance needed to take further steps to verify Miss W’s actual living costs, given what the credit search showed in order for its checks to have been proportionate. As Advantage Finance didn’t carry out sufficient checks, I’ve gone on to decide what I think Advantage Finance is more likely than not to have seen had it obtained further information from Miss W. Bearing in mind, the length of time of the agreement and the amount of the monthly payment, I would have expected Advantage Finance to have had a reasonable understanding about Miss W’s regular living expenses as well as her income and existing credit commitments. I’ve considered the information Miss W has provided us with. And having done so, this information does appear to show that when Miss W’s committed regular living expenses and existing credit commitments are deducted from her monthly income at the time, she did have the funds, at the time at least, to sustainably make the repayments due under this agreement. I appreciate that Miss W’s position may have been worse than this. For example, I can see that her rent subsequently increased and she’s gone on to accrue council tax arrears. I’m sorry to hear that Miss W found it difficult to make her payments and that she is experiencing difficulty as a result. However, I don’t think that Advantage Finance knew about this. And when the information Advantage Finance had at the time is combined with the information Miss W has now provided from the time, I don’t think it could be expected to know about this either. So I don’t think that Miss W’s later difficulty is something that Advantage Finance could have foreseen or taken into account in its assessment. So overall and having carefully considered everything, while I don’t think that Advantage Finance’s checks before entering into this hire-purchase agreement with Miss W did go far enough, I’m satisfied that carrying out reasonable and proportionate checks won’t have

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prevented Advantage Finance from providing these funds, or entering into this agreement with her. In reaching my conclusions, I’ve also considered whether the lending relationship between Advantage Finance and Miss W might have been unfair to Miss W under section 140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve explained, I don’t think Advantage Finance irresponsibly lent to Miss W or otherwise treated her unfairly in relation to this matter. And I haven’t seen anything to suggest that section 140A CCA or anything else would, given the facts of this complaint, lead to a different outcome here. I’m therefore satisfied that Advantage Finance didn’t act unfairly towards Miss W when it agreed to provide the funds and I’m not upholding Miss W’s complaint. I appreciate that this will be very disappointing for Miss W. But I hope she’ll understand the reasons for my decision and that she’ll at least feel her concerns have been listened to. My final decision My final decision is that I’m not upholding Miss W’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss W to accept or reject my decision before 30 April 2026. Jeshen Narayanan Ombudsman

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