Startline Motor Finance Limited · DRN-6238319

The complaint Miss W complains that Startline Motor Finance Limited irresponsibly gave her a hire purchase agreement she couldn’t afford to repay. What happened In March 2022, Miss W acquired a used car paid for by a hire purchase agreement from Startline. The cash price of the car was £7,140. Miss W was required to pay 59 monthly repayments of £182.09 followed by a final repayment of £192.09. Miss W had some repayment difficulties during the agreement by making some payments late. These started within two months of taking out the agreement. However, it was eventually settled early in September 2024. Miss W complained to Startline in 2025 to say that the agreement had been unaffordable to her. She didn’t think appropriate affordability checks had been completed before lending to her. Startline didn’t agree it had acted unfairly in lending to her. It said it had completed adequate affordability checks which didn’t reveal any concerns about her ability to repay the borrowing. Our investigator recommended the complaint be upheld. They pointed out that Startline’s own affordability calculations at the time of the lending decision showed that Miss W couldn’t afford the repayments without falling into financial difficulties. Startline didn’t agree. It said no proof had been provided to show Miss W was in financial hardship and that she couldn’t afford the repayments. As there was no agreement, the complaint has been passed to me for a final decision. 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. Before lending to Miss W, Startline were required to complete checks to ensure the borrowing was likely to be affordable and that it wasn’t likely to cause her financial difficulties. There isn’t a set list of checks that Startline needed to complete. The regulator’s rules and guidance at the time required it to complete checks that were proportionate to that specific lending decision. In deciding what would be proportionate, Startline needed to take into account things such as (but not limited to): the amount borrowed, the size of the regular repayments, the cost of borrowing, the term and Miss W’s circumstances. As part of the application, Miss W declared she was employed full time. Startline requested to see a payslip for proof of income which showed she was earning around £1,600 per month. Startline also completed a credit check which showed that Miss W had three historic defaults from 2017, 2019 and 2020. All three of these defaults still had outstanding balances to

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repay. In addition to this it showed that Miss W was currently one month in arrears on a loan which had monthly repayments of £150. She had also been in arrears on a different loan four months earlier where the monthly repayments were £82. Miss W held four active loans with combined balances of around £4,400 and monthly repayments of around £500. She also held 4 active credit cards with a combined balance of around £1,500. Lastly, she was also around £1,300 overdrawn in her current account and had a regular commitment towards a telecommunications account and an insurance product. Startline says it calculated Miss W’s monthly credit commitments to be around £552. However, this figure didn’t appear to take into account that Miss W also needed to repay her defaulted debts and her overdraft borrowing. Those combined amounted to almost a further £3,000 in debt that Startline also needed to consider. I understand Startline also used statistical data to estimate Miss W’s likely essential living costs. Following these estimates, I’ve seen a copy of Startline’s assessment of affordability which concluded that Miss W’s outgoings likely exceeded her income. Further, Startline’s figures also appear to indicate it was aware that by granting her this hire purchase agreement it would push her even further into financial difficulties. I’m satisfied that Startline gathered a reasonable and proportionate amount of evidence and information in order to make a lending decision. However, I don’t consider the lending decision was fair. There were clearly numerous warning signs in the checks Startline completed that illustrated very clearly that Miss W could not sustainably afford the hire purchase agreement. Not only was there evidence she was struggling with her existing commitments as close as the month before the application, but that her outgoings clearly exceeded what she could afford to repay from her income alone. Startline says that it hasn’t seen any evidence that the agreement was unaffordable. I find this response very disappointing as Startline has clearly failed to engage with the key points of this complaint. As I’ve stated above, Startline’s own assessment at the time showed it to be unaffordable, yet it still chose to proceed with the lending decision knowing it would most likely cause Miss W financial difficulties. I don’t t consider that to be fair and it ought to therefore now put things right. It isn’t possible to unwind the lending decision, and I understand the agreement has since been settled in full. As Miss W became the legal owner of the car when the agreement was repaid, I think it’s fair she pays the original cash price of that car. However, as I don’t think Startline ought to have lent to her, I think it’s fair that it refunds all interest, fees and charges that it applied to the hire purchase agreement. As Miss W was unfairly deprived of using the money she paid towards the cost of borrowing, Startline should also pay her 8% simple interest per year on the refund it provides her. This should be calculated from the date Miss W first made each overpayment to the date of settlement. Lastly, Startline should also remove any adverse information it might have recorded on her credit file in relation to this agreement. My final decision For the reasons given above, I uphold this complaint and direct Startline Motor Finance Limited to: • Refund anything Miss W has paid in excess of the original cash price of £7,140 as what she has paid in excess of this figure should be treated as an overpayment. • Pay 8% simple interest per year on any refund calculated from the date of each

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overpayment to the date of settlement. • Remove any adverse information recorded on Miss W’s credit file (if applicable) in relation to this agreement. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss W to accept or reject my decision before 22 April 2026. Tero Hiltunen Ombudsman

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