Mercedes-Benz Financial Services UK Limited · DRN-6219778

The complaint Mercedes-Benz Financial Services UK Limited (Mercedes) provided Mr S with three car finance agreements. Mr S says the credit was provided irresponsibly. What happened Mr S entered into three hire purchase agreements with Mercedes, they all had a term of 48 months. None of the agreements overlapped and agreement 3 has been fully repaid. Some further brief details about these are as follows: • Agreement 1 started in April 2014. Mr S borrowed £24,912.68 and the monthly repayment was £368.70. • Agreement 2 started in April 2017. Mr S borrowed £27,716.87 and the monthly repayment was £412.77. • Agreement 3 started in February 2020. Mr S borrowed £27,284 and the monthly repayment was £409.17. I’ve looked at everything, but the details of this complaint are well-known to both parties, so I won’t repeat them again here. The facts aren’t in dispute, so I’ll focus on giving the reasons for my 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. Having considered everything, I’m not upholding Mr S’ complaint. I’ll explain my reasoning below. We’ve set out our general approach to complaints about unaffordable or irresponsible lending on our website, and I’ve taken this into account in deciding Mr S’ case. I’ve decided the agreements were provided fairly. For all the agreements Mercedes asked Mr S some information about his circumstances as part of the application process. He confirmed that he was employed and married at the time of all the applications. But for agreements 1 and 2, Mercedes can’t show that it found out about Mr S’ income (although I accept its unlikely it lent without this information). For agreement 3 he told it that he earned between £46,000 and £54,999. But in any event Mercedes doesn’t seem to have verified Mr S’ income for any of the agreements and I think it should have done this, given the amounts it was lending and the term of the agreements. Mercedes did look at Mr S’ credit file and found out about what he owed to other creditors and how much he was repaying each month to them. But it didn’t seem to find out about any other of Mr S’ fixed or committed expenditures which I also think it should have done, given the amounts borrowed and the term of the lending.

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So, I don’t think the checks Mercedes did before providing the credit were reasonable and proportionate given the credit limit it offered and what it knew about Mr S’ financial situation. Mr S has been unable to provide any information about his circumstances when agreements 1 and 2 were started, which is understandable given the time that has passed. But it does mean I don’t have enough evidence to fairly say he was likely to be unable to sustainably repay what he was being lent for these agreements. And If Mercedes had done proportionate checks, I don’t think it’s likely these would have shown it was unfair to provide the credit to Mr S. For agreement 1, Mercedes found out that Mr S did have some other credit which totalled about £131,000. Most of this was a mortgage but Mr S had a personal loan, an existing hire purchase agreement and some credit card balances. The information Mercedes had showed that Mr S hadn’t had any problems repaying any of this. And for agreement 2 Mr S seemed to owe less to his mortgage, but his circumstances seem broadly similar in respect of his credit. So, Mercedes did know that Mr S had good history of repaying his credit over a long period of time before it approved loan 3. And more information has been provided from both parties to the complaint about Mr S’ circumstances at agreement 3. Mr S’ mortgage balance had increased to around £200,000 but his other credit balances had decreased. The information Mercedes has still showed there was no sign of arrears or credit problems. Our Investigator looked at Mr S’ bank statements for the period before agreement 3. I don’t think Mercedes needed to necessarily consider his bank statements, but they do show what it might have seen if it had made better checks. Our Investigator concluded that when Mr S’ fixed expenditures were taken from his income that he would likely have enough left over to be able to afford the lending. Mr S has not said that our Investigators calculations are materially incorrect and having looked at the bank statements, I also don’t think that they are. And even Mr S says that he still had some left over after paying his bills – albeit he doesn’t think this was enough. So, if Mercedes has made better checks before agreement 3, I think it would have seen the lending was affordable and still lent. Mr S has said that he was overdrawn and, later on in 2021, he borrowed further on his mortgage to consolidate some debt. He’s said that he had very little left over each month and he has recently run into financial difficulty because of borrowing more than he could really afford over a long period of time. I can see that there were one or two incidents of late payments to his credit cards in 2018 and 2019. But I don’t think that Mr S’ use of his overdraft was particularly problematic, and the late repayments seem to have been isolated incidents that weren’t close to any lending decisions. Mercedes wouldn’t have been able to factor in any problems Mr S had after the times of lending. So, these don’t change that I think that if Mercedes had made better checks, it still would’ve seen that the lending was likely to be affordable. And it’s worth noting that whilst I don’t dispute that Mr S may have found things difficult to manage at times he was able to repay all the agreements without a problem. And his credit file information also doesn’t show any signs of significant financial problems until recently. And it’s a reasonable assumption that he needed or wanted the cars he had use of. I don’t think Mercedes acted unfairly in any other way. This means I don’t think Mercedes did anything wrong when it provided the hire purchase agreements to Mr S.

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I’ve also considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, for the reasons I’ve already given, I don’t think Mercedes lent irresponsibly to Mr S or otherwise treated him unfairly. I haven’t seen anything to suggest that s.140A or anything else would, given the facts of this complaint, lead to a different outcome here. I know this isn’t the outcome Mr S hoped for. But for the reasons above, I’m not asking Mercedes to do anything to put things right. My final decision My final decision is that I’m not upholding this complaint about Mercedes-Benz Financial Services UK Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 22 April 2026. Andy Burlinson Ombudsman

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