Startline Motor Finance Limited · DRN-6254521

The complaint Mr T has complained that Startline Motor Finance Limited (Startline) unfairly provided him with credit for a vehicle. What happened In July 2021, Mr T entered into a finance agreement with Startline for the purchase of a car as shown below. Mr T was able to settle the agreement early in March 2025. Date Amount of credit Term Monthly payment Total repayable July 2021 £6,150 48 months £194.97 £9,368.56 In March 2025 Mr T complained to Startline with the help of a professional representative. In the complaint, Mr T said he didn’t think Startline had lent responsibly to him. He felt it had failed to undertake a reasonable assessment of his creditworthiness at the time of the lending. He’s said had Startline completed the appropriate checks it would have found the lending was unsuitable for him and that this led to an unfair relationship. Startline looked into Mr T’s complaint and issued a final response letter explaining it believed it had acted fairly when completing its checks. It said it had confirmed the agreement was affordable by verifying Mr T’s income and checking the information the credit reference agencies held about him. Startline has said based on the information it found, it believes its decision to lend was fair. Mr T didn’t accept Startline’s response, so he referred his complaint to our service with the help of his representative. One of our investigators looked into it, and based on the evidence available, our investigator said he didn’t think Startline’s decision to lend was fair as it didn’t leave Mr T with enough disposable income and he was demonstrating that he couldn’t manage the credit he already had. Startline didn’t accept what our investigator said and felt, on the information it gathered, the decision to lend was fair and the investigator hadn’t shown the lending was unaffordable. So, it asked for a final decision on the case. As no agreement could be reached, the complaint has been passed to me for a 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 done so I reached the same outcome as the investigator but for different reasons, so I issued a provisional decision saying: “I think there are key questions I need to consider in order to decide what is fair and reasonable in this case:

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• Did Startline carry out reasonable and proportionate checks to satisfy itself that Mr T was able to sustainably repay the credit? • If not, what would reasonable and proportionate checks have shown at the time? • Did Startline make a fair lending decision? • Did Startline act unfairly or unreasonably towards Mr T in some other way? Startline had to carry out reasonable and proportionate checks to satisfy itself that Mr T would be able to repay the credit sustainably. It’s not just about Startline assessing the likelihood of Mr T being able to repay the credit, it also had to consider the impact of the repayments on him. There is 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, the cost of the credit and the customers circumstances, when deciding what checks to undertake. Startline has explained that it carried out a credit search to get an understanding of Mr T’s situation before it decided to lend to him. It’s provided a copy of this search, and this shows that Mr T was behind with payments on two accounts. It appears that for two months Mr T had been behind on payments to one of his credit cards. The report also shows that Mr T was likely in a payment plan for an unsecured loan that had a monthly payment of £98. All this suggests that Mr T was unable to manage the credit he already had well and indicates that Mr T may have had some financial troubles. Startline has shown Mr T told it his monthly income was around £1,600 which it verified. It also took into account Mr T’s expenditure on other credit and said this demonstrated that he had around £1,146 disposable income a month after the repayments to this agreement and that this was sufficient to meet Mr T’s other essential expenditure. I’ve considered the information Startline gathered about Mr T’s expenditure, but I don’t think this was a full picture. I say this because it didn’t account for housing costs such as rent, or any utility bills including council tax, water, gas, or electric bills. I also can’t see that it accounted for the fact that Mr T was already behind with payments to one creditor and appeared to be in some sort of arrangement with another. Startline has pointed out that the payment arrangement may not have meant that the lending was unaffordable. It’s said Mr T may have made a conscious decision to continue with reduced payments to the arrangement in order to be able to afford other essential items – such as a car. I don’t necessarily disagree with Startline’s point here but it didn’t do enough to establish this was the case. It also didn’t do enough to account for Mr T’s other essential costs. I appreciate Startline says it thought Mr T had in excess of £1,000 to cover other costs but the information contained within the credit report indicated someone who was suffering some sort of financial strain. So, I think it needed to do significantly more than it did to establish that this lending was affordable. It follows then that I think it would have been reasonable for Startline to get a better understanding of Mr T’s financial situation, particularly his expenditure on non-discretionary expenses, before lending to him. There are a number of ways it could have done this but in the circumstances, I think it would have been reasonable for Startline to have reviewed Mr T’s bank statements for the period before the lending. Mr T has been able to provide a copy of these to this service and I’ve reviewed the two-and-a-half-month period prior to the lending. Having reviewed these it appears that after accounting for payments to insurance, housing, bills, this agreement, and other credit, Mr T would have been left with on average £30 disposable income a month, which isn’t sufficient to allow for other living costs such as food and any emergency

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expenses that might arise. The statements showed that Mr T’s income was inconsistent and fluctuated quite considerably from month to month. It also showed that he was regularly relying on short- term, high-cost lending. Again, providing further evidence that Mr T was struggling to manage his finances. If this had been taken into account, I think it would have, more likely than not, demonstrated that agreeing the further lending would likely leave Mr T with very little or no disposable income and so would be unfair. So, in summary, I don’t think Startline undertook reasonable and proportionate checks, to understand whether the lending was affordable. Had it done so, I think it would have concluded Mr T was unlikely to be able to sustainably repay what he was being lent. This means I don’t think Startline made a fair decision to lend to Mr T. Putting things right As I don’t think Startline ought to have approved the lending, I don’t think it’s fair for it to be able to benefit from any interest or charges under the agreement. However, Mr T has retained the car and had the use of it. So, I think it’s fair that Mr T should only have to pay the original cash price of the car, being £6,150.00. Anything Mr T has paid in excess of that amount should be refunded as an overpayment. To settle Mr T’s complaint, Startline should: • Refund any payments Mr T has made in excess of £6,150, representing the original cash price of the car. It should add 8% simple interest per year* from the date of each overpayment to the date of settlement. • Remove any adverse information recorded on Mr T’s credit file regarding the agreement. *If Startline considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Mr T how much it’s taken off. It should also give him a tax deduction certificate if he asks for one, so he can reclaim the tax from HM Revenue & Customs if appropriate.” Mr T responded to accept my decision, but Startline didn’t agree with what I’d said. It still felt that its checks were proportionate and believed that Mr T’s income was higher than declared based on the statements we shared with it. It said that Mr T was transferring money in from another account. I’ve carefully considered Startline’s points, but I don’t agree that Mr T had a higher income than declared. It’s correct that he did transfer money into the account, but he also transferred almost the same amount back, to what appears to be the same account, shortly after each transaction. So, I don’t think it would be reasonable to rely on this as a stable source of income for the purposes of an affordability check. Given that no new evidence has been provided, I don’t see a reason to depart from the findings in my provisional decision. My final decision My final decision is that I uphold this complaint and direct Startline Motor Finance Limited to put things right for Mr T, as I’ve set out above.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr T to accept or reject my decision before 23 April 2026. Charlotte Roberts Ombudsman

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