A Glasgow couple who borrowed £20,000 on a APR of 16.2% over 40 years - at a whopping total cost of almost £124,000 - have been successful in arguing that their lender failed to undertake a proper affordability check, had overridden its own lending criteria, and irresponsibly sold an unaffordable product to the couple, which was secured on their home.
The couple, respresented by Govan Law Centre, could not pursue a claim against their independent financial advisor (IFA) firm, which had since folded, and the lender sought to hold the IFA responsible for any failing. The Ombudsman held that 'I did not consider that White Label had properly assessed how the loan would be affordable so far into Mr and Mrs C's retirement'. The Ombudsman ordered the lender to release the couple from the current loan agreement, effectively writing-off £100,000 in terms of the secured loan agreement.
The couple's solicitor, GLC's Mike Dailly said: "This is a fantastic result for our clients who would have otherwise been looking at repossession. It raises two important principles; first, that a lender is ultimately responsible for their own product and cannot always avoid liability by pointing to a third party financial advisor who sold their product as an intermediary, and secondly, a lender has to adhere to its own lending criteria and make sufficient enquiries to assess affordability".
The Ombudsman's Final Decision is here.