Admiral Financial Services Limited · DRN-6061782

The complaint Mr S complains that Admiral Financial Services Limited trading as Admiral Money (Admiral) acted unfairly by agreeing to a loan he said he couldn’t afford. What happened Around December 2024 Mr S entered into a Fixed Sum loan agreement with Admiral for £6,000. After interest and charges were applied Mr S was required to repay a total of £11,429.40 over 60 months at £190.49 a month. Mr S said he struggled to sustain the repayments and had Admiral properly checked they would have seen his over reliance on credit. He complained to Admiral. Admiral said their checks were reasonable and proportionate. They said they used Mr S’ declared housing costs, living expenses, existing debts, and the proposed loan repayments. Based on these checks they considered the lending was affordable as Mr S should have had sufficient disposable income to sustain the loan repayments. And they hadn’t seen any signs of financial vulnerability. Mr S wasn’t happy with Admiral’s response and referred his complaint to us. Our investigator didn’t think Admiral’s checks had been enough. And after further evidence was provided by Mr S their view was the lending wasn’t sustainable. And they asked Admiral to put things right. Admiral didn’t agree and asked for an ombudsman to decide. 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’ve reached the same overall conclusions as the investigator, and for broadly the same reasons. Whilst I’ve read and considered everything, if I don’t mention any specific point, it’s not because I failed to take it on board and think about it, but because I don’t think I need to comment on it to reach what I think is a fair and reasonable outcome. This is not meant as a discourtesy but rather reflects my role of resolving disputes with minimum formality. We’ve set out our approach to complaints about unaffordable and irresponsible lending on our website. I’ve taken this into account in deciding Mr S’complaint. All lenders have an obligation to lend money responsibly. The relevant guidance is within the Financial Conduct Authority (FCA) rules on creditworthiness assessment as set out in its handbook, CONC. In summary, these say that before Admiral offered the loan they needed to complete reasonable and proportionate checks to be satisfied Mr S would be able to repay the debt in a sustainable way. These checks aren’t prescriptive but could consider several things. In deciding what was proportionate Admiral needed to consider things such

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as (but not limited to): the amount of credit, the size of any regular payments, the cost of credit and the consumer’s circumstances. In practice this means that Admiral needed to carry out proportionate checks to make sure Mr S could repay the borrowing in a sustainable way. So, in reaching my decision I need to consider: 1. Did Admiral complete reasonable and proportionate checks to satisfy themselves that Mr S would be able to sustainably repay the borrowing? a. If they did, was the decision to then lend to Mr S fair? b. If they didn’t, would reasonable and proportionate checks have shown that Mr S could sustainably repay the borrowing? 2. Did Admiral act unfairly or unreasonably in some other way? The affordability checks should be “borrower-focused”, meaning Admiral needed to think about whether repaying the loan sustainably would cause difficulties or adverse consequences for Mr S. In other words, it wasn’t enough for them to think only about the likelihood that they would get their money back without considering the impact of repayment on Mr S himself. CONC says a lender must base their creditworthiness assessment on sufficient information of which they’re aware at the time the assessment is carried out, obtained, where appropriate, from the consumer and where necessary from a CRA and the information must enable the lender to carry out a reasonable creditworthiness assessment. And that a lender should take reasonable steps to estimate a consumer’s income and non-discretionary spending. It’s not generally sufficient to rely solely on a statement of current income made by the consumer without independent evidence such as from a CRA or third party. CONC does allow the use of statistical data for the purpose of estimating a consumer’s non-discretionary expenditure. So, I’ve considered the checks Admiral did and what these showed. Mr S said he was employed full time with an annual salary of £50,000. He said he was a homeowner with two dependents. He declared he paid a 50% share of the mortgage, £650. Admiral cross checked Mr S’ income with a CRA which validated his declared income with Admiral assessing this to be £3,143.30 a month. The CRA data showed Mr S had credit commitments of £1,493.06. Admiral considered Mr S would have day to day living costs as a homeowner with two dependents of £500.98. After factoring in the new lending of £190.49 this should have left Mr S with a disposable income of £308.77. Admiral’s credit check showed Mr S was managing his existing credit with no signs of missed or late payments, arrears, defaults or county court judgments. But it did show Mr S had a hire purchase agreement and five other loans, two of which had been taken out in the preceding six months, totalling around £17,000. As Mr S said the purpose of the loan was for home improvements, Admiral said they made the assumption that these other loans would be for the same purpose. But from the credit report Admiral has given to us I can see that around the time these two loans were taken out, July 2024 and September 2024 respectively, another two loans were settled. One with a balance of £4,553 was settled around July 2024, and the other with a balance of £955 was settled around October 2024. So, I think its more likely than not, the recent two loans were used in part for debt consolidation. Mr S’ debt to income ratio was 47% which shows Mr S was using nearly half of his income to

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repay his credit commitments. And after the new lending this would push him to over 50% of his income. And given Mr S would be indebted for around five years, was a homeowner with two dependents, I think Admiral should have checked further into Mr S’ financial situation. This doesn’t automatically mean Admiral shouldn’t have lent to Mr S just that I think they should have considered his finances further rather than a reliance of data, and the assumption as to the purpose of the recent loans. I generally wouldn’t expect a lender to seek bank statements but for our purposes they provide a good indicator of Mr S’ income and expenditure. Mr S has provided his bank statements for the three months prior to the new loan being agreed. I can see loan funds of £7,000 paid into the account mid-September 2024 which Mr S seems to have used for managing his day-to-day outgoings. And for settling one of his loans. I can also see that Mr S paid the full mortgage cost each month of £1,299.05. Across the three months Mr S’ monthly income was around £3,239, slightly higher than that used by Admiral in their assessment. Mr S’ credit commitments including an insurance commitment was around £1,528, petrol and communications around £144. And his mortgage repayment was around £1,299. Which I consider would leave Mr S with around £268 before factoring in the new lending of around £190.Which I think is insufficient to be able to sustain the repayments. I take on board Admiral’s comments about Mr S’ mortgage commitment being 50%, which Mr S himself declared, and would increase Mr S’ disposable income to a sufficient level. And that they wouldn’t have asked for sight of Mr S’ partners bank statements. But its clear from Mr S’ bank statements that he paid the full cost of the monthly mortgage commitment. So, I don’t think its unreasonable to use the full amount to assess Mrs S’ income and expenditure as its evident this was his share of the household bills. And Mr S has shown that his partner paid the remainder of the day to day living costs for food, media, childcare, utilities and council tax. I can see he also made regular transfers to his partner‘s account for ‘bill payments’, which I haven’t taken into account, as I think from Mr S’ bank statements its evident without taking account of these transfers that he was reliant on credit to manage his finances, and he didn’t have sufficient disposable income to sustain the repayments for this loan. Having reviewed all the information, I’m satisfied had Admiral carried out proportionate checks, they would have seen the decision to lend to Mr S was unfair as the repayments weren’t affordable or sustainable for him when considering his actual income and existing non-discretionary commitments. In reaching my conclusions, I’ve also considered whether the lending relationship between Admiral and Mr S might have been unfair to him under Section 140A of the Consumer Credit Act 1974. But I’m satisfied that what I’ve directed Admiral to do in the section below results in fair compensation for Mr S given the overall circumstances of his complaint. For the reasons I’ve explained, I’m also satisfied that, based on what I’ve seen, no additional award is appropriate in this case. Putting things right When a business has done something wrong, I’d look for the business to put the complainant in the position they would be in now if the mistake they’d made hadn’t happened, as far as is reasonably practical. But Mr S has had the loan and used the money, so, it’s right that he should repay what he borrowed as he has had the benefit of those funds. But I don’t think it’s fair and reasonable that Admiral should apply any interest fees and/or charges incurred by Mr S because of the credit unfairly extended to him.

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My final decision I uphold this complaint. And ask Admiral Financial Services Limited trading as Admiral Money to: • Rework the account removing all interest and charges and treat all repayments Mr S has made as repayments of the capital. • If this results in any overpayment, this should be refunded to Mr S along with 8% simple interest (calculated from the date the overpayments were made to the date of the settlement.* • If this results in there still being an outstanding capital balance, Admiral must agree an affordable repayment plan with Mr S. • Remove any adverse information from Mr S’ credit file about the unfair lending once any outstanding capital balance has been repaid. *HM Revenue & Customs requires Admiral to take off tax from this interest. Admiral must give Mr S a certificate showing how much tax they’ve taken off if he asks for one. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr S to accept or reject my decision before 18 March 2026. Anne Scarr Ombudsman

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