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Lenders must provide affordability assessments

Baxter is married to Olivia with four children. When Baxter applied online for a credit card in June 2021, he said that he was earning $3,551.71 a month, that Olivia was earning $5,038 a month, and that their joint monthly expenses were $6,743. The lender was satisfied that Baxter and Olivia had a budget surplus and approved the credit card with a $2,000 limit.

By June 2022 Baxter and Olivia were experiencing financial difficulty and went to a financial mentor for help. On the information available to the financial mentor, he was concerned that the original lending decision was not responsible and asked the lender for more information about their affordability assessment.

The lender gave the financial mentor Baxter and Olivia’s bank statements but refused to give him any more information saying it was commercially sensitive. The financial mentor said that, under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the lender was obliged to give him the information relied on when assessing affordability. The lender disagreed, and the financial mentor complained to FSCL.


The financial mentor said that, based on his information, he was concerned that the lender had not met their responsible lending obligations and wanted to check the lender’s calculations.

The lender said they had given the financial mentor all the information they could and were withholding their calculation because it was commercially sensitive.


We explained to the lender that under section 9CA of the CCCFA the lender must:

  • keep records about the inquiries made under section 9C of the CCCFA (that the lending is affordable and suitable)
  • demonstrate how they satisfied themselves that the lending met the responsible lending obligations in section 9C(3)(a) of the CCCFA
  • give us records that relate to the loan agreement that is under dispute.

We also reminded the lender that under our terms of reference they are obliged to provide any information that, in our Financial Ombudsman’s view, relates to the complaint.

The lender then gave us more information showing their affordability assessment took into consideration monthly income of $8,589.71 and monthly expenses of:

  • financial commitments of $1,445
  • living costs of $2,849
  • rent of $2,167.

The lender was unable to tell us how they calculated the living costs of $2,849. However, the lender could say that Baxter calculated his monthly expenses as:

  • financial commitments of $512
  • living costs of $4,064
  • rent of $2,167.

Again, the lender was unable to say what made up the living costs of $4,046 , but when we looked at the Household Expenditure Survey and Baxter and Olivia’s bank statements this seemed to be a reasonable estimate.

We were satisfied the lender’s estimates of Baxter and Olivia’s monthly financial commitments and monthly income were about right.

Taken together it appeared the family’s monthly expenses were about $7,658 against income of $8,617.07, suggesting that the credit card may have been affordable.


With the benefit of this information and analysis, the financial mentor spoke to Baxter and he agreed to withdraw his complaint.

Insights for participants

When a financial mentor asks for an affordability assessment, the lender should it to them. If the financial mentor can see that the loan was affordable, they will not need to take the matter further with us.