Not upheld: irresponsible lending and undisclosed commission complaint against Moneybarn No.1 Limited (trading as Moneybarn)

Decision detail

Summary

Mr S complained that Moneybarn unfairly entered into a conditional sale agreement for a motorbike in August 2020, claiming inadequate affordability checks and unaffordable finance, and that Moneybarn failed to disclose a £406.77 commission paid to the credit broker. The ombudsman found that while Moneybarn's checks were not sufficiently proportionate given Mr S's CCJs and defaulted accounts, the available evidence did not show the repayments were unaffordable. Regarding the undisclosed commission, the ombudsman concluded it was a fixed payment (not discretionary), represented only 8.5% of the borrowed amount, and no commercial tie existed between broker and lender, so it did not render the relationship unfair under section 140A CCA. The complaint was not upheld.

The Ombudsman's reasoning

Although Moneybarn's proportionate checks were insufficient given Mr S's impaired credit history and the agreement's term and cost, the ombudsman could not conclude the repayments were unaffordable because Mr S's own evidence (bank statements reviewed after the fact) did not clearly show committed expenditure exceeded income when limited to regular committed costs. Mr S had electronically confirmed monthly expenditure of £1,150.00, making it unlikely that more detailed questioning would have revealed unaffordability. Regarding commission, the £406.77 fixed payment (not discretionary) represented only 8.5% of the amount borrowed and 6.5% of total credit cost, was not high relative to the borrowing, and no commercial tie existed between broker and lender, so the Supreme Court's unfairness test was not met.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website