Not upheld: irresponsible lending complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Mr C complained that Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance) irresponsibly provided him with a £5,000 personal loan in April 2024 with monthly repayments of £203.07. The ombudsman found that Novuna conducted reasonable and proportionate pre-lending checks, verifying income and reviewing the credit file, which showed Mr C would have approximately £1,500 remaining monthly income after the loan and existing commitments. Although Mr C later submitted evidence of actual expenditure showing the loan was unaffordable, the ombudsman determined such detailed financial review would not have been proportionate at this stage of the lending relationship. The ombudsman noted Mr C's credit file showed stabilised finances with no recent defaults and all active credit up-to-date for nine months. The complaint was not upheld, and no remedy was ordered.

The Ombudsman's reasoning

The ombudsman concluded that Novuna's pre-lending checks were reasonable and proportionate for the loan value and stage of the lending relationship. The checks showed Mr C would have sufficient income remaining (£1,500 monthly) to cover living costs based on national statistics. While Mr C later provided evidence of actual expenditure showing unaffordability, the ombudsman found it would not have been proportionate for Novuna to conduct such detailed financial reviews at this stage. The credit file showed Mr C's finances had stabilised with all active credit up-to-date for nine months, and his unsecured debt level was not excessive. The ombudsman found nothing in the information available to Novuna suggested Mr C would be unable to sustainably repay the loan.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website