Not upheld: irresponsible lending and undisclosed commission complaint against Moneybarn No.1 Limited

Decision detail

Summary

Miss W complained that Moneybarn unfairly lent to her by failing to carry out proportionate affordability checks and providing unaffordable finance, and that it failed to disclose a £500 commission paid to her credit broker. The ombudsman found that while Moneybarn's checks were not fully proportionate as they did not verify her actual living expenses, analysis of her bank statements showed she had sufficient funds to make the monthly payments of £201.39. Regarding the commission, the ombudsman concluded it was unlikely a court would find the undisclosed £500 payment rendered the relationship unfair under section 140 CCA, as it did not involve a discretionary commission arrangement, was not high relative to the loan amount (less than 9%), and no commercial tie existed. The complaint was not upheld.

The Ombudsman's reasoning

Although Moneybarn's proportionality checks were insufficient as it should have verified Miss W's actual living expenses rather than assuming them, the ombudsman concluded that reasonable and proportionate checks using Miss W's bank statements would have shown she had sufficient funds to make the payments. The undisclosed commission of £500 did not constitute an unfair relationship under section 140 CCA because it did not involve a discretionary commission arrangement, was not high relative to the amount borrowed (less than 9%), and there was no evidence of a commercial tie between the broker and lender.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website