Not upheld: irresponsible lending - inadequate affordability checks complaint against Mitsubishi HC Capital UK PLC (trading as Novuna Personal Finance, formerly known as Hitachi)

Decision detail

Summary

Mr S complained that Novuna irresponsibly lent him £23,000 in April 2021, arguing the lender failed to conduct suitable and proportionate checks before approving the loan. Mr S was subsequently the victim of an investment scam. The ombudsman found that while Novuna's checks were not proportionate—particularly given a low confidence verification score on Mr S's income and the sizeable repayment relative to his retired status—the complaint was not upheld because evidence showed that if Novuna had conducted further checks, it would still have determined the loan was affordable based on Mr S's actual income and expenses. The ombudsman encouraged Mr S to pursue a separate debt write-off on medical grounds with Novuna.

The Ombudsman's reasoning

The ombudsman acknowledged that Novuna's checks were not proportionate given the low confidence verification score and the sizeable repayment relative to Mr S's retired status. However, the ombudsman concluded that even if Novuna had conducted further checks (such as reviewing bank statements), the evidence shows Mr S's actual income was very close to his declaration and his essential expenses aligned with Novuna's statistical estimates. Therefore, Novuna would still have determined the loan was affordable. The ombudsman also noted that Novuna cannot be held responsible for CRA data not showing loans taken on the same day, as CRAs control information updates. The ombudsman kept the scope of review strictly to whether the loan was irresponsibly provided, separate from the scam circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website