Not upheld: irresponsible lending and unfair treatment in voluntary termination process complaint against Moneybarn No.1 Limited

Decision detail

Summary

Mr E complained that Moneybarn unfairly lent to him by failing to conduct adequate affordability checks and providing unaffordable finance for a used car purchased in May 2022 for £12,995.00 with monthly payments of £455.41. He also complained about delays in processing his voluntary termination request and an incorrectly reported default. The ombudsman found that while Moneybarn's checks were not sufficiently thorough, further checks would have still shown the payments were affordable given Mr E's validated income of £3,910.00 and actual living expenses. Regarding voluntary termination, the ombudsman determined that the pre-determined VT amount of £13,447.10 meant delays did not increase Mr E's costs. The ombudsman accepted Moneybarn's offer to remove the default and pay £250 compensation as fair and reasonable, and did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that while Moneybarn's affordability checks were not sufficiently thorough given the adverse credit history, the ombudsman was able to recreate what reasonable checks would have shown. Even using Mr E's higher calculated living expenses of £1,918.00, when added to his credit commitments and deducted from his validated income of £3,910.00, sufficient funds would have remained for the £455.41 monthly payment. Therefore, further checks would not have prevented Moneybarn from lending. Regarding voluntary termination, the ombudsman noted the VT amount was pre-determined at the outset and any delays would not have increased what Mr E had to pay, as he would only pay the difference between amounts already paid and the fixed £13,447.10 VT amount.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website