Not upheld: irresponsible lending - inadequate affordability assessment complaint against FirstRand Bank Limited trading as Motonovo Finance

Decision detail

Summary

Mr J complained that Motonovo failed to conduct proportionate affordability checks before lending £5,999 for a hire purchase agreement in March 2017. Motonovo did not collect information about Mr J's income or living costs, though it knew he was employed full-time and had recently completed an IVA. The ombudsman agreed the checks were inadequate but applied a counterfactual test using Mr J's bank statements, which showed he had approximately £800 in monthly disposable income after all commitments and no signs of financial difficulty. The ombudsman concluded that had Motonovo made proper enquiries, it would have discovered the agreement was affordable and therefore did not uphold the complaint.

The Ombudsman's reasoning

While Motonovo failed to conduct proportionate affordability checks by not collecting income information or details of living costs, the ombudsman applied a counterfactual test. Using Mr J's bank statements to establish his likely financial position at the time of lending, the ombudsman concluded that had Motonovo made proper enquiries, it would have discovered Mr J had approximately £800 per month in disposable income after all living costs and credit commitments. The bank statements showed no signs of financial difficulty such as returned payments or overdraft dependency. Therefore, even with proper checks, Motonovo would likely have concluded the agreement was affordable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website