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

Decision detail

Summary

Mrs N complained that Moneybarn lent to her irresponsibly for a £23,700 conditional sale agreement with £699.69 monthly payments and failed to disclose £800 broker commission. Although Mrs N had four active defaults and was on a debt management plan, the ombudsman found that while Moneybarn's checks were not proportionate, proper checks would have shown the agreement was affordable based on her multiple income sources and her actual on-time repayment performance. Regarding the undisclosed commission, applying the Supreme Court's Hopcraft test, the ombudsman found it unlikely a court would find the relationship unfair because the £800 was a fixed fee (not discretionary), represented only 3.3-4.6% of the transaction value, and no commercial tie existed. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that while Moneybarn did not carry out proportionate checks, a proportionate check would have shown the agreement was affordable based on Mrs N's multiple income sources, debt repayment obligations, and actual repayment performance. Regarding the undisclosed £800 commission, the ombudsman applied the Supreme Court's Hopcraft test and found it unlikely a court would find the relationship unfair because: (1) there was no discretionary commission arrangement, (2) the £800 was not high relative to the amount borrowed or cost of credit, and (3) no commercial tie existed between the broker and Moneybarn.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website