Not upheld: irresponsible lending - affordability of hire-purchase agreement complaint against MotoNovo Finance Limited

Decision detail

Summary

Mr T complained that MotoNovo unfairly entered into a hire-purchase agreement for a used car in March 2023, claiming the monthly payments of £189.76 were unaffordable. MotoNovo had completed an income and expenditure assessment and credit searches showing Mr T's existing credit was well maintained with no adverse information. The ombudsman found that while MotoNovo's checks were not fully proportionate as they did not obtain detailed information about Mr T's actual living costs, reconstructing what reasonable checks would have shown indicated the payments were sustainable. The ombudsman rejected Mr T's bank transaction analysis as it included all expenditure rather than committed expenditure only, and concluded MotoNovo did not irresponsibly lend to Mr T.

The Ombudsman's reasoning

The ombudsman found that while MotoNovo's checks were not fully proportionate as they did not obtain detailed information about Mr T's actual living costs, the ombudsman reconstructed what reasonable checks would likely have shown using information subsequently provided by Mr T. This reconstruction indicated that Mr T could sustainably make the repayments when committed regular living expenses, credit commitments, and income were considered. The ombudsman discounted Mr T's bank transaction analysis as it included all expenditure rather than just committed expenditure, and noted that Mr T was unlikely to have volunteered high expenditure levels when seeking credit.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website