Not upheld: irresponsible lending - inadequate affordability checks complaint against MotoNovo Finance Limited

Decision detail

Summary

Miss H complained that MotoNovo unfairly lent to her by entering into a hire-purchase agreement for £13,975.50 with monthly payments of approximately £322, claiming the payments were unaffordable. MotoNovo conducted a credit check but did not verify Miss H's income and living costs. The ombudsman found MotoNovo's checks were not fully proportionate but concluded that proportionate checks would have shown the payments were affordable based on bank statement analysis and the fact that Miss H made all payments on time and settled the agreement early. The complaint was not upheld.

The Ombudsman's reasoning

While MotoNovo's checks were not fully proportionate as they did not ascertain Miss H's income and living costs, the ombudsman concluded that proportionate checks would likely have shown the payments were affordable. Bank statements retrospectively analyzed showed sufficient disposable income after committed expenses and existing credit commitments. The ombudsman noted Miss H's actual payment behavior (making all payments on time and settling early) contradicted her claim of unaffordability, and considered that Miss H's current explanations may be motivated by seeking compensation rather than reflecting her position at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website