Not upheld: irresponsible lending - affordability assessment complaint against Moneybarn No.1 Limited (trading as Moneybarn)

Decision detail

Summary

Mr F complained that Moneybarn lent to him irresponsibly on two Conditional Sale Agreements for used vehicles in 2019 and 2023, seeking refund of interest and compensation. The ombudsman found that while Moneybarn's initial checks for Agreement 1 were insufficient given a recent CCJ on the credit file, further investigation would have confirmed the loan was affordable. For Agreement 2, the checks were reasonable and proportionate given improved circumstances. The ombudsman concluded both lending decisions were fair and Moneybarn did not treat Mr F unfairly, rejecting the complaint.

The Ombudsman's reasoning

The ombudsman applied the FOS approach to irresponsible lending, requiring reasonable and proportionate checks to assess affordability (not just credit risk). For Agreement 1, while Moneybarn's initial checks were insufficient given the recent CCJ, further verification using the borrower's actual bank statements would likely have shown disposable income consistent with the lender's calculations, supporting the lending decision. For Agreement 2, the checks were reasonable and proportionate given the improved financial position, higher income, and historic (not recent) credit issues. The borrower's subsequent payment performance, with only temporary issues explained by bank problems, did not indicate unfair treatment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website