Not upheld: irresponsible lending - inadequate affordability checks complaint against MONEYBARN NO.1 LIMITED

Decision detail

Summary

Mr K complained that Moneybarn irresponsibly lent to him by failing to carry out reasonable and proportionate affordability checks before providing a conditional sale agreement for a used car in May 2023 (£11,905.55 credit, 59 monthly instalments of £382.55). Moneybarn verified income via payslips and conducted a credit search but estimated essential spend using ONS data without asking about Mr K's specific committed expenditure. The ombudsman found the checks were inadequate but concluded that proportionate checks would likely have revealed the lending was affordable, as Mr K had sufficient income to cover all commitments and retain disposable income. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that Moneybarn's checks were not reasonable and proportionate as it should have asked about specific essential spend. However, the ombudsman concluded that if proportionate checks had been undertaken, they would likely have revealed the lending was affordable and sustainable. Based on bank statements and Mr K's circumstances, he had sufficient income to cover existing commitments, essential expenditure, new repayments, and reasonable disposable income. The ombudsman noted Mr K's discretionary spending and that he had been managing existing credit commitments generally well.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website