Upheld: irresponsible lending and failure to carry out proportionate affordability checks complaint against Moneybarn No.1 Limited
Financial Ombudsman decision DRN-6288314 of 2026-04-14T00:00:00+00:00. irresponsible lending and failure to carry out proportionate affordability checks complaint against Moneybarn No.1 Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6288314 |
|---|---|
| Decision date | 2026-04-14T00:00:00+00:00 |
| Firm | Moneybarn No.1 Limited |
| Product | conditional sale agreement (car finance) |
| Claim type | irresponsible lending and failure to carry out proportionate affordability checks |
| Outcome | Upheld |
| Remedy | Moneybarn must: (A) Refund any payments Miss L made in excess of £8,250.00; (B) Add 8% simple interest per year from the date of each overpayment to the date of settlement (with tax deduction as required by HMRC); (C) Remove any adverse information recorded on Miss L's credit file in relation to this conditional sale agreement. |
Summary
Miss L complained that Moneybarn lent to her irresponsibly without carrying out proper affordability checks when approving a conditional sale agreement in February 2018 for a car costing £8,250.00 with repayments of approximately £270 per month over 60 months. Although Moneybarn verified her income and completed a basic income and expenditure assessment, the ombudsman found that Moneybarn should have conducted more thorough checks given Miss L's two unsettled defaulted accounts on her credit file, relatively low income, and the long-term nature of the agreement. Bank statements revealed that Miss L was unable to live within her means, regularly withdrew large amounts of cash, and was reliant on transfers from friends and family as well as high-cost borrowing to survive. The ombudsman upheld the complaint and ordered Moneybarn to refund all payments in excess of £8,250.00 plus 8% simple interest, and to remove adverse credit file information.
The Ombudsman's reasoning
Although Miss L had declared she lived with parents and the proposed repayment represented less than 25% of her monthly income, Moneybarn did not carry out proportionate checks. The ombudsman concluded that Moneybarn knew enough to identify potential affordability issues: Miss L had two unsettled defaulted accounts on her credit file, a relatively low income, and would need to meet car running costs over a five-year term. Had Moneybarn conducted proper checks (such as reviewing bank statements or asking further questions about expenditure), it would have discovered that Miss L was entirely unable to live within her means, was reliant on transfers from others and high-cost borrowing, and would need to borrow elsewhere to meet the monthly repayments, making the lending unaffordable and unsustainable under CONC 5.3.1G(2).
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Moneybarn No.1 Limited, all decisions | 1,419 | 24% |
Source
Read the original decision on the Financial Ombudsman Service website