Not upheld: irresponsible lending - affordability assessment complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal

Decision detail

Summary

Miss K complained that Novuna lent to her irresponsibly when providing a £15,000 unsecured loan in August 2023 for debt consolidation, arguing they failed to properly consider her credit history and affordability. Novuna maintained they carried out reasonable affordability checks showing the loan was sustainable based on Miss K's stated income of £42,000, her existing credit commitments of £44,500 with no adverse history, and calculated disposable income of approximately £730 after the new loan repayment. The ombudsman found Novuna's checks were proportionate and reasonable, and that the loan was affordable and sustainable, particularly as it was for debt consolidation and Miss K subsequently reduced her debt by £12,800. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied CONC regulations requiring reasonable and proportionate affordability assessments. Novuna's checks were proportionate given the circumstances: they verified Miss K's income, reviewed her credit file showing good management of existing credit with no adverse indicators, calculated disposable income of approximately £730 after the new loan repayment, and understood the loan was for debt consolidation which would improve her financial position. The ombudsman found that Novuna could reasonably have concluded the loan would not increase Miss K's debt unsustainably, particularly as she demonstrated debt reduction of £12,800 following the loan. The ombudsman rejected the comparison to the separate second loan complaint, noting each case must be assessed on its own merits.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website