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

Decision detail

Summary

Mr W complained that MotoNovo lent irresponsibly when providing a £9,000 loan in 2022, arguing that more thorough checks would have shown the repayments unaffordable. MotoNovo rejected the complaint, but the FOS investigator initially agreed with Mr W. The ombudsman found that whilst MotoNovo should have verified income and committed expenditure given Mr W's significant existing revolving credit debt (£33,000), analysis of open banking data showed Mr W had approximately £1,098 in monthly disposable income after all committed expenses, making the loan repayments sustainable. The complaint was not upheld as the lending was not found to be irresponsible.

The Ombudsman's reasoning

The ombudsman acknowledged that MotoNovo should have undertaken more proportionate checks given the high existing revolving credit balances, but concluded that had such checks been performed using open banking data or bank statements, they would have revealed that Mr W had sufficient disposable income (approximately £1,098 per month after committed expenditure) to afford the loan repayments sustainably. The ombudsman calculated sustainable credit card repayments at 4% of outstanding balances (£1,200 per month) rather than relying on the three-month average, and found no indication of financial difficulty.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website