Not upheld: irresponsible lending and undisclosed commission complaint against Moneybarn No.1 Limited

Decision detail

Summary

Miss T complained that Moneybarn unfairly lent to her for a used car in July 2015 through a conditional sale agreement, arguing that proportionate affordability checks were not conducted and the finance was unaffordable. She also complained about an undisclosed £330 commission paid to the credit broker. The ombudsman found that while Moneybarn's checks were not sufficiently proportionate as they failed to establish Miss T's actual living costs, the complaint could not be upheld because Miss T provided no evidence that proper checks would have revealed unaffordability, and she successfully made all required payments. Regarding the commission, applying the Supreme Court's Hopcraft test, the ombudsman found the £330 payment (less than 5% of the loan amount) did not involve a discretionary commission arrangement and was unlikely to be considered high, and no commercial tie existed between the parties.

The Ombudsman's reasoning

While Moneybarn's proportionality checks were insufficient as it failed to ascertain Miss T's actual living costs, the ombudsman could not uphold the complaint because Miss T failed to provide evidence of what reasonable checks would have shown. The ombudsman noted that Miss T actually made the required payments and there was no clear evidence the loan was unaffordable. Regarding the undisclosed commission, the ombudsman applied the Supreme Court's Hopcraft test and found the £330 commission (less than 5% of amount borrowed) did not involve a discretionary commission arrangement, was not high relative to the credit cost, and no commercial tie existed between the broker and lender.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website