Not upheld: irresponsible lending complaint against FirstRand Bank Limited trading as MotoNovo Finance

Decision detail

Summary

Miss S complained that MotoNovo unfairly provided her with car finance in August 2018 for £5,398.00, arguing that proper affordability checks would have revealed she could not afford it due to her other lending. MotoNovo relied on credit reference agency checks and Miss S's unverified income declaration of just over £19,100 annually. The ombudsman found that MotoNovo should have verified her income and assessed her essential expenditure, particularly given her recent payday loan and considerable other debt. However, analysis of Miss S's contemporaneous bank statements showed she had sufficient disposable income to afford the agreement after accounting for existing commitments. The ombudsman noted that Miss S's gambling, which she later disclosed, was not visible from the statements and could not have been reasonably discovered. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that MotoNovo should have verified Miss S's income and assessed her non-discretionary expenditure given the amount of recent credit she had taken out and the presence of a payday loan. However, based on Miss S's bank statements from the time, had MotoNovo conducted such checks, it would likely have found her income declaration accurate and that she had sufficient disposable income to afford the agreement after accounting for existing debt repayments and essential expenditure. The ombudsman noted that while Miss S was gambling, this was not visible from bank statements alone and would not have been reasonably discoverable by MotoNovo.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website