Not upheld: irresponsible lending - inadequate affordability checks complaint against Mitsubishi HC Capital UK Plc (trading as Novuna Personal Finance)

Decision detail

Summary

Mr H complained that Novuna irresponsibly lent him £13,000 in December 2020 without conducting proportionate affordability checks and failed to identify indicators of his vulnerability due to neurodevelopmental conditions. The ombudsman found Novuna's checks were indeed not proportionate but could not determine what better checks would have revealed because Mr H could not provide complete bank statements. Based on the balance of probabilities using partial statements and Mr H's cost estimates, the loan appeared affordable. The ombudsman also found no evidence of vulnerability indicators at the point of application that Novuna should have detected, and deemed the £60 goodwill payment fair compensation for the credit file reporting issue.

The Ombudsman's reasoning

The ombudsman acknowledged that Novuna's affordability checks were not proportionate for a loan of this value and term, as they failed to adequately understand Mr H's fixed living costs. However, because Mr H could not provide complete bank statements for all accounts, the ombudsman could not determine what better checks would have revealed. Based on the balance of probabilities using available evidence (partial statements showing £1,740 average monthly income and Mr H's estimates of £1,020 in housing and living costs), the loan appeared affordable with approximately £474 disposable income remaining. The ombudsman found no evidence of vulnerability indicators at the point of application that Novuna should have detected, and the £60 goodwill payment was deemed fair recognition of the credit file reporting issue.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website