Not upheld: irresponsible lending / unaffordable credit complaint against First Rand Bank Limited (trading as MotoNovo Finance)

Decision detail

Summary

Miss T complained that MotoNovo unfairly entered into a hire-purchase agreement for a car in February 2019, claiming the monthly payments of £231.38 were unaffordable. MotoNovo had obtained employment details and conducted credit searches but did not verify Miss T's income and living costs. The ombudsman found MotoNovo's checks were not proportionate but concluded that proportionate checks would likely have shown sufficient disposable income to make the payments sustainable. The ombudsman noted that Miss T made all payments on time and settled the agreement early in May 2021, which contradicted her affordability claims. The complaint was not upheld.

The Ombudsman's reasoning

While MotoNovo's checks were not proportionate as they failed to ascertain Miss T's income and living costs given the payment amount and agreement length, the ombudsman found that proportionate checks would likely have shown sufficient funds remained after committed expenses and existing credit commitments to make the payments sustainable. The ombudsman was not satisfied that proportionate checks would have revealed unaffordability, particularly given Miss T's actual payment behaviour contradicted her current claims. The ombudsman also considered that Miss T's current explanations were made in support of a compensation claim and may differ from what she would have declared at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website