Not upheld: irresponsible lending / unaffordable credit complaint against Moneybarn No.1 Limited

Decision detail

Summary

Mr W complained that Moneybarn unfairly entered into a conditional sale agreement for a £5,950 car in June 2016 without conducting proper affordability checks and providing unaffordable finance. Moneybarn had verified his income via payslips and conducted credit searches revealing defaults and CCJs, but estimated his living expenses rather than obtaining detailed information. The ombudsman found Moneybarn's checks were insufficient given the adverse credit information, but concluded that reasonable checks would have shown the repayments were affordable based on Mr W's actual income and living expenses. The complaint was not upheld because the ombudsman was satisfied that even with proper checks, Moneybarn would have approved the lending.

The Ombudsman's reasoning

The ombudsman acknowledged that Moneybarn's checks were not sufficiently thorough, particularly in relying on estimated living costs given the adverse credit file. However, the ombudsman applied the test of what reasonable and proportionate checks would likely have shown. Using information Mr W provided about his actual living expenses and credit commitments, the ombudsman concluded that when these were deducted from his monthly income, he had sufficient funds to sustainably make the repayments at the time of lending. The ombudsman noted that Mr W's subsequent bank statement analysis was information Moneybarn neither had nor was required to have, and that Mr W's current submissions were made in support of a compensation claim rather than reflecting his position at the time of application.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website