Not upheld: irresponsible lending complaint against Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance

Decision detail

Summary

Mr K complained that Novuna lent irresponsibly when approving a £20,000 personal loan in December 2023, arguing they failed to identify his financial vulnerability and the £75,000 in other recent loans he had taken out. The ombudsman found that while Novuna's initial checks were not fully proportionate, proper verification would have shown Mr K had sufficient disposable income (£2,303 monthly) to afford the loan. The other high-value loans were not visible on the credit file due to the proximity of applications, and Mr K's later defaults were not foreseeable at the time of lending. The complaint was not upheld, and the ombudsman concluded the lending decision was fair and reasonable.

The Ombudsman's reasoning

The ombudsman found that while Novuna's initial checks were not fully reasonable and proportionate (as they should have verified income through bank statements or payslips), when proper checks would have been conducted, they would have shown Mr K had sufficient disposable income (£2,303 remaining after expenses) to afford the loan. The other high-value loans Mr K applied for were not visible on the credit file due to the timing of applications, so Novuna could not reasonably have been aware of them. Mr K's later defaults and the scam were not matters that would have been evident at the time of lending. The ombudsman concluded the loan was affordable and the lending decision was fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website