Not upheld: Irresponsible lending complaint against MotoNovo Finance Limited

Decision detail

Summary

Mr P complained that MotoNovo irresponsibly lent to him when entering into a hire purchase agreement for a car in October 2023 with monthly payments of £448.94. The ombudsman found that MotoNovo did not conduct reasonable and proportionate checks, as it failed to verify Mr P's declared income of £50,000 or enquire about his essential expenditure. However, the ombudsman concluded that had such checks been carried out, they would likely have shown the agreement was sustainably affordable based on Mr P's income, existing credit commitments, and remaining disposable income. The ombudsman rejected Mr P's arguments about gambling problems and mental health issues, finding these would not have been discovered through proportionate checks. The complaint was not upheld, though the ombudsman reminded MotoNovo of its obligations to treat Mr P with reasonable forbearance going forward.

The Ombudsman's reasoning

The ombudsman found that MotoNovo failed to conduct reasonable and proportionate checks by not verifying income or enquiring about essential expenditure. However, the ombudsman then considered what such checks would likely have revealed based on available evidence, including bank statements and Mr P's income and expenditure assessment. The ombudsman concluded that reasonable checks would have shown Mr P had sufficient income to meet existing commitments, the new monthly repayments, and would have disposable income remaining. The ombudsman rejected Mr P's arguments about gambling and mental health issues, finding these would not have been discovered through proportionate checks and therefore would not have made the lending irresponsible. The ombudsman also found MotoNovo provided reasonable support through forbearance measures and that continued collection activities were justified given the arrears.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website