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

Decision detail

Summary

Miss O complained that Moneybarn unfairly entered into a conditional sale agreement for a car in March 2019 without carrying out adequate affordability checks, resulting in unaffordable payments and ongoing hardship. Moneybarn had verified Miss O's income and conducted credit searches revealing recent defaults, but did not verify her actual living costs. The ombudsman found that while Moneybarn's checks were not proportionate given the adverse credit information and should have included verification of actual living expenses, Miss O failed to provide evidence that her actual living costs were significantly higher than Moneybarn's estimates or that the payments were unaffordable. Accordingly, the complaint was not upheld as there was insufficient evidence that more thorough checks would have revealed the lending to be irresponsible or the relationship to be unfair.

The Ombudsman's reasoning

The ombudsman acknowledged that Moneybarn's checks were not proportionate given the adverse credit information, as further steps should have been taken to verify actual living costs. However, the ombudsman found that the information provided by Miss O did not demonstrate that her actual living expenses were significantly higher than Moneybarn's estimates or that they made the payments unaffordable. Since Miss O proceeded with the agreement and did not correct Moneybarn's information, and given the absence of clear evidence that further checks would have revealed unaffordability, the ombudsman could not conclude that the lending relationship was unfair to Miss O.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website