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

Decision detail

Summary

Miss M complained that Novuna irresponsibly lent to her by approving two personal loans in February and March 2022 for flooring and shutters/blinds totalling approximately £6,688. Miss M later experienced payment difficulties, entering into eight payment plans with Novuna, and disclosed during investigation that she had been experiencing serious mental health difficulties and caring responsibilities at the time of borrowing. The ombudsman found that Novuna carried out reasonable and proportionate checks, including income verification through a credit reference agency, rental cost estimation, and use of ONS data for expenditure, and that the loans appeared affordable based on the information gathered. Although Miss M's actual financial situation was worse than the information indicated, the ombudsman concluded that Novuna was not required to conduct more detailed analysis and was entitled to rely on the information obtained, and that Novuna could not be expected to consider undisclosed mental health difficulties. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Novuna carried out proportionate checks appropriate to the circumstances, including verification of declared income through a credit reference agency service, estimation of rental costs using a rental model, and use of ONS data for other expenditure. The information gathered suggested Miss M had sufficient disposable income to afford the loans. Although Miss M's actual financial situation may have been worse than the information indicated, the ombudsman considered the checks reasonable and the reliance on the information obtained to be justified. The ombudsman noted that more forensic analysis might have revealed Miss M's true position, but this was not required given the proportionate nature of the checks and the size of the repayments. The ombudsman also found that Novuna could not be expected to consider Miss M's undisclosed mental health difficulties and caring responsibilities when making the lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website