Not upheld: irresponsible lending and unaffordable credit complaint against Moneybarn No.1 Ltd

Decision detail

Summary

Miss D complained that Moneybarn unfairly entered into a conditional sale agreement for a £5,000 car loan with a 39.9% APR and £198.12 monthly repayments, claiming the agreement was unaffordable. Moneybarn had verified Miss D's income through payslips, conducted credit searches, and completed an income and expenditure assessment showing sufficient funds remained after deducting £450 in non-discretionary expenses and existing commitments. The ombudsman found the lender's checks proportionate and concluded that even with additional scrutiny, the lending decision would not have changed, as Miss D's verified income supported the monthly repayments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Moneybarn's checks were proportionate given that it obtained verified income via payslips, Miss D's defaults were historic, and she was living with parents with stated non-discretionary expenditure of £450. When these costs were combined with credit commitments and deducted from verified income, sufficient funds remained for the monthly repayments of £198.12. The ombudsman noted that Miss D had confirmed the expenditure figures used and that Moneybarn was not required to obtain bank statements. Although the ombudsman acknowledged that more scrutiny could have been applied, it concluded this would not have led to a different lending decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website