Not upheld: irresponsible lending and undisclosed commission complaint against Moneybarn No.1 Limited

Decision detail

Summary

Mr M complained that Moneybarn unfairly entered into a conditional sale agreement for a £14,210.62 car in March 2017, claiming proportionate affordability checks were not carried out and that an undisclosed £500 commission paid to his credit broker created an unfair relationship. The ombudsman found that while Moneybarn's checks may not have been fully proportionate, Mr M provided no clear evidence the £480.46 monthly payments were unaffordable. Regarding the commission, the ombudsman applied the Supreme Court's Hopcraft test and found the fixed £500 payment (less than 9.5% of the loan amount) did not involve a discretionary arrangement, was not high, and no commercial tie existed between the broker and lender. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman acknowledged that Moneybarn's affordability checks were not fully proportionate as insufficient detail was provided about what the checks showed. However, the ombudsman found that Mr M failed to provide clear evidence that the monthly payments were unaffordable, and that any explanations provided would have been made to persuade Moneybarn to lend rather than to highlight unaffordability. Regarding the commission, the ombudsman applied the Supreme Court's test from Hopcraft and found that the £500 fixed commission did not involve a discretionary commission arrangement, was not high relative to the amount borrowed (less than 9.5%), and there was no evidence of a commercial tie between the broker and Moneybarn.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website