Not upheld: Irresponsible lending complaint against Mitsubishi Capital UK PLC (trading as Novuna Personal Finance)

Decision detail

Summary

Miss D complained that Novuna irresponsibly provided her with a £3,000 personal loan in September 2024 when she could not afford it, citing existing debt and overdraft use. Novuna had obtained Miss D's income declaration, verified it through credit reference agencies, conducted a credit search showing well-maintained existing commitments, and estimated living costs using statistical data. The ombudsman found that Novuna's checks were proportionate for the early stage of a lending relationship and that the information gathered suggested affordability. Even if Novuna should have obtained more detailed information about actual living costs, there was no evidence this would have changed the lending decision. The complaint was not upheld, though the ombudsman reminded Novuna to exercise forbearance if Miss D experienced future payment difficulties.

The Ombudsman's reasoning

The ombudsman found that Novuna conducted reasonable checks proportionate to the early stage of the lending relationship. The lender obtained information about income, verified it through electronic checks, and conducted a credit search. Even if Novuna should have obtained more detailed information about Miss D's actual living costs, there was no persuasive evidence that this would have revealed the loan to be unaffordable. The ombudsman rejected the argument that Novuna should not have lent due to Miss D's overdraft use, noting that borrowers are not prohibited from using overdrafts and that the loan proceeds could have been used to reduce overdraft reliance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website