Not upheld: irresponsible lending / unfair credit relationship under s140A Consumer Credit Act 1974 complaint against Moneybarn No.1 Limited

Decision detail

Summary

Miss E complained that Moneybarn unfairly entered into a conditional sale agreement for a £7,840 car in April 2018 without carrying out adequate affordability checks, resulting in unaffordable repayments. Moneybarn had verified her income against payslips and conducted credit searches revealing multiple defaults but no CCJs. The ombudsman found that while Moneybarn's checks were not proportionate given the adverse credit information, analysis of Miss E's bank statements showed she had sufficient funds to make the £262.83 monthly payments after committed expenses. The complaint was not upheld as proportionate checks would have confirmed affordability, and Miss E's subsequent payment difficulties were managed through payment plans offered by Moneybarn.

The Ombudsman's reasoning

The ombudsman concluded that while Moneybarn's checks were not proportionate given the adverse credit information (multiple defaults), proportionate checks would have revealed that Miss E could afford the repayments. Analysis of Miss E's bank statements showed that after deducting committed regular living expenses and credit commitments from her income, she had sufficient funds remaining to make the monthly payments. The ombudsman noted that Miss E's current explanations about worse circumstances were made in support of a compensation claim, whereas at the time of sale she clearly wanted the car and considered it an appropriate purchase. The subsequent payment difficulties occurred after inception and were managed through payment plans, which did not indicate the lending was unfair at the outset.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website