Moneybarn No.1 Limited · DRN-6232925

The complaint MONEYBARN NO.1 LIMITED trading as Moneybarn provided Mr C with a conditional sale agreement to purchase a car in 2022. The car price was £11,190 and he paid a deposit of £2,500, Mr C borrowed £8,690 and the monthly repayments were £288.94, making a total to repay over the 59 month term of £19,547.46. Mr C says the credit was provided irresponsibly. What happened The details of this complaint are well-known to both parties, so I won’t repeat them again here. The facts aren’t in dispute, so I’ll focus on giving the reasons for my decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having considered everything, I’m upholding Mr C’s complaint. I’ll explain my reasoning below. We’ve set out our general approach to complaints about unaffordable or irresponsible lending on our website, and I’ve taken this into account in deciding Mr C’s case. I’ve decided the credit wasn’t provided fairly because: I don’t think the checks Moneybarn did before providing the credit were reasonable and proportionate given the credit limit it offered and what it knew about Mr C’s financial situation. Mr C told Moneybarn that he was employed with a monthly income of about £2,100. Moneybarn verified Mr C’s income using a tool provide by a credit reference agency, I think this was reasonable. He was a tenant and in rented accommodation. Moneybarn looked at Mr C’s credit file and found out that he had modest credit balances, and he was paying around £80 a month to these. And it used statistical information to estimate his other monthly expenses, which it thought were about £1,420 a month. So, it thought the lending was affordable for Mr C. But Moneybarn also saw in the credit file information that Mr C had some credit repayment problems in the recent past. It also knew he’d entered an Individual Voluntary Arrangement (IVA) around ten months ago as he wasn’t able to repay the credit he had. This information also showed Mr C had nine defaults, the most recent being recorded five months before the lending. Mr C was repaying the amounts he had defaulted on. The credit problems that Moneybarn saw are potentially enough in themselves to say that it shouldn’t have lent. But I think, in this situation, a proportionate check would have needed to

-- 1 of 3 --

show that these problems were not still ongoing and why this was. The checks Moneybarn made don’t show this. If Moneybarn had done proportionate checks, I think it’s likely these would have shown it was unfair to provide the credit to Mr C. This is because, based on the information Mr C has provided about his circumstances at the time, it should have realised Mr C was likely to be unable to sustainably repay what he was being lent. Our Investigator used Mr C’s bank accounts and credit file information to show that he was already spending most of his income before the lending and he wouldn’t have enough left over to repay the new agreement. The calculations our Investigator has made seem reasonable and I agree with them. Moneybarn has said that more emphasis should have been placed on some of the joint expenditures and only a proportion of these should be assessed as being paid for by Mr C. But Mr C’s bank account does show that he paid these amounts, and he confirmed that he was fully responsible for them. And taking a step back from this I don’t think the information I have, shows that Mr C’s situation had changed or improved to the degree it would have been reasonable to lend. Mr C had clearly been in a precarious financial situation in the recent past when he started the IVA, there is very little to show things had improved for him. It’s worth noting that Mr C asked for a repayment break in November 2023 which Moneybarn didn’t agree to. Mr C began to have problems repaying the agreement shortly after this and he couldn’t make up the arrears. The agreement was voluntarily terminated in May 2024. Mr C continues to repay a much lower amount against what he still owes. I think this supports that the loan was unaffordable for Mr C This means I don’t think Moneybarn should have provided the conditional sale agreement to Mr C. I’ve considered whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. However, I’m satisfied the redress I’m awarding in this case, as set out below, results in fair compensation for Mr C in the circumstances of this complaint. I’m therefore satisfied, based on what I’ve seen, that no additional award would be appropriate in this case. Putting things right Where Moneybarn has made an error, our service would usually aim to put the customer back in the position they’ve would’ve been in had the error not occurred. However, in cases where a business has lent irresponsibly this isn’t entirely possible, as the lending provided cannot be undone. I don’t think Moneybarn ought to have approved the lending, so I don’t think it’s fair for it to be able to charge any interest or charges under the agreement. But Mr C did have use of the car for around 20 months, so I think it’s fair he pays for that use. But I’m not persuaded that monthly repayments of over £288 a month are a fair reflection of what fair usage would be. This is because a significant proportion of those repayments went towards repaying interest.

-- 2 of 3 --

There isn’t an exact formula for working out what a fair monthly repayment would be to reflect Mr C’s usage. But in deciding what’s fair and reasonable I’ve thought about the amount of interest charged on the agreement, Mr C’s likely overall usage of the car and what his costs to stay mobile would likely have been if he didn’t have this car. In doing so I think a fair amount Mr C should pay is £187 for each month he had use of the car. This means Moneybarn can only ask him to repay a total of £3,740. To settle Mr C’s complaint Moneybarn should do the following: • Refund the deposit, adding 8% simple interest per year* from the date of payment to the date of settlement. • Moneybarn should calculate how much Mr C has paid in total and deduct £3,740 for fair usage. If Mr C has paid more than the fair usage figure, Moneybarn should refund any overpayments, adding 8% simple interest per year* from the date of payment to the date of settlement. • Remove any adverse information recorded on Mr C’s credit file regarding the agreement. • If there are any amounts owing after the settlement has been calculated, Moneybarn should arrange an affordable repayment plan. And treat Mr C with forbearance and due consideration. *HM Revenue & Customs requires Moneybarn to take off tax from this interest. Moneybarn must give Mr C a certificate showing how much tax it’s taken off if Mr C asks for one. My final decision My final decision is that I’m upholding this complaint and MONEYBARN NO.1 LIMITED must put things right as I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 27 April 2026. Andy Burlinson Ombudsman

-- 3 of 3 --