Moneybarn No.1 Limited · DRN-6292028

Complaint Miss T complains that Moneybarn No.1 Limited (trading as “Moneybarn”) unfairly entered into a conditional sale agreement with him. She’s said proportionate checks weren’t carried out and she was provided with unaffordable finance. She’s also said that Moneybarn failed to disclose the commission that it paid to the credit broker that introduced her business and that this created an unfair relationship because of the impact this had on what she had to pay. Background In July 2015, Moneybarn provided Miss T with finance for a used car. The cash price of the vehicle was £7,540.00. Miss T paid a deposit of £400 and entered into a 60-month conditional-sale agreement with Moneybarn for the remaining £7,140.00 she required. The loan had interest, fees and total charges of £8,034.21 and the balance to be repaid of £15,174.21 (not including Miss T’s deposit) was due to be repaid in 59 monthly instalments of £257.19. Our investigators concluded that Moneybarn hadn’t done anything wrong or treated Miss T unfairly both in relation in deciding to lend to her, or paying commission to the credit broker. So the investigators didn’t recommend that Miss T’s complaint should be upheld. Miss T disagreed with our investigators’ assessments and asked for her complaint to be passed to an ombudsman for a final decision. My findings I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having carefully thought about everything I’ve been provided with, I’m not upholding Miss T’s complaint. I’ll now explain why in a little more detail and start by setting out my thoughts on Miss T’s affordability complaint. Did Moneybarn irresponsibly lend to Miss T? We’ve explained how we handle complaints about irresponsible and unaffordable lending on our website. And I’ve used this approach to help me decide Miss T’s complaint. Moneybarn needed to make sure that it didn’t lend irresponsibly. In practice, what this means is that Moneybarn needed to carry out proportionate checks to be able to understand whether Miss T could make her payments in a sustainable manner before agreeing to lend to her. And if the checks Moneybarn carried out weren’t sufficient, I then need to consider what reasonable and proportionate checks are likely to have shown. Our website sets out what we typically think about when deciding whether a lender’s checks were proportionate. Generally, we think it’s reasonable for a lender’s checks to be less

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thorough – in terms of how much information it gathers and what it does to verify that information – in the early stages of a lending relationship. But we might think it needed to do more if, for example, a borrower’s income was low, the amount lent was high, or the information the lender had – such as a significantly impaired credit history – suggested the lender needed to know more about a prospective borrower’s ability to repay. Moneybarn says it agreed to this application after it completed an income and expenditure assessment on Miss T. During this assessment, Miss T provided details of her monthly income which it verified against copies of payslips that it asked her to provide. Moneybarn says it also carried out credit searches on Miss T. These showed that she had defaulted accounts (but no county court judgments) recorded against her with the most recent occurrence being just over six months prior to this application. Nonetheless, in Moneybarn’s view, when reasonable repayments to the amount Miss T already owed plus a reasonable amount for Miss T’s living expenses were deducted from her monthly income, enough was left over for her to make the monthly payments for this agreement. On the other hand, Miss T says that these repayments were unaffordable and she shouldn’t have been lent to. I’ve thought about what Miss T and Moneybarn have said. The first thing for me to say is that bearing in mind the term of the agreement, its total cost and Miss T’s previous difficulties with credit, I’m satisfied that Moneybarn needed to take further steps to ascertain Miss T’s actual living costs, rather than assuming Miss T’s living expenses in order for its checks to have been proportionate here. Moneybarn did not do this, so I’m satisfied that its checks before lending in this instance weren’t proportionate. At this point, given I’ve agreed that the checks weren’t proportionate, I think that it might be helpful for me to explain that my conclusion that the Moneybarn didn’t do enough to establish whether the repayments were affordable, doesn’t, on its own, meant that Miss T’s complaint should be upheld. This is because we would usually only go on to uphold a complaint in circumstances were we are able to recreate what reasonable and proportionate checks are likely to have shown – typically using information from the consumer – and this clearly shows that the repayments in question were unaffordable. I therefore considered whether that is the case here. As I’ve explained, given the circumstances here, I would have expected Moneybarn to have had a reasonable understanding about Miss T’s regular living expenses as well as her income and existing credit commitments. However, Miss T says she is unable to provide us with the information we’ve asked her for in order to be able to assess what Moneybarn finding out more about her living costs is likely to have shown. So I’ve not been provided with sufficient evidence to be able to ascertain Miss T’s committed living expenditure, which is what I think that Moneybarn needed to find out about when deciding whether to lend. As this is the case, while I accept the possibility that Moneybarn finding out more about Miss T’s actual living costs may have seen it reach the conclusion that this agreement was unaffordable, I’ve not been provided with anything to support this more likely than not being the case. I’m afraid that I’m unable to uphold the complaint on the basis of a bare assertion that the agreement was unaffordable, in circumstances where the customer did as a matter of fact make the payments that they were required to.

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In reaching my conclusions, I’ve also considered whether the lending relationship between Moneybarn and Miss T might have been unfair to Miss T under section 140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve explained, I don’t think Moneybarn irresponsibly lent to Miss T or otherwise treated her unfairly in relation to this matter. And I haven’t seen anything to suggest that section 140A CCA or anything else would, given the facts of this complaint, lead to a different outcome here. Overall and having carefully considered everything, while I think that Moneybarn ought to have applied a bit more scrutiny to the information it obtained and found out a bit more about Miss T before entering into this conditional-sale agreement with her, I’ve not been persuaded that Moneybarn doing this would have prevented it from providing these funds, or entering into this agreement with her. I’ll now turn to Miss T’s complaint regarding the commission Moneybarn paid to the credit broker that introduced her. Miss T’s complaint about commission In the joined cases of Hopcraft, Johnson & Wrench1, the Supreme Court considered how the law applies to motor finance commission related claims. Broadly speaking, the Supreme Court concluded that the relationship between a motor finance lender and a consumer could sometimes be unfair to the consumer (under S140 CCA) in circumstances where neither the credit broker nor the lender disclosed that: • there was a discretionary commission arrangement (“DCA”) – an arrangement where the commission paid was linked to the loan interest rate and the car dealer/credit broker had the discretion to set a higher interest rate to receive more commission. • the credit broker would receive a high commission relative to the cost of credit or amount borrowed. • the credit broker was required to select the lender in preference to other lenders the credit broker could offer. This is sometimes referred to as a commercial tie or a right of first refusal. In this case, Moneybarn has provided evidence to show that it paid Miss T’s credit broker a total commission of £330. The agreement that Moneybarn had with Miss T’s credit broker was that £330 would be paid for each customer introduced that went on to take out a conditional sale agreement. I know that Miss T has said that she wasn’t told about this commission and that she has referred to Moneybarn acting unfairly as a result. In effect, Miss T’s complaint is essentially that the undisclosed commission payment of £330 that Moneybarn paid to her credit broker, resulted in the lending relationship between Moneybarn and her being unfair to her under Section 140 of The Consumer Credit Act 1974 (“S140 CCA”). While I’ve not been provided with sufficient evidence to be persuaded the existence of commission, which in this case was £330, was disclosed to Miss T, I nonetheless consider it is unlikely – and certainly less likely than not – that a court would find that the commission 1 Hopcraft and another (Respondents) v Close Brothers Limited (Appellant); Johnson (Respondent) v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance (Appellant); Wrench (Respondent) v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance (Appellant) [2025] UKSC 33

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rendered the lending relationship between Moneybarn and Miss T unfair to Miss T under S140 CCA. And I am not persuaded that Moneybarn failed to act fairly and reasonably in all the circumstances of this matter. I consider this to be the case because: • the commission of £330 did not involve a DCA. So the credit broker did not have discretion to set Miss T’s interest rate. • I think it less likely than not that a court would consider the £330 commission payment to be high when compared to the amount Miss T borrowed, or the cost of the agreement Miss T entered into. I think it unlikely that this commission of £330 would have been a major consideration in Miss T’s mind, had it been disclosed to her at the time of entering into the conditional sale agreement, when the commission payment represented less than 5% of the amount she borrowed and around 4% of the total cost of the credit. • I think it less likely than not that a court would consider that a commercial tie existed between Miss T’s credit broker and Moneybarn. In reaching this view, I have reviewed a range of contracts and agreements that Moneybarn had with various brokers over several years. I have seen nothing in any of these agreements indicating that Moneybarn had contractual ties with any of the credit brokers that it worked with. I consider this to be consistent with Moneybarn’s position within the market as a lender serving customers that typically find it difficult to obtain credit from more mainstream lenders and have less choice as a result and the public explanation its Chief Executive Officer made to the stock market about it not operating commercial ties. In this context, I’ve not seen anything to support an argument that a commercial tie existed between Moneybarn and the credit broker. I’ve noted what Miss T has said about not being able to easily access credit elsewhere and the cost of the credit on this agreement being high. However, Miss T has said she didn’t have many other options, the cost of the credit was set out and I’ve not been persuaded that the finance was unaffordable for her. In these circumstances, it’s unclear to me how or why knowing about the commission would have seen it become a major consideration in Miss T’s mind, or led to her reaching a different conclusion on entering into this agreement in the way she now seeks to argue. This is particularly bearing in mind what I’ve already said about a DCA not being involved in this case and therefore there was no clear and direct link between the commission and the interest that Miss T agreed to pay as a result of choosing to enter into this agreement. Overall, I’ve not been persuaded that the commission Moneybarn paid to the credit broker that introduced Miss T’s business means that it failed to act fairly and reasonably towards her. So I’ve not been persuaded to uphold Miss T’s commission complaint either. Having carefully considered everything, I’m satisfied that Moneybarn didn’t act unfairly towards Miss T when it entered into this conditional sale agreement with her. And I’m not upholding this complaint. I appreciate that this will be very disappointing for Miss T – especially as she clearly feels strongly about her complaint and it has taken some time for her receive a decision. But I hope she’ll understand the reasons for my decision and that she’ll at least feel her concerns have been listened to. So I’m not upholding this complaint. I appreciate that this will be very disappointing for Miss T. But I hope that Miss T will understand the reasons for my decision and that she’ll at least feel her concerns have been listened to.

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My final decision My final decision is that I’m not upholding Miss T’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss T to accept or reject my decision before 15 May 2026. Jeshen Narayanan Ombudsman

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