Mitsubishi HC Capital UK PLC · DRN-6152395

The complaint Ms C complains Mitsubishi HC Capital UK PLC trading as Novuna Personal Finance (Novuna) failed to carry out thorough enough financial checks before it approved a loan for her. What happened Ms C says Novuna approved a loan of £10,000 for consolidation purposes in May 2025. Ms C says if Novuna had carried out more robust and proportionate affordability checks, it would have seen she was reliant on credit over many years and her credit file would have shown this. Ms C says Novuna failed to identify her financial vulnerability and her ongoing financial difficulty. Ms C says she is registered disabled and suffers with her mental health and Novuna’s actions here have made her financial situation worse. Novuna says before it approved the loan it carried out financial checks using information from Ms C’s application, credit reference agencies (CRA’s) and other external sources. Novuna says these checks showed no evidence of financial stress such as defaults, credit arrangements, CCJ’s that demanded any further financial information. Novuna pointed out the loan was used for existing debt consolidation and its affordability checks indicated the new loan was affordable. Novuna says the checks it undertook were reasonable and proportionate and its decision to lend was fair. Ms C wasn’t happy with Novuna’s response and referred the matter to this service. The investigator looked at all the available information but didn’t uphold the complaint. The investigator pointed out there are no set list of checks lenders like Novuna must undertake before it approves credit but these should be borrower focused. The investigator felt while Novuna had carried out financial checks using external credit sources, he didn’t feel these were proportionate given the level of external debt Ms C had at the time of the application. So the investigator looked at the bank statements Ms C provided at the time of her complaint to Novuna, and these showed her income matched what Novuna had used in its affordability assessment of around £2,386 per month. The investigator also calculated Ms C’s average expenditure to be around £1,812 per month and while after allowing for the new loan payments of £269 per month, only left around £300 per month for essential expenditure, this didn’t take into account the cost savings of the debt consolidation exercise. So with that in mind the investigator felt the new loan was affordable and Novuna’s decision to lend was fair. The investigator acknowledged while Ms C had a disability and other health issues, Novuna weren’t made aware of this at the time of the loan application. Ms C didn’t agree with the investigator’s view and asked for the matter to be referred to an

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ombudsman for a final 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 done so, I won’t be upholding this complaint and I will explain how I have come to my decision. I was sorry to learn Ms C is experiencing financial difficulties and this must be a challenging time for her. When looking at this complaint I will consider if Novuna acted irresponsibly when it approved a loan of £10,000 for Ms C in May 2025. Ms C’s complaint centres around her view that Novuna failed to carry out robust enough financial checks before it approved a loan for her in May 2025. Ms C says if Novuna had done so, it would have seen a pattern of vulnerability with long standing debts and her reliance on credit to make ends meet. Ms C makes the point Novuna’s decision to lend has made her financial situation worse and she is now in a debt arrangement scheme. While I understand the points Ms C makes here, I’m not fully persuaded by her argument and I will go on to explain why. Both Ms C and Novuna have provided this service with comprehensive details of the course of events here and while that has proved helpful, I won’t be commenting on every point made as I don’t feel it’s necessary in order to come to a full and impartial decision here. That’s not to say I haven’t considered everything that’s been said – I have. But it’s just that I don’t need to comment on each individual point here in order to reach a decision on what’s fair and reasonable. As the investigator has pointed out there are no set list of checks lenders like Novuna must carry out before approving credit facilities, but these should be borrower focused taking into account the amount, type, term and cost of any borrowing. I should say here it’s not for me to tell Novuna what those checks must consist of, or from what sources those checks should come from. While I was sorry to hear of Ms C’s health issues, I can’t see that Novuna were ever made aware of that before the new loan was approved. From the information I have seen before Novuna approved the loan for £10,000 over five years, it undertook financial checks using information and data obtained from Ms C’s credit application, CRA’s and other industry standard financial tools. I can see from those checks Novuna verified Ms C’s income to be around £2,318 per month, much in line with what she declared in her credit application. From this data this showed Ms C had existing debt commitments totalling around £1,280 per month, along with her proportion of mortgage costs of £230 per month. So here Novuna calculated, after paying for this new loan, Ms C would be left with around £540 per month to meet her essential monthly expenditure, which it says is in line with industry acceptable guidelines. Novuna emphasised it hadn’t allowed for the savings Ms C would have gained from the consolidation and repayment of existing debt that this loan was provided for, so further net disposable income would have been available.

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Novuna also says from the CRA information it had seen there were no signs of any obvious financial stress such as CCJ’s, defaults, missed payments or payment arrangements and while Ms C had existing debts these had been well managed. To get a better understanding of Ms C’s financial position I asked for a copy of her credit file, and I also looked at her bank statements for the months preceding the time the loan was approved Ms C’s full credit report shows that at the time the loan was approved she had been managing her existing credit commitments well with no missed payments evident, no CCJ’s or any evidence of any obvious financial pressure. So while Ms C may not agree while there was evidence of external borrowing, there wasn’t any signs of any obvious financial stress as she maintains. I have also considered Ms C’s bank statements before the loan was approved by Novuna, but again there is nothing that stands out as showing any obvious financial issues such as unpaid items, hardcore overdraft borrowing. In fact arguably Ms C’s accounts looked well managed with separate accounts used to pay essential bills and evidence of some savings leading up to the time the loan was approved. Those bank statements shows Ms C’s average net monthly income for the preceding three months was actually £2,386 per month, slightly higher than what Novuna had used in its affordability assessment. As a result this meant after allowing for Ms C’s loan costs and mortgage share, she would be left with around £876 per month to meet the new loan of £269 per month leaving her with a net disposable income of around £600 per month for her essential living costs. What should also be considered here is these calculations don’t take into account any savings Ms C would have benefited from, if the loan was used to clear existing debts as intended. With that in mind I’m satisfied and on balance, the loan looked affordable with a reasonable amount each month to meet essential expenditure and a margin for any unforeseen costs going forward. With that in mind I’m satisfied even if Novuna had requested sight of these statements it would have in all probability still approved the loan. I’ve also considered whether Novuna acted unfairly or unreasonably in some other way given what Ms C has complained about, including whether its relationship with her might have been unfair under s.140A Consumer Credit Act 1974. However, for the same reasons I have set out above, I’ve not seen anything that makes me think this was likely to have been the case. While Ms C will be disappointed with my decision I won’t be asking anymore of Novuna. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms C to accept or reject my decision before 27 April 2026. Barry White Ombudsman

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