Secure Trust Bank Public Limited Company · DRN-6236361

The complaint Mr L complains that Secure Trust Bank Public Limited Company trading as Moneyway lent to him irresponsibly and failed to provide appropriate support when he struggled with the repayments. What happened In May 2022, Mr L applied for - and was given - a hire purchase agreement (HP) by Moneyway to acquire a used car. It was agreed on the following terms: Cash price of car Amount of credit Term Monthly repayment Total payable £8,974.50 £8,574.50 60 months £267.95 £16,487 On 20 December 2024, Mr L complained to Moneyway. He said that at the time he had a poor credit history including defaults and County Court Judgements (CCJ) and, as a result of an accident and another health issue, his income was “inconsistent and sporadic”. He said Moneyway had approved the HP “without conducting thorough affordability checks”. Mr L also complained about Moneyway’s admittance that it hadn’t treated him fairly. He supplied a copy of a letter from Moneyway which said it had identified that the support given to him while he was in arrears with his HP, “may not have always met the standards” it expected. Moneyway offered Mr L £110 in compensation, but Mr L said that was inadequate. Moneyway looked into Mr L’s complaint and issued a final response letter. It set out the information it had considered before reaching its decision to lend to him. It noted that when he applied for the HP, he’d told it he was employed full time, but, after falling into difficulties, he’d said he was self-employed and had problems with being paid. This led to his difficulties paying the HP. Moneyway was satisfied that it had reached a fair decision to lend and the HP was affordable at the time based on what it knew. It didn’t uphold the complaint. Mr L didn’t accept Moneyway’s response, so he referred his complaint to our service. One of our investigators looked into it. He said the checks Moneyway had conducted were reasonable and proportionate, and that it had reached a fair decision to lend to him. Mr L didn’t agree with our investigator, so the complaint has been passed to me to decide. 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, as I’ve said, I’ve reached the same outcome as our investigator, but I note that he didn’t deal with the second part of Mr L’s complaint, that is, how Moneyway treated him while he was in arrears. So I issued a provisional decision saying: “I’ll deal with the irresponsible lending aspect of the complaint first, and then move on to

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consider whether Mr L is due an increase in compensation for any unfairness in Moneyway’s treatment of him while he was in arrears. Irresponsible lending We’ve set out our approach to complaints about irresponsible and unaffordable lending on our website – including the key relevant rules, guidance, good industry practice and law. I’ve considered this approach when deciding this complaint. Moneyway needed to carry out reasonable and proportionate checks to ensure that it didn’t lend to Mr L irresponsibly. I think there are key questions I need to consider in order to decide what is fair and reasonable in the circumstances of this complaint: • Did Moneyway carry out reasonable and proportionate checks to satisfy itself that Mr L was in a position to sustainably meet the repayments? • If not, what would reasonable and proportionate checks have shown at the time? • Did Moneyway make a fair lending decision? • Did Moneyway act unfairly or unreasonably towards Mr L in some other way? Moneyway had to carry out reasonable and proportionate checks to satisfy itself that Mr L would be able to repay the HP sustainably. It’s not about it assessing the likelihood of it being repaid (sometimes referred to as credit risk), but it had to consider the impact of the repayments on him (affordability risk). There is no set list of checks that it had to do, but it could take into account several different things such as the amount and length of the HP, the amount of the repayments and the overall circumstances of the borrower. When he applied for the HP, Mr L told Moneyway that he was employed full time on a monthly income of £1,683 and had been with his employer for over six years. He lived with a partner and had two dependants. It is generally accepted that a business can accept what a consumer tells it unless it has reason to think it’s not true. Moneyway checked Mr L’s credit file and saw he had four defaulted accounts, three of which were more than two years old and can reasonably be considered as historic. One default was from nine months before this application. Moneyway hasn’t provided the actual data it saw at the time, but Mr L has provided a copy of his credit file from two well-known credit reference agencies. These both show that, as well as the more recent default, he also had a CCJ registered against him in April 2021. Moneyway used what Mr L had told it, his credit file and data supplied by the Office of National Statistics (ONS) to estimate his expenditure. It calculated his expenditure as being around £1,000 which meant he had a disposable income of £683 or so. I don’t think its figures are unreasonable as far as they go. I note that Moneyway didn’t record a figure for payments to other creditors which I understand because he had no active credit. But nonetheless, he did still have obligations to repay the defaulted accounts and the CCJ albeit perhaps in token amounts. All things considered, I think given what Mr L told it and what it found for itself, it wasn’t unreasonable for Moneyway to think Mr L could afford to meet repayments to this HP of £267 from his disposable income of £683. Ultimately, it was up to Moneyway to decide whether it wished to accept the credit risk of taking on Mr L as a customer, provided it was reasonably entitled to believe that the HP was affordable and unlikely to cause harm to him going forward.

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But I am concerned that Moneyway hasn’t mentioned the existence of the CCJ which was just a year before the application and that he subsequently defaulted on another agreement. Mr L hadn’t proven an ability to manage credit more recently as he didn’t have any. So on balance, I would have expected Moneyway to have done more in order to further understand Mr L’s financial situation. There is no set way for businesses to conduct further checks, but one way of doing so is to look at a consumer’s bank statements. To be clear, there is no obligation on businesses to request bank statements from applicants at the point of lending. In the course of assessing his complaint, Moneyway and this service have asked Mr L for copies of his bank statements. He has provided them for one of his accounts which shows numerous transfers between this account and another in his name. He has been asked to provide statements for the other account, but has not done so. The statements we do have show an account run exclusively in credit. There doesn’t appear to be any household bills – rent, council tax, utilities and the like – and the expenditure is largely discretionary. So it’s not possible to draw a firm conclusion about Mr L’s income and expenditure from the account statements provided as I don’t have a complete picture of Mr L’s income and expenditure. If the statements do represent a true and complete picture of his situation, then it seems to me that the agreement was affordable. It follows that I can’t say Moneyway’s calculations were inaccurate or that the HP was unaffordable for him. Did Moneyway act unfairly towards Mr L in some other way while he was in arrears? I’ve thought carefully about Mr L’s comments that Moneyway had treated him unfairly when he was in arrears. I’ve looked closely at the contact notes between him and Moneyway through the life of the agreement. Just before his first payment was due, Mr L contacted Moneyway to say he wouldn’t be able to make it. He asked for the payment date to be moved from 28th of the month to 5th. Mr L explained that this was required because he was self employed and pays himself at the beginning of the month. I note that this isn’t what he’d told Moneyway when he applied for the finance originally. Moneyway agreed to change the date and Mr L made payments in July and August 2022. But September’s payment was unpaid by his bank and he made no further payments at all. Moneyway wrote to Mr L several times following September's (and subsequent) missed payments, but did not hear from him until the end of December 2022. He explained that his business had been slow and his income low and sporadic, but he had made changes and was generating more business. He made the business aware of some health issues he’d experienced over the last year. Moneyway sought to find out more about his income and expenditure with a view to reaching an agreement with him, but Mr L said he needed to speak with his partner who was the main earner and said he’d call back the next day. Mr L didn’t call back so Moneyway called him on 4 January 2023. He said he still hadn’t spoken to his partner about their income and expenditure but would do so. Moneyway put a hold on the account and requested a call back by 7 January 2023. On 7January 2023 a plan was set for Mr L to restart the normal payments and pay an extra £89.32 towards the arrears, and change the payment date to 24th of the month. On 10 January 2023, Moneyway received an indemnity claim from Mr L’s bank regarding August 2022’s payment. This means that Mr L had told his bank the payment collected by direct debit was unauthorised and requested a refund. Under the direct debit scheme rules,

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Moneyway had to refund it, which had the effect of increasing the arrears. It also broke the plan that had been made to clear the arrears. No payments were made by Mr L and Moneyway made arrangements to recover the car. On 19 April 2023, Moneyway were advised that Mr L was seeking to return the car, but on 25 April 2024, he called to say his circumstances had changed and he wanted to keep it. He said he’d call back to go through his income and expenditure. Mr L didn’t call back until 21 June 2023 by which time the arrears were £3,277 and a plan couldn’t be reached. Ultimately, the car was repossessed and sold at auction on 27 March 2024. Looking at what’s gone on here, I don’t think Moneyway has treated Mr L unfairly. I say this because it tried to keep in touch with him following repayment problems. It agreed to hold the account for short periods, and agreed a plan to clear the arrears. But because no payments were received the plan failed. I know that following an internal review of his file, Moneyway felt it could have done more. It wrote to him in December 2024 and paid him £110. I’ve not seen anything which makes me think this should be increased. I realise my decision will come as a disappointment to Mr L but for the reasons I’ve already given, I don’t think Moneyway lent to him irresponsibly or otherwise treated him unfairly in relation to this matter. I haven’t seen anything to suggest that Section 140A of the Consumer Credit Act 1974 would, given the facts of this complaint, lead to a different outcome here.” Before going further, I need to correct the date of the CCJ I mentioned in my provisional decision – it was registered in January 2021 rather than April as I’d said. I apologise for that mistake, but I don’t think that makes a difference to the outcome I’ve reached. Moneyway hasn’t responded to my provisional decision, but Mr L has. He provided some further bank statements and says they demonstrate that “the income figure relied upon in the affordability assessment does not reflect a stable or verifiable source of income”. He said at the time he “applied for the finance agreement my financial situation was extremely unstable. My income was inconsistent and largely dependent on irregular self-employment work and other small amounts”. In summary, he said further checks would have revealed the HP to be unaffordable for him. He was silent on the second part of his complaint – his treatment while in arrears – so I won’t comment further on that. I’ve looked carefully at the new statements Mr L has provided. I agree with him that they don’t show the income he declared to Moneyway in his application. He would transfer in modest amounts – generally around £25 at a time – often a few times a day but not every day. He’d then use those funds for gambling. The account balance varied between zero and £300 or so. Looking at these statements alongside the ones he’d provided previously, I don’t think they add much to the picture I described in my provisional decision. They explain where some of the money transferred out of the other account went, but they don’t shed any more light on his income or committed expenditure and household costs. They don’t therefore help me to better understand whether he could afford the agreement or not. Mr L told us that his income was unstable. But when he applied to Moneyway, he told it he was full time employed and earned £1,683 per month. There is no indication from his application that his earnings were subject to fluctuation or that he was actually self- employed. Moneyway didn’t simply accept what he said at face value – it used an automated tool that is

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widely used in the industry and looks at current account turnover to verify consumer’s income. I don’t think it is unreasonable that it did so and accepted his declaration of income as a result. The point I made in my provisional decision was that I thought Moneyway ought to have looked at Mr L’s circumstances in more detail to confirm affordability. That could have been done through a variety of ways such as speaking with him about his expenditure and/or looking at his statements. As I’ve said in my provisional decision, the statements I saw at that time – and those provided now – do not show any household bills or much in the way of committed expenditure. On that basis, I don’t think Moneyway would have gained a true picture by looking at them. It would therefore likely have spoken to him about his expenditure and given that Mr L wanted or needed the car, I think it’s more likely than not that he’d have been able to satisfy it that the HP was affordable for him. Mr L hasn’t provided any evidence of his actual income and expenditure at the time of the application, but his discretionary spending through the account doesn’t lead me to think he was unable to afford the agreement. The credit agreement he signed says: “By signing this agreement you confirm that: • you can afford the monthly repayments; • you have told us if you are aware of (or it is reasonable to expect you to be aware of) any change in your future circumstances which could affect your ability to pay. Future circumstances could be, for example, a change in your employment status or your household income; • all information you have provided to us is true and correct;” So he confirmed that he could afford the HP and that shouldn’t change, and that he’d given Moneyway accurate information. While that doesn’t absolve Moneyway from conducting checks – and I think it should have done more - I don’t think doing so would have led it to think Mr L wouldn’t be able to afford the agreement. Mr L has accepted that lenders are generally entitled to rely on the information provided by the applicant. But it appears he is now seeking to say that Moneyway ought to have identified that what he told it wasn’t necessarily accurate. I have carefully considered all the information provided by each party to this complaint. Based on the information Moneyway obtained from Mr L, what it found itself and what it would likely have found had it taken further steps, I don’t think it acted unfairly when it agreed to lend to him. My final decision My final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr L to accept or reject my decision before 17 April 2026. Richard Hale Ombudsman

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