Moneybarn No.1 Limited · DRN-6180555

Complaint Miss S complains that Moneybarn No.1 Limited (“Moneybarn”) failed to act fairly and reasonably towards her when entering into a conditional sale agreement with her. She’s said that Moneybarn failed to disclose the commission it paid to the motor dealer that introduced her to Moneybarn and that this created an unfair relationship because of the impact this had on the interest she had to pay. Miss S has used a representative to make her complaint. For ease of reference, I’ll refer to Miss S throughout this final decision. Background Miss S has also complained that Moneybarn irresponsibly entered into the conditional sale agreement with her as proportionate checks would have shown that the agreement was unaffordable for her. We’ve already separately provided Miss S with our thoughts on her affordability complaint. Therefore, this decision is only looking at the commission aspect of her complaint. In July 2016, Miss S sought finance in order to acquire a used car. The purchase price of the car was £7,193.06. Miss S paid a deposit of £100 and entered into a conditional sale agreement with Moneybarn for the remaining £7,093.06 she required to complete her purchase. The agreement had a term of 60 months and had interest charges of £7,231.55. This meant that the balance to be repaid of £14,324.61 (which didn’t include Miss S’ deposit) was due to be repaid in 59 monthly instalments of £242.79. Miss S’ complaint was considered by one of our investigators who thought that Moneybarn hadn’t unfairly paid Miss S’ motor dealer commission for introducing her business. So she didn’t recommend that Miss S’ commission complaint should be upheld. Miss S disagreed with our investigator and the complaint was 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 considered everything, I’ve decided not to uphold Miss S’ complaint. I’ll explain why in a little more detail.

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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 car dealer 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 broker/motor dealer had the discretion to set a higher interest rate to receive more commission. • the car dealer would receive a high commission relative to the cost of credit or amount borrowed. • the car dealer was required to select the lender in preference to other lenders the car dealer 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 S’ motor dealer a total commission of £408.50. The agreement that Moneybarn had with Miss S’ motor dealer was that £150 would be paid for each customer introduced that went on to take out a conditional sale agreement. A further £258.08 was paid as a result of the volume of business that this broker introduced to Moneybarn. I know that Miss S has said that she wasn’t told about this commission and that she has referred to a number of instances of Moneybarn breaching its obligations. In effect, Miss S’ complaint is essentially that the undisclosed commission payment of £408.50 that Moneybarn paid to her motor dealer, 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 £408.50, was disclosed to Miss S, I nonetheless consider it is unlikely – and certainly less likely than not – that a court would find that the commission rendered the lending relationship between Moneybarn and Miss S unfair to Miss S 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 £408.50 did not involve a DCA. So the motor dealer did not have discretion to set Miss S’ interest rate. • I think it less likely than not that a court would consider the £408.50 commission payment to be high when compared to the amount Miss S borrowed, or the cost of the agreement Miss S entered into. I think it unlikely that this commission of £408.50 would have been a major consideration in Miss 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 6% of the amount she borrowed and less than 6% 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 S’ motor dealer and Moneybarn. In reaching this view, I have reviewed 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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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 motor dealers 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 motor dealer. I’ve noted what Miss S has said about not being able to easily access credit elsewhere and the cost of the credit on this agreement being high. However, Miss S has said she didn’t have many other options, the cost of the credit was set out and I’ve not seen 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 S’ mind, or led to her reaching a different conclusion on entering into this agreement in the way that 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 S agreed to pay as a result of choosing to enter into this agreement. Overall and having carefully considered everything, I’ve not been persuaded that the commission Moneybarn paid to the motor dealer that introduced Miss S’ business means that it failed to act fairly and reasonably towards her. And I’ve not been persuaded to uphold Miss S’ complaint. I appreciate that this will be disappointing for Miss S. But I hope she’ll understand the reasons for my decision and at least consider that her concerns have been listened to. My final decision My final decision is that I’m not upholding Miss S’ complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss S to accept or reject my decision before 25 May 2026. Jeshen Narayanan Ombudsman

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