BMW Financial Services (GB) Limited · DRN-6124464

The complaint Mr H complains about the termination of a hire agreement taken out with BMW Financial Services (GB) Limited trading as BMW Financial Services. What happened In April 2025, Mr H took out a hire agreement with BMW to acquire a brand new car. The car had a cash price of around £83,600 and was bought from a dealer by BMW. They then leased it to Mr H, who paid an advance rental of about £6,300. Mr H was then scheduled to make monthly rental payments of around £530 to BMW over a two year period. At the end of the following month, Mr H says he arranged for a family member, who I’ll call ‘X’, to be included on his insurance policy for the car. He says there was a family wedding, where he needed X to help with the travel arrangements. However, while X was driving the car, he was stopped by the police, who questioned if X had valid insurance cover in place. Subsequently, the police decided to seize the car and told BMW of their reasons. A few days after the car was seized, Mr H got in touch with BMW to try and sort things out. He gave them a copy of his insurance documents, to show where X was able to drive the car. He also provided BMW with a copy of his driving licence and a recent utility bill. But, BMW didn’t agree to return the car to Mr H. They said Mr H had breached the terms of the hire agreement, by loaning his car to a third party. They also said Mr H hadn’t updated his address with them and where it was the police who had informed them about the seizure of the car. BMW said that for all these reasons, they would terminate the hire agreement and hold Mr H responsible for the remaining rental payments due. The payment wasn’t made to BMW, and they went on to record adverse information on Mr H’s credit file. Mr H says this was unfair, as in his view he hadn’t done anything wrong. So, he made a complaint. BMW didn’t change their position in their final response and Mr H referred his complaint to this service. One of our investigators looked into Mr H’s case and found that BMW hadn’t treated Mr H fairly. She didn’t think it was reasonable for BMW to suggest Mr H had breached the terms of the hire agreement, because he had allowed a family member to drive the car. She also wasn’t persuaded Mr H had tried to mislead BMW in not updating his address. To put things right, the investigator asked BMW to refund the rental payments Mr H had made since the date the car was seized, and to refund a proportion of the advance rental payment. She also asked BMW to add interest to those amounts and to remove any adverse information from Mr H’s credit file. Finally, the investigator asked BMW to pay Mr H £300 for the distress and inconvenience he had experienced. Mr H accepted the investigator’s findings, but BMW didn’t. They reiterated their view that all the actions by Mr H, meant it was fair for them to decide that he had breached the terms of the hire agreement.

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The investigator didn’t change her conclusions and Mr H’s case has now been passed to me to make 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. Firstly, I’m very aware I’ve summarised this complaint very briefly, in less detail than has been provided, and largely in my own words. No discourtesy is intended by this. Instead, I’ve focussed on what I think is at the heart of the matter here. Namely, did BMW treat Mr H fairly when the hire agreement was terminated? If there’s something I’ve not mentioned, then I haven’t ignored it. I’ve not commented on every individual detail. I’ve focussed on those that are central to me reaching what I think is the right outcome. This reflects the informal nature of our service as a free alternative to the courts. This case is about a hire agreement in Mr H’s name taken out with BMW, which is a regulated financial product. As such, we are able to consider complaints about it. The seizure of the car BMW’s records show where the police initially had concerns about the insurance cover in place for X to be able to drive the car supplied to Mr H. This was the reason the car was seized, and I cannot see that any charges were brought against X for driving without insurance, or anything else. I can also see from those records where Mr H provided proof of where he says the X was insured to drive the car. This information was sent to BMW a few days after the car was seized. Having looked closely at the policy documents Mr H provided, I agree that X was a named driver on Mr H’s insurance policy, covering the relevant dates. Indeed, BMW have accepted X was insured to drive Mr H’s car and it appears the same can be said for the police. So, on balance, I’m persuaded neither Mr H, nor X had used the car in such a way that would mean it should have been seized. I accept the police had initial concerns and took the action they felt necessary at the time. But, I don’t think this means X or Mr H had done anything wrong. I accept where BMW say that the seizure of the car isn’t an everyday event. However, in the circumstances of Mr H’s Case, I don’t think it meant he had breached the terms of his contract. It then follows that I don’t think BMW could rely on what had happened as the sole reason to terminate the agreement. So, I’ve considered the other reasons BMW have outlined, to see if they have treated Mr H fairly. The termination of the agreement I’ve found that X was insured to drive Mr H’s car at the time it was seized. But, BMW say Mr H had loaned his car to X, which placed it outside of his control. In doing so, they say this meant Mr H had breached the terms of the hire agreement. From looking at BMW’s records and Mr H’s testimony, it doesn’t seem that BMW attempted

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to discuss the events, or reasons why X was driving the car before the agreement was terminated. I can see where Mr H has told us that X was a close family member, named on his insurance policy as a driver, who he’d asked to help at an important family gathering. On the face of it, the circumstances described by Mr H do not seem to reflect the loaning, or loss of control that the terms of the hire agreement imply. I say this because I’m not persuaded Mr H received payment or reward from X, for using the car. And the car wasn’t driven by an unknown third party to Mr H. I think this is supported by the short term nature of the insurance cover put in place by Mr H. I also need to keep in mind that the terms of Mr H’s agreement don’t require him to be in the car when it’s being driven. Afterall, it’s not unusual for car to be used by other family members for day to day reasons. In all the circumstances, I don’t think the use of the car by X, means Mr H breached the terms of the hire agreement. So, I think BMW treated Mr H unfairly by finding he had placed the car out of his control, and using that as a reason to terminate the agreement. Aside from Mr H allowing X to use the car, BMW also said Mr H breached his contract by not promptly updating his address with them. They say the address on the initial application for the hire agreement is different from the details on his driving licence. In a similar theme to the use of the car, I cannot see where BMW sought to engage with Mr H to discover the reasons behind the difference in the address details. Mr H says that at the time the car was seized, he was renovating his family home. So, he had been living elsewhere until the work was complete. To support what he says, Mr H provided BMW with a copy of a utility bill, suggesting he hadn’t moved house in the way that BMW had implied. I can see from that document where the address on the utility bill is consistent with BMW’s records for the agreement. Against this background, I don’t think Mr H was attempting to mislead BMW, or deliberately caused a delay in changing the address on his driving licence. So, I think it was unfair of BMW to use this as a reason to conclude that Mr H was in breach of the hire agreement. And similar to my previous conclusions, I think that means it was unfair of BMW to terminate the agreement. Initially, BMW told Mr H they had also terminated the agreement, because he hadn’t contacted them about the seizure of the car, before the police had notified them. BMW have since withdrawn that as a reason, which I think is fair. I say this because Mr H did make contact with BMW in a reasonable time frame and should not have suffered any negative reaction as a result. Moving forward and settlement According to our most recent information, the car at the heart of this case is being kept by BMW at the site of their recovery agent. It seems the car is being prepared for sale. In light of the time that has passed and that the hire agreement has been terminated, I agree with BMW, in that it may not be appropriate to start the agreement again and hand the car back to Mr H. Overall, I think ending the agreement and allowing Mr H to find another provider is the most fair outcome for all parties. With this in mind, I think it is fair for BMW to end their pursuit of Mr H for the remaining balance of the hire agreement. Mr H hasn’t had use of the car since 25 May 2025. So, I also think it’s fair for BMW to refund any rental payments made by Mr H since that date. Additionally, I’m aware that Mr H had the car for around a month, before it was seized and

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then kept by BMW. And that he made an advance rentals payment of £6,344.42. In the circumstances of my findings, I think it would be unfair for Mr H to pay this amount for about a month’s usage of the car. So, I think BMW should calculate any unused rentals from that advance payment and refund them to Mr H. Mr H has been without the use of the rental payments since the car was seized. So, I also think Close Brothers should add interest at 8% per year simple to the amounts refunded, from 25 May 2025, to the date of settlement of this complaint. In light of my conclusions about the termination of the agreement, I don’t think it’s fair for Mr H to suffer any negative impact as a result of not being able to make the full repayment due under the agreement. So, I think it’s fair and reasonable for BMW to remove any adverse information that’s been recorded about the hire agreement with credit reference agencies. Distress and inconvenience Mr H has told us that due to BMW’s actions, he encountered extreme difficulties with his personal and financial circumstances. I agree with the investigator and think Mr H was caused additional trouble, when he tried show BMW that he hadn’t breached the contract he had with them. I acknowledge all the difficulties Mr H has told us about and I can see where this has impacted his day to day life. I think the distress Mr H experienced was exacerbated by how BMW treated him. So, I think it’s fair for BMW to make a payment to Mr H to reflect the distress they caused. Having considered everything, I think it’s fair for BMW to pay Mr H £300 for the distress and inconvenience he experienced. Putting things right For these reasons, BMW Financial Services (GB) Limited trading as BMW Financial Services should: 1. End the pursuit of Mr H for the repayment of the balance of the hire agreement; 2. Refund to Mr H the monthly rentals he has paid since 25 May 2025; 3. Calculate the amount from the unused advance rentals payment, since 25 May 2025 and refund that amount to Mr H; 4. Add interest at 8% per year simple to the amounts refunded in parts two and three of this settlement, from the date each rental was paid, to the date of settlement of this complaint; 5. Remove any adverse information recorded with credit reference agencies about the hire agreement in Mr H’s name; and 6. Pay Mr H £300 for the distress and inconvenience he has experienced. BMW must pay these amounts within 28 days of the date on which we tell them Mr H accepts my final decision. If they pay later than this, they must also pay interest on the settlement amount from the date of final decision to the date of payment at 8% a year simple.

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If BMW deducts tax from any interest they pay to Mr H, they should provide Mr H with a tax deduction certificate if he asks for one, so he can reclaim the tax from the tax authorities if appropriate. My final decision My final decision is that I uphold this complaint and require BMW Financial Services (GB) Limited trading as BMW Financial Services, to put things right as set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr H to accept or reject my decision before 16 April 2026. Sam Wedderburn Ombudsman

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