BMW Financial Services (GB) Limited · DRN-6224821

The complaint Mr G is unhappy that a car supplied to him under a hire purchase agreement with BMW Financial Services (GB) Limited (‘BMWFS’) was of an unsatisfactory quality. What happened In March 2025, Mr G was supplied with a used car through a hire purchase agreement with BMWFS. He paid an advance payment of £600, and the agreement was for £21,500 over 48 months; with 47 monthly payments of £399.10 and a final payment of £11,586.17. At the time of supply, the car was around four years old and had done 24,017 miles (according to the agreement). The agreement also limited the car to a maximum of 6,000 miles a year. Mr G had issues locking the car, and he complained to the supplying dealership. While he asked to be able to reject the car, the dealership said they had the right of repair. So, Mr G complained to BMWFS. He explained that he didn’t trust the dealership to complete the repair, and he also raised issues with the gearbox and about a delay in the V5C being registered. The car was inspected, but no fault with the locking system or gearbox could be found. And the V5C was issued in May 2025. So, BMWFS didn’t uphold the complaint. Unhappy with what had happened, Mr G brought his complaint to the Financial Ombudsman Service for investigation. Our investigator said that an issue with soot build-up within the diesel particulate filter (‘DPF’) had been identified when the car was inspected in April 2025, but this didn’t mean there was a fault, this was how the DPF was meant to function, and Mr G was aware of what was needed to allow the DPF to regenerate – driving at a constant speed for a set time period to allow the DPF to burn off the soot i.e. regular motorway driving. However, as there was no evidence of any fault with the car, the investigator said Mr G didn’t have the 30-day short-term right to reject the car. They also said that, although Mr G had said there was now evidence of an issue with an incorrect tyre which was throwing out a gearbox sensor, this had not been provided to us. So, the investigator didn’t think this changed matters. Finally, the investigator said that the delay with the issuing of the V5C was likely down to the DVLA, and, as Mr G hadn’t made any payments towards the car, BMWFS were entitled to issue a default notice and report the missed payments to the credit reference agencies. So, they didn’t think BMWFS needed to take any further action. Mr G didn’t agree with the investigator’s opinion. He said that BMWFS had issued 10 default notices, including two for the V5C not being in his name, and two for the insurance – due to the need to maintain the DPF, the mileage on his insurance policy wasn’t sufficient so he cancelled the policy. However, due to the defaults due to non-payment, he was unable to pay for a new insurance policy by monthly instalments and couldn’t afford to pay it as a lump sum, so a family member insured the car instead.

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Mr G provided evidence of his correspondence with the dealership about his complaint, as well as evidence of the locking issues with the car. BMWFS issued another complaint response letter, relating to Mr G’s complaint that the car had been mis-sold to him due to the need to regenerate the DPF on a regular basis. They also didn’t uphold this complaint. As Mr G hadn’t made any payments towards the car, and as BMWFS had issued a number of default notices, BMWFS terminated the agreement in September 2025 and repossessed the car. The investigator issued a revised view, stating there was an issue with the locking system on the car, and that this had been present since the point of supply. They also said that Mr G had asserted his short-term right to reject the car, so BMWFS should treat the repossession as being a rejection. The investigator also said that BMWFS should pay Mr G £400 for the distress and inconvenience he’d been caused. BMWFS didn’t agree with the investigator, saying that Mr G signed to say he had been provided with two keys for the car, so video evidence just showing one key didn’t work wasn’t sufficient to allow him to reject the car. Mr G also didn’t agree, as he didn’t think the recommended compensation was sufficient for what had happened, especially as the defaults affected his ability to obtain further credit. As neither party agreed with the investigator, this matter 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, I’ve reached the same overall conclusions as the investigator, and for broadly the same reasons. If I haven’t commented on any specific point, it’s because I don’t believe it’s affected what I think is the right outcome. Where evidence has been incomplete or contradictory, I’ve reached my view on the balance of probabilities – what I think is most likely to have happened given the available evidence and wider circumstances. In considering this complaint I’ve had regard to the relevant law and regulations; any regulator’s rules, guidance and standards, codes of practice, and (if appropriate) what I consider was good industry practice at the time. Mr G was supplied with a car under a hire purchase agreement. This is a regulated consumer credit agreement which means we’re able to investigate complaints about it. The Consumer Rights Act 2015 (‘CRA’) says, amongst other things, that the car should’ve been of a satisfactory quality when supplied. And if it wasn’t, as the supplier of goods, BMWFS are responsible. What’s satisfactory is determined by things such as what a reasonable person would consider satisfactory given the price, description, and other relevant circumstances. In a case like this, this would include things like the age and mileage at the time of sale, and the vehicle’s history. The CRA also implies that goods must confirm to contract within the first six months. So, where a fault is identified within the first six months, it’s assumed the fault was present when the car was supplied, unless BMWFS can show otherwise. So, if I thought the car was faulty when Mr G took possession of it, and this made the car not of a satisfactory quality, it’d be fair and reasonable to ask BMWFS to put this right. Before I explain why I’ve reached my decision, I think it’s extremely important for me to set out exactly what I’ve been able to consider here. Section 56 of the Consumer Credit Act

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1974 states that BMWFS would be responsible for the actions of the dealership, but this only extends to any discussions, communication, or representations made during the sales and supply process. It doesn’t extend to anything that happens after the car has been supplied. So, while Mr G is extremely unhappy with what has happened with the dealership, their actions after he was supplied with the car, the breakdown of the relationship, and the involvement of the police; this isn’t something BMWFS are liable for. So, I won’t be considering any of this as part of my decision. I also won’t be considering how BMWFS have handled and responded to Mr G’s complaint. This is because complaint handling is an unregulated activity and so, falls outside of our service’s jurisdiction to consider. Mr G’s complaint broadly falls into four separate categories – the V5C, the DPF, the defaults, and the locking issues. I’m satisfied the V5C is something that falls outside of BMWFS’s sphere of control – this is an issue with the dealership and, most likely, the DVLA. As I’ve explained above, I’m not considering the actions of the dealership post-supply, so it follows that I won’t be commenting on the V5C document, apart from where it has impacted the default notices that have been issued. Turning to the DPF, Mr G was financing a diesel car. A DPF has been mandatory in diesel cars in the UK since 2009, although they have been fitted to cars since 2000. So, it’s not new technology where there is limited information that a consumer would be able to access. I think it’s reasonable for me to say that, when looking to finance a car, a customer would conduct some due diligence to ensure the car is suitable for their needs. And this would include whether a diesel engine was suitable i.e., whether the intended usage was going to allow the DPF to complete regular regeneration. This is a key element of the ongoing maintenance requirements that comes with owning/financing a diesel car. For clarity, I wouldn’t expect the dealership or BMWFS to have provided Mr G with advice on the suitability of the car for his needs, unless he specifically asked for this advice. And I haven’t seen anything to show that he did. The manufacturer’s requirements for DPF regeneration on the make and model of car supplied to Mr G are that the car should be driven at a constant speed of at least 50mph, with the engine above 2,000 RPM, for 20 to 30 minutes i.e. a 20- to 25-mile journey on a motorway or dual carriageway. So, even if this needed to be done weekly, which I highly doubt would’ve been necessary given the age and mileage of the car supplied to Mr G, this is only around 1,000 to 1,300 miles a year. As such, I don’t think the DPF maintenance requirements that come with the car are incompatible with the 6,000 miles a year limit in the agreement or Mr G’s insurance policy. So, it follows that I don’t consider it necessary for Mr G to have cancelled his insurance on the car, and to have had it reinsured in a family members name. Given the above, I’m not satisfied the car was misrepresented to Mr G when it was supplied to him. What’s more, a build-up of soot in the DPF at the point of supply is not indicative of a fault. Soot build up is a natural part of how the engine and emissions system works, and it’s entirely unreasonable to expect a used car to have a DPF entirely free of soot – it builds up with every journey, and regular regeneration will clear this. So, I’m also not satisfied that the DPF made the car of an unsatisfactory quality at the point of supply. Turning to the default notices, in his comments Mr G has consistently referred to 10 defaults being issued/registered by BMWFS. But this isn’t the case. BMWFS only issued three

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default notices, and a default notice is just that – a notice – it doesn’t mean that a default has actually been registered and reported to the credit reference agencies. From the evidence I’ve seen, BMWFS issued the first default notice on 7 May 2025. The defaults (breaches of the agreement) Mr G was asked to rectify was that he was one payment in arrears, the car wasn’t in his possession, and that he wasn’t the registered keeper with the DVLA i.e. the V5C wasn’t in his name. I haven’t seen anything to show me that a default was actually registered following this notice. The second default notice was issued on 25 July 2025. The breaches of the agreement that had resulted in this notice being sent were that Mr G was three payments in arrears, that the car wasn’t in his possession, and that the V5C wasn’t in his name. From what I’ve seen, I’m satisfied that the V5C had been issued in Mr G’s name by this point, so I don’t think this breach of the agreement was still valid. However, the other breaches were, so BMWFS had acted reasonably by issuing this default notice. Again, I haven’t seen anything to show me that BMWFS ever registered a default following the issuing of this notice. The third and final default notice was issued on 5 August 2025. The breaches of the agreement detailed on this notice were that Mr G was four payments in arrears, and that the car wasn’t in his possession. It’s not disputed that these were valid breaches and, as Mr G didn’t act to rectify the breaches, the agreement was terminated on 22 September 2025. While I haven’t seen a copy of Mr G’s credit file to be sure, it’s my understanding that this third default notice resulted in a default being registered, and this registration was around the time of the agreement being terminated. As Mr G had failed to make any payments to the agreement since the car was supplied to him, this alone would’ve been cause to default and terminate the agreement, so I’m satisfied that BMWFS acted reasonably by doing so, even though there was still an ongoing complaint about the quality of the car – BMWFS were acting to limit Mr G’s liability as he wasn’t paying, something that falls in line with their regulator’s rules and guidance. So, while Mr G wasn’t able to obtain car insurance with monthly payments, and while he had difficulty in obtaining a mobile phone contract; I’m satisfied this was as a result of his ongoing non-payment of the agreement and the arrears that were reported as a result, and not because BMWFS had registered multiple defaults in error. Finally, I’ve considered the locking issues with the car. Mr G has provided video evidence that shows the car only opening and locking after multiple attempts to do so. He’s also provided evidence of warning messages saying the key was not present in the car, so the car couldn’t be driven, even though the video showed the key in the car. He’s always said this was an intermittent fault, which would explain why the dealership weren’t able to replicate it. But just because the fault was intermittent, it doesn’t mean there wasn’t a fault. BMWFS have said that, as Mr G was supplied with two keys, then it’s only a fault if both keys weren’t working. I disagree with this logic, as any reasonable person would expect both keys to work. And, if one did and the other didn’t, then it follows that Mr G would’ve complained that one of the keys didn’t work, and not of a fault with the locking system. I’m therefore satisfied there was a fault with the car when it was supplied to Mr G, and, as this relates to the ability to access the car and to safely lock the car when not in use, I’m also satisfied this made the car of an unsatisfactory quality when it was supplied. Where a car is not of a satisfactory quality at the point of supply, as was the case here, the CRA gives the consumer a 30-day short-term right to reject, without any overriding right to repair.

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The evidence shows that Mr G asked to reject the car, due to the locking faults, within the first 14-days, so I’m satisfied he exercised the short term right of rejection. As such, I’m in agreement with the investigator that BMWFS should treat the car as being rejected, not repossessed, and they therefore need to do something to put things right. Putting things right As Mr G didn’t make any payments towards the agreement, outside of the deposit he paid, there is nothing more for BMWFS to refund. However, I also need to consider that Mr G had some use of the car which he didn’t pay for, and the CRA says that BMWFS are able to charge him for fair usage. It’s also clear that Mr G has been impacted by what has happened, and I think he should be compensated for that impact. But crucially, this compensation must also be fair and reasonable to both parties, falling in line with our service’s approach to awards of this nature, which is set out clearly on our website and so, is publicly available. I note our investigator also recommended BMWFS pay Mr G £400 to recognise the distress and inconvenience he’s been caused. Having considered this recommendation, alongside the fact that BMWFS are able to charge fair usage, and they are not responsible for the impact of Mr G’s breakdown in the relationship with the dealership, I think it’s a fair recommendation and one that falls in line with our service’s approach and what I would’ve directed, had it not already been put forward. So, this is a payment I’m directing BMWFS to make. Therefore, BMWFS should: • treat the agreement as being terminated as the car supplied wasn’t of a satisfactory quality; • remove any adverse entries relating to this agreement from Mr G’s credit file; • refund the deposit Mr G paid (if any part of this deposit is made up of funds paid through a dealer contribution, BMWFS is entitled to retain that proportion of the deposit); • apply 8% simple yearly interest on the refund, calculated from the date Mr G made the payment to the date of the refund†; and • pay Mr G an additional £400 to compensate him for the trouble and inconvenience caused by being supplied with a car that wasn’t of a satisfactory quality (BMWFS must pay this compensation within 28 days of the date on which we tell them Mr G accepts my final decision. If they pay later than this date, they must also pay 8% simple yearly interest on the compensation from the deadline date for settlement to the date of payment†). †If HM Revenue & Customs requires BMWFS to take off tax from this interest, BMWFS must give Mr G a certificate showing how much tax they’ve taken off if he asks for one. My final decision For the reasons explained, I uphold Mr G’s complaint about BMW Financial Services (GB) Limited. And they are to follow my directions above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G to accept or reject my decision before 23 April 2026.

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Andrew Burford Ombudsman

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