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FOS decision: Cancelled insurance on car finance agreement

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  • FOS decision: Cancelled insurance on car finance agreement

    complaint
    Mr H complains that ACF Car Finance Limited mis-sold him a finance agreement, taken out
    to buy a car.

    background

    Mr H bought a car in April 2007 with a fixed-sum loan from ACF. He part-exchanged his
    existing car as part of the deal. Mr H – whose first language is not English – says that he
    showed the agreement to his employer the next day. His employer queried the total cost as
    well as the insurances included in the deal. Mr H says he believed he was buying a car for
    approximately £3,400 but ended up with a loan agreement that would mean he would repay
    over £11,000.
    He says that, on further advice from a national charity, he returned the car to
    the dealership and tried to cancel his purchase.

    ACF recovered the car from the dealership in June 2007 and sold it at auction. The sale
    price was deducted from Mr H’s outstanding debt and the debt sold to a collection agent in
    November 2008. That agent is trying to recover the outstanding balance of just over £9,000
    from Mr H.

    I issued a provisional decision on this complaint in September 2013. In it, I explained why I
    intended to uphold the complaint in part. I did not agree that the car salesman had misled
    Mr H about the car’s price or misrepresented the loan agreement to Mr H. I was satisfied that
    the price of the car, the total cost of credit, the total amount repayable and the monthly
    repayments were all clearly set out in the agreement. Mr H chose to buy the car and signed
    the agreement. As such, I was satisfied that Mr H owed the outstanding debt for the car.

    However, I found that the insurances bought as part of the agreement were cancellable and
    Mr H should have been allowed to cancel them when he tried to withdraw from the
    agreement. I found that ACF should reduce Mr H’s debt by the insurance element of Mr H’s
    loan.

    ACF accepted my provisional decision and agreed to reduce Mr H’s outstanding debt by
    £4,324.18.

    Mr H did not. His representative said, in summary:
     Mr H was given nothing to show the price of the car and/or part-exchange value of
    his previous car;
     he was pressured into buying the car and simply signed where he was told;
     he was working 6 days a week, therefore had limited time in which to look for a car;
     he couldn’t take a work colleague or his employer with him to buy the car because of
    conflicting working hours and for childcare reasons; and
     his employer was also pressured into verifying Mr H’s employment status and other
    personal information.


    my findings
    I have considered all the available evidence and arguments to decide what is fair and
    reasonable in the circumstances of this complaint. Having done so, I find no reason why I
    should depart from my provisional conclusions.

    I am satisfied that I have already considered the arguments put forward by Mr H’s
    representative. In short, he didn’t have to buy the car. I find it difficult to understand why he
    would sign a document written in a foreign language if he didn’t understand it. Whilst I
    appreciate it might have been difficult for Mr H to have a work colleague or his employer
    accompany him to the dealership, he could have asked to take the agreement away to
    review it with someone who could better explain it to him. Had the salesman refused, Mr H
    might reasonably have walked away from the deal.

    I am satisfied that the insurance element of the agreement – including the cost of credit, this
    was £4,324.48 – was cancellable. Whilst I am satisfied that Mr H should pay for the car, I do
    not consider it fair or reasonable for him to be held liable for the cost of the insurance. ACF
    should deduct this from Mr H’s outstanding debt.

    Mr H is under no obligation to accept my decision; if he does not, he remains free to pursue
    the matter in other ways, such as through the courts. I would simply point out that ACF is not
    bound by my decision if Mr H does not accept it.

    my final decision
    My final decision is that I uphold this complaint in part and order ACF Car Finance Limited
    to:
     make arrangements with the debt collection agent that currently holds this account so
    that Mr H’s outstanding debt is reduced by £4,324.48; and

     update the information it has registered about this agreement with any credit
    reference agencies to reflect this.


    Simon Begley
    ombudsman
    #staysafestayhome

    Any support I provide is offered without liability, if you are unsure please seek professional legal guidance.

    Received a Court Claim? Read >>>>> First Steps
    Tags: None

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