FOS decision: Black Horse Hire Purchase / SOGA

[Amethyst]

complaint
Mr A complains that a car he bought under a hire purchase agreement with Black Horse
Finance Limited was not of satisfactory quality when he bought it.


background
In July 2012, Mr A entered into a hire purchase agreement with Black Horse for a car which
was four years old. He immediately experienced problems with it. The brakes failed on the
journey back from its collection, and it later failed an MOT test. Mr A had the car tested by an
independent inspector. It found a number of serious faults with the vehicle, and as the car
was to be used for his work, his work licence for the car was removed.
Mr A would like to return the car, receive compensation for his financial losses, and for his
credit rating to be restored.
The adjudicator recommended that the complaint should be upheld in part. He did not
consider that the car was of satisfactory quality at the point of sale. The adjudicator was
persuaded by a report from a garage which had repaired the car, as well as a report from an
independent garage. The adjudicator recommended that Black Horse should:

 Recover the car from Mr A at no cost to him.
 Close the finance agreement with a zero balance and refund the deposit of £200.
 Refund 25% of the monthly payments made up to 23 January 2013.
 Refund in full any payments made after this date.
 Apply interest to all refunds at 8% simple per year from the date of payment to the
date of settlement.
 Remove any adverse information passed to credit reference agencies in relation to
this agreement.
 Reimburse Mr A for the cost of the MOT test carried out on 23 January 2013 (£40).

The adjudicator did not consider that Black Horse should compensate Mr A for his loss of
earnings. He was not persuaded that Mr A had taken reasonable steps to avoid these
losses. The adjudicator noted that Mr A had not insured the car to provide cover for potential
losses, and he had not repaired it after it failed the MOT.
The adjudicator concluded that Mr A should not be compensated for legal costs he had
incurred, as he took this advice after Black Horse told him that he could complain to this
service.
Mr A is not happy to accept the adjudicator’s recommendation. He says that he should be
compensated for the loss of income he incurred as a result of the faulty car. Mr A points out
that he should not have had to fix the car, as Black Horse should have taken it back at that
point. Further, Mr A adds that insurance against losses is not common practice in the
industry, so it is not unreasonable that he did not take it out.
Mr A says that he would not have incurred legal fees if Black Horse had dealt with his
complaint properly.
Black Horse said that it will close Mr A’s account with no further payments due, and remove
any adverse credit references on his file. Mr A has paid two instalments to date, and a £200
deposit. This is a total sum of £885.48. Black Horse has already collected the car.
Ref: DRN6027057
2
my findings
I have considered all the available evidence and arguments to decide what is fair and
reasonable in the circumstances of this complaint.
I accept that it was an important implied term of the hire purchase agreement that the car
should be of satisfactory quality. I take into account its age, mileage and price. I accept that
the faults present when Mr A signed the hire purchase agreement meant that it was not of
satisfactory quality.
Black Horse has collected the car. It has pointed out that Mr A has paid two monthly
instalments and a deposit of £200. I consider that as he had use of the car for six months,
but only paid for two of these months, Mr A should not be refunded any sum he paid under
the agreement.
The adjudicator recommended that Black Horse should repay the cost of the MOT which is
equivalent to £40. I consider however that Mr A would have incurred this cost regardless of
any faults present in the car. As such, I do not consider that Black Horse should repay this
amount to Mr A.
There is no doubt that the on going problems with the car caused Mr A distress and
inconvenience. I note that the adjudicator proposed that that a partial refund of Mr A’s
monthly payments was made in recognition of this. Given that, I do not consider that a
refund of the two monthly payments made by Mr A is warranted, I consider that Black Horse
should pay Mr A £150 for distress and inconvenience.
Black Horse should remove any adverse information it has entered on Mr A’s credit file in
relation to the agreement.
Mr A says that he should be compensated for his loss of earnings since the car failed its
MOT in January 2013 and has been off the road. I agree with the adjudicator that Mr A could
have minimised his losses by having the car repaired, and claiming the cost of this from
Black Horse. In the circumstances, I do not consider that it would be fair or reasonable for it
to compensate Mr A for any loss of income.
Mr A took legal advice regarding the faults in the car. He would like Black Horse to
reimburse him for the cost he incurred in doing so. It told him however in a letter dated
11 March 2013 that Mr A had the right to make the complaint to us. I do not therefore
consider that he had to take legal advice to know where he should complain to. I find that
Black Horse did deal with Mr A’s complaint when he raised the problem with it.
Mr A has pointed out that he is still receiving regular written requests for payments under the
hire purchase agreement. I would suggest that Black Horse stops these requests given the
fault with the car and that the agreement is to be cancelled.
my final decision
My decision is that Black Horse Finance Limited should:

 Cancel the hire purchase agreement and stop sending Mr A demands for payment
under it.
 Remove any adverse credit information it has recorded on Mr A’s credit file.
 Pay Mr A £150 for distress and inconvenience.

Rosemary Lloyd
ombudsman