Upheld: Irresponsible lending complaint against CARMONEY LIMITED
Financial Ombudsman decision DRN-3190670 of 2021-12-03T00:00:00+00:00. Irresponsible lending complaint against CARMONEY LIMITED. Outcome: Upheld.
Decision detail
| Reference | DRN-3190670 |
|---|---|
| Decision date | 2021-12-03T00:00:00+00:00 |
| Firm | CARMONEY LIMITED |
| Product | Motor finance (PCP / HP) |
| Claim type | Irresponsible lending |
| Outcome | Upheld |
| Remedy | CARMONEY LIMITED must either: (1) arrange for the agreement to be unwound with nothing further to pay and refund the £4,000 deposit with 8% interest from date of payment, plus £250 compensation; or (2) if the agreement cannot be unwound within 8 weeks, fund the £4,286.31 shortfall and pay £250 compensation for avoidable distress and inconvenience. |
Summary
Miss W purchased a car for £23,380 financed through CARMONEY LIMITED with a £4,000 deposit and a £19,380 loan at 0% interest over 60 months. The finance arrangement included a subsidy normally paid to the broker in place of commission, but this resulted in a £4,000 shortfall that the dealer subsequently pursued from Miss W. The ombudsman found that CARMONEY failed to adequately disclose this additional liability, as the finance agreement and invoice made no reference to any sum beyond the advertised terms. The complaint was upheld and CARMONEY was directed to either unwind the agreement or fund the £4,286.31 shortfall, plus pay £250 compensation.
The Ombudsman's reasoning
The ombudsman found that Miss W had every reasonable expectation that she would pay only the £323 monthly payments for 60 months plus the £4,000 deposit, with nothing further due. The finance agreement explicitly stated the total payable was £23,380 at 0% interest with no mention of additional sums. Although CARMONEY sent an initial disclosure referencing a subsidy, there was no clear communication that Miss W would be liable for a £4,000 shortfall. As the primary broker responsible for arranging the loan, CARMONEY failed in its duty to ensure Miss W was aware of the full terms of the financing arrangement, leaving her in an unexpected liability situation.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| CARMONEY LIMITED, all decisions | 2 | 100% |
| Irresponsible lending, all decisions | 29,406 | 38% |
| Motor finance (PCP / HP), all decisions | 19,456 | 38% |
Source
Read the original decision on the Financial Ombudsman Service website