Not upheld: unfair termination of hire purchase agreement; vehicle quality dispute complaint against Volkswagen Financial Services (UK) Limited trading as Audi Finance

Decision detail

Summary

Mr E acquired a vehicle through a hire purchase agreement with VWFS in October 2021 and reported quality issues within weeks. After losing his job in August 2022, he fell into arrears but resumed payments in January 2023 following a redundancy payment. In July 2023, when VWFS requested larger payments, Mr E refused and stated he would not pay until vehicle faults were resolved. VWFS sent multiple default notices and monthly warnings before terminating the agreement in April 2025 when arrears reached approximately £12,000. Mr E complained that termination was unfair given the ongoing dispute and his clear communication about withholding payments. The ombudsman found that while Mr E's reasons were understandable, the agreement did not permit payment suspension for disputes, VWFS provided adequate warning, and termination was reasonable given the substantial arrears and lack of payment intention.

The Ombudsman's reasoning

The ombudsman found that while Mr E had legitimate reasons for disputing the vehicle quality, the hire purchase agreement did not permit suspension of payments due to a dispute. Mr E breached the agreement terms by not making payments, and VWFS was contractually entitled to terminate for non-payment. VWFS provided adequate warning through multiple default notices and regular correspondence explaining the consequences of non-payment. With arrears of approximately £12,000 and no indication Mr E intended to resume payments, termination was reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website