Not upheld: alleged overcharging of interest and misrepresentation of fixed interest rate complaint against Volkswagen Financial Services (UK) Limited

Decision detail

Summary

Mr H complained that he was overcharged interest on a hire purchase agreement with VWFS, believing the stated interest rate of 11.34% was rounded down from 11.3437% and that the rate varied slightly after his partial payments rather than remaining fixed. VWFS explained that the interest rate disclosed on the agreement was notional and not used to calculate monthly repayments, which were instead based on the total amount payable, cash price, advance payment, and option to purchase fee. The ombudsman found that the rounding of the interest rate was fair and reasonable, that the disclosed rate had no impact on Mr H's actual repayments, and that the agreement clearly set out the total amount payable. The complaint was not upheld as no detriment to Mr H was established.

The Ombudsman's reasoning

The ombudsman found that the interest rate disclosed on the agreement was notional and not used to calculate monthly repayments, which were instead based on the total amount payable, cash price, advance payment, and option to purchase fee. The rounding of the interest rate from 11.3437% to 11.34% was fair, reasonable, and compliant with relevant law and regulations. Since the disclosed interest rate had no impact on Mr H's actual repayments and the agreement clearly set out the total amount payable, there was no detriment to Mr H.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website