Not upheld: settlement calculation accuracy complaint against CA AUTO FINANCE UK LTD

Decision detail

Summary

Mr W disputed a settlement figure of £13,932.87 provided by CA for early repayment of a personal contract purchase agreement for a car entered into in June 2023. Mr W claimed that 30 monthly payments were not properly credited to the loan element and that vehicle finance and additional products should have been treated as separate agreements with separate calculations. CA maintained that the settlement figure was calculated in accordance with the Consumer Credit (Early Settlement) Regulations 2004. The ombudsman found that CA correctly applied the statutory early settlement methodology, which uses a specific rebate calculation rather than a straight-line reduction, and that Mr W's alternative calculations did not demonstrate the figure was incorrect. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that CA correctly applied the statutory early settlement methodology required by the Consumer Credit (Early Settlement) Regulations 2004. The regulations require a specific statutory rebate calculation that results in a larger proportion of interest being paid earlier in the agreement term, which does not produce a straight-line reduction. The ombudsman was not persuaded that Mr W's alternative amortisation model demonstrated CA's calculation was incorrect. The ombudsman also rejected the argument that separate calculations were contractually or legally required for the different elements of borrowing, finding no persuasive evidence that this would have produced a lower settlement figure.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website