Not upheld: liability for credit agreement / alleged identity fraud and unauthorized credit application complaint against Specialist Motor Finance Limited (SMFL)

Decision detail

Summary

Mr M complained that SMFL unfairly held him liable for a hire purchase agreement for a car taken in his name without his knowledge or consent. Mr M claimed he did not enter the agreement and only discovered it in December 2024 after receiving a missed payment letter, and that a third party must have fraudulently used his information from incomplete finance applications he had made earlier in 2024. SMFL maintained it had performed thorough KYC checks including identity documents, video recordings, address verification, and payslip confirmation. The ombudsman found that while a third party clearly had involvement with the car after purchase, the evidence demonstrated Mr M's knowledge of and involvement in the application itself, particularly based on video recording two being created within one hour of a text request to a phone number Mr M claimed not to recognize. The ombudsman did not uphold the complaint, finding it fair for SMFL to hold Mr M liable for the outstanding balance of approximately £24,500.

The Ombudsman's reasoning

The ombudsman applied the balance of probabilities test to determine whether it was more likely that Mr M had knowledge of and was involved in the application. The key finding was the timeline and circumstances surrounding video recording two: a text message was sent to a phone number Mr M claimed not to recognize on 1 October 2024 at 13:54, and within one hour a video was created with Mr M providing all requested information. The ombudsman found it implausible that Mr M would have completed an identical video for a different, incomplete application at almost the exact same time. The ombudsman also found Mr M's testimony unconvincing regarding his inability to recall details of earlier applications made only months prior. While acknowledging a third party's involvement after the agreement was entered, the ombudsman concluded the evidence demonstrated Mr M's knowledge of and involvement in the application process itself.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website