Not upheld: termination of hire purchase agreement based on alleged breach of contract complaint against Volkswagen Financial Services (UK) Limited trading as Audi Financial Services

Decision detail

Summary

Mrs Z complained about Audi Financial Services' termination of her hire purchase agreement for a £55,000 vehicle. The car was seized by police while being driven by X, a named driver, initially because X could not produce valid driving licence and insurance documents. After Mrs Z provided proof of insurance, police subsequently informed Audi that X was carrying a prohibited weapon in the car and had been fined. Audi issued a second termination notice based on this new information, which Mrs Z disputed, arguing she was not responsible for X's actions and that Audi should have verified the facts before terminating. The ombudsman found that the contract terms prohibited the vehicle from being seized and that Audi fairly relied on the breach to terminate the agreement, rejecting Mrs Z's complaint.

The Ombudsman's reasoning

The ombudsman applied the balance of probabilities standard given incomplete evidence. The ombudsman found that the hire purchase agreement terms explicitly prohibited allowing the vehicle to be seized or distrained upon by a third party. Although Mrs Z was not present in the car and may not have been aware of the prohibited weapon, the ombudsman concluded that as the agreement holder, Mrs Z bore responsibility for keeping the car within her control. The ombudsman found that Audi's change in stance, while frustrating to Mrs Z, was not unreasonable when presented with further information from police about the prohibited weapon. The ombudsman rejected Mrs Z's argument that Audi should have conducted further verification, finding that such investigation would not have resulted in a different outcome.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website