Partially upheld: service failure - inadequate notification of incomplete refinance application complaint against Volkswagen Financial Services (UK) Limited

Decision detail

Summary

Mr P applied to refinance a balloon payment on a hire purchase agreement with VWFS. Although the application was initially approved, it was not fully completed and no new agreement was activated. VWFS failed to clearly notify Mr P of this, leaving him believing the refinance was in place and payments would be collected automatically. Mr P only discovered the problem when contacted about arrears. VWFS accepted the error and offered £350 compensation plus removal of adverse credit information. The ombudsman upheld the complaint in part, finding the service failure caused distress and inconvenience but no financial loss, and deemed the offered remedy fair and reasonable.

The Ombudsman's reasoning

The ombudsman found that VWFS made a clear error in failing to notify Mr P that the refinance application had not been completed, which was a shortcoming in service. However, the ombudsman concluded that even if the error had not occurred, the refinance would have required further assessment and VWFS were not obliged to provide it. No financial loss was established because the balloon payment remained due under the original agreement and refinancing would have meant taking on further credit rather than removing the liability. The ombudsman considered that Mr P could reasonably have identified that no payments were leaving his account over time and made enquiries. Taking all factors into account, £350 compensation for distress and inconvenience was deemed fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website