Upheld: breach of contract and irresponsible lending practices complaint against Carmoola Limited
Financial Ombudsman decision DRN-6287789 of 2026-06-09T00:00:00+00:00. breach of contract and irresponsible lending practices complaint against Carmoola Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6287789 |
|---|---|
| Decision date | 2026-06-09T00:00:00+00:00 |
| Firm | Carmoola Limited |
| Product | Motor finance (PCP / HP) |
| Claim type | breach of contract and irresponsible lending practices |
| Outcome | Upheld |
| Remedy | Carmoola must: (1) End the hire purchase agreement with Mr E having nothing more to pay; (2) Contact credit reference agencies to remove all adverse loadings for the hire purchase agreement; (3) Refund the £12,000 overpayment; (4) Refund half of the first monthly instalment (£367); (5) Pay simple interest on refunds at Bank of England base rate plus 1% from date of payment to settlement; (6) Pay £300 distress and inconvenience compensation. |
Summary
Mr E purchased a second-hand vehicle for £31,000 using a hire purchase agreement with Carmoola on 6 November 2025. Shortly after delivery, he discovered the vehicle had a replaced head unit displaying an incorrect VIN and a non-functioning key, defects not disclosed by the dealership. When Mr E sought to reject the vehicle on 28 November 2025, Carmoola refused pending independent inspection. The vehicle was subsequently stolen and held by police until February 2026. The ombudsman upheld Mr E's complaint, finding the vehicle was not of satisfactory quality in breach of contract, and that Mr E properly exercised his statutory right to reject within 30 days. Carmoola was directed to terminate the hire purchase agreement, refund the overpayment and first instalment, remove adverse credit loadings, and pay £300 compensation.
The Ombudsman's reasoning
The ombudsman found that while there was no misrepresentation regarding the vehicle's identity, there was a breach of contract under the Consumer Rights Act. The vehicle was not of satisfactory quality at the point of delivery because the replaced head unit (requiring £1,000 replacement) and non-functioning key were defects a reasonable person would not expect in a vehicle advertised as in excellent condition. Mr E exercised his statutory short-term right to reject within 30 days of delivery. Carmoola was liable under Sections 56 and 75 CCA for the dealership's breach. The ombudsman rejected claims for consequential losses (transport, insurance costs) as these resulted from the theft and police investigation, not Carmoola's actions, but ordered removal of adverse credit loadings due to the suspension lapse.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Carmoola Limited, all decisions | 17 | 41% |
| Motor finance (PCP / HP), all decisions | 18,521 | 38% |
Source
Read the original decision on the Financial Ombudsman Service website