Upheld: unfair credit file reporting and contract term interpretation complaint against BMW Financial Services (GB) Limited

Decision detail

Summary

Mr H complained to BMW Financial Services about how they handled a £3,364.33 shortfall when his car was written off and the insurance settlement did not cover the full outstanding finance. BMW treated the shortfall as immediately payable and reported Mr H as in arrears when he continued making his contractual monthly payments. The ombudsman upheld the complaint, finding that the contract terms were ambiguous and reasonably interpreted to allow continued monthly payments until full settlement, rather than immediate payment of the shortfall. BMW was directed to remove all missed payment markers from Mr H's credit file from the date of insurance settlement onwards.

The Ombudsman's reasoning

The key issue was interpreting the contract terms regarding payment obligations after insurance settlement. The ombudsman found that the terms directing Mr H to continue making monthly payments and the terms requiring payment of any shortfall were linked within the same sub-clause, supporting a reasonable interpretation that monthly payments could continue until full settlement. The contract did not explicitly state that the shortfall became immediately payable upon insurance settlement, and it was reasonable to interpret that a consumer could continue monthly payments until the account was fully settled. Given this ambiguity, the ombudsman found it fair that Mr H should not have been reported as in arrears for continuing to make the monthly payments he was contractually directed to make.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website