Not upheld: early settlement calculation and alleged misrepresentation regarding early repayment charges complaint against CA AUTO FINANCE UK LTD

Decision detail

Summary

Mr H complained that a settlement figure of £17,939.30 provided by CA AUTO FINANCE UK LTD for early settlement of his hire purchase agreement was incorrect, as it exceeded the original amount borrowed and did not account for his first monthly payment. Mr H also claimed he was told there would be no early repayment charges and he would receive a refund. CA defended the settlement figure as correctly calculated under the Consumer Credit Early Settlement Regulations 2004, which permit retention of up to 58 days interest. The ombudsman upheld CA's position, finding the settlement figure was calculated correctly in accordance with statutory requirements and that there was insufficient evidence of misrepresentation regarding early repayment terms. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the statutory framework for early settlement calculations under the Consumer Credit Early Settlement Regulations 2004. The settlement figure was correctly calculated to include a rebate of future interest while retaining up to 58 days interest as permitted by law. While Mr H expected the balance to fall below the original amount borrowed after his payment, the statutory calculation method means this will not always occur, particularly early in the agreement term. The ombudsman found no sufficient evidence of clear misrepresentation by CA regarding early repayment charges or refunds, concluding instead that there was likely misunderstanding about how early settlement works. The statutory framework applies to all agreements of this type, and the lack of explicit detail in consumer-facing documents did not result in unfair treatment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website