Not upheld: payment allocation and contract interpretation complaint against CREATION CONSUMER FINANCE LIMITED

Decision detail

Summary

Mr K complained that Creation incorrectly applied his August 2025 lump sum payment of £3,159.18 as a partial settlement rather than covering future monthly payments on his hire purchase agreement. Mr K believed the payment would cover five or six months of payments while he recovered from health issues, but the subsequent reduction in monthly payments caused the agreement to fall into arrears. Creation maintained the payment was applied in accordance with the agreement terms and could not be reversed. The ombudsman did not uphold the complaint, finding that Creation acted in accordance with the contract terms and there was no evidence Mr K had communicated his intended use of the payment to Creation.

The Ombudsman's reasoning

The ombudsman found that Creation applied the lump sum payment in accordance with the terms and conditions of the finance agreement. While sympathising with Mr K's health difficulties, the ombudsman noted that there was no evidence Mr K communicated his intention for the payment to cover future monthly payments to Creation, and Creation had written to Mr K in August 2025 explaining how the payment would be applied without immediate objection from Mr K. Therefore, Creation did not act unfairly or make an error.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website