Not upheld: misrepresentation regarding GAP insurance and financial risk disclosure complaint against CA Auto Finance UK Ltd

Decision detail

Summary

Miss M complained that CA Auto misrepresented a hire purchase agreement for a used car by not explaining the implications of not having GAP insurance, which was crossed out on her paperwork. When her car was deemed a total loss, she faced a £1,150 shortfall. The ombudsman found no misrepresentation because GAP insurance was never discussed (due to a temporary sales pause), and the agreement terms adequately disclosed the risk of shortfall. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied Section 56 of the Consumer Credit Act 1974 and considered whether a misrepresentation occurred. A misrepresentation requires a false statement of fact that induced entry into the contract. Since GAP insurance was never discussed, no false statement could have been made. The agreement terms explicitly warned Miss M of potential shortfall liability. The temporary pause on GAP insurance sales made it reasonable not to discuss this product.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website