Partially upheld: Goods and services under S75 complaint against MotoNovo Finance Limited

Decision detail

Summary

Mr R purchased a car via hire purchase from MotoNovo Finance Limited in July 2025 but soon discovered multiple faults including water ingress, misaligned tailgate, and signs of accident damage. MotoNovo accepted the vehicle was of unsatisfactory quality and agreed to reject it, offering to refund monthly repayments subject to a deduction for fair use (£0.25 per mile for 2,570 miles after waiving the first 2,000 miles), plus a £250 deposit refund and £250 compensation. Mr R complained that the usage deduction was unfair, arguing he only drove the vehicle out of necessity during the complaint investigation. The ombudsman upheld MotoNovo's approach as consistent with the Consumer Rights Act 2015, finding that Mr R had derived substantial benefit from the vehicle's use and should contribute to that benefit. However, the ombudsman directed MotoNovo to pay 8% simple yearly interest on all refunded amounts including the deposit from the date of payment until settlement.

The Ombudsman's reasoning

The ombudsman accepted that MotoNovo correctly rejected the vehicle as unsatisfactory but upheld the principle that a reasonable deduction for fair use is permitted under the Consumer Rights Act 2015. The ombudsman reasoned that Mr R derived substantial benefit from approximately 4,500 miles of motoring and that allowing a full refund without accounting for this use would place him in a better position than if the vehicle had performed correctly. The waiver of charges for the first 2,000 miles was considered a material concession. However, the ombudsman found that MotoNovo had not explicitly confirmed interest was paid on the deposit refund, requiring this to be rectified.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website