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Motor Finance Complaints

The Increasingly Complex World Of Motor Finance Complaints

Wednesday, 7 December 2022

The Financial Ombudsman Service (FOS) recently released its latest quarterly complaints data for Q2 2022/23, revealing that Hire Purchase (motor) is now the fourth most complained about product with 2,149 complaints logged (Quarterly complaints data - Daniel Denyer, Account Director at EQ Customer Resolutions, looks at what this increase in complaints means for the sector.

Hazell Carr Dan Denyer Daniel Denyer Account Director, EQ Customer Resolutions

Although many of these complaints are about irresponsible lending, a review of the Ombudsman Decisions Ombudsman decisions (, suggests consumers are increasingly raising complaints under the Consumer Rights Act 2015 which requires goods to be of satisfactory quality. 

The complaints are generally raised by the consumer following a mechanical problem with the vehicle. The consumer will return the vehicle to the dealer to request a repair however, disputes occur where the dealer believes the fault is due to ‘wear and tear’. 

These complaints are further complicated where finance has been provided as there can be three or more parties involved in the complaint - the consumer, the dealer, and the finance company. All parties to the complaint can have a different view on whether the vehicle was faulty at the time of sale or whether the fault is down to fair wear and tear.

With vehicles becoming more complex and more electric and hybrid vehicles entering the market, dealers and finance companies need to have experienced complaint handlers and comprehensive procedures in place to ensure complaints of this nature are assessed correctly.

One area of particular interest is how complaints about battery range will be handled. It is well known that batteries degrade over time and this will impact the maximum range a vehicle can travel between charges. The question surrounds what will be considered fair wear and tear (range reduction). 

Will consumers be able to complain if the vehicle does not match 100% to the advert eg; the average range? At what point in the history of the car can the disparity be attributed to an acceptance of fair wear and tear? 

The costs associated with replacing batteries on an electric or hybrid will mean that the consumer or the dealer/finance company will be left with a very expensive repair bill that may not be economically viable.

Another area to consider is the wide range of optional extras that are now available on vehicles. Will faulty Bluetooth connectivity, parking sensors, climate control or a touchscreen display give the consumer the right to request a repair or the right to reject the vehicle? It could be argued that none of these issues make the vehicle undrivable, however the cost of repair can be many hundreds of pounds.

The Financial Ombudsman Service will often request an independent assessment of the vehicle, however there are costs associated with this and it does not always bring about an answer that is not open to challenge.

If businesses get an independent assessment every time a consumer raises a complaint about a quality issue, will this open them up to claims that the assessment is not genuinely independent? What if the consumer gets their own independent assessment, which provides a different opinion?

Paying a gesture of goodwill or token redress will often not resolve the complaint as the consumer will have lost faith in the vehicle and therefore, in many cases, the only option left is for the consumer to return the vehicle and for the contract to be terminated. 

This is also fraught with complexities. If a consumer has had use of a vehicle for 6 months and has travelled 10,000 miles, is it fair and reasonable for them to be able to return that vehicle and have a refund of the money paid for it? 

The Financial Ombudsman Service will often agree to a reduction in redress to account for the consumer having had use of the vehicle, however this is also subjective and open to dispute. After all, the dealer/ finance company now has a vehicle that they know is faulty and has travelled 10,000 miles. They are therefore left with a vehicle that is worth less than when they first sold it and that they cannot sell without repairing.

The amount of work required by all parties is often extensive, time-consuming, and requires experienced complaint managers able to negotiate with multiple parties to try and reach a fair and reasonable settlement, without having to refer the matter to the Financial Ombudsman Service.