BMW Financial Services (GB) Limited · DRN-6259770

The complaint Mr B complains that BMW Financial Services (GB) Limited trading as Alphera Financial Services (“Alphera”) irresponsibly gave him a hire purchase agreement he couldn’t afford to repay. He also says Alphera failed to respond appropriately to his circumstances when he was in financial difficulty. Lastly, he says the car that was supplied under the agreement wasn’t of satisfactory quality. What happened In June 2023, Mr B acquired a used car financed by a hire purchase agreement from Alphera. The cash price of the car was £22,649. Mr B was required to pay 60 monthly repayments of £526.65. In April 2025, Mr B called Alphera to let them know he was struggling financially and that this was exacerbated by his medical conditions, which he disclosed to Alphera. He followed this up in writing alongside his complaint about Alphera’s decision to lend to him, being supplied with a faulty car and Alphera’s failure to take his vulnerability and personal circumstances into account. Alphera didn’t agree it had made an unfair lending decision. It said it carried out appropriate affordability checks which didn’t reveal any concerns about Mr B’s ability to repay the borrowing. In relation to the faults with the car, it said that as Mr B had accepted a repair in 2023, it was no longer required to allow him to reject the car. It said that it didn’t think it had treated Mr B unfairly in relation to his financial difficulties. However, it did agree that it hadn’t provided Mr B with all available termination options and that it had given him incomplete advice when he’d asked to change his address during a telephone call. For these errors it offered him £250 compensation for any distress and inconvenience caused. I sent Mr B and Alphera my provisional decision on 3 March 2026. I explained why I thought the complaint should be upheld in part. I said: Mr B has provided detailed submissions throughout his complaint and I realise I have only briefly summarised the points he has made. No discourtesy is meant by this, it simply reflects the informal nature of our service. I want to assure him that I have read and considered everything he has said and provided. If I haven’t commented on a specific point he’s raised it doesn’t mean I haven’t considered it, it just means I don’t think it makes any material difference to the overall outcome I’ve reached. I’ll deal with each of the main complaint issues in turn. Alphera’s initial lending decision Before lending to Mr B, Alphera was required to complete checks to ensure he could afford to repay the borrowing in a sustainable way. The rules and guidance in place at the time didn’t prescribe a set list of checks that needed to be completed for every lending decision. Instead, it said that it was for the lender to ensure that any checks it did complete were proportionate in the circumstances. In deciding what would be proportionate, Alphera needed to take into account things such as (but not limited to):

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the type of credit, the amount borrowed, the size of the regular repayments, the term, the cost of borrowing and the consumer’s circumstances. As part of the application it appears that Alphera didn’t request any information from Mr B about his income. From what it has provided it also doesn’t appear to have made any attempt to estimate what his income might be. Alphera will be aware that the regulator’s rules required it to make a reasonable attempt to determine or estimate Mr B’s income unless it could demonstrate it was disproportionate in the circumstances for it to have done so. Alphera hasn’t presented any persuasive argument as to why such a check would have been disproportionate here. As a starting point, the monthly repayments were sizeable at over £500. Alphera had also provided him a second fixed sum loan agreement to cover the negative equity on his previous car which he had part-exchanged to enter into this agreement. With those two commitments combined, Alphera was asking Mr B to repay around £570 per month over a reasonably long period of time. Without having any understanding of Mr B’s income, I fail to see how it could have made any reasonable assessment of affordability. Alphera says it completed a credit check. The detail it has provided in relation to this check is disappointingly sparse. I’ve seen that it recorded Mr B had around £79,600 in outstanding debt (including his mortgage) and was utilising around 50% of his available credit limits on revolving credit facilities. Beyond this, I haven’t seen anything to show what Alphera could see about how much Mr B was currently paying towards his credit commitments or what it might have done to gauge his other essential living expenses. Overall, I’m satisfied the checks Alphera completed were not reasonable or proportionate. It should have done more to establish Mr B’s financial circumstances before lending to him. Mr B says that the complaint should be upheld where it is found that the checks were not proportionate. However, I don’t agree. This is because that approach fails to take into account whether any loss was caused by Alphera’s failure to complete adequate checks. Just because the checks were insufficient, it doesn’t automatically follow that the lending was unaffordable. Mr B says that because he fell into financial difficulties this demonstrates the agreement was unaffordable. However, this again is an incomplete way of analysing things. There are a myriad of factors that could have contributed to Mr B’s financial difficulties after the lending decision. Just because he struggled to repay later, it doesn’t automatically mean the lending was unaffordable or the lending decision unreasonable at the outset. In deciding what is fair and reasonable, I’m satisfied I need to take into account what would have likely happened but for Alphera’s errors. Therefore, it is important for me to consider what would most likely have happened had it done what it was supposed to do – in other words if it had completed proportionate and reasonable affordability checks, what would it most likely have discovered and how would this have impacted its decision to lend to Mr B. Alphera weren’t required by the rules to review payslips or bank statements although these are some ways of the ways it could have established what Mr B’s income was. It was also entitled to estimate his income, for example, by using credit reference agency data. I don’t know what it would have chosen to do, but I do think it needed to do more to establish what Mr B’s income was likely to be. I think it also needed to do more to establish what his essential living costs were and what he was paying

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monthly towards his credit commitments. Mr B has also provided a copy of his credit report. This shows that the figure of around £76,000 Alphera obtained wasn’t quite right. It didn’t appear to take into account a recent consolidation loan Mr B had taken out a few months before. This appears to be because that particular lender didn’t report to the specific credit reference agency Alphera used. I can’t fairly say Alphera did anything wrong in this respect as it did appear to complete a credit check in good faith. It appears Mr B was paying around £940 per month towards his mortgage, the consolidation loan and one other unsecured loan. He also held six credit cards with combined credit limits of around £25,000. Alphera’s credit checks showed Mr B’s balances on these were around 50% of the limits, therefore he likely had around £12,500 in outstanding credit card debt at the time. I think it would have been reasonable for Alphera to have allowed in the region of £500 per month towards these revolving balances. Therefore, with the two new Alphera agreements, Mr B’s monthly credit commitments would have been around £2,000. I think proportionate affordability checks would most likely have revealed something similar. Mr B has provided us with a selection of his bank statements from one current account in the months leading up to the lending decision. He’s also given us details of earnings as a director of a limited company up to February 24. Having reviewed what Mr B has provided it is still quite unclear to me exactly what his income was. His income appears to have come from a number of different sources, such as benefits, employed income and income from the company he was director of. He has also only provided us with statements from one current account and it appears he held five at the time. I’ve seen large transfers coming in and going out from some of these other accounts. Mr B appeared to be receiving in the region of £550 per week from one employment and his company accounts suggest he was receiving (on average) around £3,700 per month from his limited company, as well as additional contributions towards travel costs (an average of around £270 per month) and additional contributions towards ‘motoring costs’ (an average of around £557 per month). I note Mr B’s partner was also regularly contributing towards households bills in the region of £500 per month. When reviewing Mr B’s expenditure on the bank statements he has provided, it appears that he had sufficient income to comfortably afford his essential living costs, his credit commitments and the new Alphera credit agreements without needing to borrow more. His credit file showed no signs he had struggled with debt repayments in the past and he wasn’t reliant on overdraft borrowing. I’m therefore not persuaded that Alphera made an unfair lending decision as I think proportionate affordability checks would most likely have shown the lending was affordable to Mr B. Mr B says that Alphera ought to have discovered that he was vulnerable and therefore not lent to him. He says he did not understand the implications of what he was signing up for. However, I’m not persuaded Alphera knew or could reasonably have known Mr B might have been vulnerable or lacked capacity in any way to enter into the agreement. While Mr B provided Alphera with medical evidence as part of his complaint, I’ve not seen anything in those submissions that makes me think it ought to have been obvious to a non- medical professional that Mr B might have been vulnerable to the extent that providing him with finance would have been irresponsible.

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I’m further persuaded by this having listened to a call Mr B had with Alphera in 2025. During this call Mr B made it clear to Alphera that he was financially savvy, understood finance agreements very well and that he did not enter into these types of agreements lightly. He discussed with Alphera his investment dealings and his overall ability to manage his finances well. As part of his complaint submissions he has also provided detailed analysis of various rules, regulations and guidance related to financial products and services. Therefore, I think even if Alphera (or the car dealership that brokered the hire purchase agreement as agent of Alphera) had asked Mr B more questions about his understanding, I’m not persuaded Mr B would have revealed anything that would have concerned Alphera or its agent of his ability or suitability to enter into the agreement. For these reasons I’m not persuaded that Alphera made an unfair lending decision. In reaching my conclusions, I’ve also considered whether the lending relationship between Alphera and Mr B might have been unfair to Mr B under section 140A of the Consumer Credit Act 1974 (“CCA”). However, for the reasons I’ve explained, I don’t think Alphera irresponsibly lent to Mr B or otherwise treated him unfairly in relation to this matter. And I haven’t seen anything to suggest that section 140A CCA or anything else would, given the facts of this complaint, lead to a different outcome here. The quality of the car supplied The Consumer Rights Act 2015 (“CRA”) implies terms into the hire purchase agreement that the car that was supplied to Mr B needed to be of satisfactory quality. Where the car isn’t of satisfactory quality it sets out various remedies that might be open to Mr B. It doesn’t appear to be in dispute that when the car was supplied to Mr B it wasn’t of satisfactory quality and it required repairs. Mr B accepted a repair, and it appears the repairs resolved the issues with the car. As Mr B accepted repairs and these resolved the underlying issues, he isn’t entitled to now reject the car under the CRA. Mr B was without the car for some time due to the repairs being required and the investigator recommended Alphera pay him a further £300 compensation for any upset and inconvenience this caused him. Both parties appear to have accepted this as a resolution to this part of the complaint. I’m satisfied this is a fair way to put things right for this issue and Alphera doesn’t need to do anything further in relation to the quality issues with the car. Financial difficulties and overall customer service Mr B first notified Alphera in 2025 of his medical issues, financial difficulties and vulnerability. He asked Alphera to end the finance agreement and write off his outstanding balance on medical grounds. He provided medical evidence as well as substantive reasoning for making his complaint. I can’t see that Alphera appropriately engaged with Mr B’s complaint on these specific grounds. It doesn’t appear to have reviewed his medical evidence with a view to considering whether it would write off the debt or not. I say this because when I asked Alphera what conclusion it had reached about a write off on medical grounds it first suggested it had never received any medical evidence from Mr B. This was clearly not correct.

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After I requested it review the evidence and provide its thoughts on Mr B’s request for a write off, Alphera said it was not prepared to write off any of the outstanding debt. It said that if Mr B wished to exit the agreement he could either sell the car privately to raise funds to pay the settlement figure, voluntary terminate the agreement and pay any voluntary termination balance (which was currently around £5,700) or hand the car back to Alphera who would look to sell it and Mr B would need to cover any shortfall following the sale. Alphera are not obliged to accept Mr B’s request to write off the balance. I understand that many of Mr B’s other creditors have written off his outstanding debts after reviewing the same evidence. Just because other lenders have taken that commercial decision to assist Mr B, it doesn’t automatically mean Alphera are compelled to. Having reviewed the medical evidence Mr B sent to Alphera, I’ve not seen anything that makes me think Alphera’s decision not to write off the debt is unreasonable or unfair. While I accept from what Mr B provided to Alphera that he will have found managing his circumstances very challenging, there is nothing within what he provided to Alphera that said he could not work and earn a living. By Mr B’s own admission at the time he submitted the medical evidence, he was still capable of working during periods of better health. So, I can understand why with that context Alphera has taken the view not to write off the debt. Mr B has set out in detail how he has been struggling for a long time and I don’t doubt what he says. However, I haven’t seen enough to say that it is wholly unreasonable based on what he provided to Alphera for it to refuse to write off the debt. I don’t consider I can fairly compel it to write off any of the debt given what he provided to Alphera as part of his complaint to them. I understand Mr B says his circumstances have changed since he provided that evidence to Alphera. It might be that they have now changed to the point that he can no longer work regularly and therefore I would expect Alphera to re-review his circumstances to see if it makes any difference to its decision about the outstanding balance. However, any new evidence Mr B provides now wasn’t available to Alphera at the time it responded to the complaint I am now considering. My decision is solely about the fairness of Alphera’s actions up to the point it issued its final response letter in June 2025. I do think Alphera ought to have communicated better with Mr B concerning his request for a write-off earlier. But given that it has now reviewed the evidence and chosen not to write off any debt, I don’t think Mr B is any materially different position now than what he would have been had Alphera responded more fully to his request earlier. However, I think the level of care and communication Alphera provided to Mr B about this issue was poor and will have caused him unnecessary upset as his concerns weren’t appropriately addressed. Alphera already accepted in its final response letter that the service it provided to Mr B wasn’t as good as it could have been. It identified that it failed to offer Mr B all of the available termination options and gave him some incorrect advice in relation to changing his address. For these errors it offered to pay him £250 compensation for any distress and inconvenience caused. Given that I don’t consider it engaged with Mr B’s request for a write off on medical grounds with sufficient care and clarity, I’m not persuaded £250 compensation fairly reflects the overall upset and inconvenience Alphera’s actions caused.

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Taking into account all the circumstances here, I consider £400 to more appropriate. In reaching this figure, I’ve considered that even if Alphera had responded better to Mr B’s request for a write-off it still wouldn’t have materially changed the overall outcome of the complaint and therefore Mr B would still be in largely the same position as he is in now. However, the lack of an appropriate response understandably caused additional avoidable upset. This £400 compensation is separate to the £300 compensation I consider fair for the car quality issues and therefore to put things right overall, I consider Alphera should pay Mr B a total of £700 compensation. I’m aware this award will fall far short of what Mr B considers to be satisfactory given that he wants the outstanding balance to be written off. If Mr B feels his circumstances have changed since his complaint and he has further evidence of this, he should provide this to Alphera in the first instance. I remind Alphera of its obligation to treat Mr B fairly in relation to his financial difficulties and to give due consideration to any new information and evidence he might provide. Alphera accepted that outcome, but Mr B didn’t. He provided a substantive response. In summary, he said: • Proportionate affordability checks would most likely have shown the agreement was unaffordable. The details the car dealership (acting as a credit broker) entered into the application about his circumstances were incorrect. His income was not stable as it was commission based. The credit broker knew this about his circumstances as it was discussed. • Relying on his tax return for 2022/2023 is not reasonable as he did not receive a fixed income every month and his bank statements from the time also don’t show guaranteed income streams. • His suitability for the finance was not discussed in any meaningful way before entering into the agreement. • He had taken out a large consolidation loan shortly before the car finance agreement which was visible on his bank statement. Using the figures from the provisional decision this would have left him with around £1,600 per month for essential living costs which was not sufficient for his outgoings. • The application recorded him as having no dependents which was not accurate and dependents will have a material impact on affordability. • While he was able to discuss the agreement during the call in April 2025, this isn’t the same as having the financial capacity or resilience to sustainably maintain the agreement. He is not saying he lacked capacity at the time of entering into the agreement. • He informed Alphera in May 2025 that he could no longer work due to ill health and he has not returned to work since. He said that he supplied a medical letter in May 2025 confirming he was currently not fit to work. He therefore did clearly communicate his inability to work. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Mr B’s response to the provisional decision was more detailed than my brief summary and he provided numerous documents to support what he said. I want to assure Mr B that even if I don’t specifically mention or comment on a particular point or piece of evidence I’ve nevertheless read and considered everything he has provided. I’ll only focus on what I consider to be material to the overall outcome of the complaint.

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Having considered everything, I’ve reached the same outcome I reached in my provisional decision and for largely the same reasons. However, I’ll briefly address some of the key additional points Mr B has raised. Mr B says that using the credit commitment figures from the provisional decision this would have left him with £1,600 for essential living costs. However, it’s clear Mr B had other forms of income at the time outside of the one he submitted the tax return for. As I stated in my provisional decision, his company also appeared to be covering his travel expenses on top of his salary, his partner was regularly contributing to household costs, and he had other sources of income and savings. I’m therefore not persuaded that any reasonable or proportionate affordability checks would more likely than not have shown the lending to be unaffordable to him. I accept it’s possible that an exceptionally detailed analysis of Mr B’s personal circumstances, bank statements and company accounts might have revealed he may struggle to meet the repayments. However, I’m not persuaded that in the circumstances of this lending decision it would have been proportionate or reasonable for Alphera to review and analyse Mr B’s finances to such a granular degree. I think it just needed to do enough to establish what his likely income and essential outgoings were. From what Mr B has provided now of his circumstances. I’m persuaded that reasonable and proportionate affordability checks would most likely have shown the lending to be affordable. I don’t therefore think Alphera made an unfair lending decision. Mr B says the credit broker filled in details about his circumstances incorrectly on the application. He says it knew he was self-employed and on a commission only income. However, he’s also said that the suitability of the agreement wasn’t discussed and he “was not asked to explain the structure of my self-employed income”. Given there is inconsistency in what discussions Mr B says took place with the credit broker, I find I can place very little weight on what he says took place during those discussions. However, even if Alphera had known Mr B was self-employed, this doesn’t automatically mean it shouldn’t have lent to him. I’ve already concluded Alphera needed to do more thorough affordability checks, but I don’t think more detailed checks would likely have led to a different lending decision. Mr B says he did have capacity to enter in the agreement but that he lacked the financial resilience to maintain the repayments. As I’ve already set out, I’m not persuaded proportionate affordability checks would likely have revealed any concerns to Alphera about Mr B’s ability to repay the borrowing. However, when it became aware in 2025, I don’t think it dealt with Mr B’s concerns appropriately and for the reasons I gave in my provisional decision, I consider it ought to pay him compensation for the distress and inconvenience caused. Mr B says he provided medical evidence to Alphera in May 2025 that he was unable to work. I accept he did provide this letter. However, it only says that Mr B was temporarily unable to work, not that his ability to work would be indefinitely impaired (or impaired for an extended period of time). So, I’m not persuaded this letter ought to have made Alphera realise that Mr B’s circumstances had materially changed to the point he would never be able to return to work or repay the credit agreement. I understand he has later had confirmation that his ability to work will be limited but he received this confirmation after Alphera’s final response letter in June 2025. As I’ve explained in my provisional decision, I’m only considering Alphera’s actions up to that point. I don’t consider that Alphera’s decision not to write off the outstanding debt at that time, with the information they had, to have been unfair or unreasonable. If Mr B’s medical circumstances have now materially changed and he has evidence to provide to Alphera of this he should do so. I would expect Alphera to take into consideration

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anything Mr B provides and respond fairly. Just because I concluded that Alphera’s decision not to write off the debt in June 2025 wasn’t unfair or unreasonable this doesn’t mean it would never be fair, reasonable or appropriate to do so. Alphera should continue to monitor the situation as Mr B’s circumstances change and I would expect it to provide him with a considered response to any new information or requests Mr B makes in relation to his medical conditions and personal circumstances. My final decision For the reasons given above, I uphold this complaint in part and direct BMW Financial Services (GB) Limited trading as Alphera Financial Services to: • Pay Mr B a total of £700 compensation for the distress and inconvenience caused. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr B to accept or reject my decision before 27 April 2026. Tero Hiltunen Ombudsman

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