CA Auto Finance UK Ltd · DRN-6144383

The complaint Mr T complains that CA Auto Finance UK Ltd irresponsibly provided him with an unaffordable hire purchase agreement. What happened CA Auto provided Mr T with a regulated hire purchase agreement for a vehicle with a cash price of £54,000 in April 2023. Mr T paid a deposit of £1,000 and obtained finance of £53,000 with CA Auto. This credit agreement had a term of 120 months with 119 instalments of around £685 and one final instalment of around £695. The total repayable value, including the deposit, interest and fees, was around £83,220. Mr T complained to CA Auto in August 2025 about unaffordable lending. He said it hadn’t completed proportionate checks before approving this lending; and that had it done so it ought to have concluded this agreement wasn’t sustainably affordable for him. CA Auto issued its final response in September 2025 in which it didn’t uphold Mr T’s complaint. Unhappy with CA Auto’s response Mr T referred his complaint to our service. One of our investigators reviewed the details of Mr T’s complaint and upheld it. They said CA Auto’s checks weren’t proportionate to the terms of lending being provided, and what it had identified about Mr T’s finances. They went on to consider what CA Auto would more likely have identified through proportionate checks, and concluded it hadn’t made a fair lending decision when providing Mr T with this agreement. Mr T accepted our investigator’s view: CA Auto didn’t, simply requesting for the complaint to be reviewed by an ombudsman but providing no further detail. As CA Auto asked for an ombudsman’s review the complaint has been passed to me to decide. 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. The information in this case is well known to Mr T and CA Auto, so I don’t intend to repeat it in detail here. Instead, I’ve focused my decision on what I consider to be the key points of this complaint; so, while my decision may not cover all the points or touch on all the information that’s been provided, I’d like to assure both parties I’ve carefully reviewed everything available to me. I don’t mean to be discourteous to Mr T or CA Auto by taking this approach, but this simply reflects the informal nature of our service. We’ve set out our approach to complaints about irresponsible and unaffordable lending as well as the key rules, regulations and what we consider to be good industry practice on our website. I’ve taken this approach into account in deciding Mr T’s case. Having considered everything I’m upholding Mr T’s complaint, as I’ve decided this hire purchase agreement wasn’t provided fairly. I say this because:

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• I don’t consider the checks CA Auto completed before providing this credit agreement were reasonable and proportionate, given the terms of lending being provided, and what CA Auto had identified about Mr T’s finances through the checks it did complete. • Had CA Auto completed proportionate checks, I don’t think it’s likely these would have shown it was fair to provide Mr T with this credit agreement. • CA Auto’s own checks showed Mr T already had sizeable outstanding credit commitments totalling around £41,800; around £31,500 by way of non-revolving accounts and around £10,300 by way of revolving accounts. • CA Auto appears to have verified Mr T’s income by way of one weeks payslip and three years’ worth of tax returns. It appears to have satisfied itself that Mr T’s income was £40,000 a year. This would mean when taking into account this new hire purchase agreement Mr T’s total outstanding commitment to credit would stand at around £125,000, over 300% of his income. And based on the credit information CA Auto identified, with the addition of this agreement Mr T would be committed to repaying over 60% of his net monthly income towards credit. • The credit check also reported a mortgage with a monthly commitment of around £710, with no information to suggest it wasn’t in Mr T’s sole name. Taking into account the commitments I’ve set out above, CA Auto’s own checks suggested Mr T would be left with around £325 each month for household bills, living costs and any other unexpected costs that may occur from time to time. I’ve also seen its internal notes suggest a monthly disposable income of around £125, however within its final response it stated a figure of around £1,200. It isn’t clear how such a discrepancy was reached. • Our investigator considered CA Auto ought to have had concerns with the income information Mr T had provided, as it didn’t suggest he was in receipt of £40,000 per year. So, she concluded it ought reasonably to have completed better checks to fully understand Mr T’s financial circumstances, rather than relying on credit tool information. She went on to consider Mr T’s bank statements and concluded this lending wasn’t affordable for Mr T. • For completeness, I’ve also gone on to consider these statements to better understand Mr T’s financial circumstances in the lead up to this agreement being provided. While I acknowledge CA Auto was under no obligation to specifically review bank statements, in the absence of any other contradictory information I consider these statements allow me to reasonably understand what better checks at the time would more likely than not have shown CA Auto. • The bank statements largely reflect the information CA Auto had available to it through the credit check it had completed, in terms of Mr T’s existing commitments to credit and his mortgage. The income evidenced across the three months leading up to this agreement averages around £2,380 per month, as our investigator set out. • This means after Mr T paid his mortgage and monthly credit commitments, including the repayment to this new agreement, he would be left with less than £100 each month for household bills, living costs, costs associated with owning a vehicle, and any unexpected costs that may occur from month to month. • It follows I don’t consider this level of disposable income is reasonable for Mr T to

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cover these additional costs as set out above, and it therefore follows I consider CA Auto ought reasonably to have concluded this agreement wouldn’t be affordable or sustainable for Mr T. This means I don’t think CA Auto should have provided Mr T with this hire purchase agreement in April 2023. I’ve also considered whether CA Auto has acted unfairly in any other way, including whether the relationship might have been unfair under s.140A of the Consumer Credit Act 1974. Mr T has raised a number of additional points relating to CA Auto’s handling of his requests to understand his settlement options, and its actions when he made it aware of financial difficulties. However, I’m satisfied the redress I’m awarding in this case, as set out below, results in fair compensation for Mr T taking into account all of the circumstances of this complaint. I’m therefore satisfied, based on what I’ve seen, that no additional award would be appropriate in this case. Putting things right As I don’t think CA Auto Finance ought to have approved the lending, I don’t think it’s fair for it to be able to apply any interest or charges under the agreement. But Mr T has had use of the vehicle, for around 34 months up to this point, so I think it’s fair he pays for that use. However, I don’t consider monthly repayments of around £685 are a fair reflection of fair usage, given that includes interest and charges. I therefore consider fair usage to be a value of £441 for each month Mr T has had use of the vehicle. This means CA Auto can only ask Mr T to repay a total of £14,994. So, to settle Mr T’s complaint I direct CA Auto to take the following action: • End the agreement and collect the vehicle with nothing further to pay. • Refund the deposit, adding 8% simple interest per year* from the date of payment to the date of settlement. • Calculate how much Mr T has paid towards this agreement and deduct £14,994 for fair usage. o If Mr T has paid more than the fair usage figure, CA Auto should refund any overpayments, adding 8% simple interest per year* from the date of each overpayment to the date of settlement. Or; o If there is a remaining fair usage balance to pay, CA Auto should arrange an affordable repayment plan with Mr T. • Once the fair usage figure has been repaid, CA Auto should remove any adverse information that may have been reported on Mr T’s credit file regarding this agreement. *HM Revenue & Customs requires CA Auto to take off tax from this interest. It must give Mr T a certificate showing how much tax it’s taken off if he asks for one. My final decision My final decision is that I’m upholding Mr T’s complaint and I direct CA Auto Finance UK Ltd to put things right as I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr T to accept or

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reject my decision before 16 April 2026. Richard Turner Ombudsman

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