BMW FINANCIAL SERVICES (GB) LIMITED · DRN-6248735

The complaint Mr M complains about the quality of a car he has been financing through an agreement with BMW FINANCIAL SERVICES (GB) LIMITED (who I’ll call ‘BMWFS’). What happened I issued a provisional decision on this complaint earlier this month. An extract from that provisional decision is set out below. Mr M took receipt of a used car in August 2025. When he got the car home he complained to BMWFS. He said the car smelt badly of tobacco smoke and he asked to reject it on that basis. He also complained that the alloys had been misdescribed and were a different type. BMWFS referred Mr M back to the dealership, but they wouldn’t allow Mr M to reject the vehicle. They said they’d carry out an interior clean. Mr M subsequently arranged for a deep clean of the car and BMWFS agreed to refund the cost of that, although Mr M says it failed and the smell is still present. When Mr M referred his complaint to this service our investigator didn’t think BMWFS had done anything wrong. He thought Mr M should complain to the cleaning company if he was dissatisfied with the work they’d completed, but he felt BMWFS had been reasonable to pay for that work. Mr M was unhappy with the investigator’s response, and he asked for a decision by an ombudsman. He said BMWFS had denied him his short-term right to reject the car within the first 30 days. What I’ve provisionally 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. I don’t currently agree with the investigator’s view of this complaint, and I’m inclined to uphold it. Where the information I’ve got is incomplete, unclear, or contradictory, as some of it is here, I have to base my decision on the balance of probabilities. I’ve read and considered the whole file, but I’ll concentrate my comments on what I think is relevant. If I don’t comment on any specific point, it’s not because I’ve failed to take it on board and think about it but because I don’t think I need to comment on it in order to reach what I think is the right outcome. Mr M acquired his car under a hire purchase agreement, which is a regulated consumer credit agreement. This means our service is able to consider complaints about it. Under the

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Consumer Rights Act (2015), the car must have been of satisfactory quality when supplied. Given the car was a little over four years old and had already covered about 25,700 miles, a reasonable person would expect signs of wear and tear. The legislation requires us to assess whether the car’s condition at the time of supply met reasonable expectations for a vehicle of that age, mileage, and price. If it didn’t then BMWFS, who are also the supplier of the car, are responsible. The Consumer Rights Act (2015) gave Mr M a short-term right to reject the car within 30 days if it was of unsatisfactory quality. Mr M has explained that he didn’t get to inspect the inside of the car before he drove away and that his sense of smell had been affected by a previous COVID-19 infection. On that basis I don’t think it would be fair to suggest he should have noticed the smell before he drove the car from the dealership. I’m persuaded he reported the issue as soon as possible; on the day he took delivery of the car and after his wife and child were able to notice the smell. I’ve thought about whether it would be fair to suggest a car of this age and mileage was of unacceptable quality if there was a persistent smell of tobacco. I’m persuaded it would be. Mr M has explained that his wife and child are asthma sufferers and would be particularly impacted by the smell and I don’t think a reasonable consumer would expect a car to smell strongly of tobacco regardless of its age. I’m persuaded the smell was present because the report provided by the cleaning company details significant contamination and because I see no other reason for Mr M to have paid, initially at least, over £700 to have the smell eradicated. Overall, I think the smell was present at the point of supply and that it did render the car of unsatisfactory quality. I therefore think BMWFS were unreasonable not to support Mr M’s request to reject the vehicle. Mr M also raised concerns about the alloy wheels not being as advertised. I've considered that carefully. However, the presence of the wrong alloys would, in my opinion, have been likely to have been apparent on inspection before the car was driven away. In the circumstances, I think this is something Mr M could reasonably have noticed at the point of collection if it was important to him. I therefore don't think the condition of the alloy wheels means the car was misrepresented or that it independently makes the vehicle of unsatisfactory quality. However, I am satisfied that the interior smell meant the vehicle fell below the standard a reasonable person would expect. Mr M raised this issue quickly after collecting the car and indicated that he wished to reject it. In those circumstances, I think it would have been fair for BMWFS to accept that rejection under the Consumer Rights Act. Putting things right The appropriate remedy is to unwind the agreement and place the consumer back in the position they would have been in if the agreement had not been entered into. To put things right BMWFS should therefore accept the rejection of the vehicle, and the finance agreement, and arrange for the car to be returned. They’ll need to refund any part exchange/deposit or advance payment Mr M made and, as he’s been deprived of that money, they’ll need to add 8% simple interest to the refund.

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It’s only fair that Mr M pays for any use he’s had from the car. I've taken into account that he has had use of the vehicle since August 2025 and that the mileage he has covered is broadly consistent with what would have been expected under the agreement on a pro rata basis of 10,000 miles per year. That suggests Mr M has had a significant level of benefit from using the vehicle over that time. In those circumstances, I think it is fair that BMWFS retain the majority of the instalments Mr M has paid as a reasonable reflection of the use he’s had from the car. However, I have also considered that Mr M was without his own vehicle for a period of around three weeks while drivetrain repairs were carried out, and that he was provided with a lower specification courtesy car during that time. He also had to drive a car with an unpleasant odour for at least part of this period, which reduced his enjoyment of the vehicle. Taking these factors into account, I think it would be fair for BMWFS to refund Mr M the equivalent of one monthly instalment to recognise the reduced benefit he received from the agreement. They can retain any other instalments in respect of fair usage. I also recognise the inconvenience Mr M has experienced. It wasn’t fair for BMWFS not to have dealt with Mr M’s rejection request themselves, and to have instead referred him back to the dealership. After all, Mr M had clearly made out his claim, and had directed them to the relevant legislation that supported rejection. Mr M has also had to refer his complaint to this service when I think it could have been resolved more quickly. He’s had to drive a vehicle he wasn’t happy with, and has had to arrange a repair and deep clean of the car. That wouldn’t have been necessary if the car had been supplied in a satisfactory condition. In those circumstances, I think BMWFS should pay Mr M £300 in compensation. My provisional decision For the reasons I’ve given above, I’m expecting to uphold this complaint and to tell BMW FINANCIAL SERVICES (GB) LIMITED to: • Allow Mr M to reject the car and end the finance agreement. • Collect the car at no cost to Mr M. • Refund any deposit/part exchange/advance payment that has been paid and add 8% simple interest* per year from the date of payment to the date of settlement. • Refund one monthly finance payment in respect of impaired use and add 8% simple interest* per year from the date of payment to the date of settlement. • Pay Mr M £300 to compensate him for the distress and inconvenience he’s experienced. • Remove any adverse reports they may have made to Mr M’s credit file in relation to this issue.

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*If HM Revenue & Customs requires the business to take off tax from this interest, they must give the consumer a certificate showing how much tax it’s taken off if the consumer asks for one. The parties’ responses to my provisional decision Mr M was happy to accept the provisional decision but asked if I’d consider awarding higher compensation. He explained: “I fully understand and accept the principle that it is fair for a consumer to pay something to reflect the benefit of using a vehicle. However, in my particular circumstances the benefit I was able to obtain from the car was significantly reduced compared with what would ordinarily be expected - not just enjoyment which was next to zero but importantly in usability. As explained previously, the tobacco contamination was extremely strong when the vehicle was supplied. The smell was so severe that my wife and son – both of whom suffer from asthma – were unable to travel in the vehicle at all. As a result, for health reasons my family could not realistically use the vehicle. In practice, only my daughter and I were able to travel in it. This meant that, although I technically had possession of the car - which was used to commute to work, its usability for my household was substantially limited. Furthermore I must add that even after the specialist cleaning was undertaken the interior odour remains distinctly and noticeably unpleasant. That’s in addition to you rightly alluding to the fact the vehicle was unavailable for a period while drivetrain repairs were carried out. For these reasons I respectfully suggest that the level of benefit I received from the vehicle was materially lower than would normally be expected during that period. In light of this, I would be grateful if you might consider whether it might be fairer to refund more than the equivalent of one monthly instalment to reflect the reduced usability and enjoyment of the vehicle. If I may speak plainly as a consumer, every time I entered or even saw the vehicle was a sick-to-your-stomach reminder (until your provision ruling) of being stuck for years with this very expensive purchase that was not fit for purpose, how such a notable brand as BMW could and would sell a car in that condition, and how and why no-one was willing to investigate it, acknowledge my complaint - every drive or sight of the car was ultimately a reminder of how it was affecting everyday life for us as a family so there was zero enjoyment.” BMWFS didn’t accept my provisional decision. They said: “The customer signed the handover checklist (attached) when collecting the vehicle on 08 August 2025 to confirm he was satisfied with the condition of the vehicle so it can be evidenced that he was given the opportunity to inspect the vehicle before raising the issue with BMWFS on 12 August. It is questionable that a vehicle that is described as smelling strongly of tobacco smoke by Mr M could be signed off as acceptable by the customer. The vehicle was also subject to stringent BMW approved used checks before sale. It should be noted that Mr M’s initial complaint with BMWFS was that the vehicle had an ‘undisclosed history of smoker use’ which made it unfit for purpose. The customer had purchased a used vehicle, they understood it would come with a history, which could include being driven by someone who smoked. The customer should not have signed to confirm his acceptance of the condition of the vehicle. We have not seen any evidence that there has

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been misrepresentation. We do not agree that there is a fault with the vehicle as defined by the CRA 2015. I fully understand why Mr M would be unhappy with an odour inside the vehicle and that an unpleasant smell may affect his overall perception of the car’s quality. However, the presence of a strong odour does not amount to a fault within the meaning of the legislation. When assessing whether a vehicle is of satisfactory quality, we believe the focus is primarily on issues that affect the mechanical condition, durability and functionality of the goods. A fault generally refers to a defect or failure in the cars components or systems, such as the engine, gearbox or other mechanical or structural elements that make the vehicle unsafe to drive, unreliable or unfit for its normal purpose. In this instance, there is no such evidence of any such defect or mechanical issue. The odour, whilst undesirable, does not indicate that any part of the car is defective or likely to fail prematurely and has since been eradicated. A deep clean has been completed - above and beyond a full valet of the vehicle and at no cost to Mr M. The customer examined the goods and the examination should have revealed the issue as he sees it. The deep clean was organised by the customer and we have paid for this after the event. We believe we have completed our responsibilities and that it would be unreasonable to reject a vehicle for this reason.” 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. Neither parties’ submissions have persuaded me to change my conclusions. In relation to BMWFS’s response I've already taken into account that the car was used, that Mr M signed a handover checklist, and that a clean was carried out. But for the reasons I set out in my provisional decision I remain satisfied, on the balance of probabilities, that there was a significant and persistent smell of tobacco present at the point of supply, and that this went beyond what a reasonable person would expect for a car of this age, mileage, and price. I don't agree that the absence of a mechanical defect is determinative. The test under the Consumer Rights Act (2015) is whether the vehicle was of satisfactory quality overall, taking into account all relevant factors. In this case, I remain satisfied that a strong and persistent odour of this nature can render a vehicle of unsatisfactory quality particularly where it materially affects the use and enjoyment of the car. I've also considered BMWFS's point that Mr M could have identified the issue earlier. But I remain persuaded that Mr M raised the concern promptly after taking delivery, and in the circumstances, I don't think it would be fair to say he accepted the condition of the vehicle simply by signing the handover documentation. Turning to Mr M’s submissions about compensation, I've carefully considered whether a higher award or a greater reduction for use would be fair. I acknowledge the impact he's described and I don't doubt this has been a very unpleasant experience for him and his family. However, I remain satisfied that the approach I set out in my provisional decision fairly reflects the benefit Mr M did have from the car, alongside the periods of reduced enjoyment and inconvenience. The refund of one monthly instalment appropriately recognises the reduced use, and the award for distress and inconvenience is in line with what I consider fair and proportionate in the circumstances of this complaint.

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Overall, having considered everything again I've not been persuaded to depart from the findings or outcome I reached in my provisional decision. My final decision For the reasons I’ve given above, I uphold this complaint and tell BMW FINANCIAL SERVICES (GB) LIMITED to: • Allow Mr M to reject the car and end the finance agreement. • Collect the car at no cost to Mr M. • Refund any deposit/part exchange/advance payment that has been paid and add 8% simple interest* per year from the date of payment to the date of settlement. • Refund one monthly finance payment in respect of impaired use and add 8% simple interest* per year from the date of payment to the date of settlement. • Pay Mr M £300 to compensate him for the distress and inconvenience he’s experienced. • Remove any adverse reports they may have made to Mr M’s credit file in relation to this issue. *If HM Revenue & Customs requires the business to take off tax from this interest, they must give the consumer a certificate showing how much tax it’s taken off if the consumer asks for one. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 22 April 2026. Phillip McMahon Ombudsman

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