CA AUTO FINANCE UK LTD · DRN-6238204

The complaint Mr P complains about the quality of a car supplied to him by CA AUTO FINANCE UK LTD (“CA”). What happened Mr P entered into a hire purchase agreement with CA in September 2024 for the supply of a used car. The car was around five years old and had travelled around 55,500 miles when supplied. Mr P noted the oil light came on in October 2024, so the first month he had the car. He contacted the supplying dealership, who I believe put him in touch with a warranty garage. They changed the oil and the filter. But the oil light came back on quickly, so he contacted the supplying dealership again. They booked him in to bring the car back to them to be inspected in November 2024. When he did this, they said they found no oil leak but did replace the spark plugs which were worn. Mr P has told us that the oil light wasn’t on after this visit, so he assumed that whatever they had done had fixed the problem. He drove the car for several months and then suffered major engine problems in May 2025. The local garage where the car was recovered to couldn’t diagnose the problem, so Mr P arranged for the car to be transported to a main dealer and in June 2025, they identified damage to the engine which they said was due to the timing belt failing. Mr P contacted CA at this point to complain and explain what was happening, and they arranged for an independent inspection to be carried out. The engineer visited the car at the main dealer where it had been recovered to, and their report said that catastrophic engine failure appeared to be due to a timing belt failure, which was a common fault for this vehicle. While the belt itself wasn’t present for the inspection, as it had been removed and thrown away, the engineer suspected the belt had delaminated and deteriorated to the point of failure. The engineer said that the technician at the main dealership where the car was had told him that there had been an issue with the lubrication system since September when the car was supplied, and that the oil warning light had been on since September. The engineer said that this would have been the initial sign of the timing belt deteriorating, as it was likely to be partially blocking the oil pick up. The engineer concluded that in their opinion, if the engine had been switched off when the light came on, this engine failure could have been avoided, and it was the drive on damage caused by Mr P which ultimately caused the catastrophic failure. On this basis, CA didn’t uphold the complaint and said in their final response letter (FRL) in August 2025, that it was now almost a year since the car was supplied, and Mr P had covered over 29,000 miles since supply (I believe this was actually around 9,000 miles in reality). On this basis, they said no faults were present or developing at the point of sale, so

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didn’t uphold the complaint. Mr P brought his complaint to our service and the investigator who investigated it also didn’t uphold it. They said that although the independent engineer had said the fault lay with Mr P continuing to drive the car with the oil light illuminated, they didn’t agree with this as they knew he’d taken the car back and had told them the light had then turned off. But they said they could see no evidence that the fault was present or developing at the point the car was supplied, and it was more likely that the timing belt had failed due to wear and tear while Mr P had the car. Mr P didn’t agree with this and asked for an Ombudsman to make a final decision. He said that CA needed to prove the car was of satisfactory quality when supplied, and it wasn’t right that he needed to prove it wasn’t. He made a variety or arguments, including that durability needed to be considered. On this basis, the case has come to me for a final decision. I issued a provisional decision on 6 March 2026 which said the following: I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’ve reached different conclusions to the investigator, and I’ll explain why below. If I haven’t commented on any specific point, it’s because I don’t believe it’s affected what I think is the right outcome. Where evidence has been incomplete or contradictory, I’ve reached my view on the balance of probabilities – what I think is most likely to have happened given the available evidence and wider circumstances. In considering this complaint I’ve had regard to the relevant law and regulations; any regulator’s rules, guidance and standards, codes of practice, and (if appropriate) what I consider was good industry practice at the time. Mr P was supplied with a car under a hire purchase agreement. This is a regulated consumer credit agreement which means we’re able to investigate complaints about it. The Consumer Rights Act 2015 (‘CRA’) says, amongst other things, that the car should’ve been of a satisfactory quality when supplied. And if it wasn’t, as the supplier of goods, CA are responsible. What’s satisfactory is determined by things such as what a reasonable person would consider satisfactory given the price, description, and other relevant circumstances. In a case like this, this would include things like the age and mileage at the time of sale, and the vehicle’s history and its durability. Durability means that the components of the car must last a reasonable amount of time. The CRA also implies that goods must conform to contract within the first six months. So, where a fault is identified within the first six months, it’s assumed the fault was present when the car was supplied, unless CA can show otherwise. But where a fault is identified after the first six months, the CRA implies that it’s for Mr P to show it was present when the car was supplied. So, if I thought the car was faulty when Mr P took possession of it, or that the car wasn’t sufficiently durable, and this made the car not of a satisfactory quality, it’d be fair and reasonable to ask CA to put this right. Having assessed the evidence here, I’ve decided that the case should be upheld based on the independent engineer’s report. Whilst I appreciate that an engineer will generally come to a conclusion, the content and commentary of a report can be more relevant to an

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investigation than the conclusions. The engineer is an expert in car mechanics, not necessarily an expert in the law and the CRA. The conclusion the engineer has come to here was largely based on what they were told by a technician at the garage where the car was being looked at. And this information, the belief that the oil light had been illuminated, and Mr P had continued to drive while this was the case, doesn’t seem to be true. It also ignores the fact that he reported the oil light being on twice in the first month to the supplying dealership, which I don’t believe the independent engineer knew. The independent engineer actually says, “the illuminated oil light would have been the initial warning sign that the (timing) belt had begun deteriorating and (was) partially blocking the oil pick-up”. The engineer doesn’t appear aware that Mr P had presented the car to be examined when the oil light came on, both to a warranty garage the supplying dealership had sent him to and then a short while later to the supplying dealership themselves. He’d told the supplying dealership that he’d had the oil changed and oil filter replaced, and the oil light came on again. They looked at the car, and from his testimony, appear to have turned the oil light off, as well as replacing the spark plugs. Based on the independent engineer testimony, this would seem to be the initial signs of the timing belt failing. And as this was inside the first two months of the car being supplied to Mr P, this would mean that the car wasn’t of satisfactory quality when supplied to him, as the fault was present or developing when the car was supplied. Mr P has been able to continue to use the car then for several months, before the timing belt has completely failed and caused engine damage. The timeline here fits with the explanation by the independent engineer, that the oil light coming on was a first sign of the timing belt beginning to fail. I’ve thought about the durability of the car, and the expected lifespan of a timing belt. If properly maintained, a belt can be expected to last longer than it has, but I don’t have any clear evidence of service history of the car, or the specific manufacturer recommendations for changing the belt. But ultimately, the timing belt has begun to fail shortly after the car was supplied. Both parties have recognised Mr P said the oil light was on within a month or so of the car being supplied, and without realising it, the independent engineer has confirmed that this was likely the first sign of the timing belt degrading. The car was presented to the supplying dealership at this time, and they’ve not recognised the potential issue here, and sent Mr P off with new spark plugs, to continue driving. I’ve thought about how likely it is that Mr P has then continued to drive the car if the oil light had come on again, and it feels unlikely. I say this because when the light has come on originally, he’s immediately contacted the supplying dealership, who I think have first off referred him to a warranty garage who have changed the oil and filter. Then when the light has come on again, he’s contacted the supplying dealership again and taken the car to them to examine. It feels unlikely therefore that he’d have chosen to ignore the light if it had illuminated again for a third time. His testimony is that it didn’t come on again, and I think this is plausible. The independent engineer has said that the light coming on was likely due to the failing timing belt partially blocking the oil pick up, and then the drive on damage has caused the timing belt to

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eventually fail. But this confirms that the car wasn’t of satisfactory quality when it was supplied, rather than the opposite conclusion which has been drawn. The CRA says that goods supplied are of unsatisfactory quality if there is a fault present, or developing, at the point of supply. I’m satisfied that in this case, there was a fault developing in the timing belt when the car was supplied, and this has led to the catastrophic failure a few months later when the belt has broken and engine damage has occurred. Judging by the description and photos supplied, alongside the fact it has now been many months since this happened, I think it would be fairest for all parties now to allow Mr P to reject the car. I have reached out to him, and the car is still at the main dealership where they were attempting to diagnose and fix the problems. Unfortunately, what this means is that as far as Mr P knows, the engine is still in pieces, as they had taken it apart to try to see if it could be repaired. I’ve thought about this, and I think it’s reasonable for CA to collect the car as it is, as if the car is going to be returned to the road, it will need those repairs completing anyway. Mr P made the decision to go down this road of trying to repair the car only after CA wrongly didn’t uphold his complaint, and he’s told me that he’s spent over £2,000 on diagnosis and some attempts at repairs (£2,163.47 I believe). As this is a result of him being supplied with a car of unsatisfactory quality, it would also be fair for CA to reimburse him these costs on production of proof of invoice and proof payment of that invoice. Mr P hasn’t had any use of the car since May 2025, so I think it would be fair for CA to refund him all payments made for the car from 1 June 2025 onwards, as well as refunding his deposit for the car which I believe is £299. I’m satisfied that CA can retain the monthly payments for the car up to 31 May 2025, in lieu of the fair usage he did get for this period. Mr P has mentioned a warranty he was provided by the supplying dealership, but as this doesn’t form part of the finance agreement, I won’t be making any finding about that here. He did also have use and benefit of this until the car failed and presumably could cancel it at that point as he’s said it was a monthly agreement. Similarly, he said about hire car costs, but I’ve explained to him that as I will be recommending his monthly payments are refunded to him, I wouldn’t also consider hire car costs, which he understood. I also think it would be fair for CA to pay Mr P £200 for the distress and inconvenience caused by the supply of a car which was of unsatisfactory quality. Putting things right At this stage, I intend to ask CA to do the following to put things right: - End the agreement with no further monthly payments for Mr P to pay. - Collect the car at no cost to Mr P in its current state from the main dealer where it is stored (Mr P may need to liaise with CA to confirm these details). - Refund any deposit paid for the car by Mr P. - Refund all monthly payments for the car from 1 June 2025 onwards. - Refund Mr P’s repair and diagnosis costs of around £2163.47 on production of proof of these and their payment. - Pay simple yearly interest of 8% on all refunds above from the date of payment to the date of settlement. - Pay Mr P £200 for the distress and inconvenience caused by the supply of a faulty car.

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- Remove any adverse information relating to this agreement from Mr P’s credit file. My provisional decision My provisional decision is to uphold this complaint. 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 P came back to me and accepted the provisional decision but also confirmed that the deposit he had paid for the car was £99, not £299 as I’d suggested. CA came back with testimony from the supplying dealership which didn’t agree with my findings. They said that the customer had reported an oil leak, but no evidence had been found of an oil leak, so this wasn’t evidence of a fault present or developing at the point of sale. They said that the customer would not have been able to cover the mileage they did in the nine months after sale (around 10,000 miles) if the timing chain had been faulty at supply. CA also said that the supplying dealership had only seen the car in November 2024 and hadn’t been contacted before this. And they didn’t hear from him until June 2025 then when he informed them the car had failed. They said that the CRA means the customer needs to provide proof that a fault was present or developing at the point if sale, and the independent report provided concluded that the fault wasn’t present or developing at the point of sale, so my conclusions that under the CRA, the fault was present or developing at point of sale are not backed up by the facts. They felt this was an example of my conclusion being in opposition to the law, and as a minimum I should have followed up with the engineer about any concerns I had with the report. Finally, they said they didn’t agree with my conclusions and urged me to reconsider them. They said they feel there is substantially more evidence in their favour and don’t believe any new evidence has been provided that should change my mind to uphold the case. They went on to say that if I didn’t change my mind, they at least felt I should follow industry standards for fair usage and that Mr P should pay 45p per mile for his usage of the car, rather than be refunded all payments from June 2025 onwards. As both parties have commented now on the provisional decision, I will move on to make a final decision. I’ll deal with CA’s points one by one. Regarding the oil leak, the independent engineer didn’t say there would have been an oil leak. They said, and I quote “the illuminated oil light would have been the initial warning sign that the (timing) belt had begun deteriorating and partially blocking the oil pick up”. Mr P reported to the supplying dealership that there was an oil leak, as evidenced by his visit to a different garage, and which the supplying dealership accepted and apologised for in email correspondence. They also offered a partial refund for his costs to replace the oil and filter, and confirmed the car was booked in for them to examine. Alongside this, there is evidence that Mr P had the car examined at a garage in October

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2024 for an oil leak, and then he came back to the supplying dealership again shortly afterwards to say the oil warning light was illuminated again. He sent the supplying dealer an email dated 7 November 2024 complaining that he was disappointed to have discovered the oil level was very low only 1,000 miles of driving after supply, and further investigations had noted a “small oil weep from the flange connecting the bell housing to the engine”. The amount of times he has contacted the supplying dealership doesn’t really matter here; even if he’s only made contact with the supplying dealership once in October/November, which is what they’ve said, this is still inside the first three months after supply, and the independent engineer has said the oil light being on will have been the initial sign of the timing belt failing. I’m not persuaded that he hasn’t told them the oil light was on, as there is the email I refer to above which clearly notifies them that he’s had an oil leak problem. As such, the fault would have been developing inside the first six months of supply, making CA responsible for it under the CRA, unless they could prove otherwise. I’ve seen no proof otherwise. CA went on to say the customer wouldn’t have been able to cover the mileage they did if the timing belt was faulty when supplied. But the CRA says if a fault is “present or developing” within the first six months, it would fall to the business to put this right. I am satisfied based on the independent engineer report that the timing belt fault was developing within three months of the car being supplied to Mr P. I’m also satisfied that if the timing belt was failing, Mr P could have driven the further 7,000 – 8,000 miles before it finally broke and caused knock on damage to the engine. We have no way of knowing at what stage the fault was at, but again, if I go back to the independent engineer’s report, he says that the oil light illuminating would have been the first sign of the timing belt beginning to fail. He hasn’t suggested that the car couldn’t have lasted until when it fully failed, indeed he’s confirmed that drive on damage will have been the cause of the belt ultimately failing. But the engineer felt that the drive on damage was because the oil light had been on since September 2024, which seems to be what he’d been told by the repairing garage or had seen on their notes. He has assumed that Mr P kept driving and in effect ignored the light. As I said in the provisional decision, Mr P says this isn’t what happened, and I don’t think this is likely to have happened. Mr P had contacted the supplying dealership already about the oil light being on and taken the car to a garage to be checked out the first/second times the oil warning light came on. These aren’t the actions of someone who would then just drive the car for several thousand miles with an oil warning light on, ignoring it. His testimony is that he took the car to the supplying dealership, and when they’d finished with it, they told him they’d changed the spark plugs, and the oil light was off. He fairly assumed this meant it was fine now and doesn’t appear to have raised an issue about the oil light coming on again. If it had illuminated, I’m persuaded he would most likely have contacted them again. I’d also highlight that at the main dealer where the car was trying to be repaired, the independent engineer report says that the technician he saw didn’t know where the timing belt itself was, as it had been removed by someone else who wasn’t working that day. I’m not persuaded that any third-party testimony from these mechanics about whether Mr P had said the oil light had been on since September 2024 is persuasive. I think it’s far more likely that a technician has misinterpreted something, or the independent engineer has read something which said the oil light had come on in September 2024 and assumed it had remained on.

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CA have said I should have followed up with the engineer to clarify my concerns and get their opinion. But my conclusions are simply following what the independent engineer report says. It says that the oil light illuminating would have been the first sign of the timing belt degrading and ultimately failing. This happened in around October 2024, shortly after the car was supplied. The engineer has concluded that drive on damage after this would then have meant the belt failed. But Mr P presented the car back to the supplying dealership when the light had come on, and they changed the spark plugs and sent him away. He gave them the chance to correctly diagnose the problem, and unfortunately, it appears they haven’t managed to do that. Whilst CA feel my conclusions aren’t backed up by the facts, I’d say that I’ve only drawn these conclusions based on the facts presented by the independent engineer, the confirmation that the supplying dealership saw the car at the time of the oil light coming on, and the CRA. The CRA says that if a fault is present or developing in the first six months from when the car is supplied, it’s assumed the fault was present or developing at the point of sale, unless CA prove otherwise. The independent engineer has said that the fault was developing when the oil light illuminated, which we know was inside the first three months. As such, the only way Mr P would be liable for the ensuing problems would be if he hadn’t notified the supplying dealer or CA what was going on. But he did. Finally, CA have said that my conclusions that Mr P should be refunded for all his monthly payments from June 2025 onwards are not in line with industry standards which would be to retain 45p per mile for fair usage, not refund his payments. I’ve thought about this, but I don’t agree. The Ombudsman service “standard” is generally to refund monthly payments where a vehicle cannot be used due to a fault making the car of unsatisfactory quality, unless this doesn’t appear fair for any reason. The agreement had little deposit and was being paid for via monthly payments for five years, but the car has failed inside the first year. I’m satisfied that the payments from the beginning of the agreement to May 2025 inclusive fairly compensate CA for Mr P’s fair usage of the car, and as he’s had no use of the car since May 2025, he should be refunded all payments since then. They’ve said that his mileage was high, but while its slightly above average, I’m not persuaded it was excessive and warrants a different calculation here. Putting things right I instruct CA to do the following to put things right: - End the agreement with no further monthly payments for Mr P to pay. - Collect the car at no cost to Mr P in its current state from the main dealer where it is stored (Mr P may need to liaise with CA to confirm these details). - Refund any deposit paid for the car by Mr P. - Refund all monthly payments for the car from 1 June 2025 onwards. - Refund Mr P’s repair and diagnosis costs of around £2163.47 on production of proof of these and their payment. - Pay simple yearly interest of 8% on all refunds above from the date of payment to the date of settlement. - Pay Mr P £200 for the distress and inconvenience caused by the supply of a faulty car. - Remove any adverse information relating to this agreement from Mr P’s credit file.

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My final decision I am upholding this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr P to accept or reject my decision before 16 April 2026. Paul Cronin Ombudsman

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