Moneybarn Limited · DRN-6262493

The complaint Miss M complains about the quality of a car she acquired under a conditional sale agreement with Moneybarn Limited (Moneybarn). When I refer to what Miss M and Moneybarn said or did, it should also be taken to include things said or done on their behalf. What happened In April 2025, Miss M entered into a conditional sale agreement with Moneybarn to acquire a used car. The car was first registered in 2016. At the time of acquisition, the car had travelled approximately 81,516 miles. The total cash price of the car was approximately £10,995 when Miss M acquired it. The duration of the agreement was 60 months consisting of 59 monthly payments in the amount of £297.55. Miss M said that on 14 August 2025, at 88,034 miles (around 6,500 miles after supply), the car suffered a catastrophic engine failure caused by a broken timing chain. Miss M said she immediately contacted Moneybarn and the broker. She said she is currently paying monthly for the car finance and is having to pay weekly to rent a car plus excess insurance to cover the rental. She said she has to use her credit card that has a high interest rate to cover these rentals. In addition, Miss M said she paid for the car’s diagnostic. Miss M believes that she should be able to reject the car and get all her expenses refunded. She believes that, as part of this refund, Moneybarn should also refund her monthly car insurance, road tax, extended warranty she paid for, and her breakdown cover. They should also compensate her for the distress and inconvenience the matter had caused her plus what she paid to have the car inspected. In October 2025 Moneybarn wrote to Miss M and said they received a copy of an independent inspection which advised that it would not be possible for her car to have covered 6,500 miles with a timing chain defect. As such, it is not considered that this issue was developing at the point of supply. Moneybarn said that, as the report has concluded the issues would not have been present or developing at the point of supply, they had no option but to not uphold her complaint. Miss M was not happy, so she referred her complaint to the Financial Ombudsman Service (Financial Ombudsman). Our investigator considered Miss M’s complaint. The investigator was of the opinion that Miss M was provided with a car that was not of satisfactory quality, and that Miss M should be entitled to reject the car. The investigator proposed what they deemed was a fair and reasonable redress. Miss M did not accept the investigator’s findings. As such, the complaint has been passed to me to decide. After reviewing the case, I issued a provisional decision 4 March 2026. In the provisional decision I said:

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‘‘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. Where evidence is unclear or in dispute, I reach my findings on the balance of probabilities – which is to say, what I consider most likely to have happened based on the evidence available and the surrounding circumstances. In considering what is fair and reasonable, I need to take into account the relevant rules, guidance, good industry practice, the law and, where appropriate, what would be considered good industry practice at the relevant time. Miss M acquired the car under a conditional sale agreement, which is a regulated consumer credit agreement. Our service can look at these sorts of agreements. Moneybarn is the supplier of goods under this type of agreement and is responsible for dealing with complaints about their quality. I have summarised this complaint very briefly, in less detail than has been provided, and largely in my own words. No discourtesy is intended by this. If there is something I have not mentioned, I have not ignored it. I have not commented on every individual detail. But I have focused on those that are central to me reaching, what I think is, the right outcome. This reflects the informal nature of the Financial Ombudsman as a free alternative to the courts. The Consumer Rights Act 2015 (CRA) covers agreements such as the one Miss M entered into. Under this agreement, there is an implied term that the goods supplied will be of satisfactory quality. The CRA says that goods will be considered of satisfactory quality where they meet the standard that a reasonable person would consider satisfactory – taking into account the description of the goods, the price paid, and other relevant circumstances. I think in this case those relevant circumstances include, but are not limited to, the age and mileage of the car and the cash price. The CRA says the quality of the goods includes their general state and condition, as well as other things like their fitness for purpose, appearance and finish, freedom from minor defects, safety, and durability. In Miss M’s case the car was about nine years old, with a total cash price of around £10,995. It had covered around 81,516 miles. As such the car had travelled a reasonable distance, and it is reasonable to expect there to be some wear to it because of this use. I would have different expectations of it compared to a brand-new car. As with any car, there is an expectation there will be ongoing maintenance and upkeep costs. There are parts that will naturally wear over time, and it is reasonable to expect these to be replaced. With second- hand cars, it is more likely parts will need to be replaced sooner or be worn faster than with a brand-new car. Moneybarn would not be responsible for anything that was due to normal wear and tear whilst in Miss M’s possession. However, given the age, mileage and price paid, I think it is fair to say that a reasonable person would not expect anything significant to be wrong shortly after it was acquired. In summary, Miss M thinks that she should be entitled to reject the car. The CRA sets out that Miss M has a short term right to reject the car within the first 30 days, if the car is of unsatisfactory quality, not fit for purpose, or not as described, and she would need to ask for the rejection within that time. Miss M would not be able to retrospectively exercise her short term right of rejection at a later date. The CRA does say that Miss M would be entitled to still return the car after the first 30 days, if the car acquired was not of satisfactory quality, not fit for purpose, or not as described, but she would not have the right to reject the car until she has exercised her right to a repair first

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– this is called her final right to reject. And this would be available to her if that repair had not been successful. First, I considered if there were faults with the car. Miss M had the car recovered to a garage who did a diagnostic check and concluded that the car had a timing chain failure, which has led to a catastrophic engine damage. As such, they advise to replace engine with a new unit. On file there is also an independent inspection report that was completed on 17 October 2025. I can see that it concluded that the car is displaying evidence of loss of relational valve timing which, they said, most probably is failing due to wear and stretching of the chain. That report indicated that a complete engine replacement is required. However, in many instances, a repair may be possible as a more economical solution. Miss M has also arranged an independent report to be completed. This was completed on 18 December 2025. This report states that in their opinion based on the visible evidence there was a timing correlation issue. The report stated that when using a borescope to video the camshaft, they found that when attempting to start the engine, it was cranking over, the intake camshaft was not rotating and there was an abnormal noise, which was consistent with piston to valve contact. They said this was also consistent with a loss of timing correlation. There was a further fault code to support this (P0342) and this first activated at 88,033 miles, shortly before the point of the inspection. This report indicated that the car, most likely, needs a replacement engine. Based on all of the above, I think the car was, most likely, faulty. But just because a car was faulty does not automatically mean that it was of unsatisfactory quality when supplied. As such, I have considered if the car was of unsatisfactory quality when it was supplied to Miss M. From the independent inspection dated 18 December 2025, the report, which reviewed the service history, states that there does not appear to be any significant gaps or extended mileages in servicing, which could cause a concern. The report mentions that a fault code P25AB that is related to piston cooling jets, located at the bottom of the pistons in the cylinder bores, was captured to have occurred two miles after supply. The report said this fault code captured is a result of reduced oil pressure within the engine and can have detrimental effect on the engine affecting the timing chain, the cam shafts, and the crank shaft area because the cooling jets are designed to deliver oil (spray) to the underside of the pistons to cool the pistons. This report concluded that, based on when the fault code was recorded as compared with the purchase mileage, this issue was present or developing at the point of supply. As such, I have taken this into consideration. I have also considered the report dated 17 October 2025, which concluded that it was not possible for the car to have covered 6,500 miles with a timing chain defect. This report stated that the issue with the car was not present or developing at the point of supply. However, this report had a lot less detail and the car’s examination does not seem to be as thorough as the report Miss M commissioned dated 18 December 2025. For example, it had not commented on the fault code that appeared shortly after supply. As such, taking everything into consideration, I found the report commissioned by Miss M more persuasive, and I think, most likely, the issues with the car’s engine were present or developing at the point of supply. Therefore, considering the mileage, price, and age of the car as well as when the fault occurred, combined with the findings of the report Miss M commissioned, I think the car was of unsatisfactory quality when supplied to Miss M. As a result, I have carefully thought about what the appropriate remedy in this case should be.

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I know Moneybarn might suggest that they should be allowed to repair the car as they have not yet been given a chance to do so. And in similar circumstances I might have concluded that it would not be fair for Miss M to be able to reject the car before an attempt at repair has taken place. However, I think a repair, most likely, would be disproportionate because, from the evidence available, the repairs would impose costs on Moneybarn which, most likely, would be deemed unreasonable and uneconomical. Also, I considered that further delays would cause significant inconvenience to Miss M. As such, I think the more reasonable remedy would be for Miss M to be allowed to reject the car and I think, considering the specific circumstances of this complaint, this is a fair outcome. Moneybarn should end the conditional sale agreement. They should collect the car from wherever it is located without charging for the collection. Miss M has been able to use the car and has travelled around 6,500 miles in it, so I think it is reasonable she pays for this use. As such, Moneybarn can keep all monthly repayments that were due up until the car broke down on 14 August 2025, but they should refund all payments made after this date. Miss M needed to rent cars from 14 August 2025 onwards after her car broke down. She lives in a rural area with no available public transport, so renting cars was the only practical way for her to meet her daily needs. I am therefore satisfied that she should not be left out of pocket for reasonable costs she incurred as a direct result of Moneybarn supplying her with a car that was not of satisfactory quality. However, Moneybarn will already be refunding all monthly finance payments made from 14 August 2025 until the car is collected. Miss M would always have had to pay for a car during this period, so it would not be fair for Moneybarn to cover rental costs equivalent to the monthly payments they are already refunding. Accordingly, I think it is fair and reasonable for Moneybarn to first deduct the equivalent monthly finance payment from each period of car rental. After this deduction, Moneybarn should refund 75% of the remaining rental costs (including the car rental excess Miss M might have paid in addition to the rentals). I say 75% because Miss M still had a duty to mitigate her losses. While she did so to some extent—by renting cars of a lower class—the cars she rented were generally newer and not directly comparable to the nine ‑year ‑old car supplied under the agreement. In these circumstances, I do not think it would be fair for Moneybarn to refund 100% of the rental charges (and any excess) Miss M incurred over and above the monthly repayments under her agreement. There is no precise formula for this calculation, but I am satisfied that refunding 75% of the remaining rental costs, after deducting the monthly finance payment, represents a fair and reasonable contribution in these circumstances. I was minded to go with a lower percentage, but I have also taken into account that Miss M paid these rental costs on a credit card with a high interest rate. Plus when thinking of a reasonable percentage I thought about the fact that I will be asking Moneybarn to also add 8% simple interest to all amounts they refund. As these charges arose only because Miss M was supplied with a car of unsatisfactory quality, I consider 75% refund to be an appropriate way to reflect this. To be clear, upon proof of payment, Moneybarn should refund Miss M 75% of each car rental invoice, and car hire excess insurance, after first deducting the equivalent monthly finance payment from the relevant rental period. This means Moneybarn may deduct the monthly instalment that would ordinarily have been payable under the finance agreement, and then must refund 75% of the remaining amount of each rental invoice. Miss M also incurred other financial losses as a result of being supplied with a car that was of unsatisfactory quality. As such it is fair that Moneybarn:

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- Refund the £300 Miss M paid to get the car delivered to her home; - Refund the £288 she paid for the independent inspection dated 18 December 2025; - Refund the £280.80 she paid for the diagnostic of the car. Moneybarn should also add interest to the refunded amounts from the date of each payment until the date of settlement. Interest should be calculated at 8% simple interest per year. Any adverse information should be removed from Miss M’s credit file, and the credit agreement should be marked as settled in full on her credit file, or something similar, and should not show as a voluntary termination. Miss M opted to pay for the upgraded warranty for the higher level of protection and peace of mind it offered. The cost of this was a total of £775. Whether or not any claims were made, I find it unreasonable to expect her to pay for the warranty in full, when she only had use of the car until 14 August 2025, because the car was not of satisfactory quality when supplied. That being said, as I’ve mentioned above, Miss M has had some use of the car so it would not be unreasonable to expect some of the warranty costs to be paid by her. In this case I think it is reasonable for her to pay equivalent of just over four months of the total coverage, during which the warranty was good for. As such, I find it to be reasonable that Moneybarn refund a percentage of the total warranty cost to Miss M. The percentage should be based on the fact that she had cover for four months and should be refunded for all the other months the warranty would have covered her, because Miss M had use of the car for approximately only four months. Given the warranty covered her for a 24-month period, she should only be responsible for £129.17 of the £775 cost. Miss M has already received a refund of £484.37 so Moneybarn should refund her a further £161.46. Miss M also asked for other costs to be refunded. However, I do not think it would be fair and reasonable for Moneybarn to be required to refund her the car insurance and road tax costs, as she was required to have these while she was using the car and, even after the car broke down, she continued to benefit from protection against fire, theft, and other risks during the period that followed. Also, I have not seen other evidence that would allow me to say that it would be fair and reasonable that she should be refunded these costs. In addition, it would not be fair and reasonable to ask Moneybarn to refund her for the breakdown cover as either way she would have incurred this cost while having any other car she would have acquired. I know that Miss M has mentioned this situation had an impact on her and had caused her a lot of distress and inconvenience while trying to resolve it. Miss M has explained, in great detail, how this has impacted her life and health. Also, she had to make the car available for inspections and diagnostics and spend a significant amount of time trying to resolve this issue. I think Miss M would not have experienced all of this, had Moneybarn supplied her with a car that was of satisfactory quality at point of supply. As such, I think Moneybarn should pay her a total of £350 in compensation to reflect the impact this situation had on her. My provisional decision For the reasons given above, I intend direct Moneybarn Limited to: 1. End the conditional sale agreement; 2. Collect the car from wherever it is located without charging for the collection; 3. Keep all monthly repayments that were due up until 14 August 2025 when the car broke down; All other monthly repayments should be refunded;

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4. Upon proof of payment, Moneybarn should refund Miss M 75% of each car rental invoice, and car hire excess insurance, after first deducting the equivalent monthly finance payment from the relevant rental period. This means Moneybarn may deduct the monthly instalment that would ordinarily have been payable under the finance agreement, and must then refund 75% of the remaining amount of each rental invoice. 5. Refund £300 Miss M paid to get the car delivered to her home; 6. Refund £288 she paid for the independent inspection dated 18 December 2025; 7. Refund £280.80 Miss M paid for a diagnostic of the car; 8. Refund Miss M £161.46 for the remaining warranty cost; 9. Add 8% simple interest per year to all refunded amounts, from the date of each payment to the date of settlement; 10. Pay Miss M a total of £350 compensation for distress and inconvenience caused; 11. Remove any adverse information recorded on Miss M’s credit file in relation to this credit agreement. The credit agreement should be marked as settled in full on her credit file, or something similar, and should not show as voluntary termination. If Moneybarn Limited considers that tax should be deducted from the interest element of my award, they should provide Miss M with a certificate showing how much they have taken off so she can reclaim that amount, if she is eligible to do so.’’ I asked both parties to provide me with any additional comments or information they would like me to consider by 18 March 2026. Moneybarn replied and said they accept my provisional decision, and they stressed that they be provided with evidence of any payments/costs Miss R incurred. Miss M responded and provided numerous comments, which I will add address below. 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. Following my provisional decision Miss M said that she believes it is fair and reasonable for the car rental/hire costs to be reimbursed in full, without the proposed 25% deduction. In summary, she said that Moneybarn has delayed things therefore, in turn, caused her to incur higher car rental/hire costs. She feels that she has mitigated her circumstances by hiring the cars she did because they were all fairly new and she could not get alternatives which, she also believes, would have cost a lot more. Overall, she feels that being responsible herself for the 25% of the total hire costs would cause her to be in considerable debt. I have considered everything Miss M has said but I’m still of the opinion that she could have mitigated her losses further by renting cars from companies that offer older models. As such, I still do not think that it would be fair and reasonable for Moneybarn to refund 100% of the rental charges (and any excess) Miss M incurred over and above the monthly repayments under her agreement. Miss M has also asked for clarification regarding the 25% that she would be responsible for. She said that some invoices are weekly so applying the deduction as proposed would result in negative balances. To clarify, when I state in the provisional decision that ‘‘I think it is fair and reasonable for Moneybarn to first deduct the equivalent monthly finance payment from

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each period of car rental’’, I am referring to the total monthly payment in any given payment monthly cycle. As an example, if Miss M, in a given monthly payment cycle of the finance agreement in question, spent a total of £500 on car rental costs (including the car rental excess), then first her monthly conditional sale agreement payment of £297.55 would be deducted and then Moneybarn would be responsible for the remainder 75% of the remaining amount. As such, the example calculation would look like this: £500 – £297.55 = £202.45 Moneybarn refund £151.84 (75% of £202.45). Miss M also believes that £350 compensation I have proposed for distress and inconvenience caused is insufficient. She said that she spent considerable time and effort in gathering documents, correspondence, arranging car hire, managing diagnostics and reports, and researching her rights. In addition, she said that there are elements of mental stress caused by the potential big debt and being without a car. However, I have considered all of this when thinking about what amount of compensation would be fair and reasonable. I still think that a total of £350 compensation fairly reflects the impact this situation had on Miss M. In response to my provisional decision, Miss M has also told us that when the car broke down she needed to pay for a hotel stay for one night and for an evening meal (total £108.95) because there was no available transport home. I agree, I think Miss M would not have incurred those costs, had she been supplied with a car that was of satisfactory quality. As such, I think Moneybarn should refund Miss M the £108.95, upon proof of payment. In addition, Moneybarn should add 8% simple interest per year to that amount, from the date of payment to the date of settlement. On the other hand, Moneybarn, in response to my provisional decision, said they agreed with it but mentioned that they should be provided with evidence of any payments/costs Miss R incurred and have also requested confirmation of the full settlement. I agree they should only need to refund the sum that Miss M can provide proof for payment. This is why in my direction I have indicated that the refunds are due ‘Upon proof of payment’. Regarding what the total settlement should be, that will be something for Moneybarn to calculate as they work out the calculation dates and add the 8% simple interest. My final decision For the reasons given above, and in my provisional decision, I intend direct Moneybarn Limited to: 1. End the conditional sale agreement; 2. Collect the car from wherever it is located without charging for the collection; 3. Keep all monthly repayments that were due up until 14 August 2025 when the car broke down; All other monthly repayments should be refunded; 4. Upon proof of payment, Moneybarn should refund Miss M 75% of each car rental invoice, and car hire excess insurance, after first deducting the equivalent monthly finance payment from the relevant monthly rental period. This means Moneybarn may deduct the monthly instalment that would ordinarily have been payable under the finance agreement, and must then refund 75% of the remaining amount of each rental invoice in any given month; 5. Refund £300 Miss M paid to get the car delivered to her home; 6. Refund £288 she paid for the independent inspection dated 18 December 2025; 7. Refund £280.80 Miss M paid for the diagnostic of the car; 8. Refund Miss M £161.46 for the remaining warranty cost;

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9. Upon proof of payment, refund Miss M the £108.95 she paid for a hotel stay for one night and for the evening meal; 10. Add 8% simple interest per year to all refunded amounts, from the date of each payment to the date of settlement; 11. Pay Miss M a total of £350 compensation for distress and inconvenience caused; 12. Remove any adverse information recorded on Miss M’s credit file in relation to this credit agreement. The credit agreement should be marked as settled in full on her credit file, or something similar, and should not show as voluntary termination. If Moneybarn Limited considers that tax should be deducted from the interest element of my award, they should provide Miss M with a certificate showing how much they have taken off so she can reclaim that amount, if she is eligible to do so. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss M to accept or reject my decision before 27 April 2026. Mike Kozbial Ombudsman

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