Black Horse Limited · DRN-6063314

The complaint Mr C complains about problems he has had with a car Black Horse Limited trading as Land Rover Financial Services (‘Black Horse’) supplied to him under a hire purchase agreement. What happened The facts of this case are familiar to both sides, so I don’t intend to repeat them again in detail here. Instead, I’ll provide an overview. Mr C entered into a hire purchase agreement with Black Horse in June 2022 to purchase a brand-new car. The cash price of the car was £70,969. This was funded in part by a deposit of £15,000, as well as credit totalling £55,969. The total amount due under the agreement, including interest and charges, was £79,514.16. This was to be repaid through 49 monthly instalments of £704.92, followed by a final repayment (including payment of the Purchase Fee) of £30,678. Mr C says the vehicle suffered intermittent faults with various systems since he has taken ownership of it. The two most significant faults Mr C reported were exhaust fumes entering the cabin intermittently and brake failure resulting in the car breaking down whilst driving on a busy road in December 2024. In addition, Mr C has reported several other intermittent faults at various points since inception. These include a key system failure, door rattle, boot lid rubbing against bodywork, parking sensor failure, hybrid power system failure and limp mode activating intermittently and the car dropping out of gear. Mr C first contacted SD in August 2022 (within two months of taking possession of the vehicle) to report engine fumes in the cabin when the car is idling, even with the windows closed. Mr C reported an issue with the key system at the same time. The car was booked in for investigation in early September 2022. SD, having carried out road tests and an inspection under the bonnet - was unable to find the fault. However, I understand the problem with the key system was rectified at that time. The vehicle had travelled 2,912 miles at this point. In December 2022, due to further reports by Mr C of fumes entering the cabin, the vehicle was booked in to SD once again. However, as I understand it, this appointment did not go ahead due to poor weather and limited availability of a courtesy car. In the months that followed, Mr C continued to use the car but says that he experienced intermittent problems with fumes in the cabin. Mr C reports that he took the vehicle to SD in February 2023 due to the fume fault but, once again, it was unable to replicate the fault. In October 2023, the vehicle underwent its 21,000-mile service at the SD during which various minor works are undertaken1. An electronic vehicle health check was completed with 1Including (but not limited to) a renewal of oil and oil filter, brake fluid, pollen filter and an electronic vehicle check.

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no faults requiring immediate attention identified. The invoice from the time does not appear to reference the fume fault. In November 2023, due to the problem fume fault worsening, it is my understanding that Mr C returned the vehicle to SD in order for the matter to be investigated again. But SD were unable to replicate the fault. Between November 2023 and July 2024, Mr C continued to use the car but says he experienced intermittent problems with the fumes in the cabin continued during this period. In July 2024, a vehicle health check was completed which found a crack in the windscreen, slight chip near scuttle, slight lip from wear on the front brakes and rear brakes 85% worn. However, the fume fault was unable to be replicated. Around this time, following a recall notice, the vehicle was sent for relevant works titled ‘security enhancement’ to be undertaken. The vehicle was returned to Mr C. By this time the vehicle had travelled 32,861 miles. In December 2024, the car suffered a brake failure whilst travelling at speed on a main road. The vehicle had travelled 39,051 miles at this point. The vehicle was attended by Business A who found: “…brake pedal going away when pressing, no external leaks found, constant noise from abs pump and pedal, possible valve stuck in abs pump, requires investigation at dealer. Fault codes for anti-lock braking system- C055E hydraulic brake circuit 1 hydraulic leakage. U0400 external control unit. Fault codes for ecm stored-P2BAE nox monitoring P2BAF nox monitoring. P006B intake manifold pressure/exhaust gas pressure. P048A exhaust gas recirculation solenoid valve 1 stuck closed.” Mr C was advised not to drive the vehicle, and it was moved to SD where it remained whilst further investigation was undertaken. In January 2025, SD carried out diagnostic checks which identified an engine management light was showing on the dashboard due to a diagnostic trouble code for the exhaust pressure sensor. This was replaced and the fault codes were cleared. SD also found that the anti-lock braking system module was leaking so they completed a power brake sleep cycle. Having done so, the codes were clear and further tests came back all clear. A trim panel was also replaced at this time due to broken clips resulting in the panel rattling. In February 2025, owing to the fume fault occurring with increasing regularity, Mr C returned to SD to request the car is investigated again. As I understand it, Mr C was told that SD could not provide him with a courtesy car so he was advised to return home and activate the manufacturer assist button in the car. On doing as advised, Business A attended the vehicle. Business A’s report reads: “Member complaint of exhaust gasses in vehicle intermittent, unable to fault on test, vehicle going to dealer for further investigation Engine Oil Level Ok. Coolant Level Ok. - Diagnostic testing may be limited in a breakdown type situation. Please ensure symptoms/suggested faults are confirmed by your chosen repairer before any suggested work is started.” A short time later, Mr C returned the vehicle to SD and, once again, reported the problem of fumes entering the cabin. Mr C was supplied with a courtesy car during this period.

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On 25 March 2025, Mr C complained to Black Horse about the quality of the vehicle – specifically with regards to fumes entering the cabin and brake failure. In doing so, Mr C notified Black Horse (as well as SD) of his desire to reject the goods. Around this time, SD advised Mr C that it had been able to replicate the fume fault and were now investigating the cause. In early April 2025, Mr C was advised the fault – a leak in the EGR cross over pipe – had been identified and rectified at no cost to Mr C. As the vehicle had now been repaired and was available for collection, the provision of a courtesy car was withdrawn. As I understand it, due to the mounting costs associated with the hire car (following the withdrawal of the courtesy car), Mr C accepted the vehicle back in late April 2025. However, prior to doing so, he notified Black Horse (and SD) that this was being done under protest and did not change his position regarding rejection of the car. In May 2025, Black Horse responded to Mr C’s complaint. In short, Black Horse said that the alleged fume fault had been investigated several times since Mr C had taken ownership of the vehicle and it was not until 34 months post-sale that a fault with the EGR pipe was identified with a leak. As a result, it did not think there was evidence to support the assertion that the problem was present or developing at the point of sale. Black Horse went on to say that, with respect to all other faults highlighted by Mr C, it was satisfied these had developed since sale. Unhappy with this, Mr C referred her complaint to our service. In the period that followed, Mr C identified further problems with the vehicle, including an electrical charging fault, air-conditioning failure and intermittent burning electrical smell. I understand these are being treated as a separate complaint by Black Horse. Therefore, these issues fall outside the scope of this decision. One of our investigators looked into what had happened and, in December 2025, issued their findings. In short, our investigator said that the available evidence suggests that the fume fault was more likely than not present before Business A first identified the fault codes in December 2024. And, noting Mr C had asked to reject the goods after multiple diagnostics attempts to repair the goods, the investigator was satisfied that Mr C was entitled to reject the goods. Mr C did not agree. Specifically, Mr C did not think the redress proposed by the investigator went far enough. Black Horse also did not agree with the investigator. In short, Black Horse said that noting the length of time Mr C had possession of the vehicle and the mileage he covered in it, coupled with the fact that earlier investigations did not identify a problem, it did not think there was sufficient evidence to conclude that the vehicle was of satisfactory quality at the point of supply. As an agreement couldn’t be reached, the complaint has been passed to me to review afresh. 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.

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Having done so, I think this complaint should be upheld. I’ll explain why I think this is a fair outcome in the circumstances. However, before I do, I’m aware that I’ve summarised this complaint above in less detail than it may merit. No discourtesy is intended by this. Instead, I’ve focussed on what I think are the key issues here. Our rules allow me to do this. This simply reflects the informal nature of our service as a free alternative to the courts. If there’s something I’ve not mentioned, it isn’t because I’ve ignored it. I haven’t. I’m satisfied I don’t need to comment on every individual argument to be able to reach what I think is the right outcome. I will, however, refer to those crucial aspects which impact my decision. Lastly, I would add that where the information I’ve got is incomplete, unclear or contradictory, I’ve based my decision on the balance of probabilities. The agreement in this case is a regulated consumer credit agreement. As such, this service is able to consider complaints relating to it. Black Horse was also the supplier of the goods under this type of agreement, and responsible for a complaint about their quality. The Consumer Rights Act 2015 (‘CRA’) is of particular relevance to this complaint. It says, amongst other things, that every contract to supply goods is to be treated as including a term that the quality of the goods is satisfactory. The CRA says the quality of goods is satisfactory if they meet the standard that a reasonable person would consider satisfactory taking into account any description of the goods, the price and all the other relevant circumstances. The quality of goods includes their state and condition, and aspects including freedom from minor defects, durability and safety. So, it seems likely that in a case involving a car, the other relevant circumstances a court would take into account might include things like the age and mileage at the time of sale and the vehicle’s history. I note here Mr C financed a brand-new car at significant cost. I think it’s fair to say a reasonable person would expect the level of quality to be significantly higher than a second- hand, more road-worn car. And that it could be used – free from defects – for a considerable period of time. I’ve kept this in mind. Some of the problems Mr C has experienced with the car have either not been sufficiently evidenced to have been present or developing at the point of supply or were rectified within a reasonable timeframe. Here I include problems with the door rattling, boot lid, parking sensors, door key and the exhaust system. With that being the case, I do not think these problems speak to a car of unsatisfactory quality. After all, for those faults which have been identified, Mr C appeared to be willing to allow repairs to take place through SD. And, having agreed to repair, Mr C was no longer able to exercise any right to reject the car, other than if that repair failed to ensure the car conformed to contract, or the repair wasn’t carried out within a reasonable amount of time. I am not aware that either of these conditions apply in this case. With that being the case, I will focus on the other, more significant, problems Mr C has experienced with the car – these being fumes entering the cabin and the brake failure. In my view there is no question that Mr C has experienced problems with the car. This has been well evidenced by, amongst other things, breakdown reports produced by Business A and Mr C’s detailed testimony. And I think it’s highly unlikely Mr C would go to the trouble of reporting these matters to various parties, including SD, Black Horse and the

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manufacturer – as well as taking the car to SD for further inspection on numerous occasions - if the issues didn’t occur as he has described. But the simple existence of faults in itself isn’t enough to hold Black Horse responsible for repairing the car or accepting its rejection. Instead, the question becomes whether, on balance, it is more likely than not that the goods failed to conform to contract. So, I need to consider whether the issues Mr C describes amount to a lack of satisfactory quality such that this contractual requirement has been breached. If so, does the information Mr C has provided indicate the issues were present or developing when he got the car? Noting the timeline of events, and bearing in mind the age, mileage and price of the vehicle, I am satisfied that the problems Mr C has reported render it of unsatisfactory quality. A reasonable person wouldn’t expect a problem as profound as fumes in the cabin to present itself within a short space of time (if at all). After all Mr C first raised his concerns in August 2022 – just two months after taking ownership of the vehicle. Black Horse has said that, on the numerous occasions SD has had access to the vehicle over the last several years, it has been unable to replicate the issues that Mr C had described. Black Horse points to this as evidence that the fault(s) were not present or developing at the point of supply. But, in my view, a failure to replicate the problem whilst the vehicle was with it doesn’t mean the problems didn’t exist. That an intermittent problem couldn’t be replicated during an inspection doesn’t mean there’s no fault; that is, after all, the nature of intermittent problems. Equally, I don’t think a reasonable person would expect a brand-new car – at such cost – to experience problems with the EGR and the ABS resulting in brake failure (which must have been a frightening experience for Mr C and his family) causing the vehicle to break down after two and half years and after just 39,000 miles. I think this speaks to a lack of durability. With that being the case, noting the age and price of the vehicle, I am satisfied the problems Mr C has reported with the vehicle render it of unsatisfactory quality. As our investigator noted, in April 2025 SD was able to smell fumes in the cabin and identify the root cause of the fume fault (a leak in the EGR cross over pipe). As this is the exact symptom Mr C had been reporting for some time I think this lends weight to Mr C’s testimony. So, on the balance of probabilities, I think that this problem had been present (intermittently) since Mr C first reported it in August 2022. Keeping in mind Mr C’s consistent and credible testimony, I think it is more likely than not that April 2025 simply represents the point at which the problem was identified and diagnosed, as opposed to when it first developed. It follows that if the problem was present in August 2022, just two months after Mr C took possession of it, it is more likely than not (and in the absence of evidence to suggest otherwise) to stem from a problem that was present or developing at the point of supply. This is not a clear-cut case but I’m persuaded, on balance, it’s more likely than not the car was defective in some way that resulted in the problems Mr C has experienced. I’ve not been presented with sufficiently persuasive evidence from Black Horse that demonstrates there wasn’t a fault or that that there was a fault, but it developed after Mr C took possession of it. With all of that being the case, I’ve turned to look at the potential remedies under the CRA. Under the CRA, a consumer only has the right to reject a car if – after one repair or replacement – the goods still don’t confirm to contract. This is known as the single chance of repair. And this applies to all issues with the goods, and to all repairs. The CRA is clear

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that, if the single chance at repair fails, then the customer has the right of rejection. The relevant sections of the CRA says: “Section 24 Right to price reduction or final right to reject (5) A consumer who has the right to a price reduction and the final right to reject may only exercise one (not both), and may only do so in one of these situations— (a)after one repair or one replacement, the goods do not conform to the contract; (b)because of section 23(3) the consumer can require neither repair nor replacement of the goods; or (c)the consumer has required the trader to repair or replace the goods, but the trader is in breach of the requirement of section 23(2)(a) to do so within a reasonable time and without significant inconvenience to the consumer. (6) There has been a repair or replacement for the purposes of subsection (5)(a) if— (a)the consumer has requested or agreed to repair or replacement of the goods (whether in relation to one fault or more than one), and (b)the trader has delivered goods to the consumer, or made goods available to the consumer, in response to the request or agreement.” I am satisfied that the periods it was with SD represented an opportunity to identify the problem(s) and attempt a repair. And, at the very latest, I think this was in January 2025 when SD was on notice (via Business A’s report) that there was a problem with the EGR. Notwithstanding this, the vehicle was returned to Mr C with the problem persisting at which point Mr C sought to reject it. It was not until after Mr C had sought rejection – a remedy to which, in my view, he was entitled to at that time - that the problem was eventually rectified following a further investigation in April 2025. Further, I’m satisfied that Mr C has provided SD and Black Horse with sufficient time and opportunity to carry out repairs noting he first raised concerns in August 2022. So, I think the requirements of Section 24(5)(a) of CRA were met in Mr C’s situation. I can further understand why Mr C has the concerns he does about the car, and why he wants to return it. Noting the remedies available to Mr C under the CRA, I think Mr C is now entitled to right to reject the vehicle. With that being the case, I do not think that Black Horse has dealt fairly with the situation. So, I’ve turned to look at what Black Horse should do to put things right. As a starting point, Black Horse should end the agreement with no further payments due from Mr C. This should also be the position reflected on his credit file. Further, Black Horse should collect the car at no cost to Mr C and it should also return the deposit Mr C paid totalling £15,000, plus interest.

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Section 24(8) of the CRA says a deduction can be made from the refund to take account of the use the consumer has had of the goods in the period since they were delivered. It doesn’t set out how to calculate fair usage and there’s no exact formula for me to use. But as a starting point, in the particular circumstances of this case, I think the monthly repayment towards the hire purchase agreement is a reasonable figure to use for a months’ worth of use of the car. As of April 2025, the mileage was around 40,300 which means that Mr C has had significant use of the car – and well above the national annual average mileage – since he took possession of it. I think it is right that Mr C pays for that use. Mr C has sought to draw a distinction between mileage incurred due to necessity2 - which he feels should be excluded from any deduction calculation – and mileage incurred due to voluntary enjoyment of the vehicle. But I don’t think that is fair in the circumstances. Setting aside a portion of the mileage in this way would, in my view, put Mr C in a position of betterment. After all, this would result in Mr C essentially benefitting from free motoring to complete necessary trips that he would always have had to do - and that, in my view, would be unfair. However, Black Horse should reimburse a proportion of the payments Mr C made under the agreement in recognition of impairment to his use of the car. In considering fair redress, I note the vehicle has been in for repairs on numerous occasions since inception, however, from what I can see, Mr C was provided with a hire car (albeit one he describes as inferior) on each occasion. I recognise a hire car which was not a like-for like would create complications (noting Mr C says they were “unsuitable for rural family use”) but I have to bear in mind that he was kept mobile at all times. With that being the case, and noting the overall mileage covered and also noting that there were also periods Mr C was using the vehicle without issue (bearing in mind the problem recurred intermittently), I agree with the investigator that the fairest way to resolve matters is to direct Black Horse to refund of 5% of the payments made from August 2022 (when Mr C first raised the issue) to April 2025 (when the issue was rectified) to reflect the impaired use of the vehicle. I understand Mr C is seeking to recover hire costs incurred since the courtesy car was withdrawn in April 2025. I do not think that would be fair in the circumstances. I say this because the vehicle had been repaired and was available for use since this time. I think it is fair that all payments made from May 2025 onwards are retained by Black Horse noting that Mr C has had, as I understand it, full use2 of the vehicle since that point. Mr C has clearly spent considerable time dealing with this matter over a prolonged period of time. I think he has made more than a reasonable effort to sort things out and, what’s more, Mr C has described the impact this matter has had on him. With this being the case, I think compensation totalling £300 is fair and reasonable in the circumstances. With all of this being the case, I uphold the complaint direct Black Horse to settle the complaint in the way I’ve set out below. Mr C can now decide if he wants to accept my decision to resolve his complaint with Black Horse. Noting Mr C has requested (and calculated) compensation far in excess of the total amount on offer here, I expect he won’t agree with my decision. However, Mr C does not have to accept my findings and if he 2 Here I recognise Mr C has reported various other issues – including an electrical charging fault, air- conditioning failure and intermittent burning electrical smell – since he received the car back as a result of which he may dispute that he has had ‘full use’ of the vehicle since May 2025. But, as these issues fall outside the scope of this decision, I make no finding on whether Mr C’s usage has been impaired since May 2025.

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wishes he can pursue his dispute through more formal avenues such as court (seeking appropriate legal advice as he sees fit). Putting things right For the reasons explained above and in my provisional decision, I uphold Mr C’s complaint and direct Black Horse to: 1. End the hire-purchase agreement, ensuring Mr C has nothing further to pay and amend its records to show that the agreement as settled; and 2. Collect the car at no cost and minimal inconvenience to Mr C (if it has not already done so); and 3. Remove any adverse information (if any) in relation to this agreement from Mr C’s credit file; and 4. Refund the £15,000 deposit (if any part of this deposit is made up of funds paid through a dealer contribution, Black Horse is entitled to retain that proportion of the deposit); and 5. Refund 5% of each monthly payment between August 2022 and April 2025 inclusive for impaired use; and 6. Pay interest on the amounts in 4 and 5 above, calculated at an annual rate of 8% simple from the date of each payment until the date it pays this settlement; and 7. Pay Mr C a further £300 in recognition of the distress and inconvenience he’s been caused. *If Black Horse considers that it is required by HM Revenue & Customs to withhold income tax from that interest, it should tell Mr C how much it’s taken off. It should also give Mr C a tax deduction certificate if he asks for one, so he can reclaim the tax from HM Revenue & Customs if appropriate. My final decision I uphold this complaint and direct Black Horse Limited trading as Land Rover Financial Services to settle the complaint in the way I’ve set out above. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 20 April 2026. Ross Phillips Ombudsman

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