Honda Finance Europe Plc · DRN-6216973

The complaint Mr C is unhappy with how Honda Finance Europe Plc trading as Honda Financial Services (HFE) treated him when he asked for financial support in relation to a hire purchase agreement taken to finance a motorbike. What happened In April 2021 Mr C was supplied with a motorbike through a hire purchase agreement with HFE. He paid a deposit of £1,750 and the agreement was for £7,410.56 over 48 months; with 47 monthly payments of £117.72 and a final payment of £127.72. Mr C complains that HFE failed to show appropriate forbearance when he was sent to prison in 2023. He said he wrote to HFE in March 2023 informing them that he was serving a custodial sentence from February 2023 to December 2023, and authorising his wife and his brother to act on his behalf. He also asked that they freeze the account and suspend any interest and fees. He said he would contact them in January 2024. He said HFE threatened to repossess the motorbike despite being aware of his vulnerability and his previously perfect payment record. He was unhappy that HFE continued to report arrears to his credit file despite knowing that he was unable to manage his account. He said they also failed to recognise his ongoing post-release vulnerability, and caused significant distress to his family. He said he had entered into a debt management plan when he was released from prison. He said this cleared the arrears. He said he continued to meet his obligations, fully repaying the agreement in 2025, and the agreement concluded within its original contractual term time. Mr C wanted HFE to remove the negative payment markers, and confirm his credit file would be updated accordingly. He also wanted a goodwill gesture from HFE to recognise the distress caused, and for them to acknowledge they failed to handle his vulnerability appropriately. He said the temporary arrears should not be treated as reflective of long-term behaviour, and the reporting was unfair as it didn’t reflect the temporary nature of the situation and that the agreement was concluded on time. HFE didn’t uphold his complaint. They said they sent letters to Mr C’s home address when the account went into arrears in March 2023. They issued a default notice in April 2023 when they had not heard from Mr C and the account had reached two months in arrears. They said they received a letter from Mr C on 25 April 2023 informing them that he was in prison, and authorising his wife and his brother as contacts. They said the letter also requested that they freeze payments and any interest and fees whilst he was in prison.

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HFE said they worked with Mr C’s wife to keep payments going and agreed to address the arrears after his release. They said that when Mr C’s wife contacted them she told them she was happy to make the payments, and didn’t ask for any forbearance options. They said when Mr C contacted them he was three months in arrears. They said this would be sufficient to repossess the vehicle. But they agreed to allow the agreement to continue due to the clear commitment to maintain payments and their belief that the repayment of arrears would be affordable after his release from prison. They said they had acted fairly by holding off on any further action and allowing him to clear the arrears later. They also said they had accurately recorded late payment markers on his credit file. Mr C was unhappy with this response, so he referred his complaint to our service for investigation. Our investigator said that once Mr C’s wife had agreed to maintain the repayments on his behalf, it was reasonable for HFE to conclude that no further forbearance was necessary. Our investigator also explained why it was reasonable for HFE to continue to send formal letters as this was a legal requirement. They also explained that they were satisfied that the credit report had been updated accurately. Mr C didn’t agree with the investigator. He said they had relied too much on contractual rights rather than fairness, proportionality, and vulnerability guidance. Because Mr C didn’t agree, this matter has been passed to me to make a final decision. 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. Having done so, I’ve reached the same overall conclusions as the investigator, and for broadly the same reasons. 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 C was supplied with a vehicle under a hire purchase agreement. This is a regulated consumer credit agreement which means we are able to investigate complaints about it. I’d like to reassure Mr C that I’ve carefully considered his detailed submissions. But I won’t be requiring HFE to take any further action to resolve this complaint. I’ll explain why. Forbearance Mr C said that HFE didn’t provide appropriate forbearance when he asked them to freeze his payments while he was in prison. As a regulated firm, HFE must abide by rules set out by the Financial Conduct

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Authority in its handbook. Section CONC 7.3 explains that firms like HFE must “treat customers in or approaching arrears or in default with forbearance and due consideration”. Mr C asked HFE to freeze his payments while he was in prison. I would expect them to treat his request sympathetically, but they are under no obligation to agree his request. In cases like this, the debt still exists, prisoners still owe the debt, and creditors, like HFE, can still take action to pursue a debt. In this case HFE wrote to Mr C’s wife. I can see from HFE’s contact notes that Mr C’s wife messaged them on 31 May 2023. In her email she acknowledged the letter they’d sent and said she was “happy to keep this payment going”. She asked that HFE call her as she wanted to set up a new direct debit. This was confirmed in a telephone call on 1 June 2023. In this call HFE agreed to change the payment date, and confirmed that they would not take any action to terminate the agreement as long as the arrears didn’t increase. So I’m satisfied that HFE acted in accordance with the request made by Mr C’s authorised representative. She agreed to maintain the payments on Mr C’s behalf. I haven’t seen any evidence that HFE unfairly pressured Mr C or his representative. And I haven’t seen anything that shows they “threatened” to repossess the motorbike. I’ve seen the various notices and letters they sent to Mr C’s address. These set out the status of the account, and the consequences of not paying. I don’t see anything inappropriate in the correspondence. So I can’t say that HFE treated Mr C unfairly or failed to treat him with forbearance. I’m persuaded that they considered his request to freeze payments. And I’m satisfied that their response was reasonable – that they refused this request as it could have had a longer term negative impact on his finances. I can also see that Mr C contacted HFE in January 2024, as he said he would, following his release from prison. In this call HFE agreed to Mr C’s request to allow the agreement to run for three months after the original end date to help him clear the arrears. HFE also warned Mr C that this would show on his credit file. HFE confirmed this in an email sent to him on the same day. So at this point, I’m satisfied that HFE continued to show forbearance by accepting his request to extend the period of the agreement, and agreeing to the debt management plan set up by a debt counselling charity supporting Mr C. Credit reporting I’ve reviewed the credit reference agency information supplied by Mr C and I’m satisfied that HFE reported accurate information. That’s because they reported late payments, the period the arrears were outstanding, and the agreement is showing as satisfied. It is not showing that the account is in arrears. So I’m satisfied that HFE recorded accurate information in line with their regulatory responsibility to record accurate and up to date information to the credit reference agencies. I know this will be disappointing to Mr C, but I’m satisfied that HFE acted fairly and reasonably when he notified them he was in prison, and after his release. I’m satisfied they considered his circumstances and acted fairly and reasonably when they liaised with his

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authorised representative, accepted their payment proposal, and agreed to Mr C’s request to extend the agreement period following his release from prison. My final decision For the reasons explained, I don’t uphold Mr C’s complaint about Honda Finance Europe Plc trading as Honda Financial Services Under the rules of the Financial Ombudsman Service, I’m required to ask Mr C to accept or reject my decision before 21 April 2026. Gordon Ramsay Ombudsman

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