Close Brothers Limited · DRN-6077697

The complaint Mr Q complains Close Brothers Limited trading as Close Brothers Motor Finance treated him unfairly in relation to a conditional sale agreement which he entered to purchase a vehicle. What happened In November 2021 Mr Q entered the conditional sale agreement. The agreement was for £20,000 and Mr Q needed to pay a £2,000 deposit. He was then required to pay around £410 per month, over 60 months. Close Brothers retained legal ownership during this period and once the agreement was repaid, Mr Q would then have become the legal owner of the vehicle. In 2022 Mr Q returned the vehicle to the dealership he says he initially purchased the vehicle from. I’ll call this dealership “X”. Mr Q says he had a longstanding relationship with X where he had purchased multiple vehicles from X in the past. At the time of returning the vehicle he paid £2,000 to X to cover the negative equity the vehicle was in. He says he was told by the dealership it would take responsibility for the vehicle and settle the finance agreement once the car was sold. At this time Mr Q handed over the vehicle and no longer had possession of it. He has referred to this arrangement as a “finance swap”. After this time, Mr Q continued to make monthly repayments towards the finance agreement and X would then reimburse him. Mr Q says this arrangement continued for around 31 months, however X never settled the outstanding finance balance with Close Brothers. In June 2025 Mr Q says X stopped reimbursing the monthly payments for the credit agreement. Mr Q says X stopped trading and he was unable to contact the representative he was dealing with for the reimbursement of further monthly payments. Mr Q informed Close Brothers of the situation in July 2025. However, he argues it has failed to recover the car or the balance from X and continues to hold Mr Q liable for the finance agreement. The account has fallen into arrears causing negative information to be reported to Mr Q’s credit file. Mr Q feels it’s unfair that Close Brothers has continued to hold him liable for a car it doesn’t possess. In addition, he’s found this to be a very stressful experience, particularly as it has adversely affected his credit rating. Mr Q would like Close Brothers to remove him from the finance agreement and pursue X for the outstanding balance or recover the vehicle. He would like all the negative information removed from his credit file and compensation for the distress this has caused. Close Brothers considered Mr Q’s complaint but didn’t uphold it. It said that Mr Q didn’t make it aware that he was returning the vehicle to X and that the liability for settling the finance agreement rested with Mr Q. It confirmed that the account hadn’t been settled by X and that it was contacting X for payment. Mr Q didn’t accept the response given by Close Brothers and referred his complaint to our service.

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Close Brothers has since stated that the return of the vehicle was a private agreement between Mr Q and X which Close Brothers was not party to. And it does not have any direct relationship with X. It explained that because the vehicle had been sold on, it attempted to recover the funds from X. However, until X settles the account, Close Brothers will continue to hold Mr Q liable for the finance agreement. It also said that because Mr X didn’t continue to make payments under the agreement it was required to report this accurately to credit reference agencies. One of our investigators considered the complaint but didn’t uphold it. They said that whilst Mr Q trusted X, it’s clear he voluntarily handed over the vehicle to this third party who he authorised to sell it. Close Brothers wasn’t party to the agreement Mr Q had with X and wasn’t initially aware of it. So, they thought that liability for the finance agreement remained with Mr Q. The investigator also thought that Close Brothers acted fairly and reasonably when Mr Q explained the situation to it. They took sufficient steps to explore the matter with X and contacted the party who purchased the vehicle from X. And they didn’t think Close Brothers had treated Mr Q unfairly by reporting missed payments to credit reference agencies. Mr Q didn’t agree and made a number of points in response, which didn’t change the investigator’s opinion. He asked for an ombudsman to consider the matter and so the complaint has been passed to me to consider. 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’m not going to uphold this complaint for the same reasons which were outlined by the investigator. I appreciate this will be disappointing for Mr Q and I do sympathise with the circumstances he now finds himself in. The agreement in this case is a regulated consumer credit agreement. As such, this service is able to consider complaints relating to it, in so far that it does relate to the finance agreement between Mr Q and Close Brothers. As I’ve explained above, Mr Q didn’t own the vehicle until the finance agreement was repaid in full. During this time the vehicle remained the property of Close Brothers. Under the terms of the agreement Mr Q wasn’t permitted to sell the vehicle. This was clearly set out in the “Key Facts about this Agreement” document. This is also detailed in the terms and conditions under section 5 “Restrictions on Use” where it says under 5.3 “ you must not abandon, sell, gift or transfer the goods to a third party”. Return of the vehicle to X I haven’t seen any evidence that Close Brothers was aware Mr Q had returned the vehicle to be sold until he informed it in July 2025. And the account Mr Q has given of the facts in question don’t support a conclusion that Close Brothers was aware and had consented to this. So, by doing so, Mr Q has acted outside the terms and conditions of the finance agreement he had with Close Brothers. I’ve reviewed the evidence Mr Q has provided about his dealings with X. Although there isn’t documentation available which shows the initial purchase took place with X, the supporting information and Mr Q’s testimony suggest this was most likely to be the case. So, on that basis I’m happy to accept that the initial purchase took place with X.

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Mr Q returned the vehicle to X in or around November 2022. He has provided evidence to show there was a further arrangement between Mr Q and X. Mr Q isn’t able to provide documentation to support the details of this arrangement. However, he has provided text messages which demonstrate he had an arrangement with X and that X took possession of the vehicle. Mr Q has also provided evidence to show that when he returned the vehicle, he paid X £2,000 which he says was to cover the negative equity of the vehicle. Mr Q has also provided evidence to show that he continued to make the repayments under the agreement with Close Brothers and that X would reimburse him for these payments. Mr Q says that this arrangement continued until X stopped making these payments and responding to his attempts to contact it in June 2025. So, Mr Q has said around 31 repayments were made in this way. I do have some queries about the nature of the arrangement between Mr Q and X as the reimbursement continued for a substantial period of time. And Mr Q hasn’t presented evidence to suggest he queried this with X. However, in any event, I don’t think I need to make a finding on the particular terms of the arrangement between Mr Q and X. The evidence suggests to me that this was a separate arrangement between those two parties where Mr Q handed over the vehicle and that Close Brothers was not party to it. The nature of this arrangement has breached the terms of the finance agreement Mr Q had with Close Brothers. I’m also satisfied Close Brothers was not aware of the arrangement between Mr Q and X and did not consent to it. So, I can’t say that Close Brothers should be bound by the arrangement in place with Mr Q and X or that it is in anyway part of the initial finance agreement. As such I think Close Brothers is entitled to enforce the agreement it has with Mr Q and hold him liable for repayment of the outstanding balance. I appreciate that Mr Q doesn’t believe this is fair and reasonable given he no longer has the vehicle and trusted X. Whilst I appreciate why he feels like this, it isn’t equally fair or reasonable for me to hold Close Brothers liable for a separate arrangement he entered with X. As I’ve explained, Close Brothers wasn’t aware arrangement and didn’t consent to it. And the arrangement also breached the terms of Mr Q’s own agreement with it. So, I don’t agree that Mr Q should be released from the agreement he has with Close Brothers. Close Brothers treatment of Mr Q from July 2025 onwards I’ve also considered the steps Close Brothers took when Mr Q alerted it to the situation in July 2025. I can see it contacted X to chase payment for the finance agreement. It also opened an investigation, contacting the buyer of the vehicle. It asked the buyer to complete a questionnaire and provide proof of purchase from X which they did. So Close Brothers thought the buyer was entitled to trust that they had purchased the vehicle and didn’t take further action. Taking everything into consideration, I think Close Brothers took sufficient steps to support Mr Q when it informed it of the situation in July 2025. I note Mr Q has said the buyer may have been connected to X. However, I think this is a matter between X and Mr Q and I don’t think Close Brothers needed to take further steps here. Mr Q has also argued that it wasn’t fair for Close Brothers to report adverse information to his credit file after it became aware of these circumstances. And I note Mr Q asked it not to report to credit reference agencies whilst the matter was being investigated. However, Close Brothers is not required to suspend payments in the circumstances of a complaint. And I can see it made Mr Q aware of the consequences for failure to maintain payments. Close

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Brothers is also required to report accurately to credit reference agencies so again, I don’t think it treated Mr Q unfairly in the circumstances. My final decision My final decision is that I don’t uphold this complaint against Close Brothers Limited trading as Close Brothers Motor Finance. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr Q to accept or reject my decision before 1 April 2026. Claire Lisle Ombudsman

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