the times | Saturday December 4 2021 67Money
reversing assist camera for the car. But
when he took it for repair two months
later after damaging one of the wheels,
he found that the dealership had
swapped in previously refurbished
wheels from an ex-demonstration
model because they could not source
the ones he had asked for.
In addition the camera, which had
been causing problems, was not a
model approved by BMW.
Another borrower who signed an HP
agreement for a second-hand Mer-
cedes in August 2019 got a £1,750 refund
plus 8 per cent interest in May after the
FOS ruled that the dealer had lied to
her about how regularly the car had
been serviced.0 What is being done?
Finance companies say that they keep
strict tabs on dealers, including running
audits of numbers of complaints and re-
viewing how many buyers hand their
cars back because they are unafforda-
ble or they have defaulted on payments.
The finance firms say that they can stop
working with a dealer if they see too
many problems.
One industry source said: “I think
dealerships have improved over the last
five years and have become more
professional. Some still don’t do the
industry justice, but it is a whole lot
better. The difficulty for car finance
companies is that we can’t be there in
every dealership for every sale.”
Disputes can also arise over extra
charges on a PCP, which can involve
exceeding the annual mileage limit,
the cost of damages and wear and tear
if the car is returned at the end of the
agreement rather than being kept,
extra insurance cover sold to you that
you might not need, and the finalballoon payment. Martyn James from
the complaints website Resolver said:
“PCPs are the most complicated finan-
cial product I’ve ever had to get my
head around. I literally could not
understand how these deals are struc-
tured at first, and all of it falls on the
consumer.”
One driver who was charged £945 for
wear and tear when he handed back the
keys to a second-hand car in July 2019
had the fee reduced to £159.97 after the
FOS intervened in January.
Then in July the FOS found that a
customer known as Mr B had been
approved for finance for a £44,000 new
car in February 2019, which required a
deposit of £2,125 and 48 monthly pay-
ments of £565, despite not having a job.
He had previously earned £1,890 a
month, but told the dealership that he
was unemployed at the time and his
partner, whom he broke up with seven2,5002,0001,5001,00050006050403020100%New complaints (left hand scale)
Uphold rate (right hand scale)Q1 Q3
2019-20 2020-21 2021Q1 Q3 Q1Source: Financial Ombudsman Service Note: Q1 starts AprilGetting a raw deal
protection, which covers you if you
can’t work, on its Classic (£5.95 a
month) and Premium (£14.95)
accounts. It limits claims to 180 days
after purchase and to £1,000 an item or
£2,500 a year for Classic and £4,000 an
item or £10,000 a year for Premium.
Claims have a £50 excess.
Barclays offers a free current account
but with paid add-ons such as break-
down cover, protection for your gad-
gets and mobile phones, and travel
insurance. It is offering five months’
worth of free subscriptions to four
Apple services, including Apple TV+ for
newcomers who opt in to one or more
add-ons before December 12. The cost
of the add-ons ranges from £9 to £18 a
month.
Halifax is offering £125 to those who
switch to its packaged Ultimate Reward
Account, costing £17 a month, before
December 14. It includes breakdown
cover, mobile phone insurance, travel
insurance and a choice of £5 monthly
cashback or one of a range of benefits
that includes film rentals, cinema
tickets and magazines.
“My advice would always be to shop
around to see if you can find better
deals,” said Brian Brown from Defaqto,
a financial ratings company.
Daley said: “If you’re cynical, you
would say that these accounts are delib-
erately complex. It can be quite difficult
to work out the value of the features,
but you should try to do the maths.”
George NixonWhat you get with a
premium bank account
E
lla Ewen doesn’t think she got the
most out of the bank account she
paid £15 a month for.
She signed up to a Monzo Premium
account because she thought its bud-
geting options, travel and phone insur-
ance would be useful and it pays 1.5 per
cent interest on up to £2,000. It also
comes with a trendy white metal card.
But after almost a year, Ewen, 22,
from London, has cancelled the
account. “I haven’t travelled and I had
problems trying to insure my phone
through the account. The budgeting
features are useful, but not enough to
pay £15 a month for.”
Packaged accounts, which offer extra
features in exchange for a fee, had a bad
reputation after high street banks
widely missold them in the early 2000s.
They are now back, with the app-based
banks offering them as well as high
street names, and they have more
offers. Monzo said that 210,000 people
were signed up to its paid-for accounts
in March.
James Daley, a consumer campaign-
er, said: “The benefits may look great,
but you might not use them as often as
you think. The benefits have got to
cover the monthly fee at a minimum.”What’s on offer
“Banks are trying to catch younger
audiences with discount cards, mem-
bership vouchers, subscription serv-
ices, cinema tickets, which weren’t that
common ten years ago,” Daley said.
As well as its Premium account,
Monzzo offers a cheaper Plus option,
which has a £5 monthly fee, offers bud-
geting tips and pays 1 per cent interest,
but does not have insurance benefits.
Revolut’s paid-for Plus, Premium and
Metal packaged accounts cost £2.99,
£6.99 and £12.99 a month respectively
and have benefits including purchase
protection, which covers items bought
with a Revolut card that are stolen or
accidentally damaged within a year.
The paid-for accounts also offer cash-
back and allow you to take out more
cash while abroad without paying a fee.
The purchase protection benefit
comes with hefty depreciation charges
and applies only to new items, meaning
that eBay or Facebook Marketplace
purchases are not included. Claims are
capped at £1,000, £2,500 and £10,000,
depending on how much you are pay-
ing for your account. The first £50 of
any claim is not covered.
Monese, another app-based bank,
offers purchase protection and billscar claims pile up
months later, was going to pay for the
car. The lender, Black Horse, part of
Lloyds Banking Group, carried out a
credit check, but the FOS found that it
failed to verify his earnings by asking
for his payslips and should not have
agreed the loan. Black Horse
said he had provided the
company with incorrect
information.
“We now have a re-
payment plan agreed
with Mr B. Our fi-
nance agreements
are subject to robust
affordability checks
and in line with regula-
tory requirements.”
In 2018 another car
buyer, Mr T, was approved
for a five-year finance agree-
ment for a car worth £9,000 with an
APR of 17.85 per cent from the Kent-
based company Blue Motor Finance.
The deal would have cost him a total of
£13,422. Neither his income nor his
employment status were verified.
His bank statements showed that he
earned about £1,000 a month as a
contractor and had an existing HP
agreement that he was paying off. The
lender “did not carry out reasonable
and proportionate checks”, the FOS
found, and said that if it had, it would
have realised that “he wasn’t able to
make payments to this agreement with-
out experiencing financial difficulty
and/or borrowing further”.
Blue Motor Finance was ordered to
write off his debt.
It was approached for comment.
Four years ago an undercover in-
vestigation by the Daily Mail found that
unemployed drivers or people on low
incomes were being offered PCP deals,
even though no financing was actually
agreed. The FOS rulings show that
unaffordable loans are still being
provided, despite tougher rules on
affordability and credit checking.0 Stern warning
In January last year the FCA wrote to
car finance lenders warning them to be
more careful when approving these
types of deals. It said: “Financing
options can often be difficult for con-
sumers to evaluate and understand,
and that financing can be an important
source of profitability for car dealers.”
It added that there were risks of “con-
sumers being sold unsuitable or unaf-
fordable products” and “lenders not
complying with regulatory require-
ments around affordability assess-
ments”.
At the start of this year the FCA
banned a form of commission that was
linked to the interest on car finance: the
higher the interest buyers paid, the
higher the commission. It estimated
that consumers would save £165 million
from the ban.
The FLA said that by the time of the
ban the industry had already stopped
using such commission models.
James said: “There are some excel-
lent dealers out there but this is sales —
it’s a high-pressure job and the problem
is that whenever you’re in a high-
pressure environment the temptation
is to push, to upsell, so it needs much
more scrutiny.”
The FLA said the market was well
regulated and the arrears rate on loans
— where a borrower misses two pay-
ments in a row — was 1.3 per cent.
Adrian Dally, the FLA’s director of
motor finance, said: “Most FOS motor
finance complaints are about the car,
not the finance. The increase in
complaints reflects the higher number
of people using motor finance and is a
tiny percentage of the more than six
million people who have a motor
finance agreement.”11,101
official complaints
about finance
agreements since
April last yearGETTY IMAGESThe benefits and the costs
Bank accountMonthly
fee BenefitsBarclays Travel Plus
and Tech packs£32.50Global travel cover, UK and European breakdown, airport
lounge access; cover for four phones, unlimited gadgets
Halifax Ultimate
Reward £17Global travel and home cover, UK breakdown, cover for
one phone, £5 cashback or a lifestyle benefit each monthLloyds Bank Club
Lloyds Platinum £21 Global travel cover, UK breakdown, interest on up to
£5,000, cover for one phone, one lifestyle benefit a yearMonese Premium £14.95 Free international transfers, purchase and bills protectionMonzo Premium £15 Global travel cover, £600 overseas free ATM withdrawals
a month, phone cover, 1.5% interest on up to £2,000Nationwide FlexPlus £13Global travel cover, UK and European breakdown, family
phone insurance, fee-free overseas spending
NatWest Reward
Platinum£20Global travel cover, UK breakdown, cover for one phone,
free overseas spending, £5 cashback a month on billsRevolut Metal £12.99Global travel cover, purchase protection, £800 overseas free
ATM withdrawals a month, 0.1% cashback on purchasesVirgin Money Club M £14.50Global travel cover, UK breakdown, family phone and
gadget insurance, fee-free overseas spending, interest
Source: The Times Money MentorElla Ewen cancelled her Monzo card