Car PCP, Bereavement and an Ombudsman's failure?

RoadsterMag

Hi all.

First‑time poster here, and sorry this is long.

I need help from somewhere because I’m completely lost with a situation involving a car finance PCP, a bereavement, probate, and what I believe is a very flawed Financial Ombudsman decision.

I’ve tried to summarise the story as clearly as possible.

Background
My mother took out a PCP agreement in 2021, in her name only.

She died in 2022, leaving a surviving husband (my father) who had Lewy Body Dementia. We discovered an old handwritten will from the 1980s, but:

• the executors named in it were deceased
  
• because of joint tenancy, the house passed automatically to my father
  
• the will had no practical effect at the time
  
• we therefore had no legal authority to administer anything until later

We applied for Power of Attorney over our father’s affairs, which took some time to come through, but the car finance company agreed to deal with us.

We informed the car finance company immediately that:

• our mother had died
  
• our father had dementia and had his licence revoked
  
• there was no estate money
  
• the car was on the drive unused
  
• we couldn’t transfer the finance
  
• and the estate was effectively insolvent

Other creditors simply wrote off their balances. The car finance company did not. They gave us three options:

Pay the finance (impossible due to no estate funds)
Transfer the agreement (totally inappropriate - Dad had his licence revoked and no one wanted the car)
Return the car and incur the Voluntary Termination (VT) charge — £2,900

We were very worried about the VT charge, because there was no money to pay it. The finance company then told us:

“We will do a probate check, and then a second one six months later.
If both are clear, the debt will be written off.”

This made sense to us because the estate had no assets.
We returned the car in early 2023, believing the VT charge would ultimately be waived.

Probate checks (this part is critical)

First probate check (Nov 2023): clear
They should have done a second check in June 2024. They did not
Meanwhile, our father (the surviving spouse) went into a care home and sadly died in Aug 2023

We then applied for probate so that we could sell the house (now solely his after survivorship).
Probate was granted in March 2024.

At this point:

• a grant for my mother was produced purely for administrative/tax reasons
• It listed a “gross value” that reflected the house (which belonged to my father in 2022–23)
  not actual estate assets from 2022

No money existed until the house was sold in 2025.
The finance company still had not done their second check.

The house sold in 2025.
Funds were transferred into the estate account.
We immediately contacted the finance company to update them. They immediately ran their overdue second probate check and said:

“Look! a probate entry exists, so the estate has money. Therefore the VT charge is due.”

We paid £2,900, using the funds from the house sale (or father's money?) and complained immediately.

In response, the finance company admitted delays and mishandling and offered us £500.
We rejected and escalated to the Financial Ombudsman.

We argued:

• VT should not apply to bereavement — death is not “voluntary termination”.
  
• The estate had no funds in 2022 — the house passed to my father under survivorship.
  
• The probate entry in 2024 did not represent assets available at death.
  
• Their delay allowed a second death and later house sale to create “funds” that were never part of my mother’s estate.
  
• The finance company effectively waited until a second estate existed.

The FOS investigator didn’t see past:

“VT is chargeable” and “Probate grant shows value.”

We escalated to the Ombudsman, who has repeated the same errors and ruled for the finance company.

The Ombudsman did not address:

1. Whether VT was valid at all
   VT under the Consumer Credit Act requires a living debtor to make a choice.
   You cannot “voluntarily terminate” after death.
2. Estate insolvency at time of death - My mother’s estate had no money in 2022.
   Yet the Ombudsman treated a 2024 probate value (arising after our father’s death) as if it meant assets existed in 2022. They did not.
3. Survivorship and timing - The house transferred automatically to my father at the moment of death. It never formed part of my mother’s estate.
   The FOS reasoning treats a probate admin entry as if it were real money in 2022.
4. Delay - Had the second check been carried out when promised, it would have been clear again — no estate. Instead, the check happened after a second death and house sale.

Where we are now

We can either:

accept the Ombudsman’s decision, or go to small claims court separately (since accepting the FOS award does NOT block legal action). The Small claims court is going to cost us and I am not convinced they will look any deeper than the Ombudsman did.

So I am at a loss!

We feel the Ombudsman has made a legal error by:

• treating a bereavement as VT
  
• failing to apply probate/survivorship law
  
• ignoring estate insolvency at death
  
• treating a 2024 administrative probate value as if it were a 2022 asset

We believe the finance company has taken money that was never owed, and from the wrong estate.

Has anyone come across:

PCP agreements after death?
VT charges in bereavement situations?
Estate insolvency and hire purchase?
Finance companies waiting until a second estate exists?
Taking matters to small claims after FOS?
Complaining about the Ombudsman’s handling itself?

Any advice or shared experience would be hugely appreciated.

MyRealNameToo

Do you have the reference from the Ombudsman? It will start DRN. It may not be on their website yet if you havent yet responded to their final decision but it's always useful to read what they have said.

I've known various customers take matters to court after a FOS decision, not one of them have won. The role of the ombudsman is to find a "fair" outcome whereas the courts have to somewhat blindly follow the law. As such you generally have better chance with the FOS than you do the courts.

That said, have seen a couple of cases taken to judicial review by the financial services company and they did decide the ombudsman was wrong. Note that this doesnt reverse the decision for those particular cases but will impact future cases on the same matter.

On complaining about the ombudsman itself, have done that once, it took them over 2 years to make their decision which then restricted my ability to look at other mechanisms. You cannot complain about the outcome, only the process, so often undue delay or the person being rude etc.

The general principle is that on death a contract isnt automatically terminated but passed on to the estate with the Executor making the relevant decisions on behalf of the estate guided by the will and general legal principles. I dont think the options presented by the finance company were unreasonable. Whilst it's unfortunate that your mother passed and your father wasnt well enough to make use of the vehicle that doesnt mean the finance company should have to bear the costs.

If wasnt a VT then it would be a breach of contract, it's very likely that the cost of that would be higher than the VT else the VT legislation wouldnt exist.

Presumably you didnt apply for an Insolvency Administration Order?

I've not had to deal with the death of a second parent so not going to opine on why it was necessary to declare an estate having a value rather than it being insolvent as you say. I dont think the fact that the second check was done late is a reason to invalidate it if it does show the estate wasnt insolvent… you dont get away with something just because it wasnt spotted in time unless you pass the Law of Limitation limit.

Brie

Sorry for your loss and the difficult situation the PCP has caused you.

If you had asked previously I would have suggested that you act like a broken record and keep repeating "insolvent estate, insolvent estate". But you're past that stage now. Do you think there is any chance that the finance company would still offer any compensation? Maybe write and say "you said you would pay us this and we want it now!" After all if you don't ask you don't get.

Yes I agree the ombudsman decision was wrong and yes the finance company should have treated you better and in a fair way. And as painful and annoying the situation is how much time and money is going to small claims court going to cost you? Is it really worth it??

No experience with PCP agreements but years in financial institutions including debt advice. So the above is just my opinion generally based on that experience.

Keep_pedalling

You say your mother’s estate was insolvent, so I am not sure why you would apply for probate, but as you did the net probate valuation should have been zero, is that the value you submitted?

RoadsterMag

https://forums.moneysavingexpert.com/discussion/comment/81915551#Comment_81915551

Thanks for your reply and for taking your time to consider the points I made here. We have a Final Decision letter, 28 days, and a complaint reference, but no DRN.

Just to clear up a couple of points, because the situation is a bit different from how it might look.

1. My mum didn’t leave an estate.
   When she died, she had no savings and no assets. The house passed straight to my dad automatically because it was jointly owned. So there was nothing anyone could claim against at the time.
2. The car wasn’t “voluntarily terminated.”
   My mum didn’t choose anything, she died. We were given the three I mentioned in my original post, so effectively the only option was to hand the car back and incur the VT. The finance company said if probate checks showed no money in the estate, the balance would be written off.
3. The first probate check confirmed exactly what we’d said — no estate.
   The second check wasn’t done when it should have been. It was done nearly a year late.
4. Money only existed after my dad died later on.
   When he passed away, we had to sell the house. Only once the money from his estate came through did the finance company do the second probate check — and that’s when they asked for (and we paid) the £2,900. So the money the finance company took didn’t come from my mum’s estate at all - it came from my dad’s, which is the main issue.
5. The Ombudsman didn’t deal with these points.
   The decision doesn’t address whether “voluntary termination” was even the right mechanism after a death, or the fact that my mum’s estate had no value when she died. We are going to raise a service complaint about how the case was handled, but that doesn't help with the correctness of the situation!

RoadsterMag

Thanks for your reply. It's really helpful. Just to clarify our situation though:
The estate was insolvent at the time. We did indeed repeat that point a lot because there was absolutely nothing we could do. We handed the car back, and acted in good faith all along, but on it dragged (it took a year to sell the house). The finance company’s first probate check confirmed there was no estate. The issue is that the second check was done nearly a year late, after my Dad had died — which created a completely different estate.
So the money they took wasn’t from my mum’s estate (which had nothing). It came from my dad’s estate, which is the heart of the problem.
We don’t think the finance company will pay more compensation voluntarily — and small claims court is something we’d only look at once emotions have settled, if we decide it’s worth it (for fear it goes like the Ombudsman did). For now we’ve logged a service complaint with the Ombudsman, as they didn’t look at the key issues (like whether “voluntary termination” even applies after someone dies). I think if the Ombudman could have determined that VT was the correct mechanism and that the company was entitled to pursue it through the Law of Survivorship then I could reluctantly accept the outcome. But the fact that they have glossed over these points makes it harder!
Thanks again. I appreciate your thoughts.

RoadsterMag

https://forums.moneysavingexpert.com/discussion/comment/81915646#Comment_81915646

Thanks for your reply. We didn’t apply for probate for my mum when she died, because her estate was insolvent — there were no assets, and the house passed automatically to my dad by survivorship. So there was no need for a grant at that point and no probate valuation was submitted in 2022.
We only applied for probate later on after my dad died so that we could sell the house, which by then belonged entirely to his estate. We took solicitors advice on what to do, because we had never been in this situation before. As part of the combined application, the solicitor had to create a separate “Grant of Letters of Administration with Will” for my mum, but the figures on that grant are just administrative/tax reporting linked to my dad’s estate - they don’t reflect assets my mum actually had when she died.
So yes:
her estate was insolvent at death,
and the “value” showing in 2024 doesn’t change that — it wasn’t money that existed in 2022. But the existence of this documentation has absolutely confused the situation!

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/81915648#Comment_81915648

1. That is still an estate, it may have 0 or a negative value but its still an estate just as contracts continue with it which is why a negative value occurs

2. The Executor or Personal Representative acts for the estate and makes the decisions like if to buy the car or to voluntarily hand it back on behalf of the estate which is still liable for the contracts the deceased entered into unless there are explicit clauses about the death of a party. I note you ignored the comment that your 4th unlisted option of simply not paying and therefore breaching the contract is likely to be a more expensive solution than the VT

3. Again read the points made, its not ideal that they didnt do it when they should have but ultimately they ran a second check and it showed a value not an insolvent estate

4. I dont understand why his death would cause her estate to suddenly show a value that isnt negative but its not an area I know much about

5. Hence looking at their decision from the DRN reference would be helpful. People generally write very poor complaint letters with pages (literally) of superfluous details. Its very common for Ombudsman responses to say that they arent intending to cover all the points raised but to assure the complainant that they have actually read and considered the whole thing even if not directly addressed in the response. Obviously can't read their letter from here without the DRN but that may well be the case here

Did you discuss the matter with the solicitor that recommended that this is how the records should be set? Maybe they can either explain why it no longer appears to be an insolvent estate or draft a letter to the finance company to explain that it was insolvent despite what was uploaded showing it wasnt.

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81915665#Comment_81915665

I really fail to understand why the solicitor advised you to apply for probate for your mother’s estate, it is not required for jointly owned property passing to a surviving owner. The other thing I don’t understand is why you would submit a value other than what it was at the time of her death.

If you have submitted probate showing that her estate was actually solvent at the time of her death then you have no case against the finance company as they can show that her estate had the money to settle the finance er even if in reality it was insolvent. I think your real complaint should be against the solicitor for poor advice.

sourcrates

I see a catalogue of errors on the part of the car finance company, and the FOS as well.

It basically boils down to the fact the car was in your mothers name, the debt was due from her estate, but her estate was insolvent, debts cannot be transferred to any other person, so that should have been the end of it with the debt written off.

The decisions made after that are all based on incorrect information, and an inability to understand probate laws, however, should you choose to pursue this, you would have to hire a good solicitor and prove all of that in court.

This would likely cost you more than you settled the car finance for, so you have to ask yourself how far you are prepared to take this just to prove a point.

RoadsterMag

https://forums.moneysavingexpert.com/discussion/comment/81915718#Comment_81915718

Thanks for this. That's exactly our reading of the situation, and why I wrote that we are at a loss as to what to do. We shouldn't be having to fight this at all, if the correct mechanisms had been applied in the first place. The fact that the Ombudsman Service seems to have let us down makes it even harder. I believe we've paid a charge that shouldn't have been applied in the first place, and paid it from an estate the finance company wasn't entitled to. The fact we've paid it shows a willingness to meet our obligations, but whether it was right or not is the point here. I am a joint administrator - the other administrator wants to give up and accept what we've been offered, where I want to fight on principle - the finance company has treated the entire situation appallingly, with automated debt letters to a terminal dementia sufferer, and a failure to act appropriately throughout - they've even admitted to given conflicting advice. The Ombudsman's decision seems to allow them to do this. We're essentially done as an administrator - the debt has been paid and we can move on with our lives - but we don't want other families to be treated as we have - which is why the Ombudsman's engagement with the law was so important to us.