Review of The Motor Ombudsman Service

If your new car is faulty or has been misdescribed and the supplying dealer has been unable to satisfactorily resolve your complaint, you’ll likely be given the opportunity to submit it to The Motor Ombudsman Dispute Resolution Service.

The Motor Ombudsman Service

The Motor Ombudsman (TMO) is an accreditation scheme for automotive businesses and an Alternative Dispute Resolution (ADR) provider who will review and provide a decision on the complaint which is binding on the member. Understandably this is music to the ears of the new car buying public, but the reality seemingly doesn’t quite live up to expectations.

Amongst the criticisms levied at the TMO is a lack of impartiality of what to many seems like a self-regulatory membership scheme, including the absence of any prescribed time limits for reviewing and deciding the complaint and the level of product expertise and knowledge.

However, more troubling is the rise in cases accepted by the Motor Ombudsman which relate to vehicles bought on finance. This results in consumers waiting in some cases up to a year, if not more to receive a TMO decision which ultimately has no binding effect on the finance company.

This is simply owing to the fundamental principle of privity of contract, that’s to say that only the parties to the contract can enforce the contract. In the case of car finance, the dealership sells the car to the finance company who in turn sells it to the consumer. As a result, the customer’s contract of sale is with the finance company and not the dealer, although that’s not to say that the dealer may be joined as a party to any litigation. Nevertheless, finance companies are mandated to submit to the jurisdiction of the Financial Ombudsman and not the TMO, so why do they accept the complaint in the first place?

There are some who believe it’s a cynical move to commit consumer complaints to the seemingly endless labyrinthine process through which only the stoic and the bold can pass, though even if they do, are confronted with a similarly long process by the Financial Ombudsman Service.

Whether by accident or design, there can be little doubt that this has an adverse effect on complainants, while conversely providing an economic benefit to the dealer and finance company. The bottom line is that consumers are required to continue paying the finance company while the complaint is in progress, which for some could result in them paying two thirds under a 3-year contract with use of the car. These issues further fuel the suspicion of bias which could be easily be mitigated by suitable inclusion on The Motor Ombudsman’s website, and of course proper ‘signposting’ by the supplying dealer, clearly stating that the TMO cannot handle complaints involving finance companies.