PCP misselling.

[daemon]

Gio G said:

Not quite sure how relevant this is, however it would appear that recently VWFS has started to charge their ex customers, excess mileage fees when they VT their contracts. I see from the earlier post that the ombudsman has ruled against this being unfair, however the contract states you pay 50% of the balance and no more.. I can only assume an influx of VT due to the emissions scandal..

Then can ask, but you dont have to - providing you dont fill in any "return document" they send you which may have terms in it that give them permission to bill you.

They cant override your rights under the Consumer Credit Act.

Gio G said:

The mis-selling part of this has been salesman potentially encouraging low mileage PA to keep monthly payments down, knowing that there was no re-course after the VT.

I would be interested to know whether any precedents have been set in taking legal action for excess fees, whether it was for or against the consumer?

G

I dont think anyone has ever been taken to court for it. I think the finance companies know they would lose - it doesnt stop them putting pressure on people though.

I personally wouldnt ever enter in to a PCP / HP contract with my exit strategy being a VT.

[rfoster]

daemon said:

I personally wouldnt ever enter in to a PCP / HP contract with my exit strategy being a VT.

This exactly. Reading the terms and conditions on a PCP agreement (and I'll state from BMW Finance here) -

"If you return the Vehicle before the end of the agreement, the Total Maximum Mileage will be reduced to reflect the shorter period of hire on a pro-rata basis. Your obligation to pay any Excess Mileage Charge will accrue immediately prior to termination."

Worth pointing out here that an excess mileage charge or damage charge doesn't actually form part of your total amount payable under the finance agreement. In my opinion, I suggest it's perfectly fair for this charge to be levied (as, it appears, so do the legal teams at the finance companies.)

[kiethton]

rfoster said:

daemon said:

I personally wouldnt ever enter in to a PCP / HP contract with my exit strategy being a VT.

This exactly. Reading the terms and conditions on a PCP agreement (and I'll state from BMW Finance here) -

"If you return the Vehicle before the end of the agreement, the Total Maximum Mileage will be reduced to reflect the shorter period of hire on a pro-rata basis. Your obligation to pay any Excess Mileage Charge will accrue immediately prior to termination."

Worth pointing out here that an excess mileage charge or damage charge doesn't actually form part of your total amount payable under the finance agreement. In my opinion, I suggest it's perfectly fair for this charge to be levied (as, it appears, so do the legal teams at the finance companies.)

But the thing is these car companies are on hugely shaky ground. They can write whatever they like into a contract, however, the minute you VT the contract no longer exists, they can't apply any of the conditions to you.

[daemon]

kiethton said:

rfoster said:

daemon said:

I personally wouldnt ever enter in to a PCP / HP contract with my exit strategy being a VT.

This exactly. Reading the terms and conditions on a PCP agreement (and I'll state from BMW Finance here) -

"If you return the Vehicle before the end of the agreement, the Total Maximum Mileage will be reduced to reflect the shorter period of hire on a pro-rata basis. Your obligation to pay any Excess Mileage Charge will accrue immediately prior to termination."

Worth pointing out here that an excess mileage charge or damage charge doesn't actually form part of your total amount payable under the finance agreement. In my opinion, I suggest it's perfectly fair for this charge to be levied (as, it appears, so do the legal teams at the finance companies.)

But the thing is these car companies are on hugely shaky ground. They can write whatever they like into a contract, however, the minute you VT the contract no longer exists, they can't apply any of the conditions to you.

That's exactly it. The voluntary termination is a termination of the contract. It's your right under the consumer credit act. They can't pursue you for excess mileage charges.

[Sheepshanks]

daemon said:

They can't pursue you for excess mileage charges.

Of course they can. Whether they'll be successful or not is another matter.

I'm not aware it's ever been tested but as it would be a small claims case then each case would be separate and the outcome of small claims can seem random at times.

If it was a chunky amount you might as well let them sue you as there's little extra cost.

[daemon]

Sheepshanks said:

daemon said:

They can't pursue you for excess mileage charges.

Of course they can. Whether they'll be successful or not is another matter.

I'm not aware it's ever been tested but as it would be a small claims case then each case would be separate and the outcome of small claims can seem random at times.

If it was a chunky amount you might as well let them sue you as there's little extra cost.

Ok, my fault for not being wholly explicit - they cant legally pursue you for the mileage charges.

[rfoster]

The page in this link makes for particularly interesting reading on the subject:

http://www.legalbeagles.info/forums/showthread.php...

Clearly, the excess mileage problem is not clearly defined and there is conflicting data here.

It suggests liability is restricted to 50% (Section 100) - my interpretation of this section includes any sums that fall due immediately before termination - which in the case of the excess mileage charge is written into the agreement as due before termination.

Anyway - a grey area as you say. Along with 'the vehicle must be in reasonable condition' - so, up to date servicing / mot etc. If you were to hand a vehicle back with 4 bald tyres, damaged exhaust, dents in every panel, would you not be liable for any damage charges as you've already paid 50%? They'll certainly invoice you for damage.

[Trax]

rfoster said:

This exactly. Reading the terms and conditions on a PCP agreement (and I'll state from BMW Finance here) -

"If you return the Vehicle before the end of the agreement, the Total Maximum Mileage will be reduced to reflect the shorter period of hire on a pro-rata basis. Your obligation to pay any Excess Mileage Charge will accrue immediately prior to termination."

Worth pointing out here that an excess mileage charge or damage charge doesn't actually form part of your total amount payable under the finance agreement. In my opinion, I suggest it's perfectly fair for this charge to be levied (as, it appears, so do the legal teams at the finance companies.)

These agreements, and the one on the previous page from VW contain wording about the excess mileage, older contracts dont. We terminated ours, and there was no such wording, though we did take it out about 4 years ago.

It appears newer contracts have been amended to explicitly say the excess mileage is due on a pro rata basis. Whether it would hold up in court as unfair, or contradicts the CCA, well lets see if anyone gets that far.

[Jon39]

sidicks said:

Ginge R said:

C.£30bn in lease sales last year, and with a possible bubble on the horizon, I'd be interested for anyone's thoughts on this and whether or not anyone has successfully complained against a contract.

You can guarantee that, if there's money in it, there will be plenty of people coming out of the woodwork to claim 'mis-selling'.

I have only read Page 1, so apologies if my comments have already been mentioned.

Some years ago when I heard about PCP, I was intrigued about it.
From the industry end, I wondered who had thought up this brilliant scheme.
Borrowers are often only concerned about how much will it cost each month.
Only paying for depreciation, of course suddenly makes the payments so much less, than was previously the case.
Low interest rates also help.
Suddenly a new 'premium' car could be posing on the driveway, instead of the usual small hatchback on HP.
No need to worry about the balloon payment, because that is a problem for later.

How the motor industry has rubbed their hands.

Mercedes Benz new UK sales;

2009 = 72,281 cars.
2010 = 74,977 cars.

2015 = 145,254 cars.
2016 = 169,828 cars.

Remarkable.

I read recently about a journalist posing as an impoverished student, who was offered a PCP contract for a new £20,000 car, with few questions asked about how it would be paid for.

Whether the final payment might be the only PCP balloon, time will tell, but presumably it must be a worry.

Edited by Jon39 on Wednesday 19th July 12:30

[James_B]

daemon said:

Ok, my fault for not being wholly explicit - they cant legally pursue you for the mileage charges.

Of course they can. Whether they'll be successful or not is another matter.

[R0bb]

rfoster said:

The page in this link makes for particularly interesting reading on the subject:

http://www.legalbeagles.info/forums/showthread.php...

Clearly, the excess mileage problem is not clearly defined and there is conflicting data here.

It suggests liability is restricted to 50% (Section 100) - my interpretation of this section includes any sums that fall due immediately before termination - which in the case of the excess mileage charge is written into the agreement as due before termination.

Anyway - a grey area as you say. Along with 'the vehicle must be in reasonable condition' - so, up to date servicing / mot etc. If you were to hand a vehicle back with 4 bald tyres, damaged exhaust, dents in every panel, would you not be liable for any damage charges as you've already paid 50%? They'll certainly invoice you for damage.

Hi,

I thought I would sign myself up as I came across this forum whilst doing a bit of googling - it is nice to know the guidance I posted on legalbeagles is reaching out

But you are quite right in that the issue about excess mileage is a bit of a grey area in the sense that there is no binding authority on it. But s.100 was incorporated from the CCA's predecessor which was the Hire Purchase Act (1964 I think) in which the purpose of it was to afford the hirer some protection in the event they encountered financial difficulty. It was primarily aimed at striking a balance between allowing the debtor to exit the agreement whilst acknowledging that the lender might be left with a (potentially severely) depreciated asset. Thus, the lender is entitled to both 50% of the total amount payable but also the return of the asset which (theoretically) allows the lender to recoup the money it has spent under the agreement.

You mentioned that your interpretation of s.100 was that excess mileage is included because it falls immediately before termination. Whilst I respect your (and everyone elses) opinion, the CCA actually says any sums due in respect of the total price immediately before termination. The words 'total price' have been defined as not including compensation or damages arising out of a breach of the agreement. The excess mileage is effectively liquidated damages for breach of the agreed mileage and for the purposes of calculating one's liability under s.100, it is excluded.

I've kept the guide relatively simple for most to understand but recently have been trying to update as I hear the way lenders are changing tactic. I was however, more interested about the wording of the BMW PCP clause on excess mileage. I've seen earlier agreements but not actually seen any recent ones with that sort of clause so it would be helpful if you are able to provide me with a copy of it as I am trying to collect various agreements so I can understand how to counter any arguments. I'm also aware that VWFS and MBFS also have similar wording in their agreement.

BMW for example seem to rely on s.99(2) which says that VT does not affect liability which has accrued before the termination. However, attention to detail is always key - BMW's clause says "Your obligation to pay Excess Mileage Charges will accrue immediately prior to termination".

What's the difference? Accrued (past tense) and accrue (present tense). On proper construction, accrued in this context means anything that has already been paid (or overdue instalments) and the reasons why this clause was inserted was to prevent the hirer from recovering any instalments over and above the 50% of the total amount payable they have paid (makes sense). If this provision wasn't in the CCA, the hirer could effectively recover any excess instalments. Of course BMW are trying to use it to their advantage for excess mileage but (amongst other arguments) I think they've got the wrong end of the stick.

It's a novel issue since there is no direct authority, but there are plenty of persuasive (practitioner texts, Halsbury's Laws, Chitty on Contract) which all suggest that s.100 is the maximum liability possible when someone terminates under s.99 and if it's not in there, it's not recoverable.

Edited by R0bb on Thursday 27th July 10:49

Edited by R0bb on Thursday 27th July 11:01

[DonkeyApple]

https://www.moneysavingexpert.com/reclaim/reclaim-...

I noticed the other day that apparently already 1.2m people have begun the process even ahead of the Sep24 findings.

Lamentably, I've also seen some of the people rented by the FCA to work on this delivery that is over a decade, if not approaching two decades late.

My view remains that any debt vendor or agent who also has the ability to change the price of the goods is mis selling if they do so and that 'house' finance in the 21st century remains a disgrace and pure exploitation of the consumer but baby steps and it may take another decade or two for the FCA to work out that being able to manipulate RRP to push uncompetitive House credit onto unsuspecting consumers means that most new cars have been mis sold this century as well as inflating used costs for all.

ML's podcast update:
https://www.bbc.co.uk/sounds/play/p0hkvp05?at_mid=...