Alfa PCP Change in Terms on back of GDPR letter

[ChuckVader]

I recently received a letter from Alfa about an up date to their privacy policy etc as I have a PCP on a Giulietta of which I am just under 2 years of a 4 year agreement.

However the majority of this letter in reality was a note to say they were making some changes in the T&C of my finance agreement.

So first off these new terms were applicable from the 25th May to coincide with GDPR day and I actually received the letter on the 26th May.

The changes are to increase the vehicle collection charge from £70 to £139, a clause has been changed to add this if I get to the end of the agreement and decide to hand the car back.

They have expanded taking reasonable care of your vehicle to include things that were not listed, including mileage which was not previously mentioned in that section.

The original agreement does not allow provision for any changes although it does state they can increase charges with 30 days notice.

I appreciate that if I VT the car at the 50% then no further charges can be applied anyway but in the case of if I return the vehicle at the end of the PCP, then I seem to have new terms imposed on me.

I spoke to Alfa this morning and had a follow up email to confirm these charges would be applicable from the 1st July 2018 hence the 30 days written notice. No reason given why the letter date was wrong and no indication of the additional terms imposed.

Obviously I am not happy and not prepared to accept these changes. I will be writing to them but just wondered what the best way to proceed is?

[R0b]

Depends on the original wording of the contract in relation to their right to unilaterally increase the price. Their view of what amounts to 'reasonable care' is of course a subjective one since the mileage of the vehicle might affect the monetary value but not the physical condition. There is some suggestion (via the courts) that the duty to take reasonable care generally only applies to the physical condition, not the economic value.

When you do write to them, I would also let them know that you consider this to be an unfair contract term which they have imposed upon you halfway through the contract. Assuming there is no explanation for the fairly substantial increase in collection fees and that they are in effect variation the interpretation of 'reasonable care' is both to your detriment.

I would strongly suggest you read the the guidance on unfair terms produced by the Competition and Markets Authority as there is an explanation in there that unilateral variations may be found unfair - you might also want to write to the CMA about this (and let Alfa know you have reported this to the CMA). The starting point on variation clauses in the link below is page 98 and goes on to page 100. The second link provided is more of a high level overview of unfair terms which you can find under the heading 'Changing the terms of a contract'

https://assets.publishing.service.go...n_Guidance.pdf

https://www.gov.uk/guidance/unfair-t...ses-full-guide

Whether it gets you anywhere is anyone's guess, that would be up to a court to decide.

[ChuckVader]

Thanks R0b appreciate your response.

Depends on the original wording of the contract in relation to their right to unilaterally increase the price.

Part of the charges are (I have cut some out but happy to post in full)

CHARGES
If you pay late or otherwise break the terms of these agreements you must pay us the following charges if they apply:

(c) _Goods collection fee on voluntary termination of the HP agreement by you - £70 (see clause 11.1 for further details);

And at the end of this charges bit it states

These charges may be varied by us in the future. To do so we will give you at least 30 days’ written notice.

That is all Alfa seem to have come back on, however that is not the bit that I asked them about. It's the addition of changed terms in the main contract so one main one for me is this quoted in blue. There appears to be no variation clause that I can see other than the specific one about increasing charges above.

Now the new charges section with the new words in blue as highlighted by Alfa, though the wording is different in some terms too

CHARGES
If you pay late, otherwise break the terms of these agreements or if the agreement comes to an end, you must pay us all of the following charges if they apply:

and to marry that up they have changed

Condition 4 4. Your Options 4.1 Once you have paid all relevant HP payments and the Administration Fee stated in the HP agreement except the Final HP payment, you have three options. They are set out in clauses 4.2, 4.3 and 4.4 below.

and removed the text in bold red.

4.4____Option 3
_____You may return the Goods to us without paying the final HP payment,
Option Fee or Administration Fee If you chose this option, the Goods will
remain our property at all times. If you exercise option 3, you must:

So before they had no charge if I just asked them to collect at the end of the term following all monthly payments, they are now trying to impose one, not just increase the price.

Do not see how they can do this ?

Their view of what amounts to 'reasonable care' is of course a subjective one since the mileage of the vehicle might affect the monetary value but not the physical condition. There is some suggestion (via the courts) that the duty to take reasonable care generally only applies to the physical condition, not the economic value.

When you do write to them, I would also let them know that you consider this to be an unfair contract term which they have imposed upon you halfway through the contract. Assuming there is no explanation for the fairly substantial increase in collection fees and that they are in effect variation the interpretation of 'reasonable care' is both to your detriment.

I would strongly suggest you read the the guidance on unfair terms produced by the Competition and Markets Authority as there is an explanation in there that unilateral variations may be found unfair - you might also want to write to the CMA about this (and let Alfa know you have reported this to the CMA). The starting point on variation clauses in the link below is page 98 and goes on to page 100. The second link provided is more of a high level overview of unfair terms which you can find under the heading 'Changing the terms of a contract'

https://assets.publishing.service.go...n_Guidance.pdf

https://www.gov.uk/guidance/unfair-t...ses-full-guide

Whether it gets you anywhere is anyone's guess, that would be up to a court to decide.

They have introduced a new condition 13 on reasonable care ....


New condition 13

13. Excess Mileage
The Maximum Annual Mileage is the mileage you agree that the vehicle will travel on average each year during the term of the Agreement. This figure is used by us to assess the Guaranteed Future Value of the vehicle because your annual mileage affects the future value of the vehicle. If you exceed your Maximum Annual Mileage, you have not taken Reasonable Care of the vehicle and as a result, you must pay us the Excess Mileage Charge shown in the section headed “Excess Mileage” for each excess mile (or part of a mile) for each year. The Excess Mileage Charge is a reasonable preestimate of our loss. We shall not ask you to pay this charge if you purchase the vehicle from us in accordance with the provisions of the HP Agreement and the vehicle becomes your property. If your agreement ends early and you have exceeded your Maximum Annual Mileage up to that time, you will be charged the Excess Mileage Charge.

Although this actually already existed but not as long and I somewhat frustrated at the bold section ....

I will be writing to them and thanks for the documents.

What's annoying is that they are wasting my time. As far as I can see unlike other contracts I have there is no variation clause so VT issues and charges aside they have simply changed the contract...

[R0b]

If you are confident that there is no variation clause that allows them to vary the terms of the agreement, then it would be a very simple letter back to Alfa. You just need to outline that having reviewed the terms of your original agreement, there is nothing within it to suggest they have the right to do this. In the absence of such a clause any variation to the agreement requires your consent and you do not consent to the amendment of the clauses.

If they try to insist that you will be held accountable according to those varied clauses, then you will consider them unfair and shall report the matter to the Competition and Markets Authority.

Maybe they are trying to wing it since it is likely that very few will object but who knows.

[ChuckVader]

Thanks again Rob.

As far as I can tell reading the main contract and the referenced terms and conditions approx 8 pages in total, there is nothing that states we can change the terms and conditions. Unlike other contracts say my Virgin Media one which does for example have a section on "Changing this agreement" and the conditions under which they can do that. Is there any other term they could use?

The only changes they reference is to the charges already outlined in the Charges section and this requires 30 days notice.

Looking through the CMA section and how to report an issue it seems they don't deal with individual complaints although I think I have found the right route via a Word Doc. It does however mention what other organisations you have contacted about this issue. Would it not contact the FOS if Alfa came back disagreeing ?

[R0b]

Yes you are right the CMA don’t generally deal with individual complaints but will tend to keep it on record and if it is worthy of investigating they will do so.

If you want to go down the formal complaint route then your starting point is Alfa but mark it as a formal complaint. They have 8 weeks to investigate and come back with their final response. If you are not happy with that response or they fail to respond after the 8 week period, you can pursue your complaint to the Financial Ombudsman, who are quite frankly hit and miss at times. However in your case it seems pretty straightforward so there shouldn’t be any difficulties.

[Amethyst]

That's interesting they have tried to amend their terms to specify that excess mileage specifically is covered by the reasonable care provisions. Recent discussions must be concerning them. I suspect many people who receive that letter won't notice and just assume it's privacy policy and GDPR issues and ignore it, which seems to have been their intention. Definitely make a complaint and if you could post up a copy of the letter they have sent, and keep the thread updated regards your complaint it may assist others who do check it out before just accepting it.

[ChuckVader]

Thanks Amethyst,

Here is a copy of the letter I received although others have received it via email, depending on their preferences.

Also attached is the PDF, which has the blue text I referred to, along with my original contract\T&C



Changes_to_TCs_FINAL.pdf (this bit includes all the new changes and terms some of which I quoted before)


Page 2 of the main contract with the charges (happy to upload the other bits but mainly personal details and no variation clauses)



and the small print

PCP-FCAA-1015.pdf

[ChuckVader]

Just as a quick update I sent an email to the FCA (Alfa finance) on Sunday and still have not had even an acknowledgement of receipt.

Anybody no what the usual response time is ?

Will chase next week if I do not hear anything.

[R0b]

I would chase them up today and confirm they have received it. Since the letter has been signed off by a person named Kelly Turner, you may perhaps want to write to Ms Turner and send her a copy of your letter.

[ChuckVader]

I did ring and chase it and resent whilst on the phone and they confirmed receipt.

Today I got a final decision letter.

Here is the relevant extract



This only answers the first part of my email and not the second part which is below

"2) Changes\Addition in terms

The letter also states we have updated your finance agreement and link to a further document. This "amended" document outside of the blue highlighted text changes differs from my original contract and appears to be a different revision.

However there is no variation clause in my agreement that allows either party to vary the terms of the agreement (Except already specified charges with 30 days notice).

I have reviewed the terms of my original agreement and there is no right for you to vary the terms. Having no right to vary those terms you require my consent for the changes in the letter and link and I do not consent to the amendment of the clauses that you propose.

If you insist that I am held accountable according to those varied clauses I will consider them unfair and shall report the matter to the Competition and Markets Authority. In addition I shall escalate this complaint to the Financial Ombudsman Service."

As Alfa have marked this as final but not bothered responding to the 2nd part shall I go straight to FOS or is worth asking Alfa about the unanswered question?

[Amethyst]

She has kind of answered that in saying that there is a vary clause requiring 30 days notice - which covers the increased collection charge....and explained the date was incorrect on when the change would occur …. so it was 30 days notice.... On the part of the contract you have uploaded that does only apply to the charges not the overall terms of the contract. If you are certain that there are no other clauses in the contract relating to variation then yes I would take it to the ombudsman now - you need to be clear what resolution you are looking for ( presumably to retain the original contract sans amendments ) - was it only the mileage clause being added other than the collection charge £ rise ( that you have a problem with I mean - I think it's all the blue bits on the pdf upload that are amendments?)

[ChuckVader]

There were no other variation clauses in the contract.

The rest of the contract is in post 8 in the PDF called PCP-FCAA-1015.pdf I don't believe that I have missed anything.

If you have a quick look at the changes in blue there were a fair amount of changes in Changes_to_TCs_FINAL.pdf

Is it worth ringing Alfa back just to ask why they haven't answered the second part ?

[R0b]

I can see that in the contract at the end of those list of charges it can vary those terms unilaterally without your consent and as already mentioned, by giving 30 days notice.

Quite frankly, I would have some concerns with that clause and whether or not it is actually considered an unfair contract term. First of all, I don't see the relevance of giving 30 days' notice if you there is no option for you to object, disagree or terminate the agreement. Secondly, the clause does not set out in what circumstances those charges can be varied, rather it suggests that Alfa can vary for whatever reason and without explanation. You would usually expect the clause to be limited to charges being increased if their costs increase.

Also, take a look at the extract below on the Competition and Market Authority's guidance on unfair contract terms (link here):

Trader's right to vary terms generally Schedule 2, Part 1, paragraph 11

Part 1 of Schedule 2 states that the following may be unfair:

(11) A term which has the object or effect of enabling the trader to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.

5.21.1 A right for one party to alter the terms of the contract after it has been agreed, regardless of the consent of the other party, is under strong suspicion of unfairness and may well, in any case, be blacklisted for the purposes of Part 1 of the Act. A contract can be considered balanced only if both parties are bound by their obligations as agreed.

5.21.2 A right of variation is likely to be at risk of being considered unfair depending on:

(a) its breadth the extent of the changes that it allows, and particularly changes that are exclusively in the interest of the trader;
(b) its transparency how far it can result in changes that are unexpected to and unforeseeable by the consumer; and
(c) the vulnerability of the consumer in particular, whether consumers can realistically escape the impact of the changes by cancelling the contract.

5.21.3 If a term could be used to force the consumer to accept unanticipated costs or penalties, new requirements, or reduced benefits, it is likely to be considered unfair whether or not it is meant to be used in that way. A variation clause can upset the legal balance of the contract, even though it was intended solely to facilitate minor adjustments or corrections, if its wording means it could be used to impose more substantial changes.

5.21.4 The CMA's concerns apply particularly to variation clauses in contracts for a fixed or minimum contractual period. Where a consumer enters a contract for a defined period (especially if it is short) the natural expectation will be that the terms of the contract are fixed for that period. A term which, contrary to such an expectation, allows the business to provide something that is not in all significant respects what the consumer agreed to buy, or to charge a higher price than was agreed, is clearly under particular suspicion of unfairness and may well be blacklisted for the purposes of Part 1 of the Act.

5.21.5 A variation clause is more likely to be found fair if it is narrow in effect, so that it cannot be used at the discretion of the trader to change the balance of advantage under the contract to the consumer's detriment. An example would be a term allowing variations to reflect changes in the law, or to meet regulatory requirements (e.g. new health and safety requirements). But allowing variation by reference to technical legislative or regulatory provisions, without any information to enable consumers to understand what this is likely to mean for consumers in practical terms, is unlikely to suffice.

There's more information on this if you click the above link (starts at page 100), it is well worth a read and if you do complain to the Ombudsman then you definitely need to make reference to this and apply it to your situation.

[ChuckVader]

Thanks Rob,

Whilst I am concerned about the charges and as you say their unilateral ability to change them at will with 30 days notice, my main concern is that of the changing terms completely. This is the 2nd part of my complaint and they have not even answered this.

Not sure if you have read the Changes_to_TCs_FINAL.pdf I attached but look at the amount of blue new text in that. Those are some new terms imposed whatever I do at the end of contract or VT.

What are you thoughts on those please?