BMW Financial Services excess of mileage and arrears dispute.

[Mrs dee]

Hi,
I am really hoping to get some advice. I’ve got almost the same issues with the BMW over the mileage and areas disputes.
I VTed my car back in June 2020 with having over 70% off the total amount payable. In September 2020, BMW presented me with 3 charges; excess of mileage, car damages and outstanding arrears of the whole total of £2,800.
I decided not to dispute the damages and agreed to pay for it but the rest of the charges I have been disputing since last year. The reason I’m disputing only 2 charges is that; 1) there’s no legal provision in the UK legislation to charge excess of mileage,
2) I had an arrears of £1,303 prior terminating my agreement and when I spoke to one of the BMW advisers on the phone he clearly told me that I wouldn’t need to pay anything as I already paid more than 50% of the total amount.

I contacted the Financial Ombudsman and put my points across of why I believe I shouldn’t be liable for the charges.
Unfortunately, the FO investigator dealing with my case has totally taken BMW’s side and rejected my argument in regards to the mileage and arrears and in his last email too me a week ago told me that it’s now going to be passed on to the Ombudsman and if I have anything to add I can do so by the 27th of August.

The investigator’s argument is that I am liable for the excess of mileage referring to the contractual obligations in the agreement:
“ We will charge you 3.33 pence for each mile in excess of the Maximum Total Mileage. 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.”

And,referring to the arrears he responded by saying:
“Arrears are simply those payments that are past due but remain unpaid. Referring back to the second page of Mrs *** agreement, under the heading “Termination: Your Rights, the relevant section here reads:

(i) any arrears and any other sums which have become payable under the agreement before the termination

I’m satisfied that the provision above clearlyhighlights that any arrears will become payable before the termination of the agreement and that BMWFS are permitted to charge for that. So I think that Mrs ***
would have been reasonably aware that any she would be liable for any arrears.”

I have got one final statement to pitch to him and I really don’t know what to say. If anyone could give me some advice on how to proceed, it’d be very much appreciated.

Thanks.

[R0b]

I wouldn't hold out much hope, all I can suggest is that yes, the contract may say that you're liable, but you exercised a statutory right under s.99 of the CCA. Section 100 confirms your liability where you have exercised that right (see the highlighted parts below)

100(1)

Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.

The wording clearly states you are liable to pay one half of the total price plus any sums due in respect of the total price immediately before termination unless the agreement provides for a smaller payment. As I've mentioned time and again on here, total price does not include compensation, damages for breach of contract or charges categorised as penalties.

To work out whether the excess mileage charge is recoverable, you have to ask yourself what the charge is for. It's a defined charge for exceeding the contractual clause not to exceed the agreed mileage, in other words damages for breach of contract. That kind of charge is explicitly excluded for the purposes of calculating the sums due in respect of the total price immediately before termination.

So yes, the excess mileage charges might be considered arrears, but not every kind of arrears are recoverable when you exercise the right to terminate under section 99.

There have been some recent FOS final decisions on here for BMW and they're not favourable. They overlook a number of things but of course they review what's fair and reasonable. It is more than likely that you will have to go to court to try and resolve this. There's someone else ahead of you at the moment but no reply lately so I don't know what's going on.. maybe that person has agreed to settle the claim who knows (see link below). As far as I understand, BMW will continue to tarnish your credit file until you decide to pay up so that's something you need to consider.

BMW Finance - LegalBeagles Forum

[echat11]

There is some information here - https://www.thecarexpert.co.uk/car-f...tion-pcp-hp/2/

[Mrs dee]

Thank you very much ECHAT11 for the link you’ve provided. Yes, my agreement states that my excess of mileage would be calculated on the pro-rata basis.

[Mrs dee]

Thank you very much Rob! I really appreciate your response.
So,in the simple words, has BMW got all legitimate grounds to recover from me those arrears even though I’ve paid over 70% off the total price?
And after reading your post if I understood it correctly, the excess of mileage is the part BMW has no legal provision to chase me for?
If you don’t mind I can post an excerpt from an investigator’s response to me. I’m trying to read into it but it’s still very confusing so if you could just help me to understand it better, It’d be fantastic.

“So to determine whether the charges for excess mileage are legally enforceable in Mrs *** case, I firstly need to think about when the charges were accrued under the agreement, and whether they are payable as compensation for breach of the agreement so don’t fall to be included in “total price”.
When did the excess mileage charges accrueunder the agreement?
On the first page of the agreement, under the heading “Excess Mileage Charges” the agreement sets out that “any Excess Mileage Charge will accrue immediately prior to termination” (full clause set out above).
I think this wording makes it clear that the charges for excess mileage accrued before Mrs *** terminated the agreement, and the charges are therefore, pursuant to section 99(2) CCA, not affected by termination.
Are the charges payable as part of the “total price” or payable for breach?
It is necessary to decide whether the excess mileage charges are payable as compensation for breach of the agreement, on the one hand, or simply as an additional part of the price of hire on the other.
Again, referring to the section headed “Excess Mileage Charges”, the agreement sets out that “We will charge you 3.33 pence for each mile in excess of the Maximum Total Mileage. 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.”
The agreement does not say anywhere that Mrs *** must not exceed the maximum total mileage or the maximum annual mileage. The significance of those terms seems to be to identify how far the vehicle can be driven before additional sums become payable. Similarly, the phraseology that the maximum “we will charge” is neutral, rather than prohibitive. So I consider that the agreement allows Mrs **** to exceedthe applicable annual and/or total mileage but provides that the stated charges will be payable by her should she do so. The excess mileage charges are not, in my view, payable as compensation or damages for breach of the agreement.
As excess mileage charges are sums payable under the agreement, and are not compensation or damages for a breach of the agreement, if and when they are incurred by Mrs ***they will fall within the definition of “total price” under section 189. For the same reason, excess mileage charges that have accrued before a voluntary termination count towards “the sums due in respect of the total price immediately before termination” under section 100(1).
Section 173 of the CCA
Section 173 of the CCA refers to Contracting-out forbidden and essentially renders a contractual term void if it is inconsistent with the protections set out in the CCA or regulations made under the CCA. But my view is that this doesn’t apply to charges that are permitted by section 99(2) and/or section 100 unless they contravene some other protective provision.
As already referred to above, I’m satisfied that the excess mileage terms of Mrs Doherty’s agreement do accrue before termination as allowed by section 99(2) and, when they are incurred, fall within the total price of the of the agreement referred to in section 100. I’m not therefore persuaded that those sections of the CCA have been contravened such that section 173 renders the excess mileage terms of Mrs **** ’s agreement void.
Are they payable for failure to take reasonable care of the vehicle?
I have also considered section 100(4) of the CCA. Under this section, if the debtor has failed to take “reasonable care” of the goods, the creditor is able to increase the amount owed under section 100(1) CCA in order to compensate for this breach. So for completeness, I have also considered whether in driving more miles than was allowed under the agreement, Mrs **** has failed to take reasonable care of the vehicle.
I note that under the agreement, charges accrued for excess mileage are dealt with separately to charges for repairing the vehicle if it is not returned in “good repair and condition”. So the agreement has separate contractual regimes for excess mileage and damage caused from lack of care for the goods. I also note the agreement does not set out that exceeding the maximum mileage will be a failure to take reasonable care of the vehicle.
In light of the terms of the agreement, it is my view that in Mrs ****’s case, driving more than the maximum mileage does not constitute a failure to take reasonable care of the vehicle as asserted by BMWFS.”
Apology for such a lengthy post.

[R0b]

Are you able to post up a copy of your contract terms and conditions. ]

I've seen a few BMW contracts and I'm fairly certain that your BMW contract states you must not exceed the agreed mileage. That's basically a copy and paste job which seems to be doing the rounds within FOS for all decisions with BMW. I believe BMW are misleading by not providing the full terms and conditions but I won't know unless we can see what yours say. If you already provided the FOS with the full terms and conditions and they responded with that template response then clearly they are negligent and shows that they haven't actually read the contract properly.

The real issue is that the FOS doesn't actually explain the purpose of the excess mileage charges. It's obvious that the reason you have an agreed mileage is because BMW charge you a particular amount over the term of the contract based on the expected value of the vehicle at the end of that term. If the mileage has exceeded the agreed amount, the argument is that the vehicle has lost some value and therefore the excess mileage charges represent the loss of value on a pence per mile basis. In other words, yes they are sums payable under the agreement, but it's compensation for the reduction of the car's value so it's not recoverable.

Of course the FOS seem to skip over that and say that the excess mileage charges can't be compensation in any way... A flawed decision in my eyes.

The short answer to your question about BMW having legitimate grounds, I say no but BMW say yes hence why your only option is to take the matter to court and force BMW's hand to explain what those charges are actually for.

[R0b]

Just found the below in a BMW contract a few years go. As you can see, it states the excess mileage charge is for depreciation of the vehicle which is another way fo saying the charges are compensation for the loss of the vehicle's value caused by exceeding the agreed mileage.

[Mrs dee]

Hi Rob! Thank you so much for your reply.
I’m trying to get a copy of the contract off my online BMW my finance account,to which i have still an access to but I can’t see a copy of contract anywhere. I’ll check my paper documents and see if I can find it. But if it helps my contact was PCP, and assuming it would be the same wording.

On the note of a “copy and paste” I thought it was the case with some other of FOS letters I’ve had from them but I genuinely thought that response was more or less personally to me. I’m so naive.
Nevermind, I see that with arrears I have not much to say against it as well as charges for the damage of the car which in their last letter BMW described it itself as “a loss of value” , I am now more inclined towards making some agreement on the payment on those two charges.
But I will be fighting them for the excess of mileage charge.

What is your thought on that? Is it advisable?

[Mrs dee]

Hi Rob,
I’m very confused but I haven’t got a copy of my contract anywhere. I’ve only got a Used Vehicle Order and there’re T&C on the back page which don’t contain any info on excess of mileage.It seems like it’s the only document which have some terms described in I have at this moment. I obviously remember signing documents (will curse that day forever) but I have not received any copy of my contract.
Should I contact BMW directly to request one or since I haven’t been in touch with them due to the FOC taking over it should be them?

Thank you.

[echat11]

Some more info -

https://www.financial-ombudsman.org....it/car-finance

[Mrs dee]

Oops, in one of my posts I accidentally left some of my details. Is there any way to remove that, Moderators?

[echat11]

Oops, in one of my posts I accidentally left some of my details. Is there any way to remove that, Moderators?

There's a little white triangle on the left hand side of each post, go to the post, click on triangle, fill box, tell Admin the info you want removed. Shouldn't be an issue.

[Mrs dee]

Thank ECHAT11 for the link.

[R0b]

I would go back to the FOS and ask for time to provide a response because you think their decision is incorrect and you don't believe BMW have provided the full terms and conditions, so you will need to make a subject access request for those details.

In the meantime, send a subject access request to BMW and ask for all information they hold about you including copies of the contract. They have one month to provide this information to you.

[Mrs dee]

Thanks Rob! I will do this today. For the subject access request, do I just contact them on their general phone number or is there a dedicated contact number I can contact them on?