Mercedes Benz - Ridiculous back and forth VT situation

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Ok guys so the FOS has come back to me with a response favouring Mercedes Benz as suspected, they have explained in the response that if i wish to further question their finding i may do so for this to be further reviewed.

I would desperately appreciate if you guys could further help me put across points at this stage, as i feel i may not have adequately explained things. I have included the response from FOS here:

Hi Jonathan

Thank you for your patience while I’ve look into your complaint. I’ve now completed my investigation and I’m ready to share my thoughts.

In your complaint letter you’ve raised a number of points. As you’ll see below I’ve addressed each one of these individually.

you were told on many occasions that you don’t need to pay the excess mileage charges unless you keep car until end of the agreement. You were also told to take the lower mileage option on the agreement to lower your monthly costs. You feel that this is an industry-wide mis-selling scandal that requires intervention from the Financial Ombudsman Service

Unfortunately it’s very difficult for us to know what was said during sales meetings as it is often a case of one person’s word against another. Having said that, we’d expect Mercedes-Benz Financial Services (MBFS) to investigate any allegations of mis-selling by their agents and provide feedback to each branch that a complaint has been raised against. But while I’ve taken your testimony into account, it’s very difficult for me to say the agreement was mis-sold without any further evidence to back this up.

I also appreciate your concerns that this may be an industry-wide problem. But our role is to look at each individual complaint on its merits, not to investigate the industry as a whole. We do record all of our complaints and if we see any trends in complaints we report these to the relevant industry regulator. But we’d still need to look at each complaint on an individual basis.

your Hire Purchase agreement doesn’t specifically state that excess mileage charges will be applied upon voluntary termination. In addition, the voluntary termination section doesn’t specifically mention excess mileage

I’ve reviewed the hire purchase agreement and I feel that, although it doesn’t specifically mention voluntary termination on the first page of the agreement, it states that, “if you do not exercise your right to purchase the vehicle, an excess distance charge will be payable” As voluntary termination means you aren’t purchasing the vehicle, I think you should’ve reasonably known the charge would be applicable.

This note on the first page also refers you to Condition 12 of the agreement, which states that, “If the vehicle is returned to us (whether at the end of the period of hire or on earlier termination), we will calculate the total distance travelled by the Vehicle whilst in your possession (the “Total Distance”). You will pay us a charge at the rate stated in this agreement if and to the extent that the Total Distance exceeds the allowed distance for the Vehicle.”

So while I think it was already made clear enough on the first page, this condition leaves no room for doubt that the charge will be applicable on early termination.

you were told you had to sign a form authorising voluntary termination and taking responsibility for any excess mileage. You’ve now discovered you weren’t actually obliged to sign this form.

I appreciate your concerns about this and, as my investigation has mainly focused on events at the time the original agreement was signed, I haven’t placed any weight on the voluntary termination form that you signed.

MBFS are going against the Consumer Credit Act by charging for excess mileage. For voluntary termination, you should be liable for 50% of the total price, which doesn’t include any compensation or damages for breaching the term of the agreement. Additionally, taking reasonable care of the vehicle doesn’t include the excess mileage.

You’re correct that, as a customer you’re only liable for 50% of the total price upon voluntary termination – if the goods have been reasonably taken care of. But, as outlined in s.100 (4) of the Consumer Credit Act, the creditor is also entitled to charge in addition to the total price if the goods haven’t been reasonably looked after.

I understand your opinion that mileage is separate to taking reasonable care of the vehicle. But the Financial Ombudsman Service’s approach is that taking reasonable care of the goods does include keeping to the agreed annual mileage – particularly if this is made clear in the contract, as it has been here. As you’ve not kept to the agreed mileage, MBFS are entitled to say the goods haven’t been reasonably looked after. So it’s fair for them to apply the relevant charges as set out in your agreement.

MBFS are too focused on mileage and cosmetics, which means you’re being punished for them focusing on resale value. There are many other factors that can determine how well a car has been looked after. You also feel that a car with hire mileage that has been better looked after is worth a similar amount.

Under Hire Purchase agreements, the creditor knows they may receive the goods back at some point. So it’s reasonable for them to want to protect the resale value of these goods. And while there are many factors to consider the quality of a car, as I’ve previously advised, we consider it reasonable for a business to look at mileage as part of this.

Ultimately, you’ve signed the contract, agreeing to be bound by the terms of the Hire Purchase agreement. MBFS are now applying these terms as agreed. So I don’t believe they’re doing anything wrong.

I think this is a fair outcome in the circumstances, for the reasons I’ve explained. But if you decide that you don’t accept what I’ve said, then please let me know by 23 June 2017. If I can’t resolve things then an ombudsman here can look at everything again and make a final decision. If I don’t hear from you by that date we might not be able to look at your complaint again.

Kind regards

From my understanding and what i can see, it seems FOS do not even comprehend the legalities i have attempted to explain. I do like however have he has said they dont place any weight on the fact i was made to sign the return form, as this was a point where Mercedes tried to emphasise i signed to agree, where i was actually told that without signing i couldnt VT the car. I tried to explain that there is no specific part of the contract that explains mileage charges are enforceable under VT, on on early termination, or at the end of the contract completion. I dont believe VT is classed as early termination as it is shown as a separate part of the contract on its own. I believe the way these things are worded allows Mercedes to cleverly found themselves in these situations, when they know realistically they are not entitled to charge for excess mileage charges.

"But the Financial Ombudsman Service’s approach is that taking reasonable care of the goods does include keeping to the agreed annual mileage – particularly if this is made clear in the contract, as it has been here. As you’ve not kept to the agreed mileage, MBFS are entitled to say the goods haven’t been reasonably looked after. So it’s fair for them to apply the relevant charges as set out in your agreement." This is part of the problem i believe, as they arent understanding this legally, merely explaining an opinion they have.

If anyone can help me formulate a response to go back to them that would be great i have to respond before the 23rd which is only 3 days from the date i received this.

Thanks

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

I'll take a look at this later in full and try to assist you with a response - there's no guarantee but I think we need to try and keep it as simple as possible and address the relevant points so we can get real answers rather than vague ones.

I also agree about the FOS but until a binding case comes to court, they just apply what they want. A breach of the excess mileage term does not automatically mean that the car is in an unreasonable condition - you can still go over the agreed mileage and still have the car in a reasonable condition. If the car goes 10 miles over the agreed contractual mileage does that automatically mean the car has not been reasonably looked after? Of course it doesn't!

I'd also add that if you go to this link halfway down the page there is this comment from the FOS http://www.financial-ombudsman.org.u...and-truths.htm

Myth: The Ombudsman ignores the law by using "fairness" to decide complaints

It is the law itself, laid down by parliament, that requires the ombudsman to decide cases on the basis of "fairness" - while complying with the Human Rights Act.
The principle of "fairness" lies at the heart of modern consumer-protection legislation applied in the courts - including theUnfair Contract Terms Act, the Unfair Terms in Consumer Contracts Regulations and the "unfair relationships" test in theConsumer Credit Act 2006.

Most of the complaints we handle turn on disputes about what actually happened - or on the application of general legal principles. In most cases, our approach is based on what the courts would be likely to do in similar circumstances. But in some areas, the standards that the industry has voluntarily imposed on itself (through its codes of practice) exceed the law's requirement.

Clearly if a court has given guidance then the above suggests that FOS would follow what the court says but they are in a world of their own these days when it comes to excess mileage complaints and they fail to explain their reasons for departing from the law.

I'll put my comments forward later today, have a busy day today!

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Really appreciate your help R0b

I would like to try and see this all the way through, i cannot find a thread anywhere where this has gone the whole way with an outcome, and i think we need to do this to be more conclusive to everyone

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Sorry I've not had enough time to get back to you have been so busy. I've put a few pointers below as to what you could add to your arguments in response. I would suggest that you respond under the same headings listed in that email and perhaps focus on the second and fourth heading. This is always going to be a longshot because the Ombudsman are not generally legally qualified and as they look at what's fair and reasonable. It is the court's job to look at the interpretation of the law and apply it which is why sometimes you will get a better decision from the Ombudsman than a court (but not in this case).

Happy to have a quick scan over if you post up a draft and i'll give my comments.

• Under section 3(1) of The Consumer Credit (Agreements) Regulations 2010 it says the following:

Documents embodying a regulated consumer credit agreement shall contain the information set out in column 2 of Schedule 1 to these Regulations in so far as that information relates to the type of agreement referred to in column 1.

In relation to Hire Purchase or Conditional Sale Agreements, paragraph 30 of Schedule 1 requires a statement explaining (1) how and when the debtor can terminate the agreement under section 99 of the Act, and (2) the debtor’s maximum liability under section 100 of the Act.

• It also says under section 3(4):

Documents embodying a regulated consumer credit agreement, other than an exempted agreement, shall contain statements of the protection and remedies available to debtors under the Act, in the Form numbered in column 1 of Schedule 2 to these Regulations and set out in column 3, in so far as those statements relate to the type of agreement referred to in column 2.

Paragraphs 9 in Schedule 2 contains the exact termination statement as set out in the contract under the heading “Termination: Your Rights”. When both sections and Schedules are read together, I think it is made quite clear that my maximum liability when I voluntarily termination under section 99 is what is set out in the statement referred to. It clearly says I will owe nothing more (emphasis added) which means just that, nothing else other than what is stated. If I was liable for excess mileage charges, then it would have been included in the statement but it isn’t and so I cannot be liable for excess mileage charges.

• MBFS know this and have tried to insert an additional termination clause (condition 12) into the contract to try and circumvent the maximum liability set out by the CCA.

• There is a general legal principle called the contra proferentem rule which means that if there is an ambiguous clause or it conflicts with another clause, then the it should be interpreted against the party who drafted it. There is a clear conflict between the two clauses as one limits liability and the other increases it. Applying the contra proferentem principle, the termination statement should be followed.

• Definition of ‘condition’ in Oxford dictionary as being “The state of something with regard to its appearance, quality, or working order.” The value and condition of the car are two separate things yet this person seems to have thought of them as one. You are only required to return the car in a reasonable condition - the value of the car has nothing to do with it.

• Refer to Brady v St Margaret’s Trust and the comment by Lord Denning:

The price in these hire-purchase agreements is no guide to the condition of a car. There should be evidence by the hire-purchase company to show the condition of the goods at the time the agreement was made and to show how far the hirer has defaulted under it. As I read this clause, the hirer's duty is to keep the car in the condition in which it might reasonably be expected to be if he had looked after it properly. He need not put it in a better condition than it was when he hired it. He need only keep it in the condition in which a reasonably minded hirer would keep it. Thus he would repair it if there was an accident, and he would do the immediate repairs in the course of running the car, but no more. The hire-purchase company should give evidence of any default on his part in that duty.

• Also, refer them to the link http://www.financial-ombudsman.org.u...and-truths.htm in which it is acknowledged that the approach by the FOS is based on what the courts would likely do in similar circumstances.

• Therefore, the approach suggested by the person who sent the email is wrong by making the assumption that by exceeding the agreed mileage in the contract, the car is automatically deemed to be in an unreasonable condition. The correct approach is per Lord Denning i.e. the onus is on the HP company who has to provide evidence that the hirer has failed to take reasonable care of the goods – if there is no evidence, then no damages can apply and it is wrong to make any assumption or speculate as to what condition the car might have been in without inspecting it. Ways to show the car was in a reasonable condition is the fact that it has an MOT, has been serviced regularly and repaired as is necessary. This is all that a hirer is required to do according to Lord Denning.

• DISP 3.6.4 R requires the ombudsman to take into consideration a) laws and regulations b) regulators’ rules, guidance and standards c) codes of practice and, where appropriate, what he considers to have been good industry practice at the relevant time.

• In R (Heather Moor and Edgecomb Ltd) v Financial Ombudsman Service [2008] EWCA Civ 642 the Court of Appeal said that the Ombudsman is "free to depart from the relevant law, but if he does so he should say so in his decision and explain why". This is a legally binding decision that the FOS must follow.

• The CCA makes it clear about a person’s liability which is limited and if the Ombudsman is to depart from this law then following Heather Moor, the Ombudsman must explain why he or she is departing from it.

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Thanks R0b,

I really appreciate you taking the time to help out. I have formulated a response, as best i could with as little knowledge i have. I have used all the points you have set out and tried to read and understand them all which i believe i do to an extent.

It is seeming clearer and clearer to me that this is obviously something MBFS cant claim. I find it bonkers that they are getting away with it, and the FOS is so lenient on the side of the lender. Im surprised there isn't a massive claims industry itching to get into this like the new "miss sold PPI"

I hope you get a chance to read and respond, i know you are very busy, i do have to reply to FOS by the end of today/ tomorrow apparently.

Thanks in advance!

Good morning,

I appreciate you taking your time to investigate this case for me, as you have pointed out in the points you have made in your response to my arguments, several may have been beside the dispute in question where I have vented against the industry, and not focused my complaint on my current situation. You have asked I am not satisfied with your findings, that I respond with further if I do not accept your findings. I have focused on the main points in question.


1. Your Hire Purchase agreement doesn’t specifically state that excess mileage charges will be applied upon voluntary termination. In addition, the voluntary termination section doesn’t specifically mention excess mileage

I’ve reviewed the hire purchase agreement and I feel that, although it doesn’t specifically mention voluntary termination on the first page of the agreement, it states that, “if you do not exercise your right to purchase the vehicle, an excess distance charge will be payable” As voluntary termination means you aren’t purchasing the vehicle, I think you should’ve reasonably known the charge would be applicable.

This note on the first page also refers you to Condition 12 of the agreement, which states that, “If the vehicle is returned to us (whether at the end of the period of hire or on earlier termination), we will calculate the total distance travelled by the Vehicle whilst in your possession (the “Total Distance”). You will pay us a charge at the rate stated in this agreement if and to the extent that the Total Distance exceeds the allowed distance for the Vehicle.”

So, while I think it was already made clear enough on the first page, this condition leaves no room for doubt that the charge will be applicable on early termination.


2. MBFS are going against the Consumer Credit Act by charging for excess mileage. For voluntary termination, you should be liable for 50% of the total price, which doesn’t include any compensation or damages for breaching the term of the agreement. Additionally, taking reasonable care of the vehicle doesn’t include the excess mileage.

You’re correct that, as a customer you’re only liable for 50% of the total price upon voluntary termination – if the goods have been reasonably taken care of. But, as outlined in s.100 (4) of the Consumer Credit Act, the creditor is also entitled to charge in addition to the total price if the goods haven’t been reasonably looked after.

I understand your opinion that mileage is separate to taking reasonable care of the vehicle. But the Financial Ombudsman Service’s approach is that taking reasonable care of the goods does include keeping to the agreed annual mileage – particularly if this is made clear in the contract, as it has been here. As you’ve not kept to the agreed mileage, MBFS are entitled to say the goods haven’t been reasonably looked after. So, it’s fair for them to apply the relevant charges as set out in your agreement.


What I am trying my best to emphasise, is that yes, I have signed an agreement with Mercedes Benz to take on the hire purchase of a vehicle. I would argue that this is not ultimately the end of the matter, and that I need to abide to everything set out in the agreement written by them. Because this agreement contradicts the CCA as I have already stated. This is not something that can be simply sidestepped, and I would request that this is further investigated, as close to a legal point of view as possible. I feel the approach of suggesting that I signed the contract and that’s the end of that is simply avoiding all the points I have made.

Again, to further back myself up in this argument, I have set out further points to clarify my position.


Under section 3(1) of The Consumer Credit (Agreements) Regulations 2010 it says the following:

Documents embodying a regulated consumer credit agreement shall contain the information set out in column 2 of Schedule 1 to these Regulations in so far as that information relates to the type of agreement referred to in column 1.

In relation to Hire Purchase or Conditional Sale Agreements, paragraph 30 of Schedule 1 requires a statement explaining (1) how and when the debtor can terminate the agreement under section 99 of the Act, and (2) the debtor’s maximum liability under section 100 of the Act.

It also says under section 3(4):

Documents embodying a regulated consumer credit agreement, other than an exempted agreement, shall contain statements of the protection and remedies available to debtors under the Act, in the Form numbered in column 1 of Schedule 2 to these Regulations and set out in column 3, in so far as those statements relate to the type of agreement referred to in column 2.

Paragraphs 9 in Schedule 2 contains the exact termination statement as set out in the contract under the heading “Termination: Your Rights”. When both sections and Schedules are read together, I think it is made quite clear that my maximum liability when I voluntarily termination under section 99 is what is set out in the statement referred to. It clearly says I will owe nothing more (emphasis added) which means just that, nothing else other than what is stated. If I was liable for excess mileage charges, then it would have been included in the statement but it isn’t and so I cannot be liable for excess mileage charges.

I’m assuming MBFS know this and have tried to insert an additional termination clause (condition 12) into the contract to try and circumvent the maximum liability set out by the CCA.


There is a general legal principle called the contra proferentem rule which means that if there is an ambiguous clause or it conflicts with another clause, then the it should be interpreted against the party who drafted it. There is a clear conflict between the two clauses as one limits liability and the other increases it. Applying the contra proferentem principle, the termination statement should be followed.


Definition of ‘condition’ in Oxford dictionary as being “The state of something with regard to its appearance, quality, or working order.” The value and condition of the car are two separate things yet this person seems to have thought of them as one. You are only required to return the car in a reasonable condition - the value of the car has nothing to do with it.



In reference to Brady v St Margaret’s Trust and the comment by Lord Denning:


The price in these hire-purchase agreements is no guide to the condition of a car. There should be evidence by the hire-purchase company to show the condition of the goods at the time the agreement was made and to show how far the hirer has defaulted under it. As I read this clause, the hirer's duty is to keep the car in the condition in which it might reasonably be expected to be if he had looked after it properly. He need not put it in a better condition than it was when he hired it. He need only keep it in the condition in which a reasonably minded hirer would keep it. Thus, he would repair it if there was an accident, and he would do the immediate repairs in the course of running the car, but no more. The hire-purchase company should give evidence of any default on his part in that duty.

I would also like to refer you to this link
http://www.financial-ombudsman.org.u...and-truths.htm

This tells me that the approach taken by the FOS is based on what the courts would likely do in similar circumstances.

I feel the approach I have received is incorrect, assuming that exceeding the agreed mileage in the contract is automatically deeming the car in unreasonable condition.

The correct approach is per Lord Denning i.e. the onus is on the HP company who must provide evidence that the hirer has failed to take reasonable care of the goods – if there is no evidence, then no damages can apply and it is wrong to make any assumption or speculate as to what condition the car might have been in without inspecting it. Ways to show the car was in a reasonable condition is the fact that it has an MOT, has been serviced regularly and repaired as is necessary. This is all that a hirer is required to do according to Lord Denning.



DISP 3.6.4 R requires the ombudsman to take into consideration a) laws and regulations b) regulators’ rules, guidance and standards c) codes of practice and, where appropriate, what he considers having been good industry practice at the relevant time.

In R (Heather Moor and Edgecomb Ltd) v Financial Ombudsman Service [2008] EWCA Civ 642 the Court of Appeal said that the Ombudsman is "free to depart from the relevant law, but if he does so he should say so in his decision and explain why". This is a legally binding decision that the FOS must follow.

The CCA makes it clear about a person’s liability which is limited and if the Ombudsman is to depart from this law then following Heather Moor, the Ombudsman must explain why he or she is departing from it.


I would ask that all the points I have made in relation to your previous response are further considered. I feel very strongly that everything I have suggested so far, I have backed up with evidence to show that in this case, as a consumer I am protected by the CCA, I have exercised my right to VT the car and have followed all the correct guidelines in accordance to the act.

I look forwards to receiving your further findings

Sincerely

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

I'll try and take a look over lunch if I can, if not later tonight. I remember when I complained to the Ombudsman they gave me an extension because I said that a couple of days was too short. Maybe drop the person an email and ask for an extension until Monday 26 June so you can consider his/her comments and formulate a proper response.

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

I emailed FOS and they have honoured an extension till Monday, Thanks again R0b

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Hi Jonny,

I've re-arranged what you've said below but it is my view of things and an example of what you could say. It may be a case that the Ombudsman sticks to their guns and won't change their view but at least you can say that you've tried your best, and even if it doesn't go your way then you do not have to accept their decision and it is up to MBFS to pursue an action in court for the excess mileage.

I appreciate you taking your time to investigate this case for me, as you have pointed out in the points you have made in your response to my arguments, several may have been beside the dispute in question where I have vented against the industry, and not focused my complaint on my current situation. You have asked I am not satisfied with your findings and I would like to respond as follows

1. The maximum liability when terminating under section 99 of the CCA (Voluntary Termination)

The Consumer Credit Act 1974 sets out both the debtor and creditor’s rights and remedies under regulated agreements.
Section 100 of the CCA says:

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 (emphasis added).

Section 189 defines 'total price' as:

the total sum payable by the debtor under a hire-purchase agreement or a conditional sale agreement, including any sum payable on the exercise of an option to purchase, but excluding any sum payable as a penalty or as compensation or damages for a breach of the agreement (emphasis added).

The Consumer Credit (Agreements) Regulations 2010 contains details as to what creditors must include in a regulated agreement dependent on the type of agreement entered into. In particular:

(a) section 3(1) states:

Documents embodying a regulated consumer credit agreement shall contain the information set out in column 2 of Schedule 1 to these Regulations in so far as that information relates to the type of agreement referred to in column 1.

(b) Paragraph 30 of Schedule 1 (see image below), it says that hire purchase or conditional sale agreements.

Comments

From the above legislation, the statement “Termination: Your rights” therefore sets out the maximum liability under the contract when I terminate early in accordance with section 99 e.g. 50% of the total amount payable. It also says that provided I meet the criteria, I will pay nothing more. I think that is undoubtedly clear that it does not include excess mileage charges otherwise if I was liable for such charges, then it would have been made explicitly clear in the statement.

MBFS know this and have tried to insert an additional termination clause (condition 12) into the contract to try and circumvent the maximum liability set out by the CCA.

There is a general legal principle called the contra proferentem rule which means that if there is an ambiguous clause or it conflicts with another clause, then the it should be interpreted against the party who drafted it. There is a clear conflict between the two clauses as one limits liability and the other increases it. Applying the contra proferentem principle, the termination statement should be followed.

2. Vehicle damage

You said in your email, “the Financial Ombudsman Service’s approach is that taking reasonable care of the goods does include keeping to the agreed annual mileage – particularly if this is made clear in the contract, as it has been here.” For the reasons below, it is my contention that such an approach is not only the wrong approach but flawed.

(a) First of all, the value of the car and the condition are two separate issues. Section 100(4) only concerns itself with the ‘condition’ of the car. The Oxford Dictionary defines ‘condition’ as “The state of something with regard to its appearance, quality, or working order”. It is therefore wrong to base your decision simply on the car’s resale value and the approach you seem to suggest means that if the car exceeds the agreed mileage by even 10 miles, then it is automatically assumed (without evidence to the contrary) that the car is in an unreasonable condition.

In response to that position, I would like to refer to you a Court of Appeal case, Brady v St Margaret’s Trust [1963] 2 Q.B. 494, the Court had to decide the question of reasonable condition. Lord Denning (at page. 500) said:

“The price in these hire-purchase agreements is no guide to the condition of a car. There should be evidence by the hire-purchase company to show the condition of the goods at the time the agreement was made and to show how far the hirer has defaulted under it. As I read this clause, the hirer's duty is to keep the car in the condition in which it might reasonably be expected to be if he had looked after it properly. He need not put it in a better condition than it was when he hired it. He need only keep it in the condition in which a reasonably minded hirer would keep it. Thus, he would repair it if there was an accident, and he would do the immediate repairs in the course of running the car, but no more. The hire-purchase company should give evidence of any default on his part in that duty.”

(b) I would also like to refer you to a publication by the FOS (Issue 91, myths and truths about the ombudsman service, http://www.financial-ombudsman.org.u...and-truths.htm) where it suggested one of the myths was that the “Ombudsman ignores the law by using “fairness” to decide complaints”.

In response by the FOS, it confirmed that “In most cases, our approach is based on what the courts would be likely to do in similar circumstances.”

Furthermore, I also refer to another Court of Appeal case, R (Heather Moor & Edgecomb Ltd) v FOS[2008] EWCA Civ 642. Lord Justice Stanley Burton commented (para. 49 of the judgment) that DISP 3.6.4 allows an Ombudsman to “to depart from the relevant law, but if he does so he should say so in his decision and explain why”. This is a legally binding decision on the FOS and they must comply with it, failing to do so means they are in breach.

Comments

As you can see from the above, the correct approach taken by the FOS is to follow what the courts would likely do in similar circumstances and therefore the approach you referred to you in your email must be wrong. The correct approach should be that of Lord Denning i.e. if MBFS is going to allege that the excess mileage means the car is not in a reasonable condition, then they must back up that assertion with evidence.

Neither the Ombudsman nor MBFS can speculate whether or not the excess mileage caused damage. In fact, I would say that I took reasonable care of the car which was what was expected of me e.g. servicing the car, repairs, MOT etc.

Conclusion

In summary, I would ask that you reconsider your decision in light of the above information in that MBFS has supplied no evidence. However, if you believe that your decision is the correct one, then I would ask you to explain why you have departed from the CCA and legally binding case law and provide any evidence given to you by MBFS to support that decision.

Note: I have attached the relevant legislation and case law I mention above, highlighted for your convenience.

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Attached case law and relevant provisions of CCA highlighted sections too.

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Thanks R0b,

I have sent this over to them, and i am awaiting a response, can we assume out of stubborness they will stick to there guns? Its quite interstesting this whole process. I feel i am learing a huge amount along the way.

I have to say again, thanks for taking the time, i know i am not the only person you are offering advice to on this basis. I know you want to see this put right as much as us individuals.

Il be back once i have a response!

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

Unable to say really, but pretty much all excess mileage complaints are dismissed by the FOS. I assume yours is only at the initial stages with the case reviewer. If so then youcan still ask an Ombudsman to make a final decision if the case reviewer does not change their mind. Again, the final decision is likely to go against you but as I said before, at least you attempted it.

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

So i have a further response from FOS, after disputing there first response, please see as follows:

Hi Jonathan

Thanks for waiting while I looked further into your points. I’ve now reviewed these, but my opinion on your complaint hasn’t changed.

As you’ve raised some points about the business trying to circumvent the Consumer Credit Act, it’s worth me saying that this service can’t comment on the legal enforceability of an agreement. What we have to look at is what’s fair and reasonable in the circumstances of your individual complaint.

1. The maximum liability when terminating under section 99 of the CCA (Voluntary Termination)

You’ve said that you feel the excess mileage clause has been inserted in your contract to circumvent the maximum liability set out in the Consumer Credit Act 1974. I understand the point you’re raising here, but terms like this are very common in these types of agreements. So I don’t think that a term relating to this is trying to circumvent the act.

The CCA covers various types of credit agreement and isn’t specific to vehicles. So placing a term specific to vehicles in a contract for vehicle finance is reasonable. And I don’t agree that this term is ambiguous or contradicts the term you’re referring to. This is because subsection 4 of section 100 states:

If the debtor has contravened an obligation to take reasonable care of the goods or land, the amount arrived at under subsection (1) shall be increased by the sum required to recompense the creditor for that contravention, and subsection (2) shall have effect accordingly.

This clearly makes provisions for a business to increase the amount payable if an obligation to take reasonable care of the goods is contravened. In this case the obligation was to stick to an agreed maximum mileage, which hasn’t been done.

2. Vehicle damage

You’ve said that section 100 only concerns itself with the condition of the car and not the value, but in actual fact “condition” isn’t mentioned. What is mentioned is an “obligation to take reasonable care of the goods.”

I’ve also reviewed the case of Brady v St Margaret’s Trust, but I feel the ruling made in that case is very different to the issue being disputed here. The case refers to the condition of a vehicle and a breach of contract for repair, whereas this dispute is about the contravention of an excess mileage clause. We’re not talking about damage to the car, we’re talking about the mileage done.

As I don’t agree that the court case you’ve referred to is about the same issue, I can’t agree that we’re departing from any relevant law. But I do want to explain my approach clearly:

You took out a hire purchase agreement and signed to say you agreed to be legally bound by the terms. One of the terms you agreed to said:

If you don’t exercise your right to purchase the vehicle, an excess distance charge will be payable at the rate of 9.00 pence (plus VAT) for each Mile, by which the total distance travelled by the vehicle and the end of the period of hire exceeds the allowed distance, calculated at the rate of 10000 Miles per year (see Condition 12).

This term was clearly set out in the agreement and I don’t agree that it’s unfair or unreasonable. As you agreed to be bound by the terms, I believe that it’s fair for them to be applied here.

I hope I’ve explained our position more clearly. But if you decide that you don’t accept what I’ve said, then please let me know by 7 July 2017. If I can’t resolve things then an ombudsman here can look at everything again and make a final decision.

Kind regards

R0b, any thoughts on how to go from here?

Thanks

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

If the FOS is saying that the question is not about condition of the vehicle and more about the terms of the contract, then section 100(1) is a statutory provision under the CCA which is implied automatically into the agreement and cannot be removed.

Read section 100(1) it effectively states that if you terminate under section 99 then liability is capped at 50% of total price payable - which is made up of the total price of the sums paid to date and any sums of the total price due immediately before termination. 'total price' is defined in s.189 of the CCA as specifically excluding charges which are a penalty, compensation or damages for breach of the agreement.

The FOS seems to be saying that the you have breached the terms of the agreed mileage but according to section 100(1) and the definition of 'total price' you are not liable for damages for breach of the agreement as that liability is specifically excluded from any sums due immediately before termination. The excess mileage clause is damages for breach of the agreement you can't therefore be liable for them.

[jonnyfeng]

Re: Mercedes Benz - Ridiculous back and forth VT situation

If the FOS is saying that the question is not about condition of the vehicle and more about the terms of the contract, then section 100(1) is a statutory provision under the CCA which is implied automatically into the agreement and cannot be removed.

Read section 100(1) it effectively states that if you terminate under section 99 then liability is capped at 50% of total price payable - which is made up of the total price of the sums paid to date and any sums of the total price due immediately before termination. 'total price' is defined in s.189 of the CCA as specifically excluding charges which are a penalty, compensation or damages for breach of the agreement.

The FOS seems to be saying that the you have breached the terms of the agreed mileage but according to section 100(1) and the definition of 'total price' you are not liable for damages for breach of the agreement as that liability is specifically excluded from any sums due immediately before termination. The excess mileage clause is damages for breach of the agreement you can't therefore be liable for them.

So basically, if i understand correctly FOS are simply siding with MBFS, either way i put it they are ignoring certain points and picking out the points that favour them?
So they base there argument on section 100, to avoid the points ive rasied previosly. However section 99 states that under section 100 if i VT then i am exempt from from paying the additional costs.

this just goes around in circles with us stating the facts and them avoiding the facts and picking out parts that favour MBFS?

[R0b]

Re: Mercedes Benz - Ridiculous back and forth VT situation

That's the difficulty with the FOS, as I said they are not legally trained and no doubt reading and understanding the law is probably costly in terms of resources and I don't think they are equipped to deal with anything beyond a simply issue. The sooner a High Court decision is made on this the better as then the FOS have no leg to stand on in terms of rejecting these sort of arguments.