Final right to reject - should I expect a refund?

[deano94]

I’m wondering what people’s thoughts are on this? Would you expect that I receive a refund of all my monthly payments less the deduction?

I am rejecting a vehicle under the Consumer Rights Act of 2015. I exercised my right 5 months in so I am using the final right to reject.

My complaint with the finance company has been upheld and they are refunding my deposit and charging me a mileage charge of 45p per mile (note they are not calling this an excess mileage charge). The Financial Ombudsman Service have intervened and said that the 45p charge is unfair. They said that the finance company should recalculate at the excess mileage rate in my agreement (the mileage charge and excess mileage rate appear to be two different things?).


This is from the finance company:


As advised in my Final Response the Consumer Rights Act 2015 section 24, subsection (8) states: 'If the consumer exercises the final right to reject, any refund to the consumer may be reduced by a deduction for use, to take account of the use the consumer has had of the goods in the period since they were delivered.' This is not the same as your End of Contract applicable excess mileage charge rate (detailed within your agreement) as you are not returning the vehicle at the end of the contract and you are rejecting it. In such a case, the Government standard mileage charge is applicable:

First 10,000 miles at £0.45 per mile

10,000+ miles at £0.25 per mile

When rejecting a vehicle, the charge applied takes into consideration the payments the consumer has made over the terms of the agreement (whereas your applicable end of contract excess mileage charges do not), in your case, the calculation is as follows:

8,962 miles x £0.45 = £4,032.90

Paid: £2,391.36 (monthly re-payments)

£4,032.90 - £2,391.36 = £1,641.54 mileage charge

As such, in the event you wish to return your vehicle, the mileage charge applicable to you is £1,641.54 as stated within our Final Response.



This is what the ombudsman service have said:



In your offer you have stated you will end the agreement under Voluntary Termination, return the deposit and charge excess mileage (which has not been accounted for in the repayments made so far).

You have outlined the Consumer Rights Act 2015 section 24, subsection 8 in support of charging excess mileage, which I also agree with has to be accounted for following a rejection of a vehicle. However, I do not believe this has been charged fairly. The 45p per mile is a government set standard, however it applies as a standard business rate. As this was a personal finance agreement and you have identified a fault with the vehicle from when you supplied it, I do not believe it would be fair to charge this. As agreed in the hire purchase agreement by both parties, I believe it would be fair and reasonable to charge what was originally agreed, 10.8p per mile.

In order to fairly and reasonably reject the vehicle I believe you will need to take further action with your offer.

How to put things right

I have concluded that the vehicle was of unsatisfactory quality at the time of sale. It would therefore be fair of you to accept rejection and unwind the agreement of this vehicle and to put things right, I’m recommending that you:

End the agreement with nothing further to pay

Collect the car at no further cost

Refund the deposit and pay 8% simple interest from the date of payment until the date of settlement.

Re-calculate your excess mileage at 10.8p per mile

Refund 15% of payments towards the vehicle from June 2020 after the vehicle was confirmed to have a fault

[des8]

Ombudsman is correct

Dealer/finance house are entitled to make a deduction for usage.
The amount is not stipulated in CRA 2015 and often they try for HMRC's allowance of 45p per mile (but this of course takes more into account than simple usage)
It is good that the ombudsman has awarded a specific rate as you no longer need to negotiate it.

If they refuse to give way tell them you will be applying to the courts to convert the award into a court order.
If necessary you do this by using Form N322A

[deano94]

Thanks for such a quick response and for the welcome!

Would I expect to receive my repayments back less then deduction of the 10.8p mileage charge? I am doubtful as the last point from the Ombudsman Service states that I should receive a 15% refund of payments from June.

[des8]

CRA 2015 sec 20 (7 & 13) if the consumer exercises his right to reject he is entitled to a refund of monies paid

sec 24 (8)If the consumer exercises the final right to reject, any refund to the consumer may be reduced by a deduction for use, to take account of the use the consumer has had of the goods in the period since they were delivered,

I would have expected the Ombudsman to order
return of deposit
return of all instalments paid
Deduction of £967.90 as deduction for usage

However the ombudsman doesn't necessarily take into account the law, but what he regards as fair and reasonable

It might be worth going back to ombudsman asking him, in view of the above to clarify his ruling .

If you don't agree with his ruling you do not have to accept it, but can initiate a county court claim

[deano94]

This is what I thought, under the CRA 2015 I should be entitled to a refund reduced by deduction (10.8p per mile).

I will email the ombudsman for clarification and I will keep you posted on the situation.

Thanks so much!