MB Fin not backing down on VT excess mileage

[the_biochemist]

Hi

Can i get some advice please - I followed the instructions for VT including the template letters and the like.

The car got taken back with no damage charges which is great but they were claiming for mileage.

I wrote to them to say i am not willing to pay as per the excess mileage template and finally received this response back - do I pay or challenge further? It would seem they are asking me to take it to the ombudsman if I am not satisfied.

Any help much appreciated.

Quote

I was disappointed to read you have been left feeling dissatisfied by the charge raised for excess mileage. Please be assured, it is never our intention to cause any distress or aggravation to our customers during their journey with us and I apologise if this has not been the case in this instance.

I note you advised our De-Fleet department that you did not sign the Voluntary Termination acceptance form as this imposed new terms. I feel it important to advise that the Voluntary Termination acceptance form did not impose new terms and instead reiterated those already within your agreement that you have agreed to be legally bound by.

Whether you are returning your car at the end of your agreement or upon use of the Voluntary Termination (VT) clause, as you have not exercised your right to purchase the car, an excess mileage charge will be raised should your return mileage exceed your total mileage allowance. This obligation is set out within the first page of your agreement, under key information. The provisions of the Consumer Credit Act that cover a customer’s right to VT their agreement do permit us to include any over mileage when determining what is 'not reasonable' upon the cars return. It is stated in your agreement under ‘Excess Distance’; ‘If the vehicle is returned to us (whether at the end of the period hire or an earlier termination), we will calculate the total distance travelled by the vehicle whilst in your possession (the “Total Distance”)’.

Your mileage allowance has therefore been re-calculated on a pro-rata basis in line with the length of time you have had the vehicle in your possession. Please find below a breakdown of your excess mileage calculation for your reference:

Original Allowance: 40,000 miles (833.33 miles per month)
Term of agreement: 48 months
Terminated early by: 10 months
Revised allowance: 31,667 miles (833.33 miles x 38 months)
Collection miles: 44,723 miles
Exceeded by: 13,056 miles
Pence per mile: 9 pence plus VAT
Total: £1,410.05

I would also like to kindly refer you to S99 (2) Consumer Credit Act 1974 where it states:

‘Termination of an agreement under S (1) does not affect any liability under the agreement which has accrued before the termination.’

As your agreement was subject to a mileage allowance prior to termination and you have exceeded the allowance of 31,667 miles, the charge has been raised correctly and remains payable.

Whilst this may not be the response you had hoped for, I trust the above has provided you with the reassurance that I have fully investigated your concerns. Please also be assured that your complaint has been investigated in line with our obligation to treat our customers fairly.

May I kindly ask that you accept this as our final response, however, should you be at all unhappy with our handling of your complaint you have the right to refer your complaint to the Financial Ombudsman Service, free of charge – but you must do so within six months of the date of this response.

End quote

[Kati]

Re: MB Fin not backing down on VT excess mileage

tagging [MENTION=71570]R0b[/MENTION] xx

[R0b]

Re: MB Fin not backing down on VT excess mileage

Hello,

It is entirely up to you which route you want to go whether you pay or fight it but be sure that if you fight it your prepared to go all the way. I've suggested on a number of threads in various ways why I believe the excess mileage is not applicable in cases of VT.

the Consumer Credit Act that cover a customer’s right to VT their agreement do permit us to include any over mileage when determining what is 'not reasonable'

That is misleading, the CCA says the lender is entitled to compensation if the goods are not returned in a reasonable condition - that is not the same as what is reasonable or unreasonable.

I would also like to kindly refer you to S99 (2) Consumer Credit Act 1974 where it states:

‘Termination of an agreement under S (1) does not affect any liability under the agreement which has accrued before the termination.’

It's sad to see that they are resting their laurels on this specific provision and in my opinion it is complete bluff. S.100(1) explicitly states that where the agreement is terminated in accordance with S.99, the debtor shall be liable for XYZ.

Therefore S.99(2) is not absolute and in my view MBFS are barking up the wrong tree by relying on it. The purpose of S.99(2) is to stop the debtor from recovering any instalments over and above the 50% that the debtor has paid, hence it saying liability that has accrued (past tense) before termination - it does not say accrues.

[the_biochemist]

Re: MB Fin not backing down on VT excess mileage

Hi All

Been through a few more email conversations with my new friends at MBFin and they are sticking to their guns - namely I am liable for excess mileage irrespective of VT and they will not engage in any further conversations - i must go to the ombudsman.

The points they are arguing are:

1) VT does not exclude excess mileage - a point we here disagree with
2) That they pro-rate a 40k mileage contract monthly to 833.333 miles per month contract and bill excess mileage against the acrued pro-rated allowance - not something described in the contract and as it is calculated in this manner it is accrued prior to termination and thus an existing liability hence it being in scope irrespective of VT.

Any thoughts on the above specifically relating to the method of pro-rating to calculate excess mileage (creating a charge of £1400) vs excess mileage being calculated against the contracted level (creating a charge of £510) vs no excess being chargeable under S100 termination.

They also stand by the fact that the following from the contract is what allows them to take this perspective -

It is stated in your agreement under ‘Excess Distance’; ‘If the vehicle is returned to us (whether at the end of the period hire or an earlier termination), we will calculate the total distance travelled by the vehicle whilst in your possession (the “Total Distance”)’.

But from my interpretation (literal as one should review contracts not implied as they seem to infer) this offers them the capability to calculate the mileage driven by me the 'total distance' - not calculate a pro-rated 'total allowance' against which to calculate an excess mileage based on my actual mileage. They disagree that my interpretation is correct.

I have said I will take the case to the ombudsman out of principle so could do with some advice on how to approach contacting the ombudsman and what to say when I do.
[MENTION=71570]R0b[/MENTION] would appreciate your view and that of others.

Has anyone successfully challenged through the ombudsman?

[R0b]

Re: MB Fin not backing down on VT excess mileage

Morning,

I will take a look at this later today and get back to you.

[R0b]

Re: MB Fin not backing down on VT excess mileage

I've had a chance to look at your post properly, and my response on the two points are below.

1. VT does not exclude excess mileage

This is obviously a moot point unless it ends up in court. I am aware that MBFS had recently changed their agreements to say that excess mileage 'accrues' immediately before the termination takes place, but in older agreements it doesn't say this. I'd need to see the agreement terms before I could properly comment on it.

That being said, the "Termination: Your Rights" statement in your agreement is embedded within statute law, more specifically under the Consumer Credit (Agreements) Regulations 2010. The starting point for interpretation of terms is to look at their ordinary meaning. In the words of LJ Kerr (as he was then) in the Court of Appeal case Dino Services Ltd v Prudential Assurance Co. Ltd [1989] 1 Lloyd's Rep. 379 CA (when referring to the meaning of the word 'violent' in an insurance policy):

“The word ‘violent’ is an ordinary English word, which here appears in a common commercial document. It seems to me that there is no reason why its meaning should be in any way different from what any ordinary person would understand.

The same applies in the case of the statutory statement under "Termination: Your Rights" where it says something along the lines of If you have complied then you will pay nothing more. There is nothing difficult about understanding the meaning of 'nothing more' and doesn't require an expert to know what those words mean.

Other arguments include that s.99(2) refers to the word 'accrued' in the past tense whereas the MBFS agreement says 'accrue' in the present tense - two different meanings and therefore no liability.

2. Pro-rata mileage

I can't comment on this unless I have seen the contract terms because I suspect there might be something in there about them pro-rata the mileage and if that's the case the answer would be yes (if it is enforceable). If there is no mention of pro-rata you could equally equalyl argue that if its in a new year, you get your mileage allowance for the whole of the year rather than pro-rata which might reduce your liability somewhat.

The FOS are pretty useless at the moment so I don't think it is worth going to them as recent experience suggests they will just side with the lenders - however that is your choice as to whether you choose to or not.