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Voluntary Termination Letter Response - Urgent Help Needed
Good morning,
After using one of your VT letter templates I have had the following response from my finance company (amongst an account statement and a collections letter).
I will be referring this to the FOS, however, do I need to respond?
'Thank you for you emails and for taking the time to speak with me regarding the excess mileage involve you have received. Please allow me to address the points that you have raised.
In response to your comments regarding the excess mileage charge, at the beginning of your agreement you gave us a predicted annual mileage of 10,000 miles per annum. In turn, we therefore expected the vehicle to have a maximum return mileage of 40,000 miles. The entire foundations of your agreement would have been based on this given mileage, which included your monthly rentals.
As you exercised your rights to voluntary terminate, I must bring to your attention that your VT letter dated 15 February 2020 clearly outlines that your mileage will be pro-rated if the agreement ends early.
Section 99(2) of the Act provides that termination of an agreement by a customer by way of Voluntary Termination “does not affect any liability under the agreement which has accrued before the termination”.
The “Excess Mileage Charges for Depreciation” and “Termination” sections of the Agreement clearly state that Excess Mileage Charges are sums that become payable under the Agreement prior to termination and as such it is clear that they are due and payable by you pursuant to Section 99(2).
The “Termination: Your Rights” section of the Agreement does not make specific reference to you having liability for charges incurred prior to termination upon Voluntary Termination of the Agreement, however, the Agreement should be read as a whole and also in the context of Section 99(2) of the Act.
You then went on to sign the Agreement and by doing so was confirming that you had read and understood the agreement and was willing to be bound by its Terms andConditions, to include payment of an applicable excess mileage charges in the event that you choose to Voluntary Terminate the Agreement.
Whilst Section 100(1) provides that a customer will be liable to pay a “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”, Section 100(1) must be read in conjunction with Section 99(2). A customer’s liability to a creditor upon Voluntary Termination is pursuant to Section 99(2), i.e. payment of any pre-termination charges such as Excess Mileage, in addition to the limit of 50 percent of the Total Amount payable under the Act.
Further, Section 100(4) of the CCA provides that “if a debtor has contravened an obligation to take reasonable care of the goods” the amount due upon Voluntary Termination “shall be increased by the sum required to recompense the creditor for that contravention…..”. This supports the “Termination” and “Termination: Your Rights” sections of the Agreement which provide your liability upon Voluntary termination of the Agreement would be increased if reasonable care had not been taken of the Vehicle.
In this instance, mileage limitation is a fair measure of what would constitute “reasonable care” of the Vehicle given that it can affect its value upon resale. Exceeding the Maximum Total Mileage agreed upon commencement of the Agreement, is likely to have caused the Vehicle to have decreased in value more than it otherwise might have done had the agreed mileage been adhered to and you should therefore have to compensate us accordingly.
We do not agree that your liability to pay Excess Mileage Charges upon Voluntary Termination of the Agreement constitutes “contracting out” of the Act. The Act does not preclude us from having our own Terms and Conditions, such as those which provide for payment of Excess Mileage Charges, within our agreements provided that those terms do not run contrary to the provisions contained within the Act, which are there for the protection of our customers.
The Terms and Conditions of the Agreement make it clear that Excess Mileage Charges are pre-termination charges. As Section 99(2) of the Act clearly provides that Voluntary Termination does not affect a customer’s liability to pay for any charges incurred prior to termination, i.e. pre-termination charges, the clauses relating to the payment of Excess Mileage Charges within the Agreement are not contrary to the Act and therefore cannotbe considered as “contracting out” of the Act within the context of Section 173.
“The County Court Judgment between Mercedes-Benz Financial (UK) Ltd v Cahalane, does not set precedent to bind future decisions on Voluntary Termination Excess Mileage in the County Courts. Furthermore, the Court of Appeal decision is irrelevant as the charges levied against you are not a compensation charge. They are contractual charges that fall due immediately before you Voluntary Terminate”.
Taking into consideration all of the above, I am confident that XXX Financial Services have not acted incorrectly by raising this invoice to reflect the excess mileage and consider our charge to be an accurate reflection of the additional mileage incurred.'
The letter goes on to say I can refer this to the FOS within 6 months (and if not then I would have to prove mitigating circumstances, etc.).
Presumably the above is a blanket letter and the mileage figures are modified to suit my agreement?
Thanks
After using one of your VT letter templates I have had the following response from my finance company (amongst an account statement and a collections letter).
I will be referring this to the FOS, however, do I need to respond?
'Thank you for you emails and for taking the time to speak with me regarding the excess mileage involve you have received. Please allow me to address the points that you have raised.
In response to your comments regarding the excess mileage charge, at the beginning of your agreement you gave us a predicted annual mileage of 10,000 miles per annum. In turn, we therefore expected the vehicle to have a maximum return mileage of 40,000 miles. The entire foundations of your agreement would have been based on this given mileage, which included your monthly rentals.
As you exercised your rights to voluntary terminate, I must bring to your attention that your VT letter dated 15 February 2020 clearly outlines that your mileage will be pro-rated if the agreement ends early.
Section 99(2) of the Act provides that termination of an agreement by a customer by way of Voluntary Termination “does not affect any liability under the agreement which has accrued before the termination”.
The “Excess Mileage Charges for Depreciation” and “Termination” sections of the Agreement clearly state that Excess Mileage Charges are sums that become payable under the Agreement prior to termination and as such it is clear that they are due and payable by you pursuant to Section 99(2).
The “Termination: Your Rights” section of the Agreement does not make specific reference to you having liability for charges incurred prior to termination upon Voluntary Termination of the Agreement, however, the Agreement should be read as a whole and also in the context of Section 99(2) of the Act.
You then went on to sign the Agreement and by doing so was confirming that you had read and understood the agreement and was willing to be bound by its Terms andConditions, to include payment of an applicable excess mileage charges in the event that you choose to Voluntary Terminate the Agreement.
Whilst Section 100(1) provides that a customer will be liable to pay a “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”, Section 100(1) must be read in conjunction with Section 99(2). A customer’s liability to a creditor upon Voluntary Termination is pursuant to Section 99(2), i.e. payment of any pre-termination charges such as Excess Mileage, in addition to the limit of 50 percent of the Total Amount payable under the Act.
Further, Section 100(4) of the CCA provides that “if a debtor has contravened an obligation to take reasonable care of the goods” the amount due upon Voluntary Termination “shall be increased by the sum required to recompense the creditor for that contravention…..”. This supports the “Termination” and “Termination: Your Rights” sections of the Agreement which provide your liability upon Voluntary termination of the Agreement would be increased if reasonable care had not been taken of the Vehicle.
In this instance, mileage limitation is a fair measure of what would constitute “reasonable care” of the Vehicle given that it can affect its value upon resale. Exceeding the Maximum Total Mileage agreed upon commencement of the Agreement, is likely to have caused the Vehicle to have decreased in value more than it otherwise might have done had the agreed mileage been adhered to and you should therefore have to compensate us accordingly.
We do not agree that your liability to pay Excess Mileage Charges upon Voluntary Termination of the Agreement constitutes “contracting out” of the Act. The Act does not preclude us from having our own Terms and Conditions, such as those which provide for payment of Excess Mileage Charges, within our agreements provided that those terms do not run contrary to the provisions contained within the Act, which are there for the protection of our customers.
The Terms and Conditions of the Agreement make it clear that Excess Mileage Charges are pre-termination charges. As Section 99(2) of the Act clearly provides that Voluntary Termination does not affect a customer’s liability to pay for any charges incurred prior to termination, i.e. pre-termination charges, the clauses relating to the payment of Excess Mileage Charges within the Agreement are not contrary to the Act and therefore cannotbe considered as “contracting out” of the Act within the context of Section 173.
“The County Court Judgment between Mercedes-Benz Financial (UK) Ltd v Cahalane, does not set precedent to bind future decisions on Voluntary Termination Excess Mileage in the County Courts. Furthermore, the Court of Appeal decision is irrelevant as the charges levied against you are not a compensation charge. They are contractual charges that fall due immediately before you Voluntary Terminate”.
Taking into consideration all of the above, I am confident that XXX Financial Services have not acted incorrectly by raising this invoice to reflect the excess mileage and consider our charge to be an accurate reflection of the additional mileage incurred.'
The letter goes on to say I can refer this to the FOS within 6 months (and if not then I would have to prove mitigating circumstances, etc.).
Presumably the above is a blanket letter and the mileage figures are modified to suit my agreement?
Thanks
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