Where next? Is this legal action? VT Excess Mileage

[Chuchi]

Hi there - I would really appreciate some guidance if anybody is please able?

I had significant, genuine and unexpected reasons to VT my PCP (redundancy at the end of maternity leave in June with Vauxhall Finance. I'd budgeted well enough to pay for my car throughout maternity... but I wasn't expecting to lose my job and still don't have full time or permanent employment). I still cannot afford to run a car.

Having been through the templates now, the finance company respond with the below. Does this mean they are starting legal action? Do I just sit and wait? I was over the 50% (lease was due to end November), they are pursuing me for excess mileage circa £500. When I signed the lease I was about to start a new job and it was really hard to know what my mileage would be. It was told to make my best 'guess'.

They had a host of charges they dropped.. a set for damages that occurred after it had arrived at the drop off point (I have photos/video) and another set for professional repairs to a couple of small scrapes (not by me!) that had just been complete that they said were unsatisfactory. I accepted some damage to the bumper that I thought was reasonable. So... no dispute on damages currently.. presumably bad form for them to resurrect.


This is their last response.. sorry about their terrible use of punctuation...


"We have made our stance clear and we confirm that we will pursue correctly in line with the CCA which allows us to follow up breach of contracts in relation to liabilities that accrued prior to the termination of the finance under CCA section 99(2) the County Court's decision in Mercedes-Benz Financial Services (UK) Limited v Cahalane (2018), Unreported, 26 February 2018, County Court at Willesden is not relevant: it is a decision of the County Court and therefore not binding on any other County Court;

our position does not rely on an interpretation of the meaning of "total price": our position is either (i) the excess mileage charges accrued before termination and are recoverable under Section 99(2) of the CCA or (ii) you failed to take reasonable care of the Vehicle by exceeding the agreed mileage so the amount recoverable under Section 100(1) was increased by the amount of the excess mileage charges (see Section 100(4) of the CCA).

there are good public policy reasons why our position is right. If it were not, then it would allow a customer to wrongly tell a lender it only intended to cover a very small number of miles (so the monthly repayments would be low), but then significantly exceed that agreed mileage limit, and then exercise his right under Section 99(1) of the CCA to avoid having to pay any excess mileage charges (despite choosing to drive the vehicle more than he agreed to do). However, a customer who did not exercise that right would end up with a vehicle worth less than the parties expected (assuming the customer kept to the mileage limit) it would be worth at the end. This cannot have been the intention of the CCA to effectively create a windfall for customers who use a system which was designed to help customers in financial difficulties.

We confirm that this is our final decision on the matter of contractual mileage which has been breached by you. We recommend that you seek assistance from legal aid versed in the CCA."

[Chuchi]

Thank you for any help!

[R0b]

Who is the finance company?

[Chuchi]

R0b Thanks - it is Vauxhall finance (previous gmac) - I've edited the original post with a little bit more detail.

[R0b]

So what do you want to do, are you prepared to defend it and, if necessary, go to court over it? I'm not aware of Vauxhall / GMAC ever instigating court proceedings but you need to be aware that all lenders could alter your credit file with adverse entries and at that point, the ball is back in your court to take the next step - the VT Guide explains this.

You can go back with a fairly robust stance and effectively tell them to put up or shut up and I can give you a template to work from but it's your call.

[Chuchi]

Thanks for the speedy response R0b - i will reread the guide again tonight and get back to you.

[Chuchi]

R0b I can see there a few more legs on a reread of the full doc. My original intent was to keep the car (ie purchase it) as that would have been good value - so while I knew I was pro rata over, it wasnt of concern because I wasnt going to be returning the vehicle - another demonstration that the liability on mileage is not realised until that point.

I haven't managed to find any reference in the Guide (V2.1) to the point they may alter my credit file - sorry if I'm being silly. At what point could that happen? Would I be protected up to the point there was a ruling from a court or could it happen earlier?

I'd like to defend this (not least because I genuinely believe I should be protected in this circumstance). Your additional template would be very much appreciated. Thank you for your selfless support in everything I've read that you've written.

[R0b]

Here's a quick mock of up a response/position you could take. You may want to adjust the language to suit.


Dear Sir or Madam,

I’m writing in response to your previous [letter or email] on [date].

I note your stance and position you take but I would like to respond to some of your points in a little more detail. For the sake of brevity, I have summarised these below.

The Mercedes-Benz case
Whilst I accept that this case was decided in the County Court and is not binding, it is nevertheless a persuasive decision which I am sure other judges would take into consideration should this dispute reach a court hearing. The reasoning is logical and the key takeaway from that decision is that any excess mileage charges crystallise on termination, not before.

Section 99(2) and 100(4)
You mentioned in your last response that your position does not rely on the definition of ‘total price’ but I think you are misguided because the definition is absolutely relevant in the context of voluntary termination irrespective of whether you choose to rely on it or not. Sections 99 and 100 must be read together and taken as a whole in order to fully understand the mechanics of how a voluntary termination applies. It is wrong to think that you can selectively choose parts of these sections of the Act and apply to suit. I won’t re-hash what I’ve stated in previous correspondence around sections 99(2) and 100(4) except to say that the burden of proof is on you.

Public policy reasons
Your explanation that there are good public policy reasons that your position is the correct one is, in my view, a nonsense. For centuries, parties have had the freedom to contract on their own terms and the law has respected that. Indeed, it is common for most contracts to include a limitation of liability clause (which I am sure a number of your own contracts include) with the effect of limiting the liability one party owes to another. There is no doubt that parties to a contract enter into agreements knowing that they may be getting a poor deal - that is the nature of risk vs reward. In the context of the CCA 1974, Section 100(1) serves a statutory limitation of liability in favour of the consumer. This provision of the Act has been around for decades and was no doubt inserted in view of the fact that consumers are often at a disadvantage concerning the bargaining power to negotiate a contract.

I also do not agree with your view that the voluntary termination right was solely designed to help customers who are in financial difficulties for the following reasons:

• The Crowther Report published in 1971 followed a review of consumer credit legislation in the UK with the intention of addressing a number of points, including the inequality of bargaining power between the creditor and debtor. Specifically, the Crowther Report recommended that the 50% rule be incorporated to strike a balance between goods that are worthless and those that depreciate slowly; it was not limited strictly to those who are in financial difficulties.

• In 2007, the Department of Trade and Industry (DTI) commissioned a review of the Consumer Credit Act and whether there was a need for changes to the legislation due to complaints and lobbying by the motor finance industry. The arguments made by the motor trade industry did not persuade the DTI and the voluntary termination right remained.

• Following the dissolution of the Office of Fair Trading in 2014, responsibility for the CCA passed to the Financial Conduct Authority (FCA). As part of that transition, the FCA undertook a review of the Act and once again, the issue of voluntary termination was raised by the motor finance industry. The FCA specifically acknowledged that the voluntary termination right is used for purposes other than financial difficulties but at the same time commented that whilst the right may be helpful in those types of cases, it is not limited to that purpose. In the end, the FCA concluded that repealing the voluntary termination right would adversely affect the degree of consumer protection.

To round off this response, I think it is very clear that the purpose and intention of the voluntary termination right is not limited to those who are experiencing financial difficulties. The right is freely available for consumers to exercise how they see fit and are not required to give any specific reason for termination.

We are at an impasse with neither of us willing to back down and change our position. If you feel so strongly that your interpretation of the CCA is right, then you should have no problem commencing legal proceedings and obtaining a judgment in your favour and I invite you to do so. However, as I’m sure you’ll know yourself that isn’t the case, otherwise finance companies would be flooding the courts with claims. There is very little (if any) claims for excess mileage charges that I am aware of.

With that said, you should either put up or shut up. Stop sending me demands for payment otherwise I will treat your repeated and unnecessary demands as harassment and reserve the right to start legal proceedings if such conduct continues.

[Chuchi]

R0b that is great - thank you!

In terms of adverse credit entries - could they do that at any point?

[R0b]

Of course they can, any creditor could do it at any point if they're not paid. Thats where the risk is and you decide whether to follow up with some legal action of your own or pay up before it happens.

[Chuchi]

@R0b outcome of this... I issued this letter. They said their stance hadn't changed. So next step financial ombudsman. With 6 months to do it (and better things to do) I didn't hop straight on.. 4 months on and they send me a 'final letter'?!... ok, the 6 month clock starts ticking again. After repeated requests from Vauxhall Finance for the ombudsman reference number (which I didn't have to give them yet), about 8 weeks before the 6 months date they asked if I had a number. If I DIDNT they were prepared to drop all the charges. Hurray!!!

SO... they tell me all charges are dropped and send me a casual email to tell me the account is at 0. Wait, wait, wait... they still owe me the final direct debit that was taken after my VT. They responded that they took that into account in the final calculation. Well... no grey area in the law there right?!

So... went directly to bank to claim on Direct Debit guarantee - but too much time has elapsed to claim even though it had only just become apparent they wouldn't refund me. I'm not sure if this instigated Vauxhall calling me... or whether it was my email requesting a formal final account... but... they said they got it wrong and I was due a refund for the amount of the final DD!!!

So.... finally!!! After around 14 months I have not paid a penny beyond my last monthly payment (including for excess mileage, 'damage' and the last direct debit that was taken 2 days after my VT email)... no legal action... no ombudsman and no impact on credit file. It took persistence, consistency and putting up with their somewhat aggressive tactics. Not for everyone but glad I've made it through! Thank you for your information and resources. Invaluable.


In Summary:
SUCCESS with Vauxhall Finance (GMAC) on having excess mileage charges dropped, 'damage' dropped and refund of a Direct debit taken after the VT. It has taken 14 months to resolve and I have had to be patient through some fairly aggressive phone calls and communications on the excess mileage in particular. What has helped me is not rushing to the ombudsman.

Without the excess mileage and damage (they did at the auction house... photos essential!) the VT would have been really easy and straightforward.

[R0b]

That's good news, glad you persisted. Always good to see what other lenders do as there are definitely other lenders who are much more aggressive, like BMW for example.