Voluntary Termination - Mercedes

[Farks]

I bought an E Class Mercedes in December 2013 via MB Finance. I had an agreed annual mileage of 25,000 and in September 2016, having read the information of your site, I decided to carry out a Voluntary Termination.
As advised on this forum, I didn't sign any paperwork sent to me by Mercedes, but simply emailed them using the template provided.

They have now written to me on the 'standard' MB letter to advise that they have re-calculated my mileage on a pro rata basis and that I am due them £580 and that I have 6 months to raise any objection with the Financial Ombudsman.

In their letter, they state;

"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”)’."

On checking my paperwork, I only have a copy of the Agility Agreement Quotation, detailing the Finance amounts involved together with my rights and optional purchase payments. There is no Key Information as mentioned above in the document. I have every piece of paper that was sent to me in a folder and therefore I can only assume that I was never actually sent a copy of the final agreement.

Following the VT, I subsequently purchased another E Class Mercedes, again via MB Finance. Likewise I only have a copy of what is now called the Pre-Contract Credit Information form, detailing the Finance amounts involved together with my rights and optional purchase payments. It is a new form [version 39] but now has a paragraph included in relation to Early Termination, which states;

“Under the terms and conditions of this agreement you have the right to terminate the agreement and return the vehicle to us, provided you pay at least half the total amount payable and the vehicle is in a reasonable condition and is returned in accordance with the Vehicle Return Standards and subject to excess mileage charges.”

Likewise, I have not been sent a copy of the final agreement.

Questions;

1. Is there any substance in the statement from MB that “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.”

2. Are MB legally bound to send you a copy of the Final Finance Agreement as in both of my purchases, I have not.

3. The fact that there was no mention of Early Termination in my first contract and that they did not send me a copy of the Final Agreement, can they refer to this obligation on the first page of an agreement that I have not even had sight of?

4. Reading through your Forum, the advice given is that the Consumer Credit Act overrules any Credit agreement, however there appear to be no ‘stated cases’ on the subject to back up this statement. The advice given is to write to the Financial Ombudsman and on searching the internet, I can only find one finding, where the Ombudsman found in the favour of the Finance Company, which is a bit disheartening.

[R0b]

Re: Voluntary Termination - Mercedes

Hello, in response to your questions:

1. S.100 allows compensation to the finance company if the goods are not in a reasonable condition. It does not suggest an automatic right to compensation, they must prove that it is beyond a reasonable condition and they can't simply state it is owed. Because it is a term implied by the CCA, any dispute should be determined by a Court. A Court of appeal case Brady v St Margaret's Trust gives some indication of what s.100 means:

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.

If MB are claiming that the excess mileage cause the vehicle beyond a reasonable condition, they must provide evidence to that effect. This would be by way of an independent expert engineer's report or evidence of the car's condition at inception and evidence at the end. It is also arguable that provided you have maintained the car within the servicing guidelines, that is sufficient to consider it in a reasonable condition. It is difficult to impose a direct causal link between the additional mileage and the reasonableness of the car, because as you drive more miles, the car's parts will naturally wear down.

If on the other hand you fail to maintain the car as necessary i.e. you do not service at all throughout the period, then it is also arguable that you have caused the parts to wear down much faster than they have normally done and potentially put the car in an unreasonable condition. Again, its based on assumptions and I would expect them to prove it with reference to an expert and not some bottom level administrator - they can claim it all they want but without an expert to prove it, I can't see them going anywhere with that argument and a judge is certainly not the expert who can determine that sort of issue without actually seeing the vehicle but by that point the car is sold.

2. The CCA and other Regulations provide that they should give you certain information prior and after commencement of the contract.

3. Can you provide more information, did you agree to the Final Finance Agreement? They can't incorporate additional terms such as that without your consent generally.

4. Yes, the Ombudsman is shoddy and doesn't particularly have a clue when it comes to these complaints and tend to side with the lender without actually doing a proper job I would think. A Court is likely to be best placed to judge this type of question as it concerns a good chunk of interpretation of the law, I suggest the Ombudsman if they wish but unlikely to go anywhere and most people are reluctant to fight it out in court. There are little to no court cases as either the position is clear, or people just don't want to challenge it and finance companies know this and are taking advantage.

Further explanation to some of your answers can be found in posts on the following links which also relate to excess mileage.

At post #7: http://www.legalbeagles.info/forums/...light=mercedes

At post #14: http://www.legalbeagles.info/forums/...light=mercedes

[Farks]

Re: Voluntary Termination - Mercedes

In relation to point 3, I signed the contract, which I assume was identical to the Agility Agreement quotation that I have a copy of. I have no reason to think that the Final Finance Agreement was any different.

Should I be asking MB for a copy of the document that I signed but never actually received?

[R0b]

Re: Voluntary Termination - Mercedes

You are entitled to request a copy of the agreement from MB. it also depends on this Agility Agreement quotation. It sounds like there are two contracts in place, the first one Agility is perhaps where a company sources a car for you and a lender who is willing to give you credit, and the financial agreement with is MB - both are separate contracts, but equally you should have been given a copy of the one from MB.

I am just hazarding a guess at the difference but without seeing both contracts, I can't really comment much further on that point.

[joanjm]

Re: Voluntary Termination - Mercedes

Hi I am at the moment wanting to surrender my Mercedes A class under VT and would be grateful if you could direct me to a template letter so I could send to MB Finance? After reading your threads I want to make sure that I send the correct letter to them? Thank you for your help.

[R0b]

Re: Voluntary Termination - Mercedes

Hi I am at the moment wanting to surrender my Mercedes A class under VT and would be grateful if you could direct me to a template letter so I could send to MB Finance? After reading your threads I want to make sure that I send the correct letter to them? Thank you for your help.

http://www.legalbeagles.info/forums/...on-Your-rights

Be careful, 'surrender' and 'VT' are two different things with two entirely different liabilities, with surrending giving you worse off liability. I would suggest not to say surrender at all, but is your choice.

[joanjm]

Re: Voluntary Termination - Mercedes

Thank you for your advise. It's VT and I will make sure I do it use 'surrender'
I appreciate your help!

[Farks]

Re: Voluntary Termination - Mercedes

I have been delaying writing to the Financial Ombudsman in the hope that they would have made some decisions in relation to other Voluntary Termination cases, just so I could see the lie of the land. I have looked but dont see any. Have they ever 'found' on the side of the customer in such a case?

K

[R0b]

Re: Voluntary Termination - Mercedes

I have been delaying writing to the Financial Ombudsman in the hope that they would have made some decisions in relation to other Voluntary Termination cases, just so I could see the lie of the land. I have looked but dont see any. Have they ever 'found' on the side of the customer in such a case?

K

Afraid not Farks, the FOS have been pretty useless at understanding the law surrounding these types of agreements and are simply going by what the contract says. They are not legal experts and when things get complicated, they just tend to look at what's fair and reasonable.

[Farks]

Re: Voluntary Termination - Mercedes

I have written to the FOS and have had a couple of telephone calls with the Investigator, who emailed me back with her provisional response. I have a couple of days to respond to her but as you said above, she seems to have just gone with what the contract says and has basically ignored any mention of the Consumer Credit Act!!!

I see that you have said that they are not legal experts! That shocks me a bit, surely if they are making decisions on legal issues then this would be a requirement of their role!!!!

Her response was that Mercedes had acted fairly and reasonable and I responded to her email as follows:

1. In the Return Standards booklet, you highlighted Damaged aerials. Drilled holes for telephone aerial fittings where the aerial has been removed. This was the item that I too pointed out in my complaint letter.

2. The issue here is the drilled hole, not whether it is for a telephone aerial or a radio aerial as you intimated in our telephone call. A drilled hole is a drilled hole. Holes have not been drilled in cars for telephone aerials for many many years as car fitting kits are a thing of the past due to advancements in mobile telephones, which are merely connected to cars via Bluetooth. The wording of the returns booklet clearly states that it is NOT ACCEPTABLE where the aerial has been removed. If they meant that drilling a hole in the wing was not acceptable, then that is what they should have written. Why qualify the statement by saying, ‘where the aerial has been removed’? This clearly means that they are differentiating between leaving the aerial and removing the aerial. There can be no other logical reason.

3. I did not remove the aerial and confirmed by telephone to Mercedes Benz that if I left the aerial in the wing then there would be no charge. Mercedes can find no record of the call but do not say that the call did not take place. If you accept what I say and accept what Mercedes say and what they have written in their booklet, the conclusion is clearly that leaving the aerial is acceptable.

4. I have asked Mercedes for a copy of the invoice for repairing the hole but they would not send me a copy as it would appear that the repair was not even carried out and if the repair has not been carried out, why do they want me to pay for it? Their estimate of £260.00 was just that, an estimate. I obtained an estimate for the same job at £175.00

5. In the Credit Agreement, which you sent and highlighted in pink by you, it also states TERMINATION YOUR RIGHTS. You have the right to end this agreement. To do so, you should write to the person you make the payments to. We will then be entitled to the return of the goods and to half the amount payable under the agreement, that is £17,881.32. If you have already paid at least this amount plus any overdue instalments and have taken reasonable care of the goods, YOU WILL NOT HAVE TO PAY ANY MORE. My understanding is that this relates to VOLUNTARY TERMINATION and therefore I have complied fully with the statement. It does not state here that excess mileage charges will apply.

6. As I previously detailed in my complaint to you, the Excess Mileage is only referred to in my contract when a contract is taken to the end of the PCP agreement. There is no mention of it under early termination. Under PCP, when you take it to the end of the contract, the buyer has three options open to him. A) Buy the vehicle by paying Mercedes the amount outstanding (there is no excess mileage charge). B) Purchase and part exchange the vehicle for a new vehicle (there is no excess mileage charge) and, C) Hand back the car at the END of the agreement without making any further payments apart from an excess mileage charge. This is where the excess mileage charge applies as mentioned in the last bullet point to which you refer. It is NOT in relation to Voluntary Termination. That is a completely separate issue and is under the Consumer Credit Act.

7. Voluntary Termination is a private individuals right under the Consumer Credit Act. It has been made under Statutory Legislation and takes precedence over any PCP Contract. Because the contract has been terminated, conditions within said contract cannot be enforced. If I had taken my contract to its end, I would be liable for excess mileage but didn’t take it to the end.

8. Can I draw your attention to the following information on the internet? http://www.thecarexpert.co.uk/car-fi...tion-pcp-hp/2/ If this information was incorrect, surely it would be removed? I know it does not have any legal standing and is simply advice but there are numerous other sites with similar information and nowhere can I see anyone stating that the information is incorrect. Are you advising me that the information is not correct and if so, why?

9. As mentioned in my letter, I have purchased another Mercedes under their PCP Agreement. The wording in that document has been updated as follows: EARLY TERMINATION. Under the terms and conditions of this agreement, you have the right to terminate the agreement and return the vehicle to us, provided you pay at least half the total amount payable and the vehicle is in a reasonable condition and is returned in accordance with the Vehicle Return Standards and subject to excess mileage charges. As you will see, they have now added the excess mileage charge option there but it is not in the contract I signed. I attach a copy for your information.

This is the response I received. There is still no reference at all of the Consumer Credit Act! She seems to only be looking at the contract, which I pointed out states that I will have no more to pay following VT but she has simply ignored it!!


I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’ve not upheld your complaint and I’d like to explain why. Clause 8 of the terms and conditions of your credit agreement mentions that if the agreement is terminated early “all arrears of payment and other sums payable under this agreement” have to be paid. And clause 12.1 of the agreement explains that excess mileage will be charged when the vehicle is returned (either at the end of the period of hire or on early termination). The first page of the agreement also mentions that excess mileage will be charged and specifies how the cost would be calculated. By signing this agreement, you agreed to these terms and as such, you’re bound by all the terms – not selected aspects of it. In relation to the charges relating to the aerial, section 4.2 of your agreement states that “You must not make any alterations to the vehicle without our prior written consent”. The vehicle was provided to you without a radio aerial. As discussed, I have no evidence to show that you discussed this with Mercedes prior to adding this alteration. As such, I don’t think Mercedes have acted incorrectly by charging you for this. I appreciate that you feel that a drilled hole is a drilled hole, however I don’t believe it’s unreasonable to conclude that any alterations that might impact Mercedes’ ability to resell your vehicle should be discussed with them prior to being carried out – even if you haven’t removed it when you handed the vehicle back. As you were not purchasing the vehicle, the vehicle remains a property of Mercedes and therefore, the decision to allow any alteration, is solely theirs to approve. As per the terms of your agreement which states that they can charge you compensation for any damage, I don’t think Mercedes are required to provide you with an invoice in this instance. They’ve confirmed that this amount is not the cost of repairs, instead, it’s the charge they’ve applied for the alterations made to the vehicle. They’ve applied a 15% reduction to the overall damage cost as a good will gesture, which is not something they had to do. Overall, I don’t believe Mercedes have acted unreasonably, so I won’t be asking them to do more. Please find below a link to previous ombudsman decisions, where we‘ve applied a similar approach to complaints like yours. http://www.ombudsman-decisions.org.uk/Default.aspx
I’ve now concluded my investigation into your complaint and I’m satisfied that the outcome I’ve reached is fair, for the reasons I’ve explained. If you decide that you don’t accept my view, then please let me know why and I’ll be happy to consider any new information/evidence you might have. If I can’t resolve things, an ombudsman here can look at everything and make a final decision. Please let me know if you have any questions by 27 June 2017.



Do you have any advice in what I should include in my reply to her?

K

[Farks]

Re: Voluntary Termination - Mercedes

My response to FOS for information.......................... I am not holding my breath. The whole FOS experience suggests that they are biased towards the company!!



First of all, can I say that you appear to have made your decision based solely on the Mercedes Benz contract document and have not even made mention of the Consumer Credit Act 1974, which is the Act which the Voluntary Termination is based. The Consumer Credit Act 1974 takes precedence over PCP contracts and it is a right, under law, designed to protect consumers and terminates the PCP contract. Because the contract is terminated, conditions within it cannot be enforced. Can I again ask you why you have not made any mention of the Consumer Credit Act 1974?

Can I again refer you to the paragraph immediately above my signature, in relation to termination, where is says,

“You have the right to end this agreement. To do so you should write to the person you make your payments to. We will then be entitled to the return of the goods and to half the total amount payable under this agreement, that is £17881.32. If you have already paid at least this amount plus any overdue instalments and have taken reasonable care of the goods, YOU WILL NOT HAVE TO PAY ANY MORE”.

In the contract, in relation to the paragraph about early termination, there is no mention of any excess mileage charge. In the Consumer Credit Act 1974, in relation to Voluntary Termination, there is no mention of an excess mileage charge. The terms and conditions to which you refer under clause 8 and 12.1, are clearly the terms and conditions of the Mercedes ‘Agility Agreement, where the PCP contract has been taken to its conclusion as I previously highlighted to you. [The copy of the agreement that you sent me are so blurred that I cannot read them in any case]

You have suggested to me in your findings that by signing the agreement, I agreed to the terms and that I am bound by them. YES, I totally agree with that statement, however, I Voluntary Terminated that agreement, as is my right. That Voluntary Termination takes precedence over the PCP contract and therefore I am only bound by the terms of the Consumer Credit Act 1974 but you have not made any mention of this. Are you of the opinion that the PCP Contract takes precedence over the Consumer Credit Act 1974, which appears to be the case?

I also mentioned to you that in my NEW PCP Agreement with Mercedes, that they have now included that excess mileage charges apply to Early Termination. Do you wish to see a copy of that document?

I also mentioned the varying information on the internet regarding Voluntary Termination. Are you advising that this information is incorrect?


Finally, in relation to the aerial hole. I actually agree that I have caused the ‘damage’ and it is fair and reasonable that I pay for that damage, however the Vehicle Return Standard booklet clearly suggests that if the aerial is left then it is acceptable. I confirmed this by telephone and although I have no proof of the conversation, Mercedes have not denied that the conversation took place but your finding takes the side of Mercedes and assuming that it didn’t take place at all. I too am fair and reasonable and would have had the hole repaired prior to the vehicle return if I had not been given this advice, at a much lesser cost than the ‘standard repair’ figure that Mercedes have given.

I am aware that your findings will be published but I would like to see your answers to my specific questions being published as well. The questions which are reasonable cannot simply be ignored. I can see why you have come to the conclusion that you have if you are simply looking at the PCP Contract on its own merit. You cannot simply ignore the legislation under which I Voluntary Terminated the contract. To do so would not be a fair and reasonable response to my complaint.

In summary, I am not of the opinion that this is a fair outcome in the circumstances and do not accept your view. I therefore request that you take into consideration the Consumer Credit Act 1974 and/or pass the complaint to an ombudsman as you suggest.

I thank you for your consideration.

Can I ask that I again be given the option of response before your findings are published? I can be contacted by telephone as before.

[Farks]

Re: Voluntary Termination - Mercedes

Rob, Any update or advice?

Keith

[Farks]

Re: Voluntary Termination - Mercedes

I eventually got a reply today from the Ombudsman......................................

Thank you for your email in response to my initial assessment. I’m sorry I wasn’t able to respond sooner , I’ve been out of the office for the last month and have only recently returned.

I’ve reviewed all the points you raised in your email and whilst I appreciate what you’ve said, unfortunately it doesn’t change the outcome of my initial assessment.
I understand that you’ve made reference to the Consumer Credit Act 1974 (CCA). However we are not the courts and we do not apply legislation as the legal system would. We are an informal alternative to the civil courts - and take a different approach to resolving disputes. Unlike the courts we are not limited to looking only at the issues the consumer has focused on in their complaint. Our approach is to ask questions, listen to both sides of the story, and decide each case on its individual facts and merits. By law, we are required to resolve complaints on what we feel is a fair and reasonable basis, based on the evidence provided to us.
In response to your email, I’m not stating that your agreement takes precedence over the CCA. What I’ve explained is that we have reviewed the agreement which you’ve signed at the point of sale, as a whole. By signing this agreement, you agreed to these terms and as such, you’re bound by all the terms – not selected aspects of it. As mentioned in my letter, Clause 8 of the terms and conditions of your credit agreement mentions that if the agreement is terminated early “all arrears of payment and other sums payable under this agreement” have to be paid. And clause 12.1 of the agreement explains that excess mileage will be charged when the vehicle is returned (either at the end of the period of hire or on early termination). The first page of the agreement also mentions that excess mileage will be charged.

Furthermore, I also mentioned that there is no evidence of your conversation with Mercedes confirming your version of events regarding the aerial. In the absence of such evidence, we have no choice but to consider the evidence that is available to us. And in this case, section 4.2 of your agreement states that “You must not make any alterations to the vehicle without our prior written consent. As we have no evidence of prior consent being given, on a balance, I don’t believe Mercedes have acted incorrectly by changing you for this.

If you have any questions about what we discussed, please let me know by 21 August 2017. Otherwise you don’t need to reply and, if I don’t hear from you by, I’ll arrange to close my file on the case. If you decide that you don’t accept what I’ve said, please let me know why. If I can’t resolve things then an ombudsman here can look at everything again and make a final decision.

Yours sincerely


Basically they only look at the contract on its own and are NOT interested the CCA 1974!!!

This whole Ombudsman appeal process is a total waste of everyone's time if they don't take into account the Consumer Credit Act!


Any advice for me at all?

[R0b]

Re: Voluntary Termination - Mercedes

Well, thats the FOS for you! of course you can have the decision reviewed by an ombudsman and I would perhaps respond to that in quite a blunt way - you can take some of the below comments and use as part of your response.

Clearly, this person's decision is fundamentally flawed.

Unlike the courts we are not limited to looking only at the issues the consumer has focused on in their complaint. Our approach is to ask questions, listen to both sides of the story, and decide each case on its individual facts and merits. By law, we are required to resolve complaints on what we feel is a fair and reasonable basis, based on the evidence provided to us.

The above underlined is not entirely true. Under DISP 3.6.4 of the FCA Rules, the FOS are legally obligated to take into account:

(1) relevant:

1. 1. (a) law and regulations;
   2. (b) regulators' rules, guidance and standards;
   3. (c) codes of practice; and
   
   
2. (2) (where appropriate) what he considers to have been good industry practice at the relevant time.

The adjudicator goes on to say the following:

In response to your email, I’m not stating that your agreement takes precedence over the CCA. What I’ve explained is that we have reviewed the agreement which you’ve signed at the point of sale, as a whole.

The adjudicator has emphasised that they are not saying the contract takes precedence over the CCA however they have admitted that they've only reviewed the terms of the contract and not taking into account the CCA at all.

In the Court of Appeal case R(Heather Moor & Edgecomb) v FOS [2008] Lord Justice Stanley Burton 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 position was reaffirmed in the recent High Court case R (Aviva Life & Pensions (UK) Ltd) v Financial Ombudsman Service [2017] where the judge quashed the decision of the FOS because it failed to give full reasons why it had departed from the relevant law (and in fact the FOS conceded this point).

The agreement itself is regulated by the CCA and so it must therefore comply with the relevant provisions, if it doesn't then the conflicting provisions are null and void. Clearly this adjudicator has not taken into account the sections you have raised in the CCa nor has he/she given any reasons why they have chosen to depart from the law. The FOS is bound by DISP 3.6.4 but also the above case law is also binding on them.

You should also emphasise that any decision which involves departing from the law, the FOS must give its reasons for doing so and they must be clear, proper and legitimate. If they fail to do so, then it exposes the FOS to a judicial review claim.

[Farks]

Re: Voluntary Termination - Mercedes

Thanks for your advice again! I have just emailed FOS again but not holding my breath!!

K