The UK Financial Conduct Authority (FCA) has published a venture under the Consumer Rights Act 2015 by Mercedes-Benz Financial Services (UK) Limited in a potentially unclear mileage excess term in some of the company’s consumer hire purchase agreements.
Mercedes-Benz Financial Services (UK) Limited (MBFS) has committed to making changes to its consumer vehicle ‘Hire Purchase Agreements’ which contain a mileage surcharge and has committed to FCA under the Consumer Rights Act 2015.
The company also voluntarily agreed to provide compensation to affected consumers who have contracts since January 1, 2014.
The FCA was concerned that the mileage clause was unclear as to how the consumer’s mileage allowance would be calculated in the event that the contract was partially terminated during a 12-month period, for example in the event of voluntary termination by the consumer. This meant that consumers may not have understood what mileage was allowed and the amount of extra mileage charges that would be incurred.
In addition, the FCA was concerned that in practice MBFS had not interpreted the terms in the most favorable way for consumers.
MBFS features:
- agreed new contracts entered into from 31 December 2024 will include an excess mileage clause that will explain more clearly how the excess mileage charge will be calculated;
- agreed not to rely on the term in any of its existing contracts with consumers and assured the FCA that, where the contract was voluntarily terminated early, it has not relied on the term since January 2022; and
- voluntarily agreed to conduct a legal remedy exercise to identify consumers affected by the unclear term in contracts entered into from 1 January 2014 and to provide remedies where appropriate. To date, this exercise has led the company to estimate that compensation will be paid to approximately 4,700 consumers.
MBFS has voluntarily agreed to refund consumers affected by the unclear term as of January 1, 2014. The company will begin contacting consumers in mid-2024 and expects to contact affected consumers by the end of December 2024. consumers who believe they may have been affected and have not contacted MBFS by the end of December 2024 should contact MBFS.