Now VW ordered to repay fees
Consumer protection: Volkswagen SA follows BMW in being informed that charging on-the-road fees is illegal
The wheels of justice are turning fast at the National Credit Regulator - on Tuesday it declared "on-the-road", admin and handling fees, routinely added to VW Financial Services car finance deals, are illegal and ordered VW to refund those who'd been charged it.
The announcement comes less than three weeks after the regulator did the same to BMW Finance, on the basis that such fees, referred to by some dealerships as a "dealership" fee or "service and delivery fee", are not among extra charges the National Credit Act allows credit providers to add to a credit agreement. Those "allowable" extras included an initiation fee, an extended warranty, delivery of the vehicle, a tank of fuel and licence and registration fees.
The notice instructs Volkswagen Financial Services SA to refund consumers and submit an audit report to the regulator.
"[We] will continue to conduct industry-wide investigations ... to root out illegal charges and fees consumers charged," the regulator said.
In VW's case, the allegedly illegal extra fees amount to between R3,000 and R4,000.
Asked which vehicle finance house would be next, given the illegal fees are added to just about every vehicle finance agreement, Caroline Young, senior legal adviser in the regulator's investigations and enforcement department, said she was unable to disclose that.
"But clearly it is a trend in the market," she said, "and we invite any consumer who has had these fees added to their vehicle finance contract to lodge a written complaint with us. Consumers currently buying cars must read their quotations carefully and refuse to enter into a contract which includes prohibited charges," Young said.
Interestingly, BMW, which said it "disagrees with and disputes" the contents of its NCR compliance notice shortly after it was issued on October 5, and vowed to "object" to it, has not yet lodged a formal objection with the National Consumer Tribunal.
Pressed to reveal what their on-the-road fee covers, dealerships generally list the likes of a pre-delivery check, valet, fuel and gifts.
"I don't agree with the regulator's interpretation," said Motor Industry Ombud Johan van Vreden. "In my view, the issue is that motor dealers should be very clear in spelling out what they are charging consumers and why."
Gary McCraw, the Retail Motor Industry Organisation's company secretary and director of the National Automobile Dealers Association, said he could not comment "on what the banks have done", without seeing the compliance notice. "My understanding is the issue is not whether or not a fee is on the finance agreement but whether interest is charged on it," he said.