The UK Financial Conduct Authority (FCA) has published an undertaking under the Consumer Rights Act 2015 from Mercedes-Benz Financial Services (UK) Limited on a potentially unclear excess mileage term in some of the firm’s consumer vehicle hire purchase agreements.
Mercedes-Benz Financial Services (UK) Limited (MBFS) has committed to making changes to its consumer vehicle ‘Hire Purchase Agreements’ that contain an excess mileage charge and has given the FCA an undertaking under the Consumer Rights Act 2015.
The firm has also voluntarily agreed to provide redress to affected consumers who entered into contracts since 1 January 2014.
The FCA was concerned that the excess mileage term was unclear how the consumer’s permitted mileage would be calculated in the event that the contract was terminated part of the way through a 12-month period, for example in the event of a voluntary termination by the consumer. This meant that consumers may not have understood what their permitted mileage was and the amount of any excess mileage charges that would therefore be applied.
In addition, the FCA was concerned that in practice MBFS had not interpreted the terms in the way most favourable to consumers.
MBFS has:
- agreed new contracts entered into from 31 December 2024 will contain an excess mileage term which will more clearly explain how the excess mileage charge will be calculated;
- agreed not to rely on the term in any of its existing contracts with consumers and has assured the FCA that where the contract has been voluntarily terminated early it has not relied on the term since January 2022; and
- voluntarily agreed to carry out a redress exercise to identify consumers who have been affected by the unclear term in contracts entered into since 1 January 2014 and to provide redress where it is appropriate to do so. To date this exercise has led the firm to estimate that redress will be paid to approximately 4,700 consumers.
MBFS has voluntarily agreed to refund consumers affected by the unclear term since 1 January 2014. The firm will begin contacting consumers in mid 2024, and expects to contact affected consumers by the end of December 2024. Consumers who think that they may have been affected and have not been contacted by MBFS by the end of December 2024 should contact MBFS.
