VEHICLE FINANCE “EXTRA FEE”: STRIP IT OR BILL IT?

VEHICLE FINANCE “EXTRA FEE”: STRIP IT OR BILL IT?

The National Consumer Tribunal (“NCT“) recently came out guns blazing and caused a stir in the motor vehicle industry. The application by Volkswagen Financial Services SA (“VWFS“) for the review and setting aside of a compliance notice previously issued against them by the National Credit Regulator (“NCR“), was dismissed by the NCT during the month of April 2019.

First, some background: the NCR issued compliance notices against VWFS and BMW Financial Services in 2017. In terms of these compliance notices, the NCR held that the “on the road” fees (colloquially termed as “Service & Delivery Charge” or the like) by the respective vehicle financiers constitute prohibited charges in terms of the National Credit Act, 34 of 2005 (“NCA“) and ordered each of these financiers to refund consumers who paid such fees. VWFS subsequently applied to the NCT to review and set aside the compliance notice issued by the NCR against them. The NCT however rejected their application and confirmed the decision taken by the NCR in their compliance notice (in a somewhat amended form, but in principle the same). The NCT ruled that VWFS were to: (i) refund all affected consumers; and (ii) cease adding any such or similar fees on their (vehicle finance) credit agreements as from 10 April 2019.

VWFS have since indicated that they will appeal the decision of the NCT, the effect of which then suspends enforcement of the ruling until the appeal has been finalised by the relevant court. Simply put, VWFS need not to comply with the compliance notice until the matter has been settled by the relevant High Court.

Please follow the link below to access a copy of the relevant NCT ruling:

http://www.thenct.org.za/wp-content/uploads/2019/04/Volkswagen-Financial-Services-South-Africa-pty-Ltd-v-National-Credit-Regulator-NCT-94937-2017-5612.pdf

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