VW’s on-the-road fee is off the table, tribunal decrees

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VW’s on-the-road fee is off the table, tribunal decrees

Not only that - VW Financial Services must refund all such fees and interest levied to its customers

Consumer journalist


On-the-road fees must come off VW Financial Services (VWFS) agreements by Wednesday, the National Consumer Tribunal has ruled.
Not only must that extra fee – also referred to in the industry as a dealership, delivery or admin fee – be removed, but VWFS must refund all such fees and interest levied to its customers and submit a report by independent auditors to the National Credit Regulator (NCR).
The practice is industry-wide, the add-on free ranging from R300 to as much as R6,500, prompting many consumers to ask how to go about getting a refund of what they paid to their banks for that illegal fee, plus interest.
For now, though, the ruling applies only to VWFS contracts. How that “on-road-fee” is arrived at is never detailed on a finance agreement. Pressed to reveal that information, dealerships will list costs ranging from a pre-delivery check and valet to “admin costs”, a service book and the ribbon or flowers presented to the buyer when they collect their cars. As part of the financed total, interest over the entire term of the deal – usually 72 months – is added to that on-the-road or “delivery” fee.
The only extra charges the National Credit Act allows credit providers to add to a credit agreement, according to the NCR, are an initiation fee, an extended warranty; actual delivery of the vehicle, a tank of fuel and licence and registration fees.
“The NCR welcomes this judgment as it affirms the protection given to consumers by the National Credit Act against illegal charges and fees on credit agreements”, said the regulator’s chief executive, Nomsa Motshegare, yesterday.
It was 18 months ago that the NCR issued compliance notices against both VW Financial Services and BMW Financial Services, compelling them to refund or credit customers who had the fee added to their credit agreements. Both disagreed with the regulator’s interpretation of the National Credit Act, and continued to charge the fee, business as usual, along with the rest of the industry.
The NCR also vowed at the time to “continue to conduct industry-wide investigations ... to root out illegal charges and fees consumers charged”,  and repeated that vow on Monday.
Asked whether the regulator would be issuing compliance notices to other vehicle finance banks in light of the tribunal’s ruling, a spokesperson told Times Select: “(We) will continue to issue compliance notices to any vehicle financier that is charging the on-the-road fee.”
Times Select asked Wesbank, SA’s biggest vehicle finance bank, whether it would now reconsider adding the fee to its vehicle sale agreements, but the company hadn’t responded by the time of publication.
Asked to comment on the ruling, VWFS South Africa told Times Select it was reviewing the ruling and obtaining legal advice, and would “revert in due course”.
Not so fast
Delighted by the news of the tribunal’s ruling that VWFS must refund those clients it charged an on-the-road fee, plus interest, Sharee Pillay of Durban e-mailed the dealership from which she bought her car in 2015, asking how her R4,500 would be refunded. She got a “not so fast” response.
“To date no bulletin has been released in this regard by VWFS to the dealer network regarding the ruling or their stance on it. If a ruling were to be followed, VWFS would advise us ... and direct communication by VWFS will be made public.”
Legalities aside, critics of the on-the-road fee practice have argued that while the dealerships are entitled to recoup their costs, they should do so by incorporating them into a vehicle’s purchase price, rather than sneakily adding on a few thousand rand as an extra fee.
Motoring journalist Mark Smyth tweeted a warning to motorists about the impact of the on-the-road fee being declared illegal: “Expect to see across the board hikes in car prices to absorb these costs into the actual purchase price.
“Many car buyers have no idea they’ve been charged an extra fee, given that most dealership staff don’t volunteer information about it and few read every line of their contracts. And the term ‘on-the-road fee’ is confusing to some.”
@NayD_Red tweeted: “So consumers have been charged to drive their own cars? Everyday? South Africa is really a crime scene!”

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