The consumer’s issue:
“I took out a 36-month extended warranty policy at a cost of £500 when I bought my 14-plate SUV in October 2018. Two years’ later, I contacted the warranty company as there was an engine noise consistent with a timing chain issue. I was told by the warranty company to take the vehicle to a garage and that they would cover labour costs up to £50 per hour, but would not pay for the initial diagnostic check. We stopped using the car until arrangements were made to take it to another local garage, which we did in mid-November.
The local business confirmed the issue as a problem with the hydraulic tensioner, and spoke with the warranty company about it, plus they also sent a video once the engine had been taken apart. When I went to collect the car from the garage, the mechanic informed me that the warranty provider had said, that as the dealership that sold me the car was no longer trading, it meant that my policy was void and the costs of the repair would not be covered. I therefore had to settle the amount of £733.
I spoke with the selling dealership following this, and they told me that the business had changed hands about a year ago, but nevertheless confirmed that the warranty was still active on the vehicle. To resolve this complaint, I am looking to be reimbursed for the sum I had to pay.”
The accredited business’ response:
- We understand the consumer’s concerns, but have been advised that the selling dealership is no longer trading, and as the warranty agreement is a dealer-backed guarantee, the agreement is between the consumer and the seller.
- We solely act as the administrator for the purpose of claims handling only and, as the dealer is no longer trading, there is no agreement in place for us to administrate, making the policy void as a result.
- Therefore, we are unable to uphold the customer’s complaint on this occasion.
The adjudication outcome:
- The Motor Ombudsman adjudicator remarked that, under the Vehicle Warranty Products Code, the warranty agreement should inform the consumer when the product is non-insured and inform the consumer about the key terms of the product.
- Having reviewed the warranty agreement, the adjudicator found that the agreement did not disclose key terms of the product, i.e. that if the dealer ceases to trade, the warranty will be void.
- Therefore, whilst the warranty provider could not be held responsible for the actions of the selling dealership, the adjudicator believed that, key information, such as a factor that could lead to warranty being made void, should have been specified in the terms of the agreement.
- As a result, they stated that the cost of repairing the fault should be covered by the agreement, and therefore upheld the complaint in the consumer’s favour.
Conclusion:
- The business agreed with the adjudication outcome to make the payment of £733 to the consumer, and the case was closed.
