The consumer’s issue:
“I purchased a used coupé and, at the same time, I was advised to buy a three-year service plan costing £972, as this would save me between £150 and £200 over this period. I recently had my third service, and I found out that, had I serviced my car at the retail cost, it would have cost me £978 over the three years. I therefore only saved £6 with the service plan.
I raised this issue with the business, and I kept being given different reasons for why this happened and how this was due to how much an intermediate service would cost compared to a full service. Nobody could take responsibility or give me a proper answer on why the saving was only £6, compared to the £150 to £200 saving I was told I would make at the point of sale.
I raised a formal complaint with the dealership, and I was advised to contact The Motor Ombudsman to pursue my dispute. I am looking to be refunded the difference between what I paid, and the saving I thought I was getting at the time of purchase.”
The accredited business’ response:
- The retail cost of the three services was: £254 for the first intermediate service, £470 for the second full service and £254 for a third intermediate service – totalling £978.
- The consumer paid £972 over the course of the plan, therefore making a saving in terms of these costs;
- The issue was that, when we sold the plan, and gave the consumer an idea of potential savings, we used the internal costs we invoice for a service plan. These should not have been given, as these were not the actual retail prices.
- The consumer also had an option of a free courtesy car or collection and delivery service with their service plan. This cost would have been an additional £50 at each service for people without a service plan.
- Had the customer used this option, they would have enjoyed the £150 to £200 saving as advertised.
- The consumer also took advantage of interest-free monthly payments, meaning they benefited from not having a large service bill, which is the main advantage of the service plan.
- Likewise, their service costs were fixed and were immune from any increases in the cost of labour or parts.
- Finally, the customer’s next service is £624.20, so had they taken out a four-year plan instead of a three-year one, they would have ended up saving over £300.
The adjudication outcome:
- The Motor Ombudsman adjudicator reviewed the evidence and found that there was a breach of its Motor Industry Code of Practice for Vehicle Sales. This is because the terms of the plan were not correctly explained at the point of sale.
- There was no evidence to demonstrate that the business made the consumer aware of the courtesy car, or the drop off and collection service which was available within the plan. The documents for the service plan were not supplied by the business, and therefore, the customer was unaware of these features.
- As such, the adjudicator could not factor this into any potential savings made by the consumer in purchasing the plan.
- The Motor Ombudsman also concluded that the business provided incorrect advice at the point of sale regarding the savings that would be made, as they had admitted themselves. This was clearly incorrect, and was therefore a breach of the Vehicle Sales Code.
- As a result, the complaint was upheld in the consumer’s favour, and the adjudicator recommended that the business either offered a free service or a reduction in price to reflect the saving that should have been made, which was calculated by The Motor Ombudsman as being £144.
- Both parties agreed with the adjudication outcome, and the business agreed to credit the consumer’s account with £144 as recommended in the decision. As both parties accepted the outcome, the case was closed.