The consumer’s issue:
“In October 2017, I purchased a used saloon and, at the same time, I bought a three-year service plan from the dealership. I had the first and second services completed in 2017 and 2018 without any issues. However, when I went to have my vehicle’s third and final service carried out under the plan in November 2019, I was told that it wasn’t covered, and I would have to pay for it myself. I was also informed that my service plan had expired.
I assumed that a three-year product would cover three individual services, so I think it was mis-sold to me. I’d either like £491 in compensation, as that’s what I had to pay to service my car, or for the plan to be refunded in full, which would be £399.”
The accredited business’ response:
- The plan we sold to the consumer was a one-off payment at the point of purchase, and was valid either for three years or for 36,000 miles, whichever was reached first.
- The plan only included two services, which could be completed at any time over a three-year period.
- The consumer had already obtained two services under the package, so the agreement was met in full from our point of view.
- We therefore don’t agree that the plan was mis-sold and are not willing to offer any compensation or a refund to the customer.
The adjudication outcome:
- The Motor Ombudsman adjudicator said that, based on the information provided, he wasn’t satisfied that the dealership had clearly set out and explained the terms and conditions of the plan to the consumer. Therefore, he concluded that the dealership had breached the Vehicle Sales Code.
- However, the adjudicator didn’t think it was reasonable to expect the dealership to cover the full cost of the third service, because had the plan covered three whole services, it’s likely it would have cost the consumer more at the point of purchase.
- The Motor Ombudsman adjudicator reviewed the evidence and upheld the complaint in the consumer’s favour and recommended that the dealership provided a partial refund of the cost of the service plan.
- The dealership disagreed with the adjudicator’s assessment and requested that the complaint be investigated by an ombudsman to reach a final decision.
The ombudsman’s final decision:
- The ombudsman reviewed the evidence and agreed that the complaint should be upheld for broadly the same reasons as the adjudicator.
- She noted the dealership had said that the terms of the plan had been verbally explained at the time of sale. However, she said there was no evidence to support this, and it was difficult for her to comment, as she was not present during those discussions.
- The ombudsman said that, if the terms had been explained clearly to the consumer, it was unlikely that they would have returned for the third year and attempted to claim a service under the plan.
- She noted there was no indication that terms and conditions had been provided in a durable format, and although these may have been available on the dealership’s or manufacturer’s websites, she said the sale was face-to-face, so documents ought to have been provided at that time.
- She also noted that on the sales invoice, it stated: ‘sale of service inclusive 3yr’.
- The ombudsman said that this comment was vague, unclear, and misleading, and it was likely to result in the average consumer believing they had a ‘three-year’ service plan whereby they would be covered for three services over the duration of three years.
- The ombudsman, however, didn’t think it was reasonable to reimburse the cost incurred for the third service, as it wasn’t economically fair on the dealership, and the consumer wouldn’t have been entitled to it in the first place. Nor would the consumer have been able to purchase an equivalent plan from the manufacturer to cover three services at the price they paid.
- However, she said that, because the consumer had lost the benefit of the third service, which they believed they had cover for, then one third of the cost of the service plan should be refunded to account for this. This amounted to a total of £133.
Conclusion:
- Both parties agreed with the ombudsman’s final decision and the case was closed.
