BMW Financial Services (SA) intends to challenge the compliance notice issued this week by the National Credit Regulator (NCR) because the company charges consumers an “on the road” fee on credit agreements.
The NCR argued that the National Credit Act did not allow such a fee to be charged on credit agreements, but BMW Financial Services insisted the fee was agreed between the dealer and the consumer.
The company provides vehicle finance to buyers of BMW vehicles and the “on the road” fee refers to those services provided to get the vehicle ready for road use such as vehicle registration, licence plates, petrol and delivery.
The NCR’s compliance notice against BMW Financial Services follows similar action it has taken against retailers who charge account holders a monthly fee for membership of a club entitling them to discounts and perks.
The NCR has ruled that the club fee charged by Edcon was unlawful.
NCR enforcement manager Jacqueline Peters said the compliance notice against the company arose from a general compliance exercise that the regulator’s compliance department conducted in August in the motor vehicle finance sector with a focus on the cost of credit and fees charged to consumers.
“It was on the basis of what was discovered during this exercise that the NCR initiated a formal investigation as there was a reasonable suspicion that BMW was charging fees which were not permitted by the National Credit Act,” said Peters.
She said that the fees which a credit provider might charge in respect of credit agreements were very prescriptive.
“The intention of the National Credit Act is very clear when it relates to credit agreements.
“The act does not allow for any other fees, charges or costs other than those provided for to be reflected in the credit agreement or in the credit agreement documents. A consumer accordingly cannot agree to such a fee to form part of the credit agreement,” Peters said.
If BMW Financial Services does not contest the compliance notice it will be required to conduct an audit of all on-the-road fees it has charged and repay customers by December 1. To challenge the notice, the company will have to apply to the National Consumer Tribunal to have it reviewed.
BMW group product communications manager Edward Makwana said BMW Financial Services “disputes the contents of the notice issued by the regulator and will be objecting to the notice”.