KENT based leasing broker Skyfleet says it’s taking the lead on Consumer Duty and Treating the Customer Fairly by abolishing cancellation fees.
Managing director Paul Isaacs (left) said he carried out an extensive review of competitor broker websites and could not find any uniformity in the treatment of customers for cancellation of an order.
I was thinking about our approach to Consumer Duty and had something of an epiphany. How can it be treating a customer fairly if we are going to charge them for a cancellation? If we are considering the best outcome for the customer, we are potentially pushing them towards a financial contract they may not be able to afford if their circumstances change.
Paul added that if you book a hotel or similar you know in advance how much cancellation will cost with likely staged percentages. Some cheaper rail fares are bought on the premise that they cannot be changed or refunded.
“But in all the broker websites I looked at, I could not find a consistent approach. I can’t believe the FCA have let this one slip through,” Paul added. “And we’ve all been audited by the BVRLA.”
What do other broker websites say about cancellation policies?
Some are clear about what the outcome will be. For example:
All regulated policies are given a 14 day period to cancel a PCH agreement, with a £100 charge after that; on unregulated business there’s the £270 VAT inclusive processing fee that will be charged.
Others refer to potential cancellation charges from the supplying dealer as well as the broker:
In the event of cancellation by you, we reserve the right to charge you all or part of the Arrangement Fee, Order Confirmation Fee, Deposit and/or Initial Payment (as applicable) as fees for our services. Subject to the status of the order at the point of cancellation the Vehicle Supplier may also charge fees for cancellation.
Another charges a percentage of the P11D –
If you are a business customer and wish to cancel your order, we will retain the processing fee and apply a cancellation fee of up to 5% of the ordered vehicle’s P11D value to cover the costs of services.
We found one that charged 7.5% for unregulated cancellation.
A further website pushes consumers to read their terms and conditions of the supplying funder and rather breezily suggests they can also swap to PCP agreement.
While this one, for regulated agreements outside the cooling off period, said:
We are permitted by law to charge a reasonable fee for the service provided and as such we may at our absolute discretion deduct such sums as we deem reasonable and in proportion from the monies we hold from you to satisfy this. If charges are levied on us due to a cancellation by Dealers or Manufacturers we reserve the right to pass on these costs to you.
In other words, it varies from broker to broker. Paul says “we cannot influence people into a financial product that may disadvantage them. That goes for businesses too. We want to protect the customer.”
So what are we doing at Skyfleet? We have scrapped it. If you cancel you get your money back. Because it’s the only way you can maintain clarity for the customer and it doesn’t matter if the customer is personal or business.
Statement from Skyfleet on its no charge cancellation policy
We do not feel it is fair for brokers to be imposing hefty and often disproportionately high (when considering the work they have actually undertaken) levies on their customers when they wish to cancel their vehicle orders prior to delivery. Experience tells us that circumstances can change, often without warning, necessitating the need to cancel.
These often unforeseen circumstances can include a change in work situation such as a reduction in pay or hours, redundancy or perhaps a change in personal circumstance such as starting a family, moving home or a medical situation. All these, and many more can result in the need to cancel an order. Sometimes it’s simply a decision of affordability or a change of heart.
The notion that a customer should be bound to an order regardless of their circumstances and have to suffer significant financial loss if they wish to cancel does not follow the spirit of fair play and goodwill, nor does it embrace consumer protection or current regulatory requirements in treating customers fairly.
We believe there is a need for the industry as a whole, to recognise and accept that cancellations are an occupational hazard and are going to happen, for a multitude of reasons. There isn’t a single vehicle, in our experience, that has failed to sell following a cancellation. For sure it is inconvenient when this happens, some financial loss is likely, but customers surely have a right to cancel without exorbitant charges.
Please note, our stance on no cancellation fees specifically relates to cancelling Skyfleet’s brokerage service/order and does not relate to your cancellation rights with the finance provider once your vehicle contract has been set live post delivery.
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Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
