Quality complaints are a
difficult, drawn-out and costly process to become embroiled in,
says John Perez.
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The increase in Satisfactory
Quality (SQ) claims in recent months is set to continue. In times
of economic downturn, customers have used SQ complaints as an
excuse to stop payments on their finance agreements which is often
the cause of adversary between the finance company and their
customer from the offset.
The litigation costs of these
disputes should not be underestimated. They often involve three
parties (customer, dealer and finance company) and require expert
evidence.
An analysis of the statutory
position has been provided in an earlier article in Motor
Finance (December 2011, page 14-15). The critical point was
the seriousness of the customer’s right to reject the
vehicle.
Too often, dealers will
attempt to ignore the rejection and overstate their case as to why
the vehicle should be repaired instead, overlooking the possible
entitlement of the customer to reject the vehicle
outright.
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By GlobalDataThe emphasis in the article
was the need for all parties – the finance company, the dealer, as
well as the customer, to act quickly but efficiently in dealing
with the SQ complaint. It also alerted the reader to the lottery of
taking these cases to court.
There is clear merit in the
parties engaging properly at a very early stage. If they don’t then
the matter will go one of two ways – litigation or an investigation
by the Financial Ombudsman Service (FOS).
Either way only adds to delay
and cost in trying to reach an amicable solution to the SQ
complaint. The case fee for a dispute referred to the FOS is
currently £500 and the indication is that this will soon
increase.
The government has recently
announced plans to extend the maximum claims value for which the
Small Claims Mediation Service may be used from £5,000 to £15,000.
While the use of the service will not be mandatory, a party who
refuses to use the service may be penalised on costs.
It makes sense therefore that
parties address the need to resolve rather than
litigate at an early stage when the relative exposure in damages
and costs remains low and manageable.
Invariably we see customers
refusing to make payments on their finance agreement while a
dispute remains unresolved. If the dispute goes to county court for
determination it could take up to 12 months or more for a final
determination. The incentive should be for all parties to use a
different mechanism to reach a permanent and accelerated
resolution.
While general mediation
services already exist, at Chafes Solicitors we offer a bespoke
service which we have called SQ Resolve, aimed at dealers and motor
finance companies.
This service is aimed at
taking time and costs out of SQ or service level complaints. If
readers have any queries please do not hesitate to contact
us.
John Perez is partner and
head of lender services at Chafes Solicitors
