Improving the communication of contentious fair wear and tear rules between leasing companies and fleet operators was top of the agenda at a recent meeting of industry trade bodies.
The rules aim to provide an industry-wide, accepted standard that defines fair wear and tear when vehicles are returned by fleets to their leasing or rental company.
It also provides advice for best practice in vehicle maintenance and upkeep that will prevent unacceptable wear and tear occurring.
Produced by the British Vehicle Rental and Leasing Association (BVRLA), there are three guides covering cars, light commercial vehicles (LCVs) and heavy goods vehicles (HGVs)
The BVRLA contacted members last August to indicate it was carrying out a review of fair wear and tear guidelines and to understand more about the nature and volume of complaints its members have received.
Feedback from a series of roundtables, involving leasing and remarketing companies, as well as fleet representative body ACFO, will help build a picture of what the issues are and what approach can be taken to improve customer service.
Information collected through the BVRLA’s conciliation service will also be taken into account.
John Pryor, ACFO chairman, said: “The BVRLA is engaging with all parties to ensure we receive a clear and concise document that takes into account the issues fleets face when returning vehicles.”
The BVRLA reviews the fair wear and tear guide every three years. The main change following the last review was the introduction of a new rule that leasing companies have to inform customers of any end-of-contract charges within four weeks of the car being collected.
Following the latest roundtable, Nora Leggett, director of member services at the BVRLA, told Fleet News that the group agreed some principles including “the guide must be fair, easily understood and accessible to a non-expert”.
She said: “We considered five typical complaints and concluded that improved communication was an important aspect of the recommendations we were likely to issue.”
However, she added: “The process is ongoing and there will be more consultation in the coming weeks.”
Some leasing companies have long been accused by fleet managers that their interpretation of the BVRLA guide ends up with damage charges being used as a ‘profit centre’.
A fleet manager, who preferred not to be named, said he had “many thousands of off-lease invoices on hold”, some going back more than two years, for what he described as “unreasonable charges”.
He explained: “The BVRLA guide is suited to your typical three-year, 50,000-mile contract for a car or lightly used van, not for many of the industries that work their vehicles hard for a living.”
For example, he said: “I have a 63-plate Kangoo going back to a leasing company who has asked for more than £3,100 of damage all around the van. I did point out that the van only books at around £1,500 and I wasn’t looking to buy it – twice over.”
Some leasing companies, like Ogilvie, have a fixed-cost menu of charges set out at the start of the contract.
Other leasing companies do not repair vehicles before sending them out to auction, so do not charge customers for the cost to repair the damage.
Instead, they charge for the loss of value against residual value due to the damage.
The fleet manager said: “End of contract damage charges are not an excuse to raise revenue for off-lease damage that is not repaired anyway. It should be recompense for loss of value of the vehicle at sale due to damage. If some leasing companies can operate this way, why can’t others?”
Nick Hardy, Ogilvie Fleet sales and marketing manager, said: “We are very clear with end of contract charges. We operate a standard fixed-cost matrix across all contracts and explain before the start of the contract what the charges will be.
“But it is a point of pain for companies that are using others in the market. Some customers are being hit hard at the end of the contract and some companies are being very aggressive with charges. I think the problem here is that it stems from it being a profit centre.
“If you’re treating end of contract charges as a profit centre, you’re going to run into problems.”