National Credit Regulator v National Consumer Tribunal and Others and Similar Matters

The National Credit Regulator (NCR) investigated the practice in the motor vehicle finance industry of including so-called 'on the road fees' (OTR fees) in the amount financed under instalment sale agreements. OTR fees are composite charges agreed between motor vehicle dealers and consumers for services such as delivery, licensing, roadworthy certificates, fuel, and related costs. The NCR concluded that Volkswagen Financial Services, BMW Financial Services, and Mercedes-Benz Financial Services contravened sections 100, 101 and 102 of the National Credit Act 34 of 2005 (NCA) by charging or including OTR fees in credit agreements. It issued compliance notices directing them to cease charging such fees and to refund consumers. The credit providers applied to the National Consumer Tribunal to review and set aside the notices. The Tribunal reached conflicting outcomes, upholding the notice against Volkswagen but setting aside those against BMW and Mercedes-Benz. On appeal, a majority of the Full Court of the Gauteng Division held that the credit providers did not charge OTR fees but merely financed a purchase price agreed between dealers and consumers. The NCR appealed to the Supreme Court of Appeal.

The appeals by the National Credit Regulator were dismissed in respect of Volkswagen, BMW and Mercedes-Benz. The NCR’s cross-appeal was also dismissed. The compliance notice against Volkswagen was set aside. Each party was ordered to pay its own costs in all matters.

The judgment clarifies the scope of sections 100, 101 and 102 of the National Credit Act and confirms that credit providers do not contravene the Act by financing a vehicle purchase price that includes dealer-charged OTR fees. It draws an important distinction between charges imposed by credit providers and amounts forming part of a purchase price agreed between consumers and dealers, thereby providing certainty to the motor vehicle finance industry and limiting the regulatory reach of the NCR under the NCA.