Johannesburg - In what could have widespread repercussions for South Africa's motor industry, the National Credit Regulator (NCR) has ordered BMW Financial Services to refund car buyers the on-the-road fee they were “illegally” charged.

The fee, also sometimes referred to as a service and delivery fee, is commonly added to vehicle finance agreements and ostensibly covers things like a pre-delivery check‚ valet‚ and fuel. However, the NCR says this is an illegal fee that’s not permitted to be charged on credit agreements by the National Credit Act.

An on-the-road fee usually costs between R3000 and R6000, and is over and above the fee charged by dealers for getting the vehicle licensed and registered.

“The Compliance Notice instructs BMW Financial Services to refund consumers and submit an audit report to the NCR. The National Credit Act allows consumers to be given a quotation which sets out the cost of credit before signing credit agreements,” said Chief Executive Officer at the NCR, Nomsa Motshegare.

“Consumers should request this quotation from their credit providers so that they can properly check the cost of credit that is being offered.”

The NCR didn’t state what prompted the action on BMW specifically, but Motshegare said the NCR will continue to conduct industry-wide investigations on the cost of credit to root out illegal charges and fees that consumers are charged. This means more car brands could be in the firing line.

It is not known how many BMW owners are affected as the NCR notice didn't specify how far back the order is effective, but BMW South Africa says it disputes the regulator’s claims and will be objecting to its notice. "The on the road fee is a fee agreed to between the dealer and the consumer," says a BMW SA spokesman.

Drive360