Update your details online and handling pre-estimated liquidated damages - Motor vehicle industry bulletin 7
Changes to pre-estimated liquidated damages
From 1 January 2022, the maximum amount of pre-estimated liquidated damages that a dealer may charge is five per cent.
11 June 2021
Update your employment and contact information online
The department previously introduced an online gateway that allows licensed motor vehicle dealers and repair businesses, as well as individual yard managers, salespeople and certified repairers, to review and change some of their contact information.
An enhancement to this online gateway will now allow licensed dealers and repair businesses to notify the department of changes to employees listed on the register. Additionally, individual yard managers and salespeople will also be able to provide their change of employment details to the department via this facility.
An update to the departmental website will provide an access point to the change of employment function. Information will be added to the existing renewal reminders to alert applicable licensees and certificate holders to the new functionality.
More information will be available shortly on our Change contact details for a Consumer Protection licence page.
The department intends to soon provide the functionality for some new industry participants to apply for a licence or certificate of registration online. Online renewals are also planned. Watch this space!
Pre-estimated liquidated damages
Further to bulletin issue 1 in June 2020, Consumer Protection is continuing to receive enquiries and complaints relating to dealers holding deposits or claiming unreasonable liquidated damages. Licensed motor vehicle dealers are reminded there are certain requirements when faced with a breach of contract by a buyer.
When a contract to purchase a vehicle is cancelled, there may be costs incurred by the dealership as a result of the deal falling though due to a breach of contract by the buyer.
A dealer is entitled, under the Motor Vehicle Dealers (Sales) Regulations 1974, to charge up to 15 per cent of the purchase price of the vehicle as 'pre-estimated liquidated damages'. However, this maximum rate should not be automatically used as a ‘flat-rate.’
It is unlawful for motor vehicle dealers to automatically apply the rate of 15 per cent ‘pre-estimated liquidated damages’. Dealers must not charge any more than a reasonable estimation of the actual costs to the business.
This means that when determining a realistic amount to charge for consumer cancellations, dealers must be able to demonstrate the calculation of liquidated damages and link it to an actual cost, in order to justify the charge is reasonable.
Returning the full deposit
A dealer cannot make a pre-estimated liquidated damages claim and must return the full deposit if:
a contract is terminated because the dealer has breached any of their commitments;
a consumer withdraws their offer at any time before the dealer accepts it; or
a consumer can’t meet their contractual obligations despite taking all reasonable steps to do so, such as if they’re unable to obtain finance for a purchase subject to it.
Consumers are entitled to question ‘excessive’ fees being imposed, and if they believe the explanation to be unsatisfactory, they can ask for the charge to be waived or reduced.
If a dealer refuses, then a consumer may lodge a complaint with Consumer Protection. We will independently assess the complaint, attempt to resolve the matter and consider whether any breach of the legislation exists and warrants disciplinary or other enforceable action.
When Consumer Protection queries the amount of damages being charged, especially after receiving a complaint, the dealer should clearly justify how the damages have been calculated.
Additional information is available on our Cancelling a contract to buy a vehicle with a dealer page.
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