Upheld: Account administration errors complaint against Tesla Financial Services Limited

Decision detail

Summary

Miss J entered into a three-year car hire agreement with Tesla Financial Services in December 2024. When VED of £195 per annum was introduced for electric vehicles in April 2025, Tesla requested reimbursement from Miss J. Miss J disputed this, claiming she had specifically asked about VED liability before entering the agreement and was told she would not have to pay. Tesla's original contract contained no explicit term requiring Miss J to pay VED; the clause Tesla cited was only added to later contracts. The Ombudsman upheld the complaint, finding that industry practice does not typically charge consumers separately for VED on hire agreements and that Tesla's subsequent contract amendments indicated they recognised the original contract did not support this charge. Tesla was instructed to remove all VED charges, refund late payment fees, and remove adverse credit file information.

The Ombudsman's reasoning

The Ombudsman found that Tesla's original contract with Miss J contained no explicit or fairly implied term requiring her to pay VED. The clause 3.8 that Tesla initially cited was not in Miss J's contract and was only added later, suggesting Tesla themselves recognised the original contract did not support charging VED to consumers. The order agreement clause referenced by Tesla relates to purchase taxes at point of delivery, not ongoing VED. Industry practice shows VED is typically either paid by the leasing company or factored into rental payments, not charged separately to consumers. Clause 12.10 allowing 'reasonable changes' does not justify this charge given Miss J's apparent prior inquiry about VED. The fact that Tesla subsequently updated their contract terms to explicitly address VED responsibility indicates they recognised the original contract did not permit this charge.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website