**WARNING** DON'T GET CAUGHT OUT **Audi Financial Services Change of Policy**

[Spartan2013]

Hello All

Just a quick message to warn you of a massive issue that will soon come to light with many others. I have recently been caught out with a change of policy made by Audi Financial Services and wanted to warn everyone to check that they will not suffer the same substantial loss I am facing.

I bought a new A6 Black Edition in September 2017, it is the 24th Audi my wife and I have owned and the fourth new Audi purchased in the last three and a half years, all of which have been funded with Audi Finance on a PCP. When buying my cars I always make sure I choose an insurer with the right level of cover and not just the cheapest, so for the A6 I choose Quote Me Happy which is part of Aviva, I did this because they have a very good and straight forward new for old policy in the first twelve months. Like a lot of people I have bought Vehicle Replacement Insurance (GAP) which was due to start once the car enters is second year as my insurance covers this in the first. Unfortunately my car was stolen whilst I was away on holiday at the end of July, so I spoke to my insurer who promptly told me that I can no longer have the new for old because Audi finance has changed their policy and will no longer allow it! 

I checked with Audi Financial Services and yes, they have changed the policy which happened in April 2018. My Insurance company has now offered me £26,500 for an 11 month old high spec A6 Black Edition that cost over £43,000 new a short time ago. My PCP settlement is significantly higher and will leave me now with a substantial shortfall, in excess of £10,000!! I have spoken to the insurer who say they can't do anything and Audi Financial Services will not change their position, what makes it worse is the attitude of the woman from the customer resolutions team who told me it was a business decision and wasn't in my contract to start with so nothing to do with me! If Audi had taken appropriate action they would have communicated this to all customers on finance and not just the insurance companies to give them a chance to change the cover they have and not be potentially exposed to the debt that I am now left with. 

Both Aviva and Audi Financial Services will do nothing to help me resolve this and I have requested Deadlock Letters from both so I can proceed with appropriate action through the Financial Ombudsmen. I have reported this to the FCA and will progress my complaint with the Financial Ombudsmen Early Intervention Team to try to get some sensible resolve here. What I find shocking is not just the change of policy, which makes no sense, but the failure to inform the customers and their appalling attitude towards the situation. My message and warning to all is that if your car is less than 12 months old, on finance with Audi Financial Services and you have new for old cover on your insurance you ARE NOT COVERED! The Financial Conduct Authority regulates these companies and it is a requirement for them to have policies that treat customers fairly, I don't believe that they have treated me fairly, nor do I believe that they have actually thought this policy change through as the consequences to people like me are catastrophic! 

Further more this policy change affects Volkswagen, SEAT and Skoda customers as well. I am led to believe that approximately 80% of new retail VW Group Cars are purchased on finance through one form of Volkswagen Financial Services across the four brands, thats a lot of people who have been caught out! I would urge you to check you insurance and gap policies as the likelihood is you no longer have protection from the cover you thought you purchased due to the VWFS Change!

 

[Magnet]

Hello Paul,

I'm very sorry to hear of your plight. 

I wonder if it would be possible to clarify a couple of points here, so I can get the logic into perspective. 

As I understand it, it is 'unusual' for GAP insurance to only come into force from the time the vehicle is over 1year old. I raise this since (again as I understand) not ALL insurers automatically cover any form of like-for-like cover (or whatever they wish to call it) within the first year. Hence the need for GAP, and further the GAP cover 'makes up' the shortfall not covered by any other insurance. Again, there are various levels of GAP insurance cover and some make simply replace  the vehicle as near as like for like allows, some will not cover any price rises since the car was bought, and some cover for 'invoice value' which may not be adequate in the case of the purchase (or lease) of a discounted-price vehicle. GAP cover needs to be chosen carefully to ensure it covers the individual's purchase requirements. Of course, Audi would offer GAP insurance, but it would likely cost more, but there would be far less room for 'not- covered' situations to apply and hold. 

The question that comes to mind really is - was there any particular reason you chose a GAP insurance that only covered your vehicle when it was over 1 year old? 

I may be confused, but I am having difficulty in respect of the blame being laid at the door of Audi Financial Services in this case. 

As I see it, your insurance cover contract was with Aviva, so any shortfall rests at their door, irrespective of who stands in between them and yourself. That should not be of your concern. Aviva would have had access to the pricing of the vehicle when new - at the time you took out a contract with them to insure the vehicle. In your case c£43k, and UNLESS there is any contra small print, they are liable for cover you for this amount, or  replacement vehicle. This cover should not be dependent on anything Audi does, since you did not take out any insurance cover with Audi. Oversimplified? Maybe, but I would certainly be on the chasing case with Aviva, and much less so with Audi FS. 

I think it's great that you are alerting other owners to beware of Audi FS, but what has happened to you, may not necessarily happen to others, who are insured with different insurers and/or with a different GAP insurer. 

If it were me, I would be taking appropriate legal advice on this - away from services Aviva may provide you with as part of the cover, and I wish you good luck in sorting it out. 

Kind regards,

Gareth.

 

[Spartan2013]

3 minutes ago, Magnet said:

Hello Paul,

I'm very sorry to hear of your plight. 

I wonder if it would be possible to clarify a couple of points here, so I can get the logic into perspective. 

As I understand it, it is 'unusual' for GAP insurance to only come into force from the time the vehicle is over 1year old. I raise this since (again as I understand) not ALL insurers automatically cover any form of like-for-like cover (or whatever they wish to call it) within the first year. Hence the need for GAP, and further the GAP cover 'makes up' the shortfall not covered by any other insurance. Again, there are various levels of GAP insurance cover and some make simply replace  the vehicle as near as like for like allows, some will not cover any price rises since the car was bought, and some cover for 'invoice value' which may not be adequate in the case of the purchase (or lease) of a discounted-price vehicle. GAP cover needs to be chosen carefully to ensure it covers the individual's purchase requirements. Of course, Audi would offer GAP insurance, but it would likely cost more, but there would be far less room for 'not- covered' situations to apply and hold. 

The question that comes to mind really is - was there any particular reason you chose a GAP insurance that only covered your vehicle when it was over 1 year old? 

I may be confused, but I am having difficulty in respect of the blame being laid at the door of Audi Financial Services in this case. 

As I see it, your insurance cover contract was with Aviva, so any shortfall rests at their door, irrespective of who stands in between them and yourself. That should not be of your concern. Aviva would have had access to the pricing of the vehicle when new - at the time you took out a contract with them to insure the vehicle. In your case c£43k, and UNLESS there is any contra small print, they are liable for cover you for this amount, or  replacement vehicle. This cover should not be dependent on anything Audi does, since you did not take out any insurance cover with Audi. Oversimplified? Maybe, but I would certainly be on the chasing case with Aviva, and much less so with Audi FS. 

I think it's great that you are alerting other owners to beware of Audi FS, but what has happened to you, may not necessarily happen to others, who are insured with different insurers and/or with a different GAP insurer. 

If it were me, I would be taking appropriate legal advice on this - away from services Aviva may provide you with as part of the cover, and I wish you good luck in sorting it out. 

Kind regards,

Gareth.

 

Hello Gareth

If you have new for old cover on you insurance it is possible to defer the GAP until the first year is up, although this was a private car I have been in the automotive industry for over twenty five years and now a consultant so I have seen this many times and during the training given to some of the dealers I have worked with we tell them about this option. This is now with the financial ombudsmen, them along with the FCA are looking into this as there are faults with both Audi FS and the insurer. 

If you were to get a quote from and insurer today it will probably tell you you have new for old but they, to my knowledge have nothing in their terms and conditions that states that this is subject to your finance company agreeing it. Around 80% of people who buy new retail cars from the VW Group (Audi, SEAT, Skoda and VW) will fund them with VWFS and will not know that this element of their insurance is invalid, I was just trying to warn people so if they are in this position then they should not defer the GAP as it will be needed in year one despite what your insure state. 

When I purchased the car and the insurance this was not an issue as Audi Finance changed their policy some seven months later, so at the time I was covered and had my car gone in March I would have had the replacement. There are different types of GAP policy, some offer a return to invoice and tend to be for used cars and others are a vehicle replacement insurance that will cover the cost of a new car including price increases and new models, this tends to be for people buying new cars.

I am sure I will get this resolved one way or another but it will take time and has already become a very stressful process, I just wanted others to know so they can check their cover before anything happens to them

Thanks
Paul

[Magnet]

Thanks Paul,

OK. 

The only thing I can add is that I've always associated the term 'new-for-old' with house contents insurance where they will do that if your old three piece suite gets damaged! You are obviously ahead of me on this with your in-trade experience, since it is not terminology which comes to mind with car insurance. 

Kind regards,

Gareth.