Getting fee back from cancelling PCH?

cjp3

Hi all,

Entered into a PCH last week via a credit broker. The day after I signed and paid a £500 securing the vehicle fee, a competitor offers the same vehicle cheaper. 

I then want to exercise 14 day cooling off period - credit broker says this is fine for the finance but they’ll retain the £500 fee as in their T&Cs and because I signed acknowledging this fee. 

Everything was done online/phone/email so I thought I had 14 day cooling off period for everything, not just finance and therefore it would cover the £500 fee despite their T&Cs. 

34.—(1) The trader must reimburse all payments, other than payments for delivery, received from the consumer, subject to paragraph (10).

All payments except those under paragraph (9) and (10) which provide:

(9) If (in the case of a sales contract) the value of the goods is diminished by any amount as a result of handling of the goods by the consumer beyond what is necessary to establish the nature, characteristics and functioning of the goods, the trader may recover that amount from the consumer, up to the contract price.

(10) An amount that may be recovered under paragraph (9)—

(a)may be deducted from the amount to be reimbursed under paragraph (1);

(b)otherwise, must be paid by the consumer to the trader.

(8) The trader must not impose any fee on the consumer in respect of the reimbursement.

CAB are seemingly falling on my side whereas brief discussion with financial ombudsman service points to credit broker being in the right. 

Any advice? 

neilmcl

There's two different cancellations being discussed here. Firstly your 14 day cooling off period for the finance side of things is nothing to to do with distance selling, it's the standard cooling off period allowed under the terms of the Consumer Credit Act.

Your 14 day right to cancel under distance selling law is different. The way I see it is essentially you have a service contract with the credit broker and as such you can agree, via their T&Cs, that the service begins immediately and therefore you cannot cancel under normal CCR rules.

cjp3

neilmcl said:

There's two different cancellations being discussed here. Firstly your 14 day cooling off period for the finance side of things is nothing to to do with distance selling, it's the standard cooling off period allowed under the terms of the Consumer Credit Act.

Your 14 day right to cancel under distance selling law is different. The way I see it is essentially you have a service contract with the credit broker and as such you can agree, via their T&Cs, that the service begins immediately and therefore you cannot cancel under normal CCR rules.

There doesn’t appear to be anything in their T&Cs which refers to cancelling the cooling off period, rather their fee section states:

1. All orders are subject to a £500 payment that is used to secure the vehicle and is non-refundable in the event of a cancellation. No deposit, or a lower deposit may be accepted at management discretion but a £500 cancellation charge will still be applied in the event of a cancellation.

You may exercise your rights afforded to you under the Credit Consumer Act 1974, the Consumer Contracts Regulations 2013 or the Financial Services Regulations 2004 to cancel the finance agreement, subject to this being a regulated agreement. The £500 paid to secure the vehicle will be retained.

neilmcl

cjp3 said:

neilmcl said:

There's two different cancellations being discussed here. Firstly your 14 day cooling off period for the finance side of things is nothing to to do with distance selling, it's the standard cooling off period allowed under the terms of the Consumer Credit Act.

Your 14 day right to cancel under distance selling law is different. The way I see it is essentially you have a service contract with the credit broker and as such you can agree, via their T&Cs, that the service begins immediately and therefore you cannot cancel under normal CCR rules.

There doesn’t appear to be anything in their T&Cs which refers to cancelling the cooling off period, rather their fee section states:

1. All orders are subject to a £500 payment that is used to secure the vehicle and is non-refundable in the event of a cancellation. No deposit, or a lower deposit may be accepted at management discretion but a £500 cancellation charge will still be applied in the event of a cancellation.

You may exercise your rights afforded to you under the Credit Consumer Act 1974, the Consumer Contracts Regulations 2013 or the Financial Services Regulations 2004 to cancel the finance agreement, subject to this being a regulated agreement. The £500 paid to secure the vehicle will be retained.

In that case it does look like it's a deposit, rather than a service fee as such and therefore you are entitled to have that refunded in full as part of cancelling under the CCRs. If they don't like it that's tough, it's part and parcel of running an online business.

You should inform them that you are cancelling both the finance under the terms of the Consumer Credit Act 1974 (shame they can't even be bothered to name it correctly), and you're also cancelling the supply of the vehicle under the terms of the Consumer Contracts Regulations 2013 for a full refund of all monies, including deposits, as is your legal right.

Will you name this broker?

cjp3

neilmcl said:

cjp3 said:

neilmcl said:

There's two different cancellations being discussed here. Firstly your 14 day cooling off period for the finance side of things is nothing to to do with distance selling, it's the standard cooling off period allowed under the terms of the Consumer Credit Act.

Your 14 day right to cancel under distance selling law is different. The way I see it is essentially you have a service contract with the credit broker and as such you can agree, via their T&Cs, that the service begins immediately and therefore you cannot cancel under normal CCR rules.

There doesn’t appear to be anything in their T&Cs which refers to cancelling the cooling off period, rather their fee section states:

1. All orders are subject to a £500 payment that is used to secure the vehicle and is non-refundable in the event of a cancellation. No deposit, or a lower deposit may be accepted at management discretion but a £500 cancellation charge will still be applied in the event of a cancellation.

You may exercise your rights afforded to you under the Credit Consumer Act 1974, the Consumer Contracts Regulations 2013 or the Financial Services Regulations 2004 to cancel the finance agreement, subject to this being a regulated agreement. The £500 paid to secure the vehicle will be retained.

In that case it does look like it's a deposit, rather than a service fee as such and therefore you are entitled to have that refunded in full as part of cancelling under the CCRs. If they don't like it that's tough, it's part and parcel of running an online business.

You should inform them that you are cancelling both the finance under the terms of the Consumer Credit Act 1974 (shame they can't even be bothered to name it correctly), and you're also cancelling the supply of the vehicle under the terms of the Consumer Contracts Regulations 2013 for a full refund of all monies, including deposits, as is your legal right.

Will you name this broker?

They’ve replied referencing The Financial Services (Distance Marketing) Regulations 2004 and stated:

“The rules that are applicable are dependent on you being advised in advance of placing an order, that a fee will be applied if a cancellation is received. This was the case as can be seen from the signed order form.

I attach two documents that make reference to a fee, that can be researched by you by using the case law and section references as covered by the FCA and the contract rules relating to distance selling.”

After a brief chat with the FOS it seems they think the credit broker is correct although CAB still think I am?

neilmcl

They may well have a point then, as I originally thought. You may have to consult a solicitor on this one to which is the correct legislation that covers this.

David713

cjp3 said:

neilmcl said:

cjp3 said:

neilmcl said:

There's two different cancellations being discussed here. Firstly your 14 day cooling off period for the finance side of things is nothing to to do with distance selling, it's the standard cooling off period allowed under the terms of the Consumer Credit Act.

Your 14 day right to cancel under distance selling law is different. The way I see it is essentially you have a service contract with the credit broker and as such you can agree, via their T&Cs, that the service begins immediately and therefore you cannot cancel under normal CCR rules.

There doesn’t appear to be anything in their T&Cs which refers to cancelling the cooling off period, rather their fee section states:

1. All orders are subject to a £500 payment that is used to secure the vehicle and is non-refundable in the event of a cancellation. No deposit, or a lower deposit may be accepted at management discretion but a £500 cancellation charge will still be applied in the event of a cancellation.

You may exercise your rights afforded to you under the Credit Consumer Act 1974, the Consumer Contracts Regulations 2013 or the Financial Services Regulations 2004 to cancel the finance agreement, subject to this being a regulated agreement. The £500 paid to secure the vehicle will be retained.

In that case it does look like it's a deposit, rather than a service fee as such and therefore you are entitled to have that refunded in full as part of cancelling under the CCRs. If they don't like it that's tough, it's part and parcel of running an online business.

You should inform them that you are cancelling both the finance under the terms of the Consumer Credit Act 1974 (shame they can't even be bothered to name it correctly), and you're also cancelling the supply of the vehicle under the terms of the Consumer Contracts Regulations 2013 for a full refund of all monies, including deposits, as is your legal right.

Will you name this broker?

They’ve replied referencing The Financial Services (Distance Marketing) Regulations 2004 and stated:

“The rules that are applicable are dependent on you being advised in advance of placing an order, that a fee will be applied if a cancellation is received. This was the case as can be seen from the signed order form.

I attach two documents that make reference to a fee, that can be researched by you by using the case law and section references as covered by the FCA and the contract rules relating to distance selling.”

After a brief chat with the FOS it seems they think the credit broker is correct although CAB still think I am?

Yes, they can charge a fee (provided that they had advised you of this beforehand) but this fee is only to cover the work carried out by the company:
The Financial Services (Distance Marketing) Regulations 2004 (legislation.gov.uk)

(7) The charge shall not exceed an amount which is in proportion to the extent of the service provided to the consumer prior to the time at which the cancellation event occurred (including the service of arranging to provide the financial service) in comparison with the full coverage of the contract, and in any event shall not be such that it could be construed as a penalty.

and IMO, having a fixed fee of £500 certainly sounds like a penalty as it seems to apply whether you cancel 1 minute or 13 days after signing the contract.
I would certainly question them about it and depending on their reply, contact the Financial Ombudsman for their advice.