Interest on late payment (consumer)

Vizard

We are in dispute with a supplier of services, and have withheld part of one of their invoices.

They are saying that they are going to charge us 1.5% per month of the outstanding sum.

I suspect that there is legislation somewhere limiting the interest they can charge, even if it is eventually decided that the sum is due. Does anyone know whether it is enshrined in law and if so where?

Many thanks.

cx6

If you Google it you will find they are allowed to charge 8% plus base rate to business customers, but are not allowed to charge interest to consumers.

Which are you?

Late commercial payments: charging interest and debt recovery: Interest on late commercial payments - GOV.UK (www.gov.uk)

Sandtree

First of all... are you a consumer or is this a business to business relationship?

Statutory interest is 8% + Bank Of England Base Rate and so has been higher than 1.5% per month in the past. Statutory interest applies to litigated cases where the contract doesnt state otherwise.

What does your contract state the late payment charges are? 

To the best of my knowledge there is no explicit laws on maximum interest rates chargable however there is the general concept that no contract terms can be punitive - ie costs must be proportional and not a punishment

Would 1.5% be considered punitive? I doubt it... your average credit card company charges 20%pa and subprime credit cards much higher 

Sandtree

cx6 said:
but are not allowed to charge interest to consumers.

Better tell every bank in the UK that charge 20%+ on the late payment fees etc for credit cards 

And also tell the government who say interest on non-commercial debt is normally 8% Make a court claim for money: Claim the interest - GOV.UK (www.gov.uk)

cx6

... on outstanding consumer invoices! ie that statutory right of 8% plus base.

Thrugelmir

What do their contractual terms say? 

Vizard

It's a consumer contract.

I am not sure it matters what their T&Cs say, does it?

Aylesbury_Duck

Vizard said:

It's a consumer contract.

I am not sure it matters what their T&Cs say, does it?

If you agreed to them it might.

Vizard

You can't contract away your statutory rights.

Sandtree

Vizard said:

You can't contract away your statutory rights.

You dont have a statutory right not to pay interest on late payment

lincroft1710

Vizard said:

You can't contract away your statutory rights.

If their T&Cs mention interest on unpaid invoices and the amount is not unreasonable then that is not "contracting away your statutory rights". If there is no mention of interest they cannot arbitrarily charge it