Section 75 protection question 18 August 2022 at 8:14AM in Credit cards 16 replies 181 views

SteMSE

Hi, new here.
I am about to invest in a PV solar array with battery storage and thinking about a way to pay that gives me the best protections.
My question is quite specific:-
If my dad paid the deposit on his Credit Card and I paid the balance (and him back), would Section 75 apply if there were any issues?

I do not have a credit card - it was canceled due to non-use, and I have no further need of one.

Many thanks.

[Deleted User]

Not if your dad used his card, no. You'd need to get your own.

SteMSE

Thanks. Could you help me out by explaining why it would not be covered? I could not find any specific inclusion or exclusion within S.75.
I rang the Financial Services Ombudsman (0800 0234567) to ask the same question, and their advice was it would be covered under S.75.
So, a little puzzled now.

Ebe_Scrooge

SteMSE said:

Could you help me out by explaining why it would not be covered?

To be covered by S75, there has to be a direct contract between you and the supplier.  If your dad pays on his card, there's no direct link between the supplier and the customer.

You can run into similar problems for instance when buying flights through a third-party agent.  Buy directly from the airline and you're fine, but if you go via a broker or intermediary then you can sometimes encounter S75 issues.

SteMSE

Could this be solved by having a joint customer contract? By the rationale above, if my wife paid on her CC (hypothetically, as she doesn't have one either) then the same issue you describe could be encountered?

born_again

Not your scenario but shows the problems.

Second cardholders and section 75

The position is a bit more complicated if the purchase is made by a second cardholder, such as a husband, wife or partner.

Any claim must be made by the main cardholder, as they’re the one who signed the credit agreement, and the credit card company might reject a claim if it wasn’t a joint purchase such as a family holiday or something for the main cardholder (such as a birthday present).

It’s a bit of a grey area so it’s worth checking with the card issuer when you start your claim.

In effect the card holder has to benefit from the purchase. Which clearly as your father paid for it & your are paying him back, he would not be gaining any benefit from the purchase. As well as not living at the address. Which would be very clear from invoices etc.

In effect your father could be classed a 3rd party payment processor. 

Best bet would be for your father to ring his card company & ask. But he needs to make it very clear exactly what the plan is. 

Also S75 is not a cover all insurance policy. 

SteMSE

Thanks for responses. It was just an enquiry and I don't expect any issues, but just wondered if I had any protections under S.75. Life would be much simpler if my CC hadn't expired - but there you go.

DullGreyGuy

SteMSE said:

Thanks. Could you help me out by explaining why it would not be covered? I could not find any specific inclusion or exclusion within S.75.
I rang the Financial Services Ombudsman (0800 0234567) to ask the same question, and their advice was it would be covered under S.75.
So, a little puzzled now.

1) The FOS telephone line aim to give good advice but they are basic trained telephone staff that have to try and answer questions over a vast range of topics and dont always get it right

2) The FOS is not bound to follow the exact letter of the law or what a court would do. There are a number of decisions made by the FOS on S75 where they have explicitly acknowledged that a court may have come to a different conclusion.

The law www.legislation.gov.uk/ukpga/1974/39/section/75 is very clear in the very opening clause of the section... If the debtor under a debtor-creditor-supplier agreement... your father is the debtor, his bank is the creditor but he has no relationship with the supplier because you are the buyer and so a forth party to the arrangement which breaks the terms of S75

It is very easy resolution though, if your father is the buyer of the solar panels on the invoice and contract then the D-C-S relationship exists and S75 applies. The fact he is getting them installed on another property or that you intend to refund him is irrelevant to S75. It may be relevant to any grants etc however.

Ebe_Scrooge

SteMSE said:

Thanks for responses. It was just an enquiry and I don't expect any issues, but just wondered if I had any protections under S.75. Life would be much simpler if my CC hadn't expired - but there you go.

Can you not apply for another card?  If you have a thin credit file you might only be accepted for one of the credit-builder cards, and be offered a high APR and a low limit.  But neither of these matter - you only need to put 1 penny on the card in order to qualify for S75, the balance you can pay by whatever means you choose.  And so long as you pay the credit card in full when the statement arrives then you won't pay any interest, so the APR is irrelevant.

One thought occurs to me though - will your installation cost more than £30,000?  Because S75 will only cover you for items costing between £100 and £30,000.  No idea what a solar panel installations costs, but I can imagine it might be quite pricey if you're having a storage battery as well.

SteMSE

My credit rating is excellent and I would (probably) have no problem getting a card - it just takes time, and I want to avoid delays.
The overall cost would be ~11k, which I will pay for outright on completion. There no grants currently for PV installation.
The FOS guy asked several colleagues who all agreed that it would be covered..... 

It won't affect my decision to have them installed, it's just an added layer of comfort that I may have options if anything went wrong that would normally be covered under S.75.

[Deleted User]

SteMSE said:

My credit rating is excellent and I would (probably) have no problem getting a card - it just takes time, and I want to avoid delays.
The overall cost would be ~11k, which I will pay for outright on completion. There no grants currently for PV installation.
The FOS guy asked several colleagues who all agreed that it would be covered..... 

It won't affect my decision to have them installed, it's just an added layer of comfort that I may have options if anything went wrong that would normally be covered under S.75.

Your credit rating is irrelevant, no lender ever sees that, excellent or not, lenders always credit check you based on their own criteria

Remember you only need to spend 1p on the card to get S75 cover so if you got a basic card even with a £200 limit, if the solar company accept card payments, put a deposit down of say £200 (you don't need to spend that much but firm is more likely to accept than you paying 1p)