Called to court after Sec75 approved

powerful_Rogue

But did the OP pay using a credit card? Especially as the terminology around s75 and chargeback has been interchanged.

born_again

Undervalued said:

Manxman_in_exile said:

DullGreyGuy said:

Manxman_in_exile said:
To my mind that makes it even more important that banks should be acting transparently in their customer's best interests and not their own.

There are pro's and con's to both and particularly because you can do a S75 after an unsuccessful chargeback but because of the chargeback timelimit the opposite is rarely true is probably the deciding factor in my mind at least why its in the customer's interest to do a Chargeback before a S75 claim.

If the bank can honestly and sincerely say that it will be in the customer's (and not its own) best interests for the bank to pursue a chargeback first, and that if that chargeback fails then the bank will still do a s75 claim at no detriment to the customer - then fair enough.

But that's of no help to a customer who has had a successful chargeback and then finds themself being sued by the trader.  What the position there should be is that the bank tells their customer:  

"OK.  We think you probably have a valid s75 claim, but for reasons we really don't want to explain to you we would prefer to try a chargeback first.  If that chargeback fails we will still process a s75 claim for you.  And if that chargeback is successful, but the trader subsequently sues you in court, we will provide your defence to that claim at no cost or inconvenience to yourself because we think your s75 claim would be valid".

That's if it genuinely is in the customer's best interests to initiate a chargeback first.

If it isn't genuinely in the customer's best interests, the bank should do a s75 claim if applicable

Surely the bank must do as the customer instructs, so long as it is within the law and within the terms and conditions of the account?

Advising the customer which is the best choice would surely amount giving financial and / or legal advice - both regulated activities?

Talk about stoking a hornets nest 🤣 No offense folks 👍
Interesting to see this.
Yet a retailer can choose what they do.

Most customers have no idea, all they want is their money back & come for advice on what they can do to get it back. A few come citing S75, but have no idea why (they have just heard someone mention it as they got their money back) many want it on debit cards etc. When you run through the options. You have to advise them of these. Chargeback is the one most will go for. Speed of refund (most overnight) is the big pull. 

Is a chargeback in customers interests. Yes, as it is quicker, simpler & requires a lot less information. If it fails & purchase falls under S75 that is a fallback option.

We have to advise customers about chargeback & the retailers rights, & the possible actions they can take. Such as court. As well as if could be a S75 that will automatically be looked at if chargeback fails.
Do not know if other banks do, but it is common sense & was driven by staff requests, rather than customer complaints.

HillStreetBlues

If the OP loses/ doesn't defend, then the OP can use the S75

eskbanker

HillStreetBlues said:

If the OP loses/ doesn't defend, then the OP can use the S75

Surely failure to defend could compromise the s75 claim, if the bank is aware that OP had failed to take reasonable steps to mitigate the loss?

HillStreetBlues

eskbanker said:

Surely failure to defend could compromise the s75 claim, if the bank is aware that OP had failed to take reasonable steps to mitigate the loss?

They are decided differently. Take it to the Ombudsman and they base their decision on what is "fair" rather than the letter of the law.

I would agree that if losing in a Court it won't help,  but in that case was it going to win the S75
Also if the OP did lose in court then a S75 claim might fail  for the cost of the sofa, but get the extra outlay of court costs refunded. (So put into a position as if bank processed a S75 instead of a Chargeback)

eskbanker

HillStreetBlues said:

eskbanker said:

Surely failure to defend could compromise the s75 claim, if the bank is aware that OP had failed to take reasonable steps to mitigate the loss?

They are decided differently. Take it to the Ombudsman and they base their decision on what is "fair" rather than the letter of the law.

I would agree that if losing in a Court it won't help,  but in that case was it going to win the S75
Also if the OP did lose in court then a S75 claim might fail  for the cost of the sofa, but get the extra outlay of court costs refunded. (So put into a position as if bank processed a S75 instead of a Chargeback)

Decided differently, yes, but if the bank was aware that OP had effectively chosen to pay the merchant again, that conduct is unlikely to help a s75 claim!  As you say, FOS sets a lower threshold but again if the bank's position was presented as being more reasonable than OP's then that could scupper OP's chances.

On the subject of FOS, is anyone on here aware of any of their decisions that relate to rectifying adverse consequences of banks choosing to pursue chargeback instead of s75?

Manxman_in_exile

eskbanker said:

But are banks actually required to act in the customer's best interests in scenarios where the nature of the relationship is that the interests of bank and customer are diametrically opposed, such as s75, where the customer is holding the bank legally liable in an essentially adversarial stance, unlike chargeback where bank and customer are effectively acting in unison against a third party?

Terms like 'duty of care' and 'treating customers fairly' require nuanced interpretation, so it's not clear to me that banks are actually required to prioritise customer interests over their own in these specific circumstances, but happy to be persuaded otherwise via directly relevant citations from FCA, FOS, etc?

I'd be happy for any confirmation of what duties a bank legally owes their customers, but I would have thought there would at least be a presumption that the bank owed them a fiduciary duty.  The customer has after all entrusted the bank to look after their money.

If a bank wants to avoid an actual, or even apparent, conflict of interest then it shouldn't be looking at dealing with disputes on a s75 basis when it is they who are the creditor.  But if they do decide to entertain s75 claims, then they shouldn't divert valid s75 claims down the chargeback route - unless it's clearly to that customer's benfit to do so.  However, if it then goes wrong and turns out that it wasn't in that customer's interests, the bank should sort out the ensuing mess* that they,ve left their customer in.


*Being sued by a trader when the customer had a good s75 claim all along

Manxman_in_exile

HillStreetBlues said:

If the OP loses/ doesn't defend, then the OP can use the S75

I don't think it would be reasonable to expect any ordinary person in the street not to be rather worried about being sued - with the possibility of losing and getting a judgment against them - because they were going to rely on s75 to extricate themselves after the fact.  We've seen at least one OP give in and pay up in this sort of situation before.

The bank shouldn't put its customers in that position in the first place, but if they do and the customer has a valid s75 claim, then it should be down to the bank to sort the ensuing mess out.

Manxman_in_exile

born_again said:

Undervalued said:

Manxman_in_exile said:

DullGreyGuy said:

Manxman_in_exile said:
To my mind that makes it even more important that banks should be acting transparently in their customer's best interests and not their own.

There are pro's and con's to both and particularly because you can do a S75 after an unsuccessful chargeback but because of the chargeback timelimit the opposite is rarely true is probably the deciding factor in my mind at least why its in the customer's interest to do a Chargeback before a S75 claim.

If the bank can honestly and sincerely say that it will be in the customer's (and not its own) best interests for the bank to pursue a chargeback first, and that if that chargeback fails then the bank will still do a s75 claim at no detriment to the customer - then fair enough.

But that's of no help to a customer who has had a successful chargeback and then finds themself being sued by the trader.  What the position there should be is that the bank tells their customer:  

"OK.  We think you probably have a valid s75 claim, but for reasons we really don't want to explain to you we would prefer to try a chargeback first.  If that chargeback fails we will still process a s75 claim for you.  And if that chargeback is successful, but the trader subsequently sues you in court, we will provide your defence to that claim at no cost or inconvenience to yourself because we think your s75 claim would be valid".

That's if it genuinely is in the customer's best interests to initiate a chargeback first.

If it isn't genuinely in the customer's best interests, the bank should do a s75 claim if applicable

Surely the bank must do as the customer instructs, so long as it is within the law and within the terms and conditions of the account?

Advising the customer which is the best choice would surely amount giving financial and / or legal advice - both regulated activities?

... Yet a retailer can choose what they do...

Yes they can - but that's because the Consumer Rights Act specifically gives them that option.  The respective positions of the retailer and the bank are not the same.

born_again said:

Undervalued said:

Manxman_in_exile said:

DullGreyGuy said:

Manxman_in_exile said:
To my mind that makes it even more important that banks should be acting transparently in their customer's best interests and not their own.

There are pro's and con's to both and particularly because you can do a S75 after an unsuccessful chargeback but because of the chargeback timelimit the opposite is rarely true is probably the deciding factor in my mind at least why its in the customer's interest to do a Chargeback before a S75 claim.

If the bank can honestly and sincerely say that it will be in the customer's (and not its own) best interests for the bank to pursue a chargeback first, and that if that chargeback fails then the bank will still do a s75 claim at no detriment to the customer - then fair enough.

But that's of no help to a customer who has had a successful chargeback and then finds themself being sued by the trader.  What the position there should be is that the bank tells their customer:  

"OK.  We think you probably have a valid s75 claim, but for reasons we really don't want to explain to you we would prefer to try a chargeback first.  If that chargeback fails we will still process a s75 claim for you.  And if that chargeback is successful, but the trader subsequently sues you in court, we will provide your defence to that claim at no cost or inconvenience to yourself because we think your s75 claim would be valid".

That's if it genuinely is in the customer's best interests to initiate a chargeback first.

If it isn't genuinely in the customer's best interests, the bank should do a s75 claim if applicable

Surely the bank must do as the customer instructs, so long as it is within the law and within the terms and conditions of the account?

Advising the customer which is the best choice would surely amount giving financial and / or legal advice - both regulated activities?

... Most customers have no idea, all they want is their money back & come for advice on what they can do to get it back. A few come citing S75, but have no idea why (they have just heard someone mention it as they got their money back) many want it on debit cards etc. When you run through the options. You have to advise them of these. Chargeback is the one most will go for. Speed of refund (most overnight) is the big pull...

No offence from me either, but that sort of sounds like "Our customers know so little and are so greedy that they don't know what their rights are and they'll swallow anything we tell them".  It also sounds a bit like "And we'll exploit that ignorance".

When you explain the pros of a chargeback, do you also include the con that legally the retailer could sue them afterwards, and you won't be there to offer your customer any help?  Do they still go for the quick refund once that's been explained to them?

born_again said:

Undervalued said:

Manxman_in_exile said:

DullGreyGuy said:

Manxman_in_exile said:
To my mind that makes it even more important that banks should be acting transparently in their customer's best interests and not their own.

There are pro's and con's to both and particularly because you can do a S75 after an unsuccessful chargeback but because of the chargeback timelimit the opposite is rarely true is probably the deciding factor in my mind at least why its in the customer's interest to do a Chargeback before a S75 claim.

If the bank can honestly and sincerely say that it will be in the customer's (and not its own) best interests for the bank to pursue a chargeback first, and that if that chargeback fails then the bank will still do a s75 claim at no detriment to the customer - then fair enough.

But that's of no help to a customer who has had a successful chargeback and then finds themself being sued by the trader.  What the position there should be is that the bank tells their customer:  

"OK.  We think you probably have a valid s75 claim, but for reasons we really don't want to explain to you we would prefer to try a chargeback first.  If that chargeback fails we will still process a s75 claim for you.  And if that chargeback is successful, but the trader subsequently sues you in court, we will provide your defence to that claim at no cost or inconvenience to yourself because we think your s75 claim would be valid".

That's if it genuinely is in the customer's best interests to initiate a chargeback first.

If it isn't genuinely in the customer's best interests, the bank should do a s75 claim if applicable

Surely the bank must do as the customer instructs, so long as it is within the law and within the terms and conditions of the account?

Advising the customer which is the best choice would surely amount giving financial and / or legal advice - both regulated activities?

Is a chargeback in customers interests. Yes, as it is quicker, simpler & requires a lot less information. If it fails & purchase falls under S75 that is a fallback option.

So if the bank thinks that a chargeback is in the customer's better interests (as opposed to the bank's) rather than a good s75 claim, what should the bank do if their customer subsequently gets sued by a disgruntled trader?  I think the bank - if they decided not to process a valid s75 claim because not doing so was in their customer's best interest - should provide their customer with a defence.

What do you think?

(Apologies - I'm not getting at you personally here, but as you know from several previous threads I don't like the way banks seem to prioritise chargebacks over s75 claims.  Seriously, no personal ill-will intended)

HillStreetBlues

Manxman_in_exile said:

I don't think it would be reasonable to expect any ordinary person in the street not to be rather worried about being sued - with the possibility of losing and getting a judgment against them - because they were going to rely on s75 to extricate themselves after the fact.  We've seen at least one OP give in and pay up in this sort of situation before.

The bank shouldn't put its customers in that position in the first place, but if they do and the customer has a valid s75 claim, then it should be down to the bank to sort the ensuing mess out.

If taken to the Financial Ombudsman they think it's good practice for a bank to try a Chargeback before S75 if there is chance of success.

https://www.financial-ombudsman.org.uk/decision/DRN-3028396.pdf

https://www.financial-ombudsman.org.uk/decision/DRN-3123352.pdf

 

As you can see different Ombudsman  but nearly the same wording of putting a Chargeback before a S75