Financial Ombudsman problems

richc1981

Hi there

Im having some problems with the Financial Ombudsman and wanted to sense check my complaint in case it’s me who is in the wrong!
Summary of complaint as follows, 

1. I bought a refurbished Herman Miller office chair on my credit card at a cost of £450.

2. Chair broke after 5 months, the plastic back snapped rendering it unusable.

3. Supplier went bust 3 months after purchase so I lodged a Section 75 claim with bank.

4. Basis of claim is breach of statutory rights under Consumer Rights Act - not of sufficient quality.

5. Fault occurred within 6 months hence under Consumer Rights Act was deemed to be there at point of purchase unless the supplier (I.e. bank) can prove it wasn’t (reverse burden of proof).

6.  I would like repair or replacement as a remedy.  Failing that full refund plus interest. 

7.  Bank refuses claim and unless I submit report which shows fault was due to a manufacturing issue.

Ombudsman investigator is siding with bank and says I have to provide report.  I have pointed out reverse burden of proof of fault occurs within 6 months but to no avail.

it is frustrating because I have read the CRA legislation and government guidance and believe I am correct in my position.  The CRA is drafted in this way to prevent suppliers fobbing off consumers when a fault occurs soon (within 6 months after buying).  

I don’t expect ombudsman investigator to be a legal expert but this is disappointing. Or am I wrong?

the_lunatic_is_in_my_head

Have you sent a letter before action to the bank citing the legislation and requesting a full refund?

Not sure what the claim for interest refers to OP? 

richc1981

I have not sent an LBA because I’m not taking legal action (yet).  I was hoping the ombudsman would rule in my favour and so could avoid court.

The claim for interest on the purchase price from the point at which the fault occurred would be part of the remedy if the bank is unwilling to repair or replace the chair.

the_lunatic_is_in_my_head

I agree with your stance on the legislation.

I don’t think the ombudsman is there to rule on the law but rather whether the bank has treated you fairly.

You’d think the two would go hand in hand but I’m sure I recall past thread(s) where it’s been shown that’s not the case with the ombudsman.

A letter before action would hopefully spur them into action without the need for small claims.

I don’t think anyone here can say how small claims will view the matter but the wording of the legislation is clear, burden of proof on the trader (+ bank in this case) rather then the consumer if you exercise the final right to reject within 6 months so make sure to make a clear statement that is your intention before the 6 month deadline. 

RefluentBeans

I’m surprised the ombudsman didn’t agree with you that the S75 was unfairly rejected. Is the company completely dissolved now, or are there administrators involved? If there’s administrators involved and you haven’t contacted them, that may be the banks argument for declining the claim. Also how was the payment made - straight onto a card or via a service like Klarna etc? That also affects the S75 claim (which I’m sure you know as you seem fairly clued up on the laws, but wanted to add for clarity). 

As above, you can take them to court to claim, but I don’t know if they will settle beforehand or not. They may feel that their argument (whatever it’s based on) is bolstered by the ombudsman. So may wish to roll the dice and see what happens. 

richc1981

The banks reason for denying is because, in their words, they require me to supply an inspection report which confirms the fault occurred due to a manufacturing defect rather than an accident or misuse.  The ombudsman thinks this is fair and reasonable (!).

I have made the point to bank and ombudsman that reverse burden of proof applies because fault occurred in first 6 months, and it is automatically assumed the fault was there at the point of purchase.  In reality, there was probably some fatigue or minor cracking to the plastic back which caused the failure but was not immediately obvious.

The bank has been quite successful in muddying the waters with this argument and it is frustrating that despite my clear explanations the ombudsman investigator is incorrectly interpreting the CRA.

I am now concerned that if the ombudsman ruling goes against me it may affect chance of success in small claims court.

I have rejected the investigators findings which means a “proper” ombudsman will review the case but this will take several more months and to be honest I have lost faith in the service.

I don’t want to pay for my own inspection because it’s not my responsibility under CRA, it’s an extra £150 I would have to try and claw back from the bank.  I just want my statutory rights to be respected.

the_lunatic_is_in_my_head

richc1981 said:

The banks reason for denying is because, in their words, they require me to supply an inspection report which confirms the fault occurred due to a manufacturing defect rather than an accident or misuse.  The ombudsman thinks this is fair and reasonable (!).

I have made the point to bank and ombudsman that reverse burden of proof applies because fault occurred in first 6 months, and it is automatically assumed the fault was there at the point of purchase.  In reality, there was probably some fatigue or minor cracking to the plastic back which caused the failure but was not immediately obvious.

The bank has been quite successful in muddying the waters with this argument and it is frustrating that despite my clear explanations the ombudsman investigator is incorrectly interpreting the CRA.

I am now concerned that if the ombudsman ruling goes against me it may affect chance of success in small claims court.

I have rejected the investigators findings which means a “proper” ombudsman will review the case but this will take several more months and to be honest I have lost faith in the service.

I don’t want to pay for my own inspection because it’s not my responsibility under CRA, it’s an extra £150 I would have to try and claw back from the bank.  I just want my statutory rights to be respected.

Can only agree with everything again really  

Just to correct my above post, regarding burden of proof it's a simple goods which do not conform to the contract at any time within the period of six months beginning with the day on which the goods were delivered to the consumer must be taken not to have conformed to it on that day.

The 6 months and final right to reject applies to deductions for use:

https://www.legislation.gov.uk/ukpga/2015/15/section/24

(8)If the consumer exercises the final right to reject, any refund to the consumer may be reduced by a deduction for use, to take account of the use the consumer has had of the goods in the period since they were delivered, but this is subject to subsections (9) and (10).

(9)No deduction may be made to take account of use in any period when the consumer had the goods only because the trader failed to collect them at an agreed time.

(10)No deduction may be made if the final right to reject is exercised in the first 6 months (see subsection (11)), unless—

(a)the goods consist of a motor vehicle, or

(b)the goods are of a description specified by order made by the Secretary of State by statutory instrument.

So you ideally want to make it clear to the bank you are exercising the final right to reject as they are not replacing/repairing within a reasonable time/without significant inconvenience before 6 months so the refund doesn't have a deduction.

Personally I'd recommend sending the letter before action in the hope it will nudge them to refund you, £450 isn't much to a bank vs the costs of them having to appear at your local court for a hearing. 

RefluentBeans

To play devils advocate here - could the bank be arguing that the chair is second hand and so the argument of ‘not sufficient quality’ is rendered moot? 

Again - I don’t agree with that argument, but if that’s the defence they’re going down then what is the arguments that can be used against it - asking generally here.

I’ve seen an interesting article based on ex display models - but this also confirms that there are CRA obligations still, but that customers should have tempered expectation based on the % off. https://www.disputeresolutionombudsman.org/articles/sales-of-ex-display-items-3

the_lunatic_is_in_my_head

The only reference to second hand is where second hand goods are sold at auction where individuals can attend the sale in person (in such an instance the purchaser isn't classed as a consumer). 

Satisfactory quality would apply to second hand goods and the main considerations are the description and price, refurbished should mean pretty much as good as new and £450 is a lot for a chair, I think the standard that a reasonable person would consider satisfactory would be for that a £450 chair should last a lot longer than 6 months. 

richc1981

Thank you for the considered responses it is good to know I am on the right track.

The bank did make an attempt to argue CRA didn’t apply but as suggested above I pointed out the CRA does not differentiate between new and second hand goods (when bought from a shop) in that must still be of Satisfactory quality, and it’s not been mentioned since. 

I am beyond 6 months now, but I made it clear in my original complaint (submitted at 5 months) that if they were unable to repair or replace I was rejecting the item.  I thought the clock stopped at the point I made the complaint so I am still able to exercise my final right to reject if required.  

I have gone back to ombudsman today with a link and excerpt of the Explanatory Notes to the CRA which are absolutely clear on where burden of proof sits.  I have also advised that I do not believe a solution can be considered fair and reasonable (the ombudsman’s priority apparently) if it does not reflect a consumers statutory rights.  

Will post back as it develops.  

Alderbank

richc1981 said:

The banks reason for denying is because, in their words, they require me to supply an inspection report which confirms the fault occurred due to a manufacturing defect rather than an accident or misuse.  The ombudsman thinks this is fair and reasonable (!).

I have made the point to bank and ombudsman that reverse burden of proof applies because fault occurred in first 6 months, and it is automatically assumed the fault was there at the point of purchase.  In reality, there was probably some fatigue or minor cracking to the plastic back which caused the failure but was not immediately obvious.

Neither the bank nor the Ombudsman have seen this chair and wouldn't know what to look for if they did.

The OP will have stated his opinion that 'There was probably some fatigue or minor cracking to the plastic back...'

The trader will have countered with something like 'This chair was subjected to, and passed, the tests described in BS ISO 7173:2023 Furniture, Chairs, Determination of strength and durability.'

It is crucial to this claim that it is established as far as reasonably practicable whether the failure was due to an intrinsic fault or abuse by the buyer, so I am absolutely with the requirement for a qualified and independent expert who knows about chairs to supply an inspection report. 
My disagreement with the ombudsman is that I think the bank should arrange this and pay for it.

If the report states either that the chair was inherently faulty or it was damaged by the user then the proof is established and 'burden of proof' is academic. Only if the author of the report is unable to establish how the chair came to be damaged does the burden of proof assumption become relevant and within the first six months this must be decided in the consumer's favour.