Section 75 - advice needed for house build

screech_78

Probably a good example of why Section 75 needs an overhaul when consumers are deliberately trying to find loopholes to make it work. 

eskbanker

screech_78 said:

Probably a good example of why Section 75 needs an overhaul when consumers are deliberately trying to find loopholes to make it work. 

As usually observed when s75 reform is suggested, it's unlikely that doing so would be to consumers' advantage, given that it's applicable to way more than was originally envisaged!

Apart from anything else, the minimum item value of £100 when the legislation was enacted in 1974 would be equivalent to nearer £1000 today, but the main factor is the exponential growth in credit card use over those fifty years, as opposed to the one-off financing agreements that the legislation was intended to protect....

screech_78

eskbanker said:

screech_78 said:

Probably a good example of why Section 75 needs an overhaul when consumers are deliberately trying to find loopholes to make it work. 

As usually observed when s75 reform is suggested, it's unlikely that doing so would be to consumers' advantage, given that it's applicable to way more than was originally envisaged!

Apart from anything else, the minimum item value of £100 when the legislation was enacted in 1974 would be equivalent to nearer £1000 today, but the main factor is the exponential growth in credit card use over those fifty years, as opposed to the one-off financing agreements that the legislation was intended to protect....

I completely agree with you. I absolutely do think it needs a reform. 

Money_Grabber13579

Setting aside whether splitting the contracts achieves the desired s75 objectives, are there other risks which arise from doing so? 

For example (I’ve made this up to illustrate the point I’m trying to bring out, so might be a bit far fetched - but there might be other scenarios where something like this could arise), the windows arrive and there is a problem with one of the windows. The problem with that one window can’t be resolved and so the contract is breached.  It’s agreed that the windows can be returned for a full refund. However, the windows are split across two contracts, and one of the contracts has been completed successfully. Are you stuck with half the windows, with no guarantee you could get others to match?

RefluentBeans

Money_Grabber13579 said:

Setting aside whether splitting the contracts achieves the desired s75 objectives, are there other risks which arise from doing so? 

For example (I’ve made this up to illustrate the point I’m trying to bring out, so might be a bit far fetched - but there might be other scenarios where something like this could arise), the windows arrive and there is a problem with one of the windows. The problem with that one window can’t be resolved and so the contract is breached.  It’s agreed that the windows can be returned for a full refund. However, the windows are split across two contracts, and one of the contracts has been completed successfully. Are you stuck with half the windows, with no guarantee you could get others to match?

Assuming that the two windows contracts are independent, then yes; assuming that there’s bi clause to say that both contracts are codependent. A breach in one doesn’t mean a breach in the other. It’s the issue with making overly complicated situations to skirt rules. It would definitely make it harder to reject the whole order (if that’s what the OP wanted to do).

the_lunatic_is_in_my_head

born_again said: 

That has to be linked finance, which would need to be provided by the company. Nothing to do with a CC in anyway.

My mistake, thanks for the clarification @born_again  

eskbanker said:

screech_78 said:

Probably a good example of why Section 75 needs an overhaul when consumers are deliberately trying to find loopholes to make it work. 

Apart from anything else, the minimum item value of £100 when the legislation was enacted in 1974 would be equivalent to nearer £1000 today

The original amount in 1974 was £30 with a max of £10,000. Looks like it was increased in 1983.

According to the Bank of England the increase in 83 was a tad over inflation. 

In today's money, again according to the Bank of England, that original £30 would be £272 with the upper £10k being around £90k. 

eskbanker said:

but the main factor is the exponential growth in credit card use over those fifty years

I do agree the use of credit is no doubt much higher than it was but that also equates to more customers paying what are relatively high interest rates earning the banks good money. 

At the lower end of the scale with goods for a few £100 customer service should be more accessible these days than in the 70s (email, chat, social media), banks will push for a chargeback first and with goods being so cheap these days I'd image a lot of people simply buy another which wasn't the attitude back then either.

Money_Grabber13579 said:

 Are you stuck with half the windows, with no guarantee you could get others to match?

This is correct as far as a remedy under the CRA goes, not sure how it would play out with regards to damages. 

Grumpy_chap

the_lunatic_is_in_my_head said:

eskbanker said:

but the main factor is the exponential growth in credit card use over those fifty years

I do agree the use of credit is no doubt much higher than it was but that also equates to more customers paying what are relatively high interest rates earning the banks good money. 

Except, in the case of CC, the whole issue of S75 applying is subject to assessment as to whether it is appropriate.
In the original scenario, the credit provider had a close relationship with the trader.
The CC has no such relationship with the trader but becomes liable for the full value of a contract even if the amount paid on CC is a nominal sum.  

Consider the case covered by this thread, the OP intends to procure £45k worth of windows split across two orders with a part of each order paid on separate credit cards.  I assume the OP is not paying the full £45k on CC, so it might be two sums, say £100 each, on the CC.  That would put the CC companies "on the hook" for potentially £45k liability against finance advanced as low as £200 and the actual earned revenue to the CC only a few £.  
Then, there was the suggestion that the CC could become liable for damages also...

No-one would ever write a set of rules that imbalanced against the provider.

the_lunatic_is_in_my_head

Grumpy_chap said:

No-one would ever write a set of rules that imbalanced against the provider.

Perhaps showing my (lack of) age, I assume credit cards existed in 74, and in 83 when they increased the item values? 

Grumpy_chap said:
That would put the CC companies "on the hook" for potentially £45k liability against finance advanced as low as £200 and the actual earned revenue to the CC only a few £.  

Really the window company are on the hook as the bank can make a claim against them.

Born_again has said before that that don't really bother for small amounts but when you are talking banks and billions of pounds maybe £30k is nothing to them either? 

I'd be annoyed if I dropped a tenner, some people blow a million a night in casinos, wealth is relative, banks tend to have a lot of it, may be they don't care about £30k in the same way you or I would.

I think the biggest problem is an LTD can just fold and start again, I understand how liability for an LTD works and if they genuinely go bust then maybe that's life but this idea you can dissolve a company and then just start up another doing the exact same business is a bigger problem IMHO, for either the consumer or a bank looking to reclaim losses. 

In the OP's case that seems less likely as it's not a back street car dealer or iffy builder but rather a window manufacturer.

Alderbank

the_lunatic_is_in_my_head said:

Grumpy_chap said:

No-one would ever write a set of rules that imbalanced against the provider.

Perhaps showing my (lack of) age, I assume credit cards existed in 74, and in 83 when they increased the item values? 

From Barclays Bank archives, this is a picture of the very first credit card issued in the UK. Note the 'Battle of Hastings' expiry date!
Only issued by Barclays, these were very profitable. Other banks wanted a share of those profits so they set up a syndicate (the Joint Credit Card Company) which issued the second UK card, Access (now called Mastercard) in 1972.

With no regulation and fierce competition between these two cards it was the Wild West for about a year until the Government passed the Consumer Credit Act 1974 which we know and love today.

In spite of massive promotion (which included giving away free credit cards without any form of checks) there were only about 1 million Access cards in use by 1977, about 1 card per 50 people.

born_again

the_lunatic_is_in_my_head said:

Grumpy_chap said:

No-one would ever write a set of rules that imbalanced against the provider.

Perhaps showing my (lack of) age, I assume credit cards existed in 74, and in 83 when they increased the item values? 

You are right Barclaycard was around. But if you cast your mind back, they were not in the same numbers as now. In fact they would have been pretty hard to get hold of.

To which S75 was written in mind of the linked finance most people used back then to purchase goods, not for credit cards.