Financial Ombudsman win, but who owns the goods, merchant or bank?

Spride

Long story short, we started a chargeback against a merchant, the bank initially ruled in our favour and returned our money, but later reversed the chargeback. We initiated a complaint through the Ombudsmen which decided the bank had to refund the money plus a small amount of compensation which it did. Job done, however what I need to know is who owns the item on which the claim was originally made? It's a faulty car and hence it was the duty of the merchant to recover it but I guess once it got to the stage of the Ombudsmen the bank has to pay out of its own funds and cannot attempt to recover the costs from the merchant a second time?

PHK

The ombudsman should have covered this off in the decision. As their policy seems to be it’s unfair for you to have refund and use of the car.  They normally say that you should arrange return of the car to the bank. This could be as simple as dropping it off at a nominated garage or handing a represents the keys when they collect it. 

I would go back to the ombudsman for clarification. 

The bank won’t be able to get the money using chargeback (you’ve slightly misunderstood how it works) but there’s nothing stopping the bank suing the car dealer / retailer. 

Spride

So the Ombudsmen was involved because the bank had mishandled the chargeback, the claim being between us and the bank, at this point the merchant is no longer involved, but as you say on a technical basis the car belongs to the bank? I guess going back to the Ombudsmen for clarification makes sense ( for reference the car broke down the day after purchase, we have never 'had the use of it')

born_again

Spride said:

So the Ombudsmen was involved because the bank had mishandled the chargeback, the claim being between us and the bank, at this point the merchant is no longer involved, but as you say on a technical basis the car belongs to the bank? I guess going back to the Ombudsmen for clarification makes sense ( for reference the car broke down the day after purchase, we have never 'had the use of it')

Ask the bank. Ombudsmen won't know.
TBH, I doubt that bank will want it.

Undervalued

PHK said:

The ombudsman should have covered this off in the decision. As their policy seems to be it’s unfair for you to have refund and use of the car.  They normally say that you should arrange return of the car to the bank. This could be as simple as dropping it off at a nominated garage or handing a represents the keys when they collect it. 

I would go back to the ombudsman for clarification. 

The bank won’t be able to get the money using chargeback (you’ve slightly misunderstood how it works) but there’s nothing stopping the bank suing the car dealer / retailer. 

I don't see why. The FOS was adjudicating on the banking aspects of this, that is all. They are not making a judgement about whether the OP was right or wrong in their dispute with the merchant. Just like, in the old days, stopping a cheque. Under certain circumstances the banking rules allowed you to do that but it doesn't decide whether you have a legal right not to pay for the goods or services.

Generally the customer cannot "have the penny and the bun". If they are not paying for the goods they have no right to keep them unless the merchant chooses to write them off as a gesture of goodwill. 

the_lunatic_is_in_my_head

Hello OP

This would likely come under the principle of involuntary bailee, you should write to the owner twice to let them know you have their goods and they can arrange collection at a suitable time, if after those two letters this still hasn't been arranged you may either take care of the car or sell it for a fair market value. 

If you do sell it you should account* to the owner how much you have (after deducting any costs of selling).

Which ever option you choose typically after 6 years you are in the clear and free to keep either the car or money ,although as time passes the odds of anyone making contact obviously reduces. 

Being an involuntary bailee is sadly a thankless experience which does cause a little inconvenience.

*I'm not sure what "account" to the owner means, I would assume (but may be wrong) it means advise them you have the money and again they can collect it if they wish. 

If the bank said "we don't want the car, you do what you want with it", they later sued the car dealer and the car dealer then came after you I'm not really sure what would happen, I guess you could complain via the bank's process, how a court would view it I've not seen any answer to that anywhere. 

I guess the question is, if you write to the bank and the bank doesn't want the car is it worth you fixing the car and using it? If you did that I guess you run the risk of complications if the car dealer ever comes looking. If you had space you could leave it on your drive, etc for a year under a cover and if by that point haven't heard from anyone it's more likely you never will. 

Is this a £200 car or a £20,000 car? 

DullGreyGuy

Undervalued said:
Generally the customer cannot "have the penny and the bun". If they are not paying for the goods they have no right to keep them unless the merchant chooses to write them off as a gesture of goodwill. 

If you do a S75 claim, appreciate it wasnt that in this case, and the bank uphold it so you get reimbursed its exceptionally rare that the bank will ask for the asset; they simply aren't setup to deal with a load of broken bed frames or non-roadworthy cars. Even insurers only claim certain types of salvage where there is intrinsic value in it. 

I litigated against JL for a fridge and freezer matching pair when the freezer broke down for the 3rd time, JL eventually refunded (less use) plus damages for spoiled food but confirmed they wanted neither device back.

I agree with the other poster in that ideally the FOS should have been asked and clarified. 

Spride

I make the assumption that as the bank was at fault they have paid out of a presumed fund banks must keep for such events, correct me if I'm wrong? 

The merchant, on refusing to comply with the consumer rights act arrange a refund and collect the non running car, was informed that storage of £60 per day would be charged, currently standing at over £11,000, the car was £5,000

Another question, if the bank has incorrectly reversed a chargeback, and returned the money to the merchant they don't have a second go at claiming it back from the merchants bank, leaving them with court as the only option, this would be between the merchant and the bank, not sure how the merchant can come to me for the car? Of course they are welcome to it on settling the storage charge.

the_lunatic_is_in_my_head

Spride said:

 if the bank has incorrectly reversed a chargeback, and returned the money to the merchant they don't have a second go at claiming it back from the merchants bank, leaving them with court as the only option, this would be between the merchant and the bank, not sure how the merchant can come to me for the car?

If the bank gets the money out of the merchant via the courts I guess the merchant could come after you via the courts. I think it's unlikely (although the value may change that) but if you reject goods there is a duty to make them available for collection or, if agreed return them which leads on to.... 

Spride said:

The merchant, on refusing to comply with the consumer rights act arrange a refund and collect the non running car, was informed that storage of £60 per day would be charged, currently standing at over £11,000, the car was £5,000

Unless the storage fee was part of the original contract it wouldn't be enforceable, changes to the contract would require express agreement from both parties. 

If you suffered genuine loses as a result of a breach of contract you could claim these as damages, extreme example but if it was £1 million worth a gold you have good argument for paying to keep it somewhere very safe, a car should be parked up on the drive/garage.

If you didn't have a drive or such then perhaps it's fair to claim the cost of the tax and insurance required to keep it on the public highway. 

Jenni_D

You say you did a chargeback and the bank repaid you the money.(As I understand things, your bank recovered the funds from the seller's merchant bank and repaid them to you).

You also say (imply?) that the bank "snatched" the money back from your account - on what basis? Was it on the basis that the original seller challenged the chargeback? If yes then I'm not really sure what the bank did wrong, nor why FOS reached the decision they did. 🤷‍♀️

born_again

Spride said:

I make the assumption that as the bank was at fault they have paid out of a presumed fund banks must keep for such events, correct me if I'm wrong? 

The merchant, on refusing to comply with the consumer rights act arrange a refund and collect the non running car, was informed that storage of £60 per day would be charged, currently standing at over £11,000, the car was £5,000

Another question, if the bank has incorrectly reversed a chargeback, and returned the money to the merchant they don't have a second go at claiming it back from the merchants bank, leaving them with court as the only option, this would be between the merchant and the bank, not sure how the merchant can come to me for the car? Of course they are welcome to it on settling the storage charge.

If you want the storage charge you need to take dealer to court. Odds of getting the funds given their refusal to follow the CRA.

Banks can't reverse a chargeback, only retailer can reject it. Although they could choose the wrong reason which would scupper it. Only 1 chance at a chargeback. No they would not take a retailer to court to reclaim the money. simply not cost effective.

Funds will come from the complaints budget, which in effect is a bottomless pit.