Section 75

Gilo1

Hello MoneySavingExperts

I currently find myself in a really difficult situation which is causing me a great deal of anxiety and stress. I purchased 20 windows and these were installed for which I paid £32k on my credit card believing I had Section 75 cover for the following reasons.

1. Each of the individual windows was listed separately on the invoice with the associated price attached to each of them
2. I could have had them fitted by anyone but decided to pay for installation by the same company who supplied them due to the fact if there were any issues I would just be dealing with a single company. The fitting price around £7k was also listed as a separate line item on the invoice under the Product heading of ‘Fitting’
3. I also ordered some bespoke handles which the window supplier ordered from a third party, even though the windows already came with standard handles and the fitters changed them over during installation listed separately as a ‘custom’ item under the Product heading in the invoice
4. I ordered some replacement glass for an existing French door again listed as a ‘custom’ item in the invoice
5. And finally some internal trim and maintenance kit which is listed as ‘Miscellaneous’ under the Product heading

I have so many problems with the windows which I have been trying to resolve with the supplier and reached the point I decided to raise a Section 75 claim. This has been rejected on the grounds the contract value is over £30k

My understanding is this, all the items are individually listed on the invoice with a cash price attached. 

The handles are a custom item which should be viewed as stand alone purchase. The same for the trim, glass and maintenance kits. 

All the items were individually listed on a single order which I signed, but it seems I have separate contracts for the supply and installation,although this is not 100% clear,  although it does state in the T&C’s a Supply contract ends on delivery and a Service contract ends on completion of install.

One final point is not all of the items were fitted for example the glass and the trim so I am due a refund for this.

When I look the potential reduction due, the custom and miscellaneous items viewed as separate purchases the actual cost would probably fall below £30k even if the credit card company viewed all the windows as a ‘single’ item including the fitting. I am not sure if this would make any difference as the contracted price was originally £32k?

Maybe I am just clutching at straws here, but tbh this whole Section 75 legislation seems to be open to a great deal of interpretation.

Thanks for reading this rather longwinded post, any feedback and advice would be greatly received 

S

Mark_d

The legal text of Section 75 says that the cost of an individual item must be between £100 and £30k.  There is no constraint on the size of the order

eskbanker

If your s75 claim has been rejected by your creditor on the basis of value exceeding £30K, then your next step will be to escalate it to the Financial Ombudsman Service, who'll adjudicate on whether the card company has acted fairly.

It's a complex area - you're right that the legislation does clearly consider 'item' value rather than 'contract' value but AIUI it's not unusual for such contracts to be considered to be a single entity, even though this may seem counterintuitive.  Perhaps worth spending some time trawling through the FOS database of published decisions to understand the thought processes involved in assessing such claims:

https://www.financial-ombudsman.org.uk/decisions-case-studies/ombudsman-decisions

born_again

Gilo1 said:

Hello MoneySavingExperts

I currently find myself in a really difficult situation which is causing me a great deal of anxiety and stress. I purchased 20 windows and these were installed for which I paid £32k on my credit card believing I had Section 75 cover for the following reasons.

1. Each of the individual windows was listed separately on the invoice with the associated price attached to each of them
2. I could have had them fitted by anyone but decided to pay for installation by the same company who supplied them due to the fact if there were any issues I would just be dealing with a single company. The fitting price around £7k was also listed as a separate line item on the invoice under the Product heading of ‘Fitting’
3. I also ordered some bespoke handles which the window supplier ordered from a third party, even though the windows already came with standard handles and the fitters changed them over during installation listed separately as a ‘custom’ item under the Product heading in the invoice
4. I ordered some replacement glass for an existing French door again listed as a ‘custom’ item in the invoice
5. And finally some internal trim and maintenance kit which is listed as ‘Miscellaneous’ under the Product heading

I have so many problems with the windows which I have been trying to resolve with the supplier and reached the point I decided to raise a Section 75 claim. This has been rejected on the grounds the contract value is over £30k

My understanding is this, all the items are individually listed on the invoice with a cash price attached. 

The handles are a custom item which should be viewed as stand alone purchase. The same for the trim, glass and maintenance kits. 

All the items were individually listed on a single order which I signed, but it seems I have separate contracts for the supply and installation,although this is not 100% clear,  although it does state in the T&C’s a Supply contract ends on delivery and a Service contract ends on completion of install.

One final point is not all of the items were fitted for example the glass and the trim so I am due a refund for this.

When I look the potential reduction due, the custom and miscellaneous items viewed as separate purchases the actual cost would probably fall below £30k even if the credit card company viewed all the windows as a ‘single’ item including the fitting. I am not sure if this would make any difference as the contracted price was originally £32k?

Maybe I am just clutching at straws here, but tbh this whole Section 75 legislation seems to be open to a great deal of interpretation.

Thanks for reading this rather longwinded post, any feedback and advice would be greatly received 

S

It is.
In reality it needs a whole rewrite, as it was never designed for Credit Cards.

All you can do if they have rejected your complaint (not just the claim) you need to say you are complaining about the outcome, go through that process. Which odds on will be the same result.
Then you can take it to FOS for a judgment. 

DullGreyGuy

eskbanker said:

If your s75 claim has been rejected by your creditor on the basis of value exceeding £30K, then your next step will be to escalate it to the Financial Ombudsman Service, who'll adjudicate on whether the card company has acted fairly.

Next step will to be register a complaint, the ombudsman will only look at complaints after either the company has provided their final response or 8 weeks have passed since the complaint was registered, whichever is sooner. 


The actual legislation states:

(3) Subsection (1) does not apply to a claim—

(a) under a non-commercial agreement,

(b) so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding £100 or more than £30,000

So the limit is not at contract level but at "single item", the problem here is that single item isn't defined and therefore open to interpretation say if you buy a "pack of 5 shirts", is that 5 items because its 5 shirts or is it 1 item because its a single pack?

You can search the Ombudsman website of its prior decisions and you can see that this has been opined upon many times in the past in both directions (if multiple items that summed to over £100 were covered or if things that were broken down, sometimes over different invoices, if they were under £30k even if the sum was over £30k). 

From memory the ombudsman has been more likely to consider things as "projects" rather than individual items. I recall with one case there were three invoices for Kitchen Design, Kitchen Supply, Kitchen Fitting for £5k, £25k and £10k or such... the ombudsman accepted that design was a separate item as there was no commitment to continue on to supply and fitting but stated that the division of the other two was artificial and so it was over £30k and outside S75 (there were other features of the case that aren't relevant for this discussion so take it as broad brush)

Ultimately you can only present your case and await their decision.

Grumpy_chap

Mark_d said:

The legal text of Section 75 says that the cost of an individual item must be between £100 and £30k.  There is no constraint on the size of the order

eskbanker said:

the legislation does clearly consider 'item' value rather than 'contract' value but AIUI it's not unusual for such contracts to be considered to be a single entity, 

This issue around "item" value and "order" value seems to cause some confusion and the comments on these forums are not always consistent.

There are several threads where S75 has been advised as not in place because the individual items were each less than £100.  
Keeping with the example of shirts as per DGG, five individual shirts at £25 totals £125 but often advised in these threads as out of S75 scope as each below £100.
Keeping the same example, one shrink-wrapped pack of five shirts at £125 would be one item so in scope.

With the examples of kitchens, windows, extensions and such like, supply and fit are commonly considered as one contract and, hence in the OP's case exceed the upper value limits of S75.  

Unfortunately I don't think these forums have or know a definitive answer. 
The treatment should be consistent at both ends of the spectrum.  If five shirts each costing £25 are not within S75 scope because unit price is below £100, then 32 windows (or however many) each costing £1k to supply and fit should be within scope as each is individually below £30k.
The reality seems to be that the finance industry seems to try to play this both ways, so the five shirts excluded as below the £100 value threshold (unit cost) but the windows excluded as above the £30k value threshold (combined contract value).
I really don't think we've ever seen clear and definitive answer on the way the value thresholds should apply and how that achieves consistency.

I think what this discrepancy really demonstrates is how the S75 process is not fit for purpose with the way credit cards are currently used.  I suspect this is not near the top of any priority for regulations to be reviewed.

eskbanker

Grumpy_chap said:
I think what this discrepancy really demonstrates is how the S75 process is not fit for purpose with the way credit cards are currently used.  I suspect this is not near the top of any priority for regulations to be reviewed.

Yes, as mentioned above, the legislation wasn't intended to offer protection for vast numbers of purchases and was enacted in the context of credit provision in 1974, where credit card usage was minuscule relative to today and most credit was bespoke HP financing and the like.

However, while there seems to be consensus that the legislation could do with review, my strong suspicion is that finance industry representations will weaken its degree of consumer protection rather than strengthening it....

Gilo1

Thanks to everyone who has commented on this so far. It's clear there are differing views on this, as suggested i am going to raise with the Ombudsman to review my case. I am due a refund for some items not provided which i need to go back to the supplier and ask for. This could potentially mean the total cost of the project falls below £30k, would this help me as i have already paid £32k on my card?           

DullGreyGuy

eskbanker said:

Grumpy_chap said:
I think what this discrepancy really demonstrates is how the S75 process is not fit for purpose with the way credit cards are currently used.  I suspect this is not near the top of any priority for regulations to be reviewed.

Yes, as mentioned above, the legislation wasn't intended to offer protection for vast numbers of purchases and was enacted in the context of credit provision in 1974, where credit card usage was minuscule relative to today and most credit was bespoke HP financing and the like.

However, while there seems to be consensus that the legislation could do with review, my strong suspicion is that finance industry representations will weaken its degree of consumer protection rather than strengthening it....

Obviously I am finance industry but insurance instead so technically should be fully supportive of S75 given it would mean the bank has unlimited liability for a Motor policy we sell but dont payout on a claim for.

In practice I am very much against it and think it should be more like S75a. When it was drafted almost all finance for goods was like HP and in that context it makes sense as a bank has a direct and real relationship with the merchant so can decide if they want to put their name to the merchant or not. In the world of credit cards the creditor has a real and direct relationship with me as the debtor and in most cases absolutely no relationship with the merchant and yet they are held liable if the merchant does bad?  I mean if you were to describe that to a bunch of business graduates with no experience of the UK banking scene they'd probably suggest a credit card should only be able to be used with stores that you bank has personally vetted rather than anyone with an iPhone who can start taking Zettle payments within minutes if they want to. 

Gilo1 said:

Thanks to everyone who has commented on this so far. It's clear there are differing views on this, as suggested i am going to raise with the Ombudsman to review my case. I am due a refund for some items not provided which i need to go back to the supplier and ask for. This could potentially mean the total cost of the project falls below £30k, would this help me as i have already paid £32k on my card?           

You need to get some form of paperwork to show the value of the contract has reduced; certainly saw one Ombudsman case where the customer claimed the contract had been renegotiated to below £30k by descoping elements of it but they couldn't substantiate it with any evidence so the Ombudsman didnt believe it. 

Remember you can only go to the ombudsman after complaining to the company. You cannot add new elements to the complaint when going to the ombudsman either as the ombudsman is obliged to only act after the company has had opportunity to put matters right.

Grumpy_chap

DullGreyGuy said:

if you were to describe that to a bunch of business graduates with no experience of the UK banking scene they'd probably suggest a credit card should only be able to be used with stores that you bank has personally vetted rather than anyone with an iPhone who can start taking Zettle payments within minutes if they want to.   

Do services such as Zettle / Sum-Up and such like mean that S75 is not applicable because the supplier-creditor - debtor relationship is interrupted?

born_again

Grumpy_chap said:

DullGreyGuy said:

if you were to describe that to a bunch of business graduates with no experience of the UK banking scene they'd probably suggest a credit card should only be able to be used with stores that you bank has personally vetted rather than anyone with an iPhone who can start taking Zettle payments within minutes if they want to.   

Do services such as Zettle / Sum-Up and such like mean that S75 is not applicable because the supplier-creditor - debtor relationship is interrupted?

No.
As they are not like PayPal when you are going through your account.