Cooling off and your right to cancel

You will benefit from a cooling off period if the credit agreement was made in one of the following ways:

1. For agreements signed away from the creditor’s normal business premises – i.e. at your home, place of work or at an exhibition stand
2. For agreements made at a distance (this also includes banking, insurance, pensions and investments)
3. For financial products and services marketed by an intermediary or broker (even where this is face to face)

For agreements which fall under (1), you will have a cooling off period of 5 days, which begins from the time you receive the second copy of the agreement (containing the cancellation form). For contracts which fall under (2) and (3), you benefit from a 14 day cooling off period (30 days for life insurance and personal pensions). Unlike the cooling off period for goods bought under the Distance Selling Regulations (DSRs), the creditor may make a reasonable charge for any service (such as insurance cover) which was operating during this time.

There are specific guidelines on how you should cancel the contract, which must be notified to you by the creditor before or immediately after the contract is made. If the creditor does not make this information available to you, then your cooling off period will not begin until this happens.

Credit Cards – Section 75

Section 75 of the Consumer Credit Act imposes equal liability on the creditor for breaches by the supplier. In other words, if the company you are buying from goes bust or disappears, or if the goods turn out to be faulty and you can’t get recompense from that company, the credit card company shares responsibility to refund you for the entire amount. However, it is important to remember that this is the case only for amounts between £100 and £30,000.

More recently, section 75 was also extended to cover transactions made overseas or to foreign companies. This also includes buying goods for delivery to the UK from overseas by telephone, mail order or over the internet.

There is now widespread awareness of this loophole as a means of enhanced consumer protection. As a result, credit card companies are getting increasingly reluctant to accept claims so easily. If you are having difficulty pursuing a claim against a credit card issuer, or they are telling you that you must first get a court judgement against the supplier, report it to the Financial Ombudsmen (www.financial-ombudsman.org.uk). They may even be able to award you compensation.

CCA Request – Section 77 – 79

Under these two sections of the Consumer Credit Act, it is your right to request a copy of the executed credit agreement from the creditor, along with specific and current information concerning the debt (s 77 relates to fixed-sum loan agreements,  s 78 refers to running-account credit (credit cards) and s 79 to hire agreements).

With regard to loans, the specific information must include:

• The total sum to be paid, as per the agreement
• The sum still outstanding and the due dates for each installment
• The total sum payable, if different from the agreement.

The creditor has a period of 12 days working days in order to provide the agreement and the statement. If they cannot provide the information, the debt cannot be enforced until they do. If the creditor are still unable to provide the documents after one month, they commit a criminal offence.

In addition to this requirement, new regulations now require loan providers to provide statements to be sent to the consumer no later than one year after the contract was made. Failure to do this will mean repayments (and interest) can be halted until the statement is sent.

Your request must be made to the creditor (via the debt collection agency if one is involved) with the payment of £1)

Is my credit agreement legally unenforceable?

There has been a lot of publicity surrounding the ability to get out of debt by going through credit agreements with a fine toothcomb in order to spot any breaches of the regulations. In other words, looking for ways in which credit agreements may be rendered legally unenforceable. As mentioned in the previous section, the various Consumer Credit Regulations are very strict on what information must be presented, when it must be presented, and the order and manner in which it is to be shown. If any of the required information is missing, or simply not provided to you within seven days, the supplier may be in breach of these regulations. However, amendments made to the Act in 2006 closed this loophole, so now a court can still enforce a credit agreement even if the creditor has not complied. However, the creditor will still have to get a court order to do this, and may well not bother if the sum is not significant.

Accessing your Credit File

If you have been turned down for a credit agreement, you have the right, under sections 157-159 of the Act, to request that the lender provides you with details of the credit reference agency they used to access your credit file. You must do this in writing within 28 days and the lender must respond to your request within 7. There is more on this in our section on accessing your credit file.

• Consumer Credit Act Required Information
• Ending a Credit Agreement
• Defaults, Arrears and Debt Collection Agencies
• Consumer Credit Act
• Accessing your Credit File
  

Do shops have to give me my money back?

When you buy something you enter into a legally binding contract of sale with the shop or supplier. Therefore shops are under no legal obligation to give you a refund, or take anything back simply because you have changed your mind. For this reason shops can impose their own policies on time limits for returns. These days most shops will offer you a refund and nearly all will allow you to make an exchange, but whatever their policy, they must have it clearly displayed at the point of sale. Of course this is not the case where goods are faulty, which is why you’ll always see ‘this does not affect your statutory rights’ on any policy notice.

Did you keep the receipt?

Whatever the reason for the return, you must prove that a contract of sale existed between you and the shop, which includes when you bought it and the price paid. This However, it doesn’t have to be a till receipt, and a bank or credit card statement will do just as well. If you have nothing, shops are quite within their rights to only give you back the price the item is currently selling at, which may be a good deal lower than the price you paid initially.

Cooling off periods.

These only apply to certain products and goods bought under a distance selling contract (online and mail order) or from a doorstep seller. Under the regs you can send the goods back and get a full refund no questions asked – even if you’ve taken the item out of the box or thrown the packaging away. You’ll need to get your skate on though, because you’ve only got 7 days. For more on this, see our guide to Cooling Off and Cancellations.

What are my statutory rights?

That the item is as described, that it is of satisfactory quality, safe and durable, and that it is fit for the purposes specified. If any of these are not the case, this is a breach of your statutory rights and it is the retailer’s responsibility to take action

What action must the retailer take?

Firstly, don’t be fobbed off by shops who tell you it’s the manufacturer’s responsibility, your contract of sale is with whoever sold it to you. Secondly, don’t be misled into thinking you only have the duration of the warranty period to return faulty items. You have consumer rights under the Sale of Goods Act which implies that goods should work satisfactorily for a reasonable length of time. If they do not, you cannot simply march into a shop and demand your money back. You must allow the seller the opportunity to repair or replace the goods, although it should be without any additional expense or significant inconvenience to you, and within reasonable time. If a repair or a replacement cannot be effected, you can then request a refund or a discount. For more on problems getting problems rectified, see our section on Returning Damaged or Faulty Goods.

Is the guarantee worth the paper it’s written on?

For certain products, manufacturers and retailers will often issue their own guarantees or warranties (basically the same thing!). They are not compulsory and exist to enhance consumer confidence, as well as giving the manufacturer the opportunity to collect valuable marketing information about you! Warranties are a commitment to repair or replace defective parts within a specified time frame (usually 12 months) and, thanks to recent European regs, they are now legally binding contractual obligations between you and the manufacturer, or retailer for the time frame indicated. The important point about warranties is that they should never seek to replace your rights under the Sale of Goods Act, and even after they have run out, you will still be protected by these statutory rights. Beware also small print requiring the consumer to bear the cost of any shipping, labour etc as this runs contrary to Sale of Goods. For information, see our guide to extended warranties

Rights when buying sale items

If an item is reduced in price due to a sale, your rights are the same as if it were a full priced item. If you are buying seconds, you are still entitled to a product which is undamaged and fully useable. If you knowingly buy a damaged product, the specific defect must be pointed out to you before you buy, and although you cannot then return the item on the basis of that defect, it does not mean you cannot return the item if you discover something else wrong with it – even if they have reduced the price. Don’t let the sales assistant tell you otherwise!

Items bought from online auction sites

When buying from sites such as e-bay and Amazon’s ‘Sell Your Stuff’ the important point to remember is that you are not buying from the sites themselves, but from individuals who have put their possessions or products up for sale on those sites, and this has important implications for your consumer rights. Firstly, if you are buying from a private seller (as opposed to a commercial entity), you will not benefit from a cooling off period under the distance selling regs. Neither does the statutory right to quality apply, and you will have no legal redress if the item is unsatisfactory. For more on this, see our guide to buying from online auction sites

QuickQuid expected me to provide evidence that I didn’t owe them any money, but I argued the opposite: it was up to QuickQuid to prove that I had taken out a loan with them. This they couldn’t do, because they allowed someone to use my identity without having to provide any proof of who they were. QuickQuid even sent the money to a third party bank account not in my name. I feel alarmed that a lender operating in the UK, with a valid Consumer Credit Licence, could operate with such slack controls.

Of course, I won in the end; I was an investigative journalist with consumer champion, Roger Cook, at the BBC. They took on the wrong guy, but still, this was stressful for me and took up precious time and energy to deal with.

I’ve prepared two videos that I feel readers of this forum may find interesting. One is a video of the exasperating phone call I had with QuickQuid, when I tried to tell them that I wasn’t responsible for the loan taken out in my name. The second video is of a recent BBC Radio 4 interview with me about this entire saga. Although I am a newbie here, I hope I will be allowed to post the links to these videos, which appear at my YouTube channel at JonDanzig.com

‘Jon Danzig: My Exasperating Phone Call With QuickQuid’ Click the link below to listen:

‘Jon Danzig: Help! My Identity Was Stolen’ Click the link below to watch this video:

What about contracts for services?

• They are taking forever to do the work!
• It cost me a fortune!
• The price was significantly higher than the estimate
• The job was done as a ‘foreigner’. Do I have any rights?
• How much can I claim in damages?

How can I resolve the situation?

The first step is to ask yourself a few basic questions:

1. What type of credit agreement do you have?
2. How was the contract made?

1. Types of credit agreements

The Consumer Credit Act will regulate the majority of credit agreements. There are exceptions, such as mortgages, loans secured on property, short term agreements and charge cards. In addition to credit and store cards, personal loans and overdrafts, a credit agreement will govern the following types of contracts:

• Finance options for the purchase of goods and services (credit sale agreements)
• Hire purchase agreements
• Hire agreements
• Conditional sale agreements

Credit sale agreements
This is the most common type of financing option when purchasing high-priced goods and services such as cars, electronic goods, or home improvements. It is basically a loan to over the purchase price of the item, with the loan paid back the loan in equal monthly instalments over several months or even years. The consumer (the ‘debtor’) may pay a large initial deposit (such as with the purchase of a car), or not pay anything at all for the first year or two. Either way, you will legally own the goods as soon as the credit sale agreement is made, even if you have paid nothing at all. Where ‘interest-free credit’ is advertised, you will have a specified time to pay back the outstanding balance, otherwise the due balance will automatically roll into a longer term credit agreement where interest will be payable.

Hire purchase (HP) agreements
Under this arrangement, you will pay monthly instalments to hire the item, but will not legally own it until the final instalment has been paid. This type of agreement may also give you the option to buy with a lump sum at the end of the period, such as with ‘balloon payments’ on car finance.

Hire agreements
This is simply the hire of goods at a (usually low) monthly fee. You will never own the item, but must keep up the payments for the term of the contract to avoid having the goods repossessed and being sued for the outstanding debt.
Conditional sale agreements
This is very similar to the HP agreement described above. Even though you will be in possession of the goods in question, you will only own them on the condition that you have paid all the instalments. However, the agreement may also specify other conditions to be met before ownership can take place.

2. Way in which the contract was made

Basically, this refers to where you signed the contract. Was it in the presence of the creditor at their place of business? Was it in the presence of the creditor but away from their place of business? Was it at home? Or were you with a broker – either in their office or at home? This will have important implications for your cooling off rights, the information which must be supplied to you and the way in which it must be presented. We will look at cooling off and required information in the following two sections.

• CCA: Required Information
• CCA: Your Rights
• Ending a Credit Agreement
• Defaults, Arrears and Debt Collection Agencies
• Debt Management Companies
  
• Accessing your Credit File
  

Your statutory rights

One of your principal statutory rights is the expectation that the item will be of reasonable quality. This also includes fitness for purpose specified, appearance and finish, freedom from minor blemishes, safety and durability. The failure of the product to meet any one of these criteria is a breach in your statutory rights, enabling you to go back to the retailer, even after some months of use.

The retailer’s obligations

If there is an obvious fault with the item at any time within the first 6 months and it has not been caused by wear and tear or misuse, your first port of call must be the shop you bought it from. They have the responsibility to put the matter right, and should not evade this responsibility by referring you to the manufacturer in the context of a guarantee or warranty.

In the first instance and if considered appropriate, the seller must offer to at least repair the goods. They must do this within reasonable time, at no additional cost to you and without causing any significant inconvenience. If any inconvenience is caused you should be given a replacement item on a ‘like for like’ basis (and not simply the cheapest and most basic model). Many consumer complaints relate to the length of time the item is away being repaired – and although you must allow reasonable time for repair, the law does not say what ‘reasonable time’ is. It very much depends on the item itself and the nature of the problem. For most things, shops would usually allow you to exchange the item or give you your money back straight away. However, if the damage is minor and can be repaired easily, then the shop can insist on this as a first option, although this will not stop you from taking it back if the repair is unsatisfactory or there is something else wrong with it.

If a repair is impossible or unfeasible, you must then be offered a replacement. Due to the emphasis on proportionality in this legislation, you must give the seller reasonable time to repair or replace before demanding your money back and you should be aware that any refund given may well take account of any use you have had of the goods since you took possession of them. If you do not want the seller to repair or replace, or they have told you they are unable to, you can then request they reduce the purchase price to an appropriate amount, although this does not affect your ability to take return the item if something else goes wrong

Proof of purchase?

Shops will often tell you they will only give a refund on production of proof of purchase. Don’t be misled into thinking this must be a till receipt. It can be a bank or credit card statement, although you may run into difficulties if it is for a different amount than that of the item you are trying to return.

If the item is damaged, the shop cannot say they will only refund on the basis of a till receipt. However you must have proof of purchase of some kind – particularly if it was bought recently and you want to show that the damage wasn’t caused by continued use or wear and tear over time.

Where you have no rights

• If you were aware of the defect before you bought it
• If you bought it from a private buyer on a non-commercial basis (i.e. not a shop)
• If you were invited to carry out a thorough inspection of the product and fail to spot a defect which that inspection ought to have revealed
• You simply changed your mind or the item was not appropriate due to colour, size or style
• The item is dirty and the mark can be removed easily at home. This is not the same as damage and shops are not obliged to give you any discount

Buying seconds or damaged items

If you are buying seconds, you are still entitled to a product which is undamaged and fully useable. If you knowingly buy a damaged product, the specific defect must be pointed out to you before you buy, and although you cannot then return the item on the basis of that defect, it does not mean you cannot return the item if you discover something else wrong with it – even if they have reduced the price. Don’t let the sales assistant tell you otherwise!

See also:

Deliveries and Collections

The main focus of the Act is the provision of three statutory rights, although the act goes on to describe exactly what consumers are entitled to if any of these statutory rights are breached.

There is some confusion about how the Sale of Goods Act applies to second-hand goods, items purchased on the internet or by mail order, items purchased via a doorstep sale, or anything bought from an online auction or marketplace. This following sections will cover all these situations, and hopefully give you a better understanding of how the law protects you and what you must watch out for.

How the Sale of Goods Act applies to:

• Second-hand goods
• Goods sold online or by mail order
• Doorstep sales
• Ebay or other online auctions or marketplaces

Your Statutory Rights

• How do you measure quality?
• It’s not fit for purpose
• How long should it last?
• Is the guarantee worth the paper it’s written on?
• I bought it from a bloke down the pub
• Rights when knowingly buying damaged goods

And if your statutory rights are broken

• They say I’ve taken ownership so it’s my responsibility
• Do shops have to give me my money back?
• The shop doesn’t want to know, they say it is the manufacturer’s responsibility.
• It’s second hand – do I have any rights?
• It was damaged on delivery

Under certain circumstances, you are given the right to cancel over a specific period of time. This is referred to as your cooling off period and the duration of this period depends on what you bought and the manner in which you bought it. The following are situations in which the cooling off period applies

Buying online from shops or suppliers

The purchase of goods and services over the internet, by phone or by mail order generally is subject to the Distance Selling Regulations. One of the most important implications of these regulations is a cooling off period of 7 days during which you have the right to cancel. You must provide notice of cancellation in writing and it must be posted to, left at, faxed or emailed to the business address of the supplier, and you must ensure this is done no later than 7 working days after receipt of goods. Contracts for financial products sold by distance means are subject to different rules, see below for more on this.

Something else worth mentioning is that the supplier must have sent you written confirmation of your order no later than the time of delivery of the product or performance of the service. If they did not, then your 7 day cooling off period will not begin until they do, and may be extended by a further 3 months.

If you have commissioned a service under a distance selling contract and the work begins before the end of the 7 days cancellation period, then you must give up your right to cancel, but this must be clearly communicated and with your express agreement.

Does the right to cancel apply for all goods bought by mail order?

There are obvious exceptions and you will not have the right to cancel with the purchase of the following goods:

• Goods made to a personalised specification
• Perishable goods, such as foodstuffs and flowers
• Audio/video recordings or software where the seal has been broken
• Newspapers, magazines or other reading material (not books)
• Gaming, betting, lotteries

Buying from a doorstep seller

If you have bought something costing more than £35.00 from a trader as a result of a visit to your home or place of work (whether or not the visit was requested by you), you will be protected by the Doorstep selling Regulations – or to give it its proper title: The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008. These regulations give you a cooling off period of 7 calendar days during which time you have the right to cancel and get a full refund. Just as with the Distance Selling Regulations, you must have been provided with a notice of your cancellation rights, otherwise the agreement may be legally unenforceable

Buying away from the trader’s normal place of business.

You may also invoke your 7 day cancellation rights for items over £35.00 where business is taking place away from the trader’s HQ or shop. This may include any of the following:

• Your place of work
• A trade fair
• A one-day fair (such as a wedding fair) or a marketing presentation (such as overseas property)

It is also the case even when contracts are concluded at a later date, back at the trader’s shop or office – the fact that you have made your offer away from here is the important thing.

Timeshare agreements

There have been numerous problems to do with consumers who have signed contracts while under pressure from sales reps in the UK or as a result of a ‘free’ holiday provided by the company. For this reason, the Timeshare Act 1992 gives you the benefit of a cooling off period of 14 days if contracts are signed in the UK. If you sign abroad you will be subject to local laws, although most European member states have a cooling off period of 10 days. Check before you sign, although the company must provide you with the same notification of your rights as doorstep sellers.

Credit Agreements

You will only benefit from a cooling off period if the credit agreement was made in one of the following ways:

1. For agreements signed away from the creditor’s normal business premises – i.e. at your home, place of work or at an exhibition stand
2. For agreements made at a distance (online, by phone or by post)

For agreements which fall under (1), you will have a cooling off period of 5 days, which begins from the time you receive the second copy of the agreement (containing the cancellation form). For contracts which fall under (2) and (3), you benefit from a 14 day cooling off period. Unlike the cooling off period for goods bought under the Distance Selling Regulations (DSRs), the creditor may make a reasonable charge for any service (such as insurance cover) which was operating during this time.

There are specific guidelines on how you should cancel the contract, which must be notified to you by the creditor before or immediately after the contract is made. If the creditor does not make this information available to you, then your cooling off period will not begin until this happens.

Financial products and services

Financial products including banking, credit, insurance, personal pensions and investments, sold by distance means are subject to a 14 day cooling off period (this is 30 days in the case of life insurance and personal pensions). This includes renewals for insurance where the agreement has been sent by post. This 14 day cooling off period also covers situations where you bought a financial product from an intermediary or a broker, even if it was discussed and signed face to face. You must be sure to follow correct procedure for cancellation (see below). The insurer or broker must refund any monies paid by you within 30 days, although they have the right to deduct a reasonable admin charge, and a sum proportionate to the number of days cover you have had. If you have any related credit agreements, these will also be cancelled.

Extended warranties

These are effectively insurance policies and have a 45 day cancellation period with the right to a full refund if you have not made a claim in this time. Any cancellation after this time will entitle you to a  pro-rata refund. See our guide to extended warranties for more in depth information.

The correct procedure

With any contract or sale which is concluded away from the trader’s normal business premise, you must be sure you have been presented with clear written notice of your right to cancel, at or before the time the contract is made. If you have not, the contract is legally unenforceable. This notice, which cannot be in the form of small print, or otherwise disguised, must also provide a cancellation form and advise you on how and to whom a notice of cancellation is to be made. You can use the cancellation form provided or a simple written notice, as long as it is clear of your intentions. And as long as you have posted your notice of cancellation before the end of the cancellation period, it doesn’t matter when it is actually received. For this reason, it is always advisable to send it recorded delivery.

Refunds

The supplier must reimburse you within 30 days of cancellation, without charge, unless you have been informed that you will be liable for the cost of returning the goods. If you have any related credit agreements, these will also be cancelled.

The seller has the right to sell

So what precisely are your statutory rights when you make a purchase? Firstly, you should expect the seller to have the right to sell the item and to be able to transfer full ownership to you. Seems an obvious point really. A second hand car dealer who sells you a stolen car does not have the right to sell that car and you would not take ownership of it, even though you have handed over the money. If the item is not owned by the seller, or the seller has not been given permission to sell the item, the contract is immediately invalidated – and you will own nothing.

It is what you expected?

Secondly, if you have bought something on the basis of the seller’s description or a sample, you should expect the item to conform exactly to that description or sample. If it does not, you have the right to reject the goods, demand a full refund and possibly claim damages. This is still the case even where you have selected or examined the items for yourself before buying them.

Satisfactory quality

And finally, the most commonly cited and hotly contested of all, that of satisfactory quality. There is so much to say about this, it deserves its own section:

• How do you measure quality?
• It’s not fit for purpose
• How long should it last?
• Is the guarantee worth the paper it’s written on?
• I bought it from a bloke down the pub
• Rights when knowingly buying damaged goods

Common Complaints

• They say I’ve taken ownership so it’s my responsibility
• Do shops have to give me my money back?
• The shop doesn’t want to know, they say it is the manufacturer’s responsibility.
• It’s second hand – do I have any rights?

And if your statutory rights are breached…?

Alternatives to court action

The procedure will require you to consider alternative dispute resolution routes such as arbitration, mediation and ombudsmen schemes (details for which can be found in the useful contacts page on this site). However, if it is clear that you will not get the desired result any other way, then you can pursue a claim issued through the county court. You can do this for any of the following scenarios:

• An unpaid debt
• Poor workmanship
• Non-performance of contractual obligations
• Damage to property
• Road traffic accidents;
• Personal injury
• Faulty goods or goods not supplied

First steps

Your application will include information on what steps you have already taken to try and recover the money. You would therefore be advised to write to them as a first step, explaining the reasons for your dissatisfaction, what you would like in return and a reasonable timeframe for doing this. You should also provide notice of your intention to take further action if they do not do as instructed. See our templates page for a model of how to structure your letter and what kind of information to include. Remember to send any correspondence recorded delivery and keep copies for inclusion in your claim.

Things to consider

You should also consider the capacity of the firm or individual to pay the sum. If they are unemployed, insolvent, on a low income or heavily in debt, this will be taken into account and you may not get anything. Therefore it is very possible that even though you will win your claim you will still not get any of the money which is owing to you.

How much will it cost?

To start proceedings, claimants must usually pay an initial court fee, and although it will  not be as much as instructing a solicitor, the amount will depend on how much money you are claiming. If you are receiving benefits, pension or tax credits, or if your income is below a certain level, you will not have to pay this court fee. You can also get a partial contribution to the fees if you can prove that it would be difficult for you to pay.

Additional Expenses

If, once judgement has been made the company or individual still does not pay and continues to dispute your claim, you may have to pay additional fees, although these can often be added onto the amount they will eventually owe you if you are successful.

• If you have witnesses you will have to cover their expenses / loss of earnings

• If you need a report from a professional acting as an expert witness, you will have to pay for this

• If you require a professional to attend the hearing to give their expert opinion, you will need to pay their charges and expenses

• If you are suing for a specific sum of money, the case may well be heard in the court local to the firm or individual you are suing, therefore you will incur travel costs and suffer loss of earnings.

However, you may be able to claim some or all of these costs back if your claim is successful.

Representing yourself

For claims less than £5000 the system is set up for you to represent yourself. You would be advised to seek advice from a solicitor at the outset to get an understanding of legal aspects such as providing evidence, as well as court processes and putting realistic figure on how much to claim. However, they don’t need to be involved in the process itself, which will save you money. If you will have difficulty representing yourself you will also be allowed to take a friend, family member or colleague with you as a ‘lay representative’.

There are firms which can offer a claims management service on a ‘no win no fee’ basis for things like personal injury, accident claims, housing disrepair or recovery of bank charges. You must check these firms are authorised before you instruct them, as they will be acting unlawfully if they are not.

Filling online

For claims which are less than £10,000 and against not more than two people, you will be able to file a claim online. Go to: www.moneyclaim.gov.uk

For more information and forms to download, go to: www.hmcourts-service.gov.uk