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I have read on many lawyer’s web sites that following the biggest change to the all inclusive Consumer Rights Act 2015, the ability to return goods that do not conform to the conditions laid down in the new Act, that consumers have confused this with the terms of the Distance Selling Act.

The new Consumer Rights Act replaces many old acts such as the Sale of Goods Act (last revision 2006) Unfair Terms In Consumer Regulations and the Supply of Goods & Services Act along with other minor acts. But not totally as I will explain in a moment.

In the new act you have 30 days, during which, if the goods are, in simple terms, Faulty, Not As Described or Unfit For Purpose you can claim a refund. You don’t have to give the seller the opportunity to repair the item and you certainly don’t need to go to court to claim your money back.

A word with your local Trading Standards Office or Citizen’s Advice Bureau should do the trick. If you choose the Court route you will probably be offered the free Small Claims Court Mediation Service once the other party has filed a defence. Well worth considering.

First let me deal with the confusion. You have 30 days to return goods or claim on services that do not meet the conditions of the Consumer Rights Act and claim your money back. Not to be confused with the 14 days you have under the Distance Selling Act when you buy goods or services that you haven’t been able to inspect before paying for them.

In this case you have the right to return goods to the seller within 14 days and claim your money back simply because you don’t like the colour or design of the goods whereas items returned under the Consumer Rights Act must be faulty, not as described or not fit for purpose.

But cases have been going to small claims courts citing the Consumer Rights Act when the consumer didn’t have a leg to stand on because he simply didn’t want the goods after getting them home. So don’t be confused, you can’t return goods under the Consumer Rights Act just because you changed your mind.

30 Day, 6 Month & 6 Year Rules: The 30 day rule is the period during which you can simply ask for your money back if the goods or service don’t conform to the Consumer Rights Act. You can allow the seller to repair or replace the goods but if you allow for a repair and it doesn’t fix the fault you still have the right to claim your money back.

And the onus is not on you to prove that the goods or service are in breach of the Consumer Rights Act it is down to the supplier to prove that they aren’t. This brings me to the 6 month rule. You must allow the supplier to remedy the fault with a repair or replacement after 30 days but within 6 months.

Again, you don’t have to prove that the fault existed when you bought the goods the supplier must prove that it didn’t. After 6 months but up to 6 years you can still exercise your rights if the Consumer Rights Act has been breached but after 6 months the onus is on you to prove that the fault existed.

Car Warranty: I think that it is worth mentioning at this point your legal position when it comes to a faulty car and its manufacturer’s warranty. Apologies if you have read this before as it is something that I bang on about quite regularly. Most new cars come with a transferable 3 year warranty, some more but most with 3 years.

Whenever you read a complaint in the National press, specialist motoring press or popular blogs about a car fault the warranty is considered to be the ultimate redress when things go wrong. It isn’t, it is there to add to the customers’ legal protection but just because the warranty ends on the car it doesn’t mean that the car falls off a cliff and every part on the car is expected to fail.

Outside of fair wear and tear I would expect most components on a car to last at least 8 years of average mileage provided the car has been properly serviced. The ultimate redress is not the warranty, it is legislation, in this case the Consumer Rights Act.

So when a major item such as a gearbox goes faulty after 3 years and 1 month and the manufacturer refuses to accept liability as you are now outside the warranty revert to your rights within the Consumer Rights Act and take the dealer and the manufacturer to court.

What is a Consumer?: The Consumer Credit Act 2006 defines an individual to include a sole trader, small partnership (3 partners or less) or an unincorporated association. As I understand it (and I have read conflicting information) the Consumer Rights Act defines a consumer as  “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession”.

Not sure how you would determine how much of the use of a laptop computer is for business and how much for personal use. But I have seen suggestions that the ‘spirit’ of the CRA should also apply to SME’s so whilst they may not have the same statutory right of rejection within the first 30 days a court may use as a test of reasonableness the terms laid down in the CRA. The situation is made even more unclear by the scope of control exercised by the Financial Ombudsman Service (FOS).

The FOS deals with complaints from consumers relating to Finance and Insurance Products with consumers being defined as above by the Consumer Credit Act. Now the CCA completely ignores ‘Unincorporated Associations’, i.e. Limited Companies but if you go onto the FOS website you will see that they also offer their services to Micro Enterprises as defined by the EU, which is a business that employs less than 10 people and a turnover or balance sheet net worth of less than 2 million Euros. And of course this can apply to limited companies So where is the consistency?

Financial Ombudsman Service: The little understood fact is that the FOS acts outside the law. It will use the law as its basis for coming to a ruling, which is legally binding on both sides, but the Ombudsman will consider such common sense things such as ‘was the customer treated fairly?’

The FOS can make an emotional decision compared to a judge who must base his decision on the letter of the law so I always recommend that you consider the FOS before court action. And bear in mind you don’t have to accept the FOS ruling, you can still exercise your right to go to court. And whilst you may run a Micro Enterprise and your complaint would normally fall outside the CCA you can still make your complaint to the FOS and you will be listened to.

By Graham Hill

As we get closer to the time when the new Financial Conduct Authority (FCA) takes over control of the Consumer Credit Act it is important to make sure that you and your business, if you are an SME that isn’t a limited company, are in good shape for credit. In future lenders will want to carry out an ‘affordability test’ to ensure that you can afford your repayments.

Thinking of a change but unsure as to the best way to finance your car? Then you need a copy of my car finance book, Car Finance – A Simple Guide by Graham Hill. Click on the link below to buy the best car finance book on the market, available as a Kindle Book and Paper Back.

Whilst some lenders claim that their own affordability tests are already working well and therefore won’t change I personally think that you should assume that lending will tighten up, certainly in the short term. This strengthened affordability test may be in the form of an income and expenditure account or it may be copies of your last three months bank statements.

Whilst your income and expenditure report may show that you can afford repayments the one thing that will kill an application is a returned item shown on your bank statement, if asked for, because you have exceeded your overdraft limit or dropped into an unauthorised overdraft and the bank has not paid an item.

Having an overdraft that is being used isn’t a bad thing although it will probably knock a few points off your credit score but nowhere near as bad as having a returned item. So make sure that your last three months are clean. If not wait until any adverse drops off the last 3 months statements.

You can avoid a returned item if you cancel a direct debit before the money is applied for from your account but beware, this shouldn’t be a direct debit for finance, especially car finance, as a missed payment will show up as arrears. This is another situation that would cause finance to be refused.

You will also be asked for a copy of, or the original of, a current driving licence so make sure that you have both parts available, the paper and the plastic parts. Also make sure that if you have the newer licence that it hasn’t run out of date (has to be renewed every 10 years) and that it is showing your current address.

If you only have an old style licence then make sure that you have a current passport for photo ID to be provided at the same time. One of the issues I regularly address is the need by some funders to see a utility bill dated within the last 3 months. So if you are about to apply for credit make sure that you haven’t thrown away all of your bills as soon as you have paid them.

Mobile phone bills are never accepted and we are finding that fewer funders are now accepting credit card statements and council tax bills as proof of address. Landline telephone bills, water, gas and electric bills are all acceptable along with bank statements as long as they are paper statements not printed off the Internet.

In my book, Car Finance – A Simple Guide, I dedicated the first section to preparing for finance. Essential reading. Final piece of advice on the subject – if you are thinking of changing your car, do it now before the new rules kick in. By Graham Hill

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