Section 75 Claim - Consumer Credit Act 1974 (as amended)

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Under the Consumer Protection (Distance Selling) Regulations 2000, which is relevant to the T&Cs with the AI (as it was concluded before the revised legislation effective from 2014 onwards):

"Cancellation period in the case of contracts for the supply of services

12.—(1) For the purposes of regulation 10, the cancellation period in the case of contracts for
the supply of services begins with the day on which the contract is concluded and ends as
provided in paragraphs (2) to (4).
(2) Where the supplier complies with regulation 8 on or before the day on which the contract
is concluded, the cancellation period ends on the expiry of the period of seven working days
beginning with the day after the day on which the contract is concluded.
(3) Where a supplier who has not complied with regulation 8 on or before the day on which the
contract is concluded provides to the consumer the information referred to in regulation 8(2) and
(3), and does so in writing or in another durable medium available and accessible to the
consumer, within the period of three months beginning with the day after the day on which the
contract is concluded, the cancellation period ends on the expiry of the period of seven working
days beginning with the day after the day on which the consumer receives the information.
(4) Where neither paragraph (2) nor (3) applies, the cancellation period ends on the expiry of
the period of three months and seven working days beginning with the day after the day on which
the contract is concluded."

The AI never provided any information on cancellation. The T&Cs also never mention "cancellation". The closest in the T&C is some language about "termination":

"Termination by the Student

14. The Student may terminate his/her participation in the Programme by giving the School written notice of termination not less than four weeks before the date on which the Programme commences. In these circumstances the Student shall not be liable to pay the School any sum other than those sums which have already fallen due for payment (e.g. reservation and commitment fees)."
However, this appears to be directly in violation / non-compliance with The Consumer Protection (Distance Selling)Regulations 2000, which states that:

"Where neither paragraph (2) nor (3) applies, the cancellation period ends on the expiry of
the period of three months and seven working days beginning with the day after the day on which
the contract is concluded."

Under the Consumer Protection (Distance Selling) Regulations 2000, a full refund during the cancellation period is available by law.
However, the AI's clause 14 above states that the "Student shall not be liable to pay the School any sum other than those sums which have already fallen due for payment (e.g. reservation and commitment fees).", i.e. the Student would lose approximately £7,000 paid through reservation / commitment fees upfront.

I presume the Consumer Protection (Distance Selling) Regulations 2000 makes Clause 14 unlawful?

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Yes that's right dossier, I can't foresee anything which you might regret if you are seeking to rely on s.75 no but it was something I meant to say in passing so you are aware

Thanks. I have submitted a s. 75 claim to American Express and will keep you posted.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

R0b: on another forum, on section 75, a comment below was:

"
Rottidog, BATH, United Kingdom, about a year ago

After over a year of battling on all available consumer fronts to get redress for a car declared unfit for purpose and dangerous to drive due to excessive water ingress we took out a Section 75 with HSBC as part of the transaction was on the credit card. 14 months later they have turned it down as they were "unable to claim the money from the retailer" and yet they are jointly liable! They have referred me to the FO or courts. As I have already gone down the FO route with the finance company who were also part of the transaction and failed, I am unable to take HSBC to the FO even as a separate company as it is for the same transaction. Their advice now is to take HSBC to court as they have sidestepped their responsibility."

Does the same problem apply here? That once the FOS has looked at the T&Cs, I cannot take an Amex s 75 back to the FOS concerning the same product

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Yes that's right dossier, I can't foresee anything which you might regret if you are seeking to rely on s.75 no but it was something I meant to say in passing so you are aware

I am concerned that getting the FOS to look at the underlying transaction (with the AI) may cause problems in taking the credit card company to the FOS (concerning the underlying transaction), as this may be barred?

[R0b]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

I am not sure it would be barred, the bank failing to pay under s.75 is a separate issue of asking the FOS to provide their view as to whether the contract is regulated or not.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

I am not sure it would be barred, the bank failing to pay under s.75 is a separate issue of asking the FOS to provide their view as to whether the contract is regulated or not.

R0b - I have asked the FOS Investigator to confirm this, although they are now on holiday. I will see what the FOS confirm. If the FOS position is that it does bar a s. 75 complaint to the FOS concerning the credit card issuer, then I will have to freeze or cancel the existing complaint concerning the AI in order to prevent that from happening.

Are you also familiar with the usual tactics concerning a s. 75 claim with the card company? I have submitted the documentation and they have tried to call me.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

I am not sure it would be barred, the bank failing to pay under s.75 is a separate issue of asking the FOS to provide their view as to whether the contract is regulated or not.

Thanks R0b. If I am asked by the credit card s. 75 team to get an independent report to prove the misrepresentation by the AI, how do I do that?

Many thanks

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Thanks R0b - the FOS have confirmed this complaint does not bar me from a complaint in future about the credit card company for the same transaction.

Also, the credit card company has confirmed they have referred my section 75 to their legal team for investigation, as they are not sure it falls within the scope of s 75 (on the grounds that it is above £30k for a "Programme"); I have pointed them to the FOS guidance and my arguments about "single item", but do you have any recommendations on other material I can give them to help convince / persuade them?

My claim is for the 1st academic year and consequential loss.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Hi dossier (I was very careful to insert the 'i' there.......I certainly wouldn't want to be accused of stereotyping students, lol!)

The first thing that comes to mind is that they should be regulated by the FCA.

But let's not stray too far down this path without further input.
@Amethyst & @R0b ....................any thoughts? (I still think, based on para 15 of the T&Cs, that there are 2 discrete years)

Thanks - I welcome any more arguments you have on the "single item" point; I have raised it with the Section 75 credit card team and they are now trying to get their head around the single item point as well; their first thought is it is a "Programme" and it costs more than £30k, so it is not a s. 75 valid claim.

[R0b]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Given the fact that we are not talking about a small sum of money here, be expected for them to resist in some way. Highly unlikely a bank is going to keel over and just accept your argument, they might rely on the fact it is one agreement and not two but that remains to be seen.

Can you explain to me of this single item argument, are you referring in other words the agreement not exceeding £30k? Overall it depends on the interpretation as they will more likely conflict.

As Charity has said, paragraph 15 appears to indicate that there are only two years instead of one. Just because the agreement refers to "Programme" does not mean much its what the terms of the contract says.

It will simply come down to whether or not the agreement is one or two

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Given the fact that we are not talking about a small sum of money here, be expected for them to resist in some way. Highly unlikely a bank is going to keel over and just accept your argument, they might rely on the fact it is one agreement and not two but that remains to be seen.

Can you explain to me of this single item argument, are you referring in other words the agreement not exceeding £30k? Overall it depends on the interpretation as they will more likely conflict.

As Charity has said, paragraph 15 appears to indicate that there are only two years instead of one. Just because the agreement refers to "Programme" does not mean much its what the terms of the contract says.

It will simply come down to whether or not the agreement is one or two

R0b: thanks for this. Yes, I am fully expecting the credit card s. 75 team to "push back" as much as they can on this, as clearly the amounts involved are substantial. Having spoken to them over the phone, they have certainly been polite and accessible. Their preliminary issue at present is that the prima facie case in their eyes is the 'Programme' costs well in excess of £30k, and therefore is outside of the £100 - £30k criteria for a s. 75 claim. However, they have referred it to their internal general counsel for closer review. I am also invited to provide anything further that I can to convince them otherwise.

So at this point, I am at the stage where I have agreed to also provide them as much "evidence" as possible to convince them that each 'Academic Year' should be treated as the "single item", not the entire programme. As discussed before, looking at it in terms of a single academic year puts it within £100 - £30k (as each academic year was priced at £28.7k).

I have been through some of the FOS precedents, but is there any compelling "single item" reference material I can give them?

[charitynjw]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Hi dossier

If the FOS decide that it is non-regulated due to it being 2 discrete years, 3 payments per year, surely this will hand you your s75 argument on a plate?
[MENTION=71570]R0b[/MENTION]..........what do you reckon?

[R0b]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Not so sure it could be that straightforward, it's giving me a headache already and I have only thought about it for 5 minutes lol!

@charitynjw I did think that but I might have to re read the whole thread to try and understand it again.

S.75 allows for breach of contract or misrepresentation. If the FOS decides that the agreement is not regulated then it can only mean that each academic year is a separate agreement as the exemption can only apply if it is a fixed credit agreement and those payments are made 4 or less in 12 months.

If the FOS decides that it is a regulated agreement, then it might make things a bit more interesting. There will be a clear misrepresentation at that point because the school is basing the contract as if it is exempt from the CCA and it also does not have a licence to enter into regulated agreements. The question then arises, could you bring a further complaint against the school for misrepresentation and/or your initial complaint? Secondly, as a result of the misrep, does this still give rise to a right of claim against Amex and entitle you to claim the sums you have paid to date e.g. being the first year only (if i recall you did not complete the second year and so you did not pay the fees) which comes in under the £30k mark.

Or can Amex rely on the fact that the Programme is considered an agreement over two years in which the total value of the contract is more than £30k and despite you only paying and claiming for one year, cannot be entitled to the sums paid as it falls outside of the scope of s.75.

I'll reserve the right to change the above as your matter isn't so straight forward as many s.75 claims.

As for the evidence, it would be difficult to add to anything much more than the facts and circumstances around your case. It seems quite unique and the only way I see you pulling further evidence is from case law. There are a few cases which have gone right to the House of Lords such as OFT v Lloyds TSB in 2007 but that related to connected lender liability and overseas credit card payments as well as payments. You would have to read through their decisions and connected cases as to whether there is any comment or reference to 'single item'.

You could make reference to the FOS initial decision that they consider the agreement to be two separate ones and therefore that would give rise to the claim. That is of course if you have not mentioned this already.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Thank you for all of this. Let me go back to the s. 75 CC team and make further arguments about the "single item" point. Their initial position is to say it is a "Programme" and the "Programme" costs well over £30k, so does not qualify under the CCA 1974 s. 75.

Interestingly, I have an old e-mail from the AI, in response to a query I made about the first invoice, where the response was: "Your invoice is correct. All invoices are raised showing the total programme fee, and instalment due dates.". This relates to an invoice for the first year fees of less than £30k.

[dossier]

Re: Section 75 Claim - Consumer Credit Act 1974 (as amended)

Hi dossier

If the FOS decide that it is non-regulated due to it being 2 discrete years, 3 payments per year, surely this will hand you your s75 argument on a plate?
@R0b..........what do you reckon?

Thanks for this charitynjw. I have been through all the FOS final decision cases relating to "single items", and the bulk of them are situations where someone has ordered several items (arguably a set) which is over £100 in total, but where all or many of the individual items are below £100. In most of these cases, the credit card team have argued that it is below £100 for a s. 75 and the FOS has agreed. Only two exceptions are where the complaint was about some car work service (even though the individual parts were below £100) and for petrol (priced per litre, where the credit card company argued it was unleaded petrol per litre, but the FOS accepted the claim and agreed it was the total amount).

In this instance, I claimed the T&Cs are a CCA 1974 regulated agreement, as it does not meet the payment exemption requirements. The FOS argue it does meet the payment exemption requirements, as there are two separate agreements for payment and therefore it is not regulated by the CCA 1974.

To make matters even more complicated: there are actually two executed contracts: one signed upon offer of admission (at acceptance) and one signed after acceptance of admission (but technically before the start) of the programme. I.e.. There is a "First Contract" and a "Second Contract". The T&Cs posted previously here in this thread and all discussions to date pertain to the "Second Contract", as I assumed that the "Second Contract" was designed to replace / supersede the "First Contract", although there was actually no explicit side-letter or discussion about this being the case. There are some small, but significant differences between the "First Contract" and the "Second Contract".

The "First Contract":

- refers to a much higher penalty default rate
- has no reference to structuring payments in a way that complies with the CCA 1974 payment exemption
- makes no reference to academic years and makes no distinction to termination in the 1st vs 2nd year after the start

I will post the redacted First Contract below, but had assumed the First Contract was simply superseded by the second contract. However, I am now starting to wonder whether the fact that TWO contracts existed helps to claim that each one relates to a different "single item academic year" and therefore we now have TWO contracts, TWO invoices and TWO years!

The FIRST contract is not CCA 1974 exemption compliant.
The SECOND contract is CCA 1974 exemption complaint, if treated as TWO separate academic years.

I expect the AI asked for a signed SECOND contract to replace the FIRST contract, due to the clear lack of compliance of the FIRST contract with the CCA 1974 payment exemption requirements.