Do you know your consumer rights?

It pays to know your consumer rights before you make a purchase, so you don t accept items you re not happy with or end up with goods you can t return.


As Mary Portas shows in her hit television show 'Mary Queen of Shops', you often have to be tough to get the best service from stores. But you also need to mug up on the law if you want to avoid being ripped off in either the real or the virtual high street.

The rules protecting shoppers differ depending on how you shop, with online buyers offered additional safeguards, mainly because you can't inspect your purchases in advance.

And for consumers taking out a financial product such as a loan or pension, there are cooling-off periods to give them time to ponder the financial implications of their deals.

Espe Fuentes, lawyer for consumer rights organisation Which?, says: "When buying in person you have rights under the Sale of Goods Act to return, reject or have the item repaired if it's not of satisfactory quality. But you don't have a right to return them just because you don't like them.

"Many retailers such as Marks & Spencer or TK Maxx allow a change of mind, but these policies are not part of your statutory rights, they are extra."

This is why you see that curious phrase "this does not affect your statutory rights" at the bottom of a retailer's returns statement - because its policy does not replace the law.

Shops offer these additional benefits as a gesture of goodwill, to keep you coming back.

John Lewis, for example, recently upgraded its policy - previously a 28-day no-quibble return arrangement - to a never-ending refund policy on returned goods so long as they are unused, unworn and accompanied by receipts as proof of purchase.

Be aware, however, that even tolerant retailers may expect you to keep the original packaging, if relevant, and may charge you if they have to replace it.

Fuentes warns: "You need to check each retailer's policy. People come a cropper because they assume they are entitled to return goods with no questions asked.

"I had a recent case when someone bought a sofa but had failed to measure their sitting room correctly, so the sofa didn't fit. The store did not take the sofa back, and legally it doesn't have to, as it's your responsibility to get the measurements right."

According to a Which? survey carried out in late 2010, just 18% of shoppers check returns policies before making a purchase.

Faulty items

Faulty or wrongly described goods are covered by tighter rules, with retailers legally obliged to replace them even if you don't have a receipt - although you may have to produce some proof of purchase.

"In this situation you have a month to return them," says Fuentes. "This can cause problems, as often people buy presents well in advance of a birthday or Christmas so that period has expired by the time they discover the fault. Because of that, you won't necessarily get a refund but might have to make do with repair or replacement.

"Under contract law, consumers have up to six years after purchase to return a faulty product."

The Trading Standards Institute warns consumers against being fobbed off by retailers that direct you to the manufacturer if your product is faulty. It says if goods are not of satisfactory quality or are wrongly described it's the retailer's responsibility to sort out the problem.

Even if the goods come with a manufacturer's guarantee, this is in addition to your consumer rights.

Sales shopping

Goods might be marked down in the sales but you still have the same rights if they prove to be faulty or unfit for purpose. Shops displaying signs saying "no refunds on sale goods" are breaking the law.

Fuentes says: "Often you see something reduced because it has a button missing, but if you get it home and find the seam is ripped you're entitled to take it back."

Watch out for any changes to a store's own returns policy during the sales period - Monsoon normally allows 28 days, for example, but that reduces to seven days for sale items.

Distance shopping

Shoppers buying remotely get extra protection. "The law recognises that if you've bought an item through a catalogue or online you need to ascertain what it really looks like," says Fuentes.

If you buy online, by phone or post, the Distance Selling Regulations 2000 gives you up to seven working days to return them or inform the seller if you're not happy. Both the value of the goods and the postage should be refunded.

The drawback for serial returners, however, is that they have to pay the return postage and packing charges - unless the retailer offers it as part of its own returns policy. Be warned: refunds are not usually allowed on CDs, DVDs and computer games if they are no longer sealed, unless they are faulty.

Holiday purchases

If you have a change of heart and cancel a confirmed holiday booking you're likely to lose your deposit or face a cancellation charge because you're breaking a contract.

You'll only be able to cancel a package trip if the content has changed significantly after booking. Sometimes you can transfer a holiday in the event of a death in the family - but not just because you changed your mind.

To cover yourself against a tour operator going bust make sure it's signed up to either the Air Travel Organisers' Licensing (ATOL) or the Association of British Travel Agents (ABTA), or a similar scheme which protects you against financial loss or being stranded abroad.

Think about taking out holiday insurance too - but check the policy's small print on cancellation and curtailment.

If you pay for your holiday by credit card, and it costs between £100 and £30,000, you may be covered by Section 75 of the Consumer Credit Act and be entitled to a refund should something go wrong, even if you booked individual elements of your holiday yourself rather than a package.

You will need to contact your card issuer. If it rejects your claim, take it up with the Financial Ombudsman Service (FOS).

Buying a motor

When you buy a car from a car dealer or an online trader it must be of 'satisfactory quality', 'fit for purpose' and 'as described'. Failure to comply with these rules means you're entitled to a repair, replacement or refund, as with any other product, according to government-funded advice service Consumer Direct.

If you buy over the phone or through the web, you also have a cooling-off period of seven working days in which to cancel and get your money back.

You have fewer rights if you buy privately, as the car simply has to match the seller's description and be legally theirs to sell.

Phones and broadband

Always scrutinise the terms and conditions before signing up with a home phone, mobile or broadband provider - some may give you a cooling-off period (they must give you seven days if you sign up online or by phone) but others don't, which could land you with a charge if you change your mind.

If you have a broadband service that doesn't work for four weeks continuously, you're entitled to cancel the contract without penalty. If your complaint is unresolved within eight weeks, you can then contact one of two resolution services, Otelo or Cisas, depending on which provider you use.

Financial products

Many financial products allow you to change your mind about buying without penalty, so long as you cancel within a set period. For credit agreements, such as credit cards and personal loans, the cooling-off period is 14 days. For general insurance it's also 14 days, and for life insurance and pensions, 30 days.

If you feel you have been mis-sold a financial product, you need to complain to the company first, and if that fails, seek redress from the FOS.

Mortgage borrowers can get out of a deal any time before completion, but you risk losing money if you've paid a valuation and certain other fees that are not refundable.

Once you have completed, if you want out, you'll have to pay the loan off somehow, such as by switching to another lender, and there may be early redemption penalties and exit fees that would make that option expensive.

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How banks took us all for mugs (and got away with it)

I’m at the European Commission’s Consumer Summit in Brussels, which has a focus on bank fees, and reluctantly, I’m beginning to accept that the villains of the Noughties will simply walk away from the mess they've created.

Let’s lay out the charge sheet covering the major sins of the last decade:

* Casino banking was a major contributor to the economy-wrecking credit crunch;

* Banks, and other lenders, pushed loans and mortgages to those unable to repay – on a grandscale;

* Banks aggressively ramped up the cost of banking for those most likely to be in financial hardship: the applying of penalty charges (sometimes more than £35 a pop) for millions of customers;

* And so as not to leave any group of customers feeling left out in the exploitation stakes, bank ‘advisers’ flogged high-risk investments to customers looking to avoid risk.

How not to treat customers

So, we have bank account customers, borrowers and investors all wronged to varying degrees.

It’s not exactly something out of the Tesco manual of how to keep your customers happy.

But hey, why should they care? The banking industry remains massively profitable, bankers continue to collect enormous bonuses and there’s little evidence of any over-arching force bringing it to an end.

For some bankers, it feels like the party’s only just begun. After all, some of the competition has disappeared at a time when there’s more business to be done: countless recession-hit companies have been forced to turn to banks to help them raise money by issuing extra shares or bonds. And the cherry on the cake has been that central banks have generously slashed rates and therefore borrowing costs for banks.

But don’t get me started on investment banking.

Instead, let’s focus on the banks’ consumer sins for a moment (putting aside the casino banking that bought about the worst recession in 80 years – that’s the last time I’ll mention it. Promise).

Credit cards, loans, mortgages

Banks lent to people who couldn’t afford it. On loans, they also added expensive insurance (payment protection insurance) that customers often didn’t need, or disguised the true cost of repaying the debt. They also sent enticing ‘cheques’ that added expensive debt to their credit cards of those cashing them. These, of course, were mostly cashed by those least likely to be in a position to repay. On mortgages, loans that were more than five times bigger than annual income were common. Some of those people are now in arrears or have had their homes repossessed.

The result: As the borrowers fail to repay all of the money lent out, the banks simply pass on the cost to other borrowers. That’s why rates on loans and credit cards have soared relative to the base rate in the past two years.

Action: The EC passed laws in 2008, which now force banks to make rates clear from the start. That doesn’t help those already lumbered with expensive debt. Today I asked the EC consumer department’s head of financial services and redress, Dirk Staudenmayer, whether banks can be trusted to make individual lending judgements. He preferred to put the emphasis on financial education: teaching the next generation how to manage money. But what about those in trouble today?

Investments

If you have a pot of cash, the last thing you should do is ask your bank what to do with it. That, at least, is the conclusion you could make from reading the countless tales of mis-selling in recent years. Our sister title Money Mail has done an incredible job in exposing this dubious practice. Basically, bank staff were able to earn better commission by selling a risky investment when a safer product may have been better,

Result: Sadly, many of the victims were elderly people looking to place their money somewhere safe where it could pay them an income. Some lost most of their money. Some Barclays customers were inspired to set up a website: http://www.barclaysinvestmentvictimsclub.co.uk/
Banks claim to be phasing out dubious bonus schemes.

Action: The FSA, which regulates the industry and makes up the rules, and the Ombudsman, which decides on compensation, are being urged to work together more closely to spot when problems arise. But there are no new rules in place to stop banks doing this again once the dust settles.

Bank accounts and charges

The banks began steadily increasing penalty charges – fees on exceeding overdrafts or bouncing cheques, etc - in the early Noughties as an easy way to make more money. But they overcooked it, and some shrewd consumers hit back. They found a law that suggested penalties should only cover the costs incurred by the bank. The industry ran scared, paying out millions in refunds until a two-year test case that repeatedly found against the banks got turned round on appeal, with the UK Supreme Court ruling late last year finally killed off the refund party. This week the Office of Fair Trading, previously feisty on the issue, tamely admitted that banks had done much to reduce fees..

Result: Many bank customers are unlikely to get back fees at a time they could really used them - the banking industry-induced recession may have left them struggling. They can still attempt to get back unfair fees by putting a case to the ombudsman. But in the end, the banks will probably keep most of the rip-off charges. Meanwhile, charges are lower but there’s no rules to stop them rising again – only consumer and media coverage could stand in the way.

Action: The OFT will continue to look at the issue, but don’t expect much given that the Supreme Court ruling clipped its wings on the issue. As for Europe, surely there’s good news around the corner if the EC’s consumer bods are focused on bank fees? I asked the top man on consumer issues John Dalli - the new EC Consumer Commissioner. He wants to provide the means for consumers to compare bank accounts on the full price (all bank fees included). He believes transparency and comparison is the answer then it can be ‘left to the market’. If this comparison could be extended across borders, then that would help further, he says, increasing competition and decreasing costs.

I like the theory, but the full 'harmonisation' of banking services across Europe is unlikely to happen in my working lifetime.

What’s more, Britain’s online banking comparison industry is far more advanced than in Europe. But the EC’s study of the cost of banking in nation states last year ranked the UK a pitiful 17th, with customers paying nearly £100 a year, on average. Conclusion? Widespread access to bank comparisons has not made banking cheaper in the UK.

The issue in the UK is the lack of competition (consider that the recent banking licence granted for Metro Bank was the first for a start-up in 150 years).

And that’s why bankers will get away with it.

P.S. Feel free to use this blog post to urge the EC and UK authorities to get tough on any of these issues. I’ll make sure they see it. Then write to your MP and tell them how you feel.

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