Your consumer rights when things go wrong

By the time Thomas Cook collapsed, the writing had been on the wall for a while, but that didn’t make it any less shocking.

Both customers on holiday and those with future bookings felt suddenly cut adrift, desperate to understand what their rights were and whether their holiday or money was safe.

For Thomas Cook’s customers, there has been a huge amount of information shared across the media, so most should understand their rights and what they can demand.

If not, here’s a quick rundown of your rights and what happens next.

But when things go wrong, it’s often just for one or two people at a time and so there’s no frenzy of media information. The risk of not knowing your rights is that you can’t stand up for them when you’ve been let down.

So, from flights to wedding cakes to financial advice, what are your rights and how can you enforce them if a company goes under?

Your rights in a nutshell

Before we get into what you should expect if a business you’re dealing with as a customer goes under, it’s worth taking a moment to remember your rights in the first place.

There are certain consumer rights that are enshrined in law and cannot be ignored by companies. These are the Consumer Rights Act 2015 and the Consumer Contracts Regulations – and any business that you deal with in the UK has to meet them.

All goods must be of satisfactory quality, they must be fit for purpose and they must be as described. If you have paid for something that does not fulfil those three criteria then you can claim for a refund or a repair or replacement, depending on how long you’ve had the item.

That also goes for services, although there are some additional rights and protections when it comes to financial services.

What are my extra protections for finances?

There are extra protections in place for when financial services providers go under and a good place to find out more is the Financial Conduct Authority’s website.

Perhaps the best-known protection available to people is the Financial Services Compensation Scheme, which pays out if certain types of regulated financial providers go under.

For example, if a bank, building society or credit union fails then it will compensate each account holder up to £85,000. And if an investment firm fails and you can show it was negligent in its dealings with you, it may be possible to claim compensation via the scheme too.

Just be aware that simply being regulated doesn’t mean your money is safe.

Who should I complain to?

If you buy an item and it’s faulty then sometimes a retailer will try to suggest you approach the manufacturer for your refund but that’s not necessary.

In fact, it’s the retailer that is responsible because your agreement was with them and not the manufacturer. If you can’t find your receipt then you can still prove where you bought it by showing a bank statement, for example.

What if the retailer goes under?

Unfortunately, we’ve lost many high street names recently. When that happens, it can affect a customer’s ability to enforce their rights.

If a trader or company goes under, there are a number of ways it could owe customers money. Perhaps they have paid for an item that has not yet been delivered or paid a deposit. They may be paying gradually or be holding vouchers or gift cards. Or they may have a faulty product that they had wanted to exchange for a refund.

In that situation, you need to contact the receiver or liquidator and complete a claim form – it’s important to do that as quickly as you can. You may need to provide things such as receipts as evidence.

After that, you join the list of creditors hoping to get some cash back. If you can’t get a refund that way, then people who paid with a credit card have one last hope.

Can I get any extra protection?

If you are confident that you can use credit responsibly, then one way to increase your protection is to consider paying for anything that costs more than £100 with a credit card.

Paying for something using a credit card means the card provider becomes jointly liable with the seller if something goes wrong. So, if the retailer goes under or just won’t help, you can begin a claim through the credit card company instead.

The reason for this extra protection is to ensure you don’t end up with a debt for something you can’t use.

For Thomas Cook customers who didn’t have Atol protection or a travel insurance policy that covers this kind of event, claiming through their credit card provider was their only way to reclaim their money.

What if the company that owes me cash is sold?

If the company is sold on, then it will usually be up to the new owners to decide whether they will honour old debts, unless they have bought the business with the old owners’ liabilities.

That means they may refuse to honour gift vouchers issued before they took over, they may not carry out deliveries placed with the previous owner and they may refuse to repair or refund faulty products.

Again, in that situation, it’s worth looking at whether you might be able to request a refund through your credit card company if you used one.

How about my warranty if the maker goes under?

Even if the retailer you bought something through has gone under, you may still be able to use any warranty if the item you bought came with one. If it’s a manufacturer’s warranty then you approach them for a repair or refund.

And if you paid extra for an extended warranty then don’t despair. It’s possible that extended cover was provided by a third-party insurer, so look at your paperwork to see if you can still make a claim.