What the Competition and Markets Authority investigation in to cancellation policies means for you

Without doubt, the most common question I’ve heard in the last month has been about refunds and consumer rights. The rules are complicated and vary depending on the different business sectors, so it’s little wonder that people have been confused and telephone helplines have been under onslaught.

Where there’s no law or regulation covering refunds, your rights usually come down to the contract. Not just what it says but whether it’s clear, unambiguous or fair. These distinctions are subtle and often get decided by an ombudsman if there is one for the courts, so it’s not black and white.

My heart sinks a bit when I see online ‘armchair experts’ covering the intricacies of contract law online. I’m afraid that often there isn’t an easy answer – and it’s often on a case by case basis.

However, some businesses are required to give refunds but are stalling while others have been accused of misleading people or not acting in the spirit of the contract. So today’s announcement by the Competition and Markets Authority (CMA) on cancellation rights has resulted in a massive amount of publicity.

What did the CMA say about refunds?

The CMA has basically said that after a huge number of complaints about refunds, it has a number of concerns about how businesses are (or more specifically, aren’t) giving refunds.

It’s identified three sectors of particular concern.

• weddings and private events
• holiday accommodation
• nurseries and childcare providers

But the CMA has also made it clear that it will be looking at other business sectors.

• a business has cancelled a contract without providing any of the promised goods or services
• no service is provided by a business, for example because this is prevented by the restrictions that apply during the current lockdown
• a consumer cancels or is prevented from receiving the service, for example due to the restrictions that apply during the current lockdown

Here’s the complicated bit. The CMA has taken a look at existing consumer law and concluded that in most cases where services are cancelled or not provided you could get a refund. Here’s their reasoning: https://www.gov.uk/government/publications/cma-to-investigate-concerns-about-cancellation-policies-during-the-coronavirus-covid-19-pandemic/the-coronavirus-covid-19-pandemic-consumer-contracts-cancellation-and-refunds

Does this mean a business has to give me a refund?

The announcement is the CMA’s way of letting businesses know what it thinks and what it might do if they don’t play ball. But it isn’t a new law and some businesses may well ignore it if they disagree or simply can’t afford it.

If a firm doesn’t follow this guidance the CMA can take them to court, but that’s a complex and lengthy process. So by issuing this guidance, the CMA is making it clear what they expect and making it clear that businesses need to fall in line.

What next? (and an ethical dilemma)

I’m really pleased that the CMA has clarified how businesses should be considering refunds. It’s really hard for us specialists in consumer rights to navigate this complicated and varied landscape, never mind customers, so I and Resolver absolutely welcome this announcement.

Since the pandemic began, I and other consumer rights campaigners have been encouraging people to ‘do the right thing’ if they can afford it and not go straight in on the refund option. Even big businesses like airlines are perilously close to going under if we all demand our cash back. So if we want to take advantage of a business’s services in the future, it’s not only ethically sound to support it but practical and pragmatic too.

Where the CMA’s statement is particularly helpful is giving you and the business a starting point to negotiate a good solution. So say your wedding has been cancelled (sorry to all those affected!) but you can’t cancel the venue, the CMA has made it clear that if you cannot use the venue because we’re still in lockdown then you may be entitled to a refund. But… you could also move the event to a point in the future. Even if the wedding date isn’t confirmed you could use a future date for a big celebration with friends and family anyway. Or you could transfer the booking to someone who does want to take it up.

Nothing is set in stone because nothing in the months ahead is definitive. We may be able to travel but we may not want to – and that’s a different situation too. That’s why it’s important that we all work together, get creative and compromise wherever possible.

So on one hand, what great news! But on the other, be responsible. Businesses will go under if everyone asks for cash back – and I for one don’t want to see vital small businesses like nurseries going bust when we could hold fire and support them through this difficult time.

We’ve seen so many examples of people doing wonderful, community things throughout this pandemic. Let’s keep working together. Know your rights, help where you can.

Alex Neill