Faulty Goods On Finance

Buying goods on finance, like a car or appliance, offers the convenience of spreading payments over time. However, it introduces added complexities when the purchased item proves faulty. Your rights and responsibilities depend on various factors, primarily the Consumer Rights Act 2015 and the type of finance agreement you have.

Your Rights Under the Consumer Rights Act 2015: This Act provides legal protection when you buy goods. The goods must be of satisfactory quality, fit for purpose, and as described. If a purchased item is faulty upon delivery, develops a fault shortly after purchase, or doesn't meet these standards, you have a right to redress. These rights apply regardless of whether you've paid outright or are using finance.

Responsibility of the Finance Company: When using finance, the finance company shares responsibility with the supplier under Section 75 of the Consumer Credit Act 1974, if the purchase price is between £100 and £30,000. This joint and several liability means you can claim against the finance company even if the supplier has gone out of business or is uncooperative. Crucially, this only applies to purchases made via a credit card or a finance agreement arranged directly by the supplier (like a hire purchase agreement). Personal loans, where you secure the loan independently and then purchase the goods, are not covered by Section 75.

Addressing the Issue: Your first step is usually to contact the supplier. Explain the fault and request a repair, replacement, or refund. Keep detailed records of all communication, including dates, names, and content of conversations or emails. If the supplier is unhelpful, you can then pursue a claim against the finance company under Section 75 (if applicable). The finance company may investigate the claim and contact the supplier themselves. They can request evidence from you to support your claim. You'll need to demonstrate the goods are faulty and that you've attempted to resolve the issue with the supplier.

Resolving Disputes: If the finance company rejects your claim or the supplier is unresponsive, you can escalate the matter to the Financial Ombudsman Service (FOS). The FOS is an independent body that resolves disputes between consumers and financial service providers. They will assess the evidence from both sides and make a decision, which is binding on the finance company. Before approaching the FOS, you must allow the finance company a reasonable opportunity to resolve the issue themselves.

Continuing Payments: A common question is whether you should continue making finance payments while a dispute is ongoing. Generally, it's advisable to continue payments to avoid negatively impacting your credit score. However, if you've formally made a Section 75 claim, you can potentially request a temporary suspension of payments while the claim is investigated. Consult with the finance company or a legal advisor before suspending payments, as doing so without proper justification could lead to adverse consequences. Ultimately, understanding your rights and following the correct procedures is vital to resolving issues with faulty goods purchased on finance.