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OFT advises on protection for consumers buying home improvements

120/06    28 July 2006

As many home owners plan to make improvements to their properties in the summer, the OFT is highlighting the options available to consumers to protect themselves should something go wrong.
 
Tips for consumers

• If you are buying goods or services costing over £100, consider paying by credit card. If you pay by credit card you can claim your money back from the card company if the seller fails to honour the contract, or if the item is faulty or if the seller wrongly describes it or if the supplier goes out of business (see note 1).
• Consider making staged payments and keeping back a significant part of the cost of the home improvements until they are satisfactorily completed, particularly where work such as fitting is involved. This is so you can ask for defects to be put right without the need to make a claim or go to court for compensation.
• Be wary of contract terms requiring full payment in advance, particularly for supply and fit contracts. Check the small print and only pay in full if there is a satisfactory independently-run pre-payment protection scheme, such as that run by Qualitas that will cover you if something goes wrong (see note 2).  

Christine Wade, OFT Director of Consumer Regulation Enforcement said:
 
'It is important for consumers who are asked to pay considerable sums in advance for home improvements to be aware of the ways in which they can protect their interests. Going to court can be difficult and expensive, but these simple steps can provide consumers with some redress should things go wrong.'

NOTES

1. Section 75 of the Consumer Credit Act 1974 says that a credit grantor is equally liable with the supplier for any breach of contract or misrepresentation if all of the following conditions are met:

• the cash price of the item is over £100 but not more than £30,000
• the credit agreement is regulated, ie generally where not more than £25,000 of credit is advanced to an individual (includes sole traders, partnerships and unincorporated bodies)
• the creditor is in the business of granting credit and the agreement is made in the course of that business
• the credit is advanced under arrangements between the credit grantor and the supplier, so that a bank overdraft arranged by an individual to pay for an item is not covered.

Section 75 does not cover debit or charge cards.

2. The Unfair Terms in Consumer Contracts Regulations (UTCCRs) came into force in 1999 (superseding the UTCCRs 1994) and apply to standard contract terms used with consumers. The UTCCRs protect consumers against unfair standard terms in contracts they make with traders. The OFT, together with certain other bodies, can take legal action to prevent the use of potentially unfair terms. A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. An unfair term in a contract covered by the UTCCRs is not binding on the consumer. Ultimately, only a court can decide whether a term is unfair.

Undertakings under the UTCCRs were accepted by the OFT from B&Q, MFI, Limelight (now HomeForm, the parent company for Moben Kitchens, Dolphin Bathrooms and Kitchens Direct) and Magnet that they would use the payment protection scheme administered by Qualitas to address concerns about contract terms requiring full payment in advance of installation.

Under the scheme, consumers pay a deposit when they order the goods and the full balance just before delivery. But if they express dissatisfaction, either with the product or with the installation, the companies pay 20 per cent of the cost in to an independent trust account administered by Qualitas and cannot access it until the complaint is resolved.

In 2003 the OFT announced that it would be carrying out a review of the Qualitas scheme to monitor its effectiveness. That review has now been concluded following the improvements made to publicity and customer information material by the companies concerned.

Qualitas is an independent standards body financed by members from the furniture and floorcoverings industries and overseen by an Advisory Panel whose members are drawn from the trade, consumer groups and trading standards services. Qualitas is part of FIRA (Furniture Industry Research Association). Qualitas has issued a leaflet for consumers who enquire about its scheme. Visit the Qualitas website.    

Other bodies also provide varying degrees of protection for consumers through alternative dispute resolution or deposit indemnity schemes, codes of practice or approval under the DTI TrustMark scheme.

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