Credit card providers 'failing' on rights advice

Credit cards Image copyright PA

Many financial providers are failing to properly explain protection shoppers have when something goes wrong with a credit card purchase, consumer group Which? says.

Ten firms were asked about a scenario where a sofa firm had gone bust after a deposit had been paid with a card.

Knowledge of section 75 of the Consumer Credit Act - which entitles consumers to a refund - was "poor", they say.

Six firms were only able to correctly answer half or less of the inquiries.

Which? said it was the third time in three years that it had identified gaps in staff knowledge at credit card providers.

Section 75 of the Consumer Credit Act can make credit card providers jointly liable for breaches of contract with a trader when consumers make a card purchase.

It means shoppers should not be left out of pocket if an item is faulty, the retailer goes out of business or it does not deliver what it has promised.

Consumers are potentially protected for the total value of their purchase - provided the total cost of the item is between £100 and £30,000 - even if they only used a credit card for part of the payment.

£600 sofa

The researchers from Which? phoned the 10 providers with such a situation to put their knowledge to the test..

They asked for advice on behalf of a relative who had bought a £600 sofa, with a £60 deposit paid by credit card and the remainder by cheque.

Which? awarded half points in cases where advisers gave a vague answer but indicated that a refund might be possible, or where they said they could not give any information without speaking to the cardholder.

No points were awarded for calls where the adviser said it would not be possible to make a claim, or that the cardholder would only be able to get the deposit back.

The six firms which answered correctly half the time or less were Santander, Nationwide, NatWest, Halifax, Barclaycard and American Express.

Santander staff were found to be the least knowledgeable, only getting half points for one reply out of the six times that researchers contacted them

Tesco Bank was found to have correctly answered five out of the six inquiries, while Capital One and Lloyds got 4.5 right and MBNA 3.5.

Around a quarter of the credit card disputes taken to the Financial Ombudsman Service (FOS) in 2011/12 involved section 75.

Consistent advice

Richard Lloyd, executive director of Which?, said: "Section 75 is an important piece of consumer protection so it's unacceptable that credit card providers have such poor understanding of it.

"Banks must improve staff training and help consumers get their money back when they are entitled to it."

Richard Koch, head of policy at the UK Cards Association, said the research shows "a need to do more to ensure that customers get more consistent advice about their rights".

A spokesman for Santander said: "Although there is undoubtedly an industry-wide difficulty in correctly identifying section 75 claims, we are disappointed to learn of the findings by Which? and are working hard to put robust processes and training in place for our customer advisers.

"We would like to emphasise, however, that where section 75 claims are correctly identified, the vast majority are resolved to our customers' satisfaction."

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