Not upheld: Goods and services under S75 complaint against Social Money Limited

Decision detail

Summary

Mr A complained that Payl8r mishandled his section 75 Consumer Credit Act claim regarding an accountancy training course purchased for his wife that allegedly failed to deliver promised services. Payl8r declined the claim, stating no debtor-creditor-supplier agreement existed because the transaction was between Mr A's wife and the course provider, not between Mr A and the provider. The ombudsman upheld Payl8r's position, finding that Mr A was not a party to the services contract and therefore had no valid section 75 claim. The ombudsman also rejected Mr A's arguments that Payl8r should have warned him about section 75 protection beforehand, investigated the breach independently, or suspended loan repayments during the claim process. The complaint was not upheld.

The Ombudsman's reasoning

Section 75 Consumer Credit Act 1974 requires a valid debtor-creditor-supplier agreement where the credit finances a transaction between the debtor and the supplier. Here, the transaction was between Mr A's wife and R, not between Mr A and R, as evidenced by the pre-contract correspondence and services agreement naming only Mr A's wife as the contracting party. Therefore, Mr A does not have a valid section 75 claim. Regarding service issues: Payl8r was not obligated to proactively warn about section 75 protection as it is ancillary to the main purpose of the agreement; Payl8r was not obligated to investigate the breach once it established no valid section 75 claim existed; and Payl8r was not obligated to suspend repayments as the credit agreement terms permitted continued collection unless the retailer confirmed a refund was in progress, which R had not done. The source of Mr A's frustration is R's conduct, not Payl8r's, and Payl8r bears no responsibility for R's actions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website