Firms that are failing to give refunds to customers for cancelled weddings or holiday accommodation because of the Covid-19 pandemic could face court action from Britain’s competition watchdog.
The Competition and Markets Authority has recorded a rise in customer complaints about cancellations and refunds, which it said it would now investigate. It highlighted concerns that firms are refusing refunds or pressuring people to accept vouchers for holiday accommodation that can only be used during a more expensive period.
Complaints about cancellations and refunds account for four out of five complaints received by its Covid-19 taskforce. They relate mainly to three areas: weddings and private events; holiday accommodation; and nurseries and childcare providers. The watchdog will tackle these areas first and then move on to other sectors.
Thousands of flights have also been cancelled during the pandemic, but this does not fall under the CMA’s investigation. The Civil Aviation Authority, which regulates airlines, has issued advice to travellers and said they should contact it with specific questions.
The CMA said that most businesses are “acting reasonably in what are unprecedented circumstances”, but added that consumer rights cannot be ignored.
Andrea Coscelli, the chief executive of the CMA, said: “Our Covid-19 taskforce is shining a light on some of the big issues facing consumers in wake of this pandemic. Alongside price-gouging reports, we’re now seeing cancellation issues in their thousands. So far, the CMA has identified weddings, holiday accommodation and childcare as particular areas of concern.
“The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside. If we find evidence that businesses are failing to comply with consumer protection law then we will get tough – that means launching enforcement cases and moving to court action where there is a strong reason to do so.”
For most consumer contracts, the CMA would expect a full refund to be issued where a business has cancelled a contract without providing any of the promised goods or services; no service is provided by a firm; or a consumer cancels or is prevented from receiving the service, for example because of the restrictions imposed by the lockdown.
The watchdog said the rights to a refund will usually apply even where the consumer has paid what the business says is a non-refundable deposit or advance payment. It accepts that it may take businesses longer than normal to process refunds, but urged them to make the timeframes clear to customers. A spokesperson added that it would not expect consumers to have to wait “weeks and weeks or even months” for a refund.
Salman Haqqi, personal finance expert at online comparison service Money.co.uk, said: “Now is the time for holiday companies, insurers and airlines to step up and provide better options for holidaymakers at this difficult time and form an industry standard response.
“This will help people understand what they are entitled to if their holiday has been or is likely to be cancelled. Banks also have a role to play here and support where they can.”
The CMA also advised that businesses should not be profiting by “double recovering” their money from the government and customers.
Consumer association Which? meanwhile called on the Civil Aviation Authority to clamp down on airlines which were still not refunding passengers. Rory Boland, of Which? Travel, said: “While the CAA is right to remind airlines of their legal obligations to refund passengers for cancelled flights, incidents of carriers openly breaking the law are mounting up and people are being left thousands of pounds out of pocket as a result – so it is clear that more needs to be done to hold airlines to account.
”Asking airlines to issue refunds ‘as soon as practically possible’ does nothing to remedy this, and risks giving too much leeway… the regulator must stand up for passengers’ rights.”
