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ombudsman news

issue 144

April 2018

staying aware: holiday clubs and solar panels

Each year we hear from people who’ve had problems involving holiday club memberships – and others who’ve got concerns after having solar panels installed on their homes.

how can the Financial Ombudsman Service help with solar panels and holiday clubs?

People buy a whole range of things on credit – whether it’s using a credit card, or taking out a loan or finance deal. And on the face of it, the goods and services involved aren’t “financial” – whether it’s a car or a new kitchen, or in this case, solar panels and holiday clubs. So people might not always think of us in the first instance.

But if something goes wrong, the law says that – in certain circumstances – the provider of the credit is equally responsible for putting things right with the provider of the goods or services in question. The parts of the law that are most relevant here are Sections 56 and 75 of the Consumer Credit Act 1974.

And if someone feels they’ve been treated unfairly by the business that provided the credit, or that brokered the loan or finance, we’ll generally be able to look into what’s happened.

so what’s the problem with holiday clubs and solar panels?

When we get a complaint about goods or services bought on credit, we have to weigh up all the evidence around whether the quality is acceptable – or whether someone’s got what they were led to expect.

Overall, we reach a range of conclusions – deciding in some cases that the credit provider needs to take action, and in others that they’ve already given a fair answer. However, with complaints about both holiday clubs and solar panels, we’re seeing evidence that people have received misleading information.

what exactly is a holiday club – and what’s going wrong?

Over the years we’ve heard from steady numbers of people who’ve joined holiday clubs. Some holiday clubs are effectively like a timeshare – where someone buys a membership of a club, which allows them to take holidays at the club’s resorts and hotels.

Other holiday clubs are like a "discount club". These will typically be claiming to offer discounted rates on accommodation, and sometimes on flights and other things like excursions.

People often join holiday clubs when they’re already away on holiday – usually, a rep will host a meeting at a resort, and sign people up there and then. Unfortunately, people sometimes find these arrangements aren’t such a good deal. We’ve seen evidence that – whatever the reps may have said at the time – people haven’t ended up getting what they were told they would.

In some cases, people are left struggling to afford the ongoing costs of holiday club membership. And the businesses involved often can’t show us any evidence that they checked whether people could actually afford the club membership before signing them up to it.

    Ms N told us she’d been misled about the benefits of a holiday club membership.

    She explained she’d gone to a presentation about the club when she was on holiday in Tenerife. And she’d signed up on the basis she’d get discounts on flights and holidays, with a significant “cash rebate” after three years.

    Ms N said she’d been given a “certificate” – and remembered being told she’d get back 70% to 100% of the “face value” of £6,000. She told us she’d paid about £8,000 for the membership, partly on her credit card and partly by bank transfer.

    Ms N said she hadn’t made the savings she’d been promised through the discounts. And despite registering a claim for the cash rebate, she hadn’t got that either.

    Ms N told us she’d complained to her credit card company. They’d said there’d never been any guarantees about either the discounts or cash rebate. But Ms N didn’t agree – and asked us to look into what had happened.

    putting things right

    Ms N showed us the cash rebate certificate she’d received in the post following the initial meeting – which referred to a face value of £6,000. When we looked at the terms and conditions of the holiday club membership, we found these didn’t mention the potential to get back between 70% and 100% of this face value.

    However, Ms N sent us some handwritten notes made by the rep during the meeting, which she’d kept. These clearly suggested Ms N would get the rebate she’d mentioned. In our view, her account of what had happened was consistent and credible. And we didn’t think she’d have paid £8,000 for a single year’s membership to the club unless she’d been led to believe she’d get a sizeable amount of cashback and access to discounts.

    Given everything we’d seen, we decided the benefits of the holiday club had been misrepresented to Ms N. So we told the credit card provider to refund the membership costs, adding interest.
    Mr and Mrs P told us they’d been signed up to unaffordable loans to pay for a holiday club membership.

    They explained they’d taken out the membership on holiday in Costa del Sol. After attending a presentation, they’d agreed to pay £20,000 to join the holiday club. They said they’d ended up with a loan in Mrs P’s name for £15,000, and another in both their names for £5,000.

    Mr and Mrs P said that, more than a year on, they were struggling to meet the repayments for these loans. They’d also recently received a £700 bill for “management fees”. They said they hadn’t been told about this – and couldn’t afford to pay it.

    Mr and Mrs P complained to the holiday club – who responded in their role as the broker of the loan. They said that, although they believed the loans were affordable, they were willing to arrange for the smaller loan to be cancelled at no cost to Mr and Mrs P. However, Mr and Mrs P didn’t think this was enough – and asked us to step in.

    putting things right

    We looked closely at the holiday club’s records from when they’d brokered the loans. We saw that they’d initially made four different loan applications to different lenders. Each time, they’d applied for the total of £20,000 – in the name of both Mr P and Mrs P. However, all the applications had been declined. It seemed that, to get around this, the holiday club had then split the amount into two.

    The loan for the bigger amount was in Mrs P’s sole name. Although Mrs P was in regular employment, her income was quite low. Mr P was self-employed, but he also had very little income.

    When we asked the holiday club how they’d decided the loans would be affordable, they couldn’t provide any evidence. Neither could they explain how the future costs arising from the club membership – such as the annual management fees – had been taken into account when they were considering affordability.

    In discussing the loans with Mr and Mrs P and the holiday club, we found there was some confusion about how much they were for. There was also evidence that the information Mr and Mrs P had been given about the loans wasn’t clear. In our view, this meant it was likely they hadn’t understood the full financial implications of what they were signing up to.

    In light of what we’d seen, we decided Mr and Mrs P hadn’t been given enough clear information to make an informed decision about the loans – and that, in any case, the loans weren’t affordable.

    We told the holiday club to reimburse all the loan payments and other fees paid by Mr and Mrs P – and to arrange for both the loans to be cancelled. We said it was fair to deduct from the compensation the cost of the holiday the couple had taken during their club membership.

and what’s happening with solar panels?

We often hear from people who’d thought they were doing the right thing by having solar panels fitted on their homes – but now have concerns they’ve lost out.

Many of these people are looking to reduce their bills, and are often retired or approaching retirement. Typically, having been cold-called, they’ve agreed to have the panels installed – taking out a loan to pay for them. People often tell us they were told the panels would “pay for themselves”, and even make some money.

Unfortunately, for some people – taking their loan repayments into account – the solar panels are actually costing them money. And in some cases, people are being left in financial difficulty.

In the same way as holiday clubs, people who’ve bought solar panels on credit are able to ask the credit provider to refund the costs of the solar panels under Section 75. And if they’re not happy with the answer they get, they can ask us to look into their complaint.

When we look into these complaints, we often find evidence of pressure sales techniques, and misleading sales literature or representations by the salesperson. In many cases, we’re deciding that people wouldn’t have agreed to have solar panels installed if they’d received clearer information. So we’re telling the credit providers involved to put things right.

    Mr L told us he’d been ripped off by a company selling solar panels. He explained he was told the panels would be “self funding”. He’d used his savings to cover some of the costs of having the panels installed, and had signed up to a credit agreement to pay for the rest.

    Mr L said he’d soon realised the panels weren’t saving him any money. He’d already complained to the credit provider, who’d didn’t agree that the benefits had been misrepresented. Mr L didn’t agree, and asked us to look into what had happened.

    putting things right

    Mr L told us that the salesperson promised his loan repayments would be totally covered by the benefits of his solar panel system – through “feed-in tariff” payments and the savings made on his electricity bills.

    He explained the salesperson said the solar panels were “better than free”. But in reality, there was a shortfall between what he was paying out and what he was getting back.

    We looked at the paperwork Mr L had been given explaining the benefits he’d receive. The documentation wasn’t complete – and in our view, the information wasn’t clear. This meant Mr L would have been relying on what the installer told him, rather than on the paperwork, to understand what he was signing up to.

    We then looked at what Mr L was actually getting back. We found that – instead of the situation being self-funding – he was nearly £1,000 a year out of pocket.

    All in all, we decided there was clear evidence of misrepresentation on the installer’s part. And we didn’t think Mr L would have agreed to have the panels installed if he’d realised that, rather than being “self funding”, the panels would actually leave him worse off.

    We carefully considered how to put things right in Mr L’s individual circumstances. In this case, it seemed Mr L was happy to have the solar panels, but was unhappy that they weren’t self-funding. Following our involvement, the credit provider offered to reduce the loan slightly – and to allow Mr N to keep the panels.

    However, we didn’t think this was enough. We told the credit provider to rework the loan – so Mr L wouldn’t pay any more for the panels than the potential savings they’d make over the long term.

if I think this has happened – to me or someone I know – what should I do?

If you’ve got concerns about issues like these, it’s easy and free to complain yourself.

It’s not necessary to use a claims management company. If you do, and we decide a business should pay you compensation, you won’t be able to keep all the money you’re entitled to. In some cases, we’ve seen that people who are already struggling financially are then left with fees to pay to claims managers.

If you want to make a complaint, you’ll need to contact the credit provider – whether it’s by phone or in writing. Tell them, in your own words, why you’re unhappy. They’re required to take your concerns seriously and look into them properly.

Then, if you’re not happy with what the credit provider says, you can give us a call or get in touch online. If you’d prefer, we can talk to someone else on your behalf, like friends or family, or someone in Citizens Advice.

Image: ombudsman news 144

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.