England: Consumers should be moved up creditor list, says Law Commission

In a report published this week the Law Commission recommends that consumers paying a cash deposit of £250 or over within six months of a retailer going bust should be moved up the priority list when it comes to getting their money back.

“Getting a refund on your deposit depends very much on how you paid, and on commercial decisions made by the accountants dealing with the bankrupt business,” said Stephen Lewis, law commissioner for commercial and common law.

“It can be a hit-and-miss affair, and it’s often the most vulnerable consumers who lose out. We believe that consumers should have better protection in the more serious cases where larger sums are involved.”

As well as protections for larger cash deposits, the Law Commission also recommends that banks should do more to tell their customers about existing protections for card transactions.

Mr Lewis said: “Banks must make it clear to customers what protections are being offered and how to make a claim under the ‘chargeback’ scheme. Consumers should be encouraged to use credit and debit cards whenever they can and to contact their bank quickly if things go wrong.”

The report also considers Christmas clubs and other “savings schemes” that deliver goods or services at the end of the savings period rather than returning money with interest, and the Law Commission recommends that schemes marketed as being suitable for savings must make sure their savers’ funds are protected.