The Consumer Rights Act 2015 (CRA) received Royal Assent on 26 March 2015 and is expected to come into force on 1 October 2015. It consolidates existing law and provides new rights and remedies to consumers relating to faulty or mis-described goods, services and digital content.

This article looks briefly at consumers' remedies where goods supplied (including under a hire-purchase contract) are not of satisfactory quality, not fit for purpose or not as described at the time of delivery. These are, of course, issues that often arise in the sale of cars.

In brief, consumers will be able to:

  • within the first 30 days reject the goods for a full refund - the short term right to reject; or
  • seek free repair or free replacement - the 1st tier remedies;

but if the problem is not resolved after one repair or replacement (or more if the consumer agrees) or another fault appears

  • either reject the goods and seek a refund or keep the goods but get a reduction in price - the 2nd tier remedies.

This tiered system of remedies can be found in Chapter 2, Part 1, sections 20 to 24 CRA.

The following points are worthy of particular note:

  • The short term right to reject arises without the need for the consumer to first accept a repair or replacement.
  • When exercising a 1st tier remedy within 30 days, the early rejection period stops running until the repair or replacement is provided. The consumer has the remainder of the 30-day period, or seven days (whichever is longer) to exercise their short term right to reject if the goods are still not satisfactory, fit for purpose etc, either because of the same or a further issue.
  • If the issue with the goods occurs within six months of delivery, where the consumer exercises 1st or 2nd tier remedies, there is a presumption that the goods failed to meet the requirements at delivery and the trader must show otherwise. After six months, the onus is reversed - the consumer must show the goods failed to meet the requirements when delivered.
  • Consumers may enforce their right to a repair or replacement for up to six years from delivery if they can show the goods did not meet the statutory requirements at the time of delivery.
  • If a repair or replacement fails to fix the initial problem, is impossible to provide or cannot be provided within a reasonable time or without causing significant inconvenience to the consumer, or further faults appear after repair or replacement, the consumer can reject and seek a refund or seek a reduction in price if the short term right to reject has expired.
  • The consumer can choose repair or replacement but if their choice is impossible or disproportionately expensive to the trader, they cannot insist on it, and, provided it is equally effective and does not cause significant inconvenience, must accept the alternative remedy.
  • When exercising the 2nd tier remedy of a final right to reject within six months of receiving the goods, the refund will be in full, save where the item in question is a motor vehicle - where a reduction for the actual use the consumer has had from it can be made. If rejection is more than six months after supply, a reduction can be made for the use of the goods.
  • Refunds (and price reductions) must be paid within 14 days after agreement is reached. In hire-purchase agreements or conditional sales contracts, if the contract is terminated before the whole price has been paid, the entitlement to a refund extends only to the part of the price paid.

Guidance for businesses has been produced by the Department for Business, Innovation and Skills (BIS). All motor finance companies and dealers need to be aware of the changes and ensure they are ready for them.

This article was originally published in the May 2015 edition of Motor Finance.