Customers who have made a Section 75 claim with their bank or credit card provider could be waiting until next year for a refund, This is Money can reveal.
One HSBC customer – who simply wants to be named as Ray – made a claim in August 2020 after a New York holiday scheduled for April 2020 was cancelled due to the pandemic. However, he is facing a lengthy delay for a payout.
He is just one of thousands who have made claims with banks reporting an increase in Section 75 claims over the past year as it enables travellers to get a refund on their cancelled trips.
This appears to have created a backlog – and especially so at HSBC.
HSBC told one customer he could have to wait until the end of 2022 for a refund to be given
In Ray’s case, his holiday operator, Jetline, said it wouldn’t pay out so he and his wife claimed on their respective credit cards, with £2,058 on his HSBC card and £1,165 on his wife’s Tesco card.
Initially, Tesco wrongly told Ray it would refund them the whole amount, despite only paying £1,165 on it, but as is correct, just that amount was returned, in August 2020.
This is when he opened a Section 75 refund claim via his HSBC credit card for the rest of the holiday covered by that card.
Section 75 of the Consumer Credit Act 1974 gives credit card users protection in the event they suffer from a breach of contract or misrepresentation when buying goods.
It removes the risk that people could be put into debt for goods or services that weren’t received at all, were faulty, or were otherwise not as described.
Section 75 offers protection for items or services valued from £100 to £30,000, of which at least part of the purchase, such as a deposit, was made with a credit card – such as Ray’s holiday.
However, he had not heard any update by Christmas, so contacted HSBC.
He claims he was told by the bank there were ‘no applicable timescales for Section 75 claims’ and it was currently taking between 6 and 12 months for cases to be reviewed.
It added this time frame relates to the amount of time taken to complete an initial review of a case, not resolve the case.
One holidaymakers trip to New York was cancelled and they waited nearly a year for a refund
This means, he could potentially be waiting until the end of 2022 for a holiday that was due to go ahead in April 2020 – nearly a two year wait.
This is Money contacted HSBC to find out why it was taking so long for a refund to be processed.
A HSBC spokesperson said: ‘Like most financial services providers, we have faced an unprecedented increase in volumes of Chargeback and Section 75 claims due to the Covid-19 pandemic.
‘We are sorry for any delays customers have experienced as a result of this and are currently making improvements to streamline the claims process.’
Fortunately, he has now received his refund in full as well as £100 compensation for his troubles which he has donated to charity.
This is Money contacted several major banks to find out how long it is taking them to process claims.
HSBC admitted there is a backlog of Chargeback and Section 75 claims it needs to process
Santander said it is reviewing all Section 75 claims within an eight week period from the claim being received and is currently able to review the majority of claims within one to two weeks.
Barclays added it can be done in two weeks but in some cases but there are circumstances where it takes longer.
Lloyds said that, whilst every claim is different and are managed on a case by case basis, it is processing claims within its usual timescales.
Both Santander and Barclays added the length of time taken to process a claim varies depending on the nature of the claim and its complexity as they continue to receive higher volumes of claims than normal.
Whilst there is no timeline laid out in the Consumer Credit Act that stipulates a deadline for Section 75 claims to be dealt with, firms should be mindful of their overarching regulatory requirements to treat customers fairly whilst processing such claims, according to UK Finance.
It said it is essential for customers to provide all relevant information to their issuer – this will always be easier to assess if it is recent, so claiming sooner rather than later is sensible if the retailer has rejected the claim or ceased trading.
The Limitation Act will also be a matter for customers to consider when thinking about claiming as this sets out a timeline within which claims must be made.
If customers are unhappy with how a firm has handled a claim they can complain to the firm and then to the Financial Ombudsman Service.
Firms need to respond to complaints within eight weeks and issue a final letter after which customers are able to take their complaint to the Ombudsman.
Holidaymakers who took out travel insurance could also try and make a claim on their policy if their Section 75 one is unsuccessful.
Looking forward to this summer, when foreign travel may be allowed, consumers are encouraged to take out insurance as soon as they make their booking.
Travellers who book a package holiday will also have more protection and should be given a full refund in 14 days if a trip is cancelled.
While this is taking a bit longer due to the current circumstances, you will be entitled to claim back the whole amount.
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