Enhanced consumer protection in respect of pre-payments for goods

The Government has announced its intention to bring forward legislative changes which would have the effect of enhancing the rights of consumers who have pre-paid for goods including in the event of a retailer’s insolvency.

Currently, if a retailer enters formal insolvency, goods which have been paid for in advance but which remain in the company’s possession are, subject to various factors, likely to be treated as assets belonging to the retailer and may be realised by the insolvency office-holder for the benefit of creditors generally.

The proposed changes will aim to, amongst other things, provide clarity for consumers about when transfer of ownership of goods from the business to the consumer occurs where goods have been paid for in advance, and set out ways of identifying the consumer as legal owner (for example if goods have been labelled or altered for the buyer).

Given the significant rise in on-line shopping, which almost invariably requires payment in advance, these proposed changes are likely to be a positive step for consumers, albeit, it appears unlikely that the changes will benefit a consumer if the item they have purchased is bespoke in some way and has not yet been manufactured.

To read the Government’s press release click here.

Sarah Mower specialises in business insolvency and restructuring within the Business Services department at Barker Gotelee Solicitors in Suffolk.

Suffolk Insolvency Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email bg@barkergotelee.co.uk