CMA acts as firms duck refunds for customers having to cancel events

Some firms may be dragging their feet in an attempt to stave off bankruptcy, but there’s clearly some rank bad practice out there, says James Moore

The lockdown and social distancing have led to widespread cancellation but getting refunds is proving a problem (PA)

Furlough” is not a word that I imagine is much used at the Competition & Markets Authority, whose staff could be forgiven for feeling run off their feet, especially those employed by the Covid-19 task force.

The latter has been deluged by complaints in relation to cancellations and refunds, or rather the lack of refunds, for services people have paid for but can’t access as a result of the lockdown.

They have accounted for four out of every five lodged.

The regulator has cited weddings and private events, holiday accommodation and nurseries/childcare, as particular areas of concerns.

It has received multiple reports of people pressured into accepting vouchers for holiday accommodation, which can only be used during a more expensive period, of wedding venues refusing to refund any money and telling customers to claim on their insurance, of nurseries asking parents to pay through the nose to retain places.

Now it’s just possible that some of the businesses resorting to these ignoble tactics are doing so because the alternative is bankruptcy. In that case, something like a voucher might be a better option than joining a queue of unsecured creditors, as is the rule when companies collapse.

But note the use of “just possible” and “some”.

I would be much more inclined to feel sympathy for smaller businesses in such a position than I would larger ones, which tend to have more resources and can more easily access help.

There has, in recent years, been a fashion for binging on cheap debt to furnish share buy backs or overly generous dividend payments, while overstuffing the bonuses of CEOs, among large firms. Those indulging in this sort of “financial engineering” are the authors of their own misfortune now the pigeons are coming home to roost.

It should also be remembered that the support made available to businesses from government is considerable, ranging from state-backed loans, to business rate holidays to the job retention scheme covering the wages of staff put on furlough. Banks have also been ordered to play nice.

As a package, it’s rather more generous than the help offered to individuals, some of whom will find themselves thrust onto the rocky shores of universal credit, some of whom will be facing quite severe financial difficulties.

The option of flouting consumer law to keep the show on the road is not something open to those in that unhappy position.

So while we can have a certain amount of sympathy for businesses finding themselves on the horns of a Covid-19 dilemma, it can only go so far.

The CMA’s statement also makes clear that the conduct of some firms is nothing short of reprehensible.

It warns that “businesses should not be profiting by ‘double recovering’ their money from the government and from customers”.

This implies that it has uncovered instances of that happening. Those behaving in such a matter are no better than the profiteers bulk buying hand sanitiser so they can flog it at £20 a go.

Andrea Coscelli, the regulator’s CEO, has promised to take action against firms thumbing their noses at consumer law.

Regulators are not often popular, but the one Coscelli leads could find itself in that position if it follows through and brings the hammer down on businesses using the current unhappy situation to rip off their customers and the taxpayer.

And the bigger the scalp, the louder the cheers will be.