Consumers to have preferential status?

Consumers could be set to jump up the insolvency hierarchy if parliament backs the latest law commission recommendations.

The Law Commissions Report Consumer Prepayments and Retailer Insolvency put before parliament on the 13th July 2016 recommends, amongst other things, that consumers who prepay for goods or services over £250 in the 6 months prior to a formal insolvency process should be paid as preferential creditors.

The general recommendations mean that consumers would become preferential if:-

A) The person is a consumer under Section 2(3) of The Consumer Rights Act 2015;

B) There is a prepayment by the consumer;

C) The prepayment amounted to £250 or more in the 6 months prior to insolvency; and

D) The consumer did not use a payment method which offers a charge back remedy (ie credit card).

The proposed recommendations appear to have been generated by the recent large scale retail insolvencies.

Posted 9:31 AM | Permalink