The Financial Services (Distance Marketing) Regulations 2004

Payment for services provided before cancellation U.K.

13.—(1) This regulation applies where a cancellation event occurs in relation to a distance contract.

(2) In this regulation, “cancellation event” means the cancellation of a distance contract under regulation 9 or 12.

(3) The supplier shall refund any sum paid by or on behalf of the consumer under or in relation to the contract to the person by whom it was paid, less any charge made in accordance with paragraph (6), as soon as possible and in any event within a period not exceeding 30 calendar days beginning with—

(a) the day on which the cancellation event occurred; or

(b) if the supplier proves that this is later—

(i) in the case of a contract cancelled under regulation 9, the day on which the supplier in fact received the notice of cancellation, or

(ii) in the case of an attached contract under which the supplier is not the supplier under the main contract, the day on which, pursuant to regulation 12(3)(b) or (5)(b), he was in fact informed by the supplier under the main contract of the cancellation of the main contract.

(4) The reference in paragraph (3) to any sum paid on behalf of the consumer includes any sum paid by any other person (“the creditor”), who is not the supplier, under an agreement between the consumer and the creditor by which the creditor provides the consumer with credit of any amount.

(5) Where any security has been provided in relation to the contract, the security (so far as it has been provided) shall, on cancellation under regulation 9 or 12, be treated as never having had effect; and any property lodged solely for the purposes of the security as so provided shall be returned forthwith by the person with whom it is lodged.

(6) Subject to paragraphs (7), (8) and (9), the supplier may make a charge for any service actually provided by the supplier in accordance with the contract.

(7) The charge shall not exceed an amount which is in proportion to the extent of the service provided to the consumer prior to the time at which the cancellation event occurred (including the service of arranging to provide the financial service) in comparison with the full coverage of the contract, and in any event shall not be such that it could be construed as a penalty.

(8) The supplier may not make any charge unless he can prove on the balance of probabilities that the consumer was informed about the amount payable in accordance with—

(a) regulation 7(1) and paragraph 13 of Schedule 1,

(b) regulation 7(4) and paragraph 5 of Schedule 2, or

(c) rules corresponding to those provisions,

as the case may be.

(9) The supplier may not make any charge if, without the consumer’s prior request, he commenced performance of the contract prior to the expiry of the relevant cancellation period.

(10) In paragraph (9), the relevant cancellation period is the cancellation period which—

(a) in the case of a main contract, is applicable to that contract, or

(b) in the case of an attached contract, would be applicable to that contract if that contract were a main contract,

under regulation 10, or under rules corresponding to that regulation, as the case may be.

(11) The consumer shall, as soon as possible and in any event within a period not exceeding 30 calendar days beginning with the day on which the cancellation event occurred—

(a) refund any sum paid by or on behalf of the supplier under or in relation to that contract to the person by whom it was paid; and

(b) either restore to the supplier any property of which he has acquired possession under that contract, or deliver or send that property to any person to whom, under regulation 9, a notice of cancellation could have been given in respect of that contract.

(12) Breach of a duty imposed by paragraph (11) on a consumer is actionable as a breach of statutory duty.