MSE News

Watchdog to investigate unfair coronavirus cancellation policies

The competition watchdog has launched an investigation into complaints that some firms are failing to  refund customers for cancellations due to coronavirus, and it's threatened to take legal action to enforce consumers' rights if needed. The watchdog says as a general rule firms MUST offer cash refunds for cancellations, and you can report firms that don't – watch Martin's interview with one of its bosses below.

The Competition and Markets Authority (CMA) says it will initially focus its investigation on weddings and private events, holiday accommodation and childcare providers, including nurseries, before moving on to other sectors. It says 80% of the complaints received by its Covid-19 taskforce – which monitors the problems facing consumers – are now related to cancellations and refunds.

The issues reported include firms refusing refunds or pressuring customers to accept holiday vouchers which could only be used in more expensive periods.

The watchdog says while most businesses are acting reasonably, if there is evidence that companies aren't complying with consumer rights laws around cancellations and refunds, it will take "appropriate enforcement action". This could involve taking firms to court if they don't address the concerns – and individuals are also able to take their own legal action against unfair terms.

The CMA's investigation comes as continues to receive large numbers of complaints from users about cancellations and missing refunds, particularly relating to holidays and flights. We've had thousands of complaints in the past few weeks, particularly in response to the MSE Coronavirus Survey, and we've briefed the CMA as well as Trading Standards and the Government on what we've been told.

If you've been affected by unfair cancellation terms from a firm during the coronavirus crisis, you can report it to the CMA using its online form. While you won't receive individual support with your complaint, the information you provide will help the CMA decide which issues to focus on. 

See our Coronavirus Travel Rights guide for more info on holiday refunds, and our Coronavirus Life-in-Lockdown Help guide for more info on cancelled events.

'This is welcome guidance – but ultimately enforcement action will likely be needed'

Responding to the announcement, Martin Lewis, founder of, said: "Let's hope this is the game-changer. Many firms are fighting tooth and nail to not give monetary refunds – whether it's holiday firms like Hoseasons and Sykes, wedding providers and airlines like Ryanair. And sadly, in some of those areas, contractually there are grey areas, leaving things at an impasse.

"These CMA guidelines effectively say it doesn't matter what's in the contract – if you're not delivering the goods or service to customers, they have rights, and they should be given a full refund.

"However, while this is welcome guidance, often even when rights are clear-cut consumers have no way of enforcing them, other than starting court action – which is in no one's best interest. How can you force a firm to give you a refund when it simply says no regardless of the law? Ultimately, enforcement action is likely to be needed.

"The CMA has chosen to start with nurseries, holiday accommodation and weddings and events, all of which we've seen massive numbers of complaints about. The obvious missing fourth though is flights.  We know EU regulation 261/2004 gives all those whose flights have been cancelled an automatic right to a refund, yet many of the big players are not paying up or saying you'll have to wait a year. Perhaps it's had fewer complaints as people know their rights, even if they're not getting them."

What are my refund rights?

The CMA has also issued a statement on its expectations around cancellations and refunds.

It says that for most consumer contracts, it would expect a full refund to be issued if:

  • A firm has cancelled the contract, and hasn't provided any of the promised goods and services.
  • The firm hasn't provided any service – for example, because lockdown restrictions prevented it from doing so.
  • A customer cancels or is prevented from using the service – again, an example would be if lockdown restrictions prevented them from accessing the service.

The CMA has also warned firms against "double recovering" their money from the Government and customers.

Here you can watch Martin interview George Lusty, the CMA's director of consumer protection, on the Martin Lewis Money Show, about your rights and what action you can take:

Embedded YouTube Video

What does the CMA say? 

Andrea Coscelli, chief executive of the CMA, said: "Our Covid-19 taskforce is shining a light on some of the big issues facing consumers in wake of this pandemic. Alongside price-gouging reports, we're now seeing cancellation issues in their thousands. So far, the CMA has identified weddings, holiday accommodation and childcare as particular areas of concern.

"The current situation is throwing up challenges for everyone, including businesses, but that does not mean that consumer rights can fall by the wayside. If we find evidence that businesses are failing to comply with consumer protection law, then we will get tough – that means launching enforcement cases and moving to court action where there is a strong reason to do so."

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