Bank of Scotland plc · DRN-6238054

The complaint Mrs O complains about the outcome of a claim she made under sections 75 and 140 of the Consumer Credit Act 1974 to Bank of Scotland plc trading as Halifax (“Halifax”). Mrs O is represented in this complaint by a claims management company (“the CMC”). What happened In September 2021, Mrs O entered a contract with a company I’ll call ‘T’ for spray foam insulation to be installed in her loft space. The contract price was £3,300 and Mrs O paid £2,500 of this using her Halifax credit card. Mrs O arranged to remove the spray foam from her loft space in January 2024. The CMC sent in a claim to Halifax under sections 75 and 140 of the Consumer Credit Act 1974 in December 2024, saying the following: • T installed the product in direct contravention of the appropriate British Board of Agrement (‘BBA’) certificate, and in doing so failed to comply with Section 13 of the Supply of Goods and Services Act 1982. • A Chartered Surveyor (who I’ll call ‘H’) had concluded that the removal of the product was a reasonable action to prevent damage to the roof timbers and metal components through condensation as a result of the incorrect installation of the product. • The prospect of Mrs O being able to sell her property had been severely curtailed as a result of the installation of the product as many mortgage lenders will not lend money to purchase a property when the product has been installed. • The mortgage section on Halifax’s website highlighted that spray foam is not an approved product in relation to what insulation products quality for its Green Living Reward mortgage. • There had been a Court Injunction against the company director of T as well as various shareholders and multiple salespersons of T for their involvement in deceiving customers into purchasing wholly unnecessary spray foam loft insulation.

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• There was case law which set out that a Court or Arbitrator is bound to accept unchallenged expert evidence. • Mrs O was entitled to a remedial order pursuant to Section 140B of the Consumer Credit Act 1974. The CMC said Halifax should pay Mrs O the contract price of the insulation, the £3,600 it cost her to remove the product, and £1,020 for the cost of the report carried out by H. Halifax didn’t think Mrs O’s claim should succeed. They said the spray foam had already been removed a year before H had inspected Mrs O’s loft space, and that they weren’t now able to commission an independent report to validate any breach of contract. The CMC didn’t agree. They said H had provided specific evidence about the installation of the spray foam, and that it wasn’t reasonable for Halifax to dismiss this. The CMC then referred Mrs O’s complaint to our service. Our investigator didn’t recommend that it should be upheld. He said: • There was insufficient evidence that T misrepresented the spray foam to Mrs O during the sale. H had noted that T’s brochure made misleading claims about the energy efficiency of spray foam, but the CMC hadn’t sent any supporting evidence showing the impact spray foam had on Mrs O’s energy bills. • Certain guidance that was published in December 2021 said there were mortgage lenders who decided not to provide lending on properties with spray foam. However, this guidance was retracted in March 2023. • Because the spray foam had been removed, it was no longer possible to obtain further evidence to show what the spray foam was like post-installation. So, it was reasonable for Halifax to decline the claim. • The report from H wasn’t persuasive and appeared to be more opinion than fact. • There was no evidence provided which showed there was any damage to the timbers or metal, as claimed. • The company who removed the spray foam didn’t set out there were any problems with it that necessitated its removal. The CMC disagreed with our investigator. They provided advice they’d received from an instructed Barrister which said the investigator’s determinations were irrational or wrong in law for the following reasons: • The requirement to show evidence of the actual condensation damage ignored H’s opinion that such was likely and failed to consider Mrs O’s right to take remedial measures to mitigate future anticipated loss. • The evidence that ventilation problems had occurred or will occur was provided by an expert which was independent and uncontroverted. • The investigator’s comments that H’s report was more opinion than fact was irrational and ludicrous. The purpose of an expert such as H is to provide opinion which is what distinguishes expert evidence from evidence of fact.

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• There was no basis for the investigator to replace H’s opinion with his own. • Where the opinion of an independent expect is unchallenged by opposing independent expert evidence, that opinion should be accepted unless it is obviously incorrect. This was set out in the case: TUI (UK) Ltd v Griffiths [2023] UKSC 48. As the matter remains unresolved, Mrs O’s complaint was passed to me for a decision. I issued my provisional decision on 6 March 2026, in which I said the following: ‘I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Where the evidence is incomplete, inconclusive, or contradictory, I reach my decision on the balance of probabilities – that is, what I consider is most likely to have happened in light of the available evidence and the wider circumstances. When considering what’s fair and reasonable, I’m required to take into account; relevant law and regulations, relevant regulatory rules, guidance and standards and codes of practice; and, where appropriate, what I consider to have been good industry practice at the time. I think relevant law in this case includes Section 75 of the Consumer Credit Act 1974 (“Section 75”). Section 75 affords consumers (debtors) a right of recourse against lenders (creditors) that provide the finance (in part or in whole) for the acquisition of goods or services from third- party merchants (suppliers) in the event there is an actionable misrepresentation and/or breach of contract by the supplier. In short, a claim against Halifax under Section 75 essentially mirrors the claim Mrs O could make against the supplier. Certain conditions must be met if the protection afforded to consumers is engaged, including, for instance, the cash price of the purchase and the nature of the arrangements between the parties involved in the transaction. Halifax doesn’t dispute that the relevant conditions are met in this complaint. I consider that The Consumer Rights Act 2015 (“CRA”) is also relevant here, not The Supply of Goods and Services Act 1982 that the CMC referred to in its Letter of Claim. This implies terms into Mrs O’s contract with T that, amongst other things, the service being provided would be done with reasonable care and skill. What is considered reasonable care and skill isn’t focused on the results achieved, but the manner in which the service was carried out. And it is usually taken to mean the level of care and skill that would be expected in that particular industry. Halifax’s response to the Section 75 claim was essentially that it wouldn’t succeed because the spray foam had been removed a year prior to the inspection by H, and that it wasn’t possible for an independent inspection to now be carried out.

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I think Halifax’s response was too narrow in its consideration. The CMC had provided what it considered to be expert evidence from H who had provided specific comments about how T installed the product, and how (in their opinion) this wasn’t carried out with reasonable care and skill and that it contravened the requirements of the relevant BBA certificate. I think Halifax should have considered the report and those specific points in more detail and provided its reasons for disagreeing with it, rather than not commenting on its contents at all. So, as a starting point, I don’t think Halifax dealt with the Section 75 claim particularly appropriately. As the Section 75 claim hinges on the contents of H’s report, I’ve gone on to consider the key points made within it and whether this should have led Halifax to have upheld the claim. Compliance with BBA Certificate H made several separate points within its report which it says showed that the spray foam wasn’t installed in compliance with the appropriate BBA certificate. The key parts of this are that: • Section 4.2 states the spray foam can be used within existing dwellings ‘between, or between and under, timber rafters in a non-habitable warm pitched roof (loft space). Insulation at rafter level only, with or without counter battens’. H though says insulation was present at ceiling level which was contrary to the certificate’s requirements. • Section 4.4 states that ‘constructions must be designed and constructed in accordance with the relevant recommendations of Buildings Standards Regulation: BS5250:2011’. H says this regulation states that for warm pitched roofs with a ‘low resistance felt underlay’, an air vapour control layer (AVCL) ‘should be provided at ceiling line. If the external covering is sufficiently permeable, it will allow vapour to be released to atmosphere, and no ventilation of the batten space is recommended’. H said counter battens wouldn’t be necessary to create a ventilated void above the underlay and that it would be impractical to install a AVCL at ceiling line as that required the removal and reinstatement of the ceilings below. H then referred back to BS5250:2011 and said it states that, ‘there might be some risk of interstitial condensation forming on the underside of the underlay and the external covering; to avoid that risk ventilated voids should be provided as in H.5.2’. However, H said no AVCL or vapour control layer (VCL) was present and no ventilated void was provided. • Section 4.5 states that a ‘pre-installation survey must be carried out to ensure the construction is suitable for the application of the product’. And, Page 1 states that ‘the risk of interstitial condensation will depend on the roof construction and should, therefore, be assessed for each project’. However, H said there was no evidence that T undertook any specific condensation risk assessment for Mrs O’s property. • Section 7.6 states that a VCL should be placed on the underside of the insulation and the ceiling must be well sealed. H noted though that no VCL was present and the plasterboard ceiling wasn’t well sealed.

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• Section 4.10 states that ‘the product must not come into direct contact with flue pipes, chimneys or other heat-producing appliances’. H said the spray foam was installed in direct contact with the boiler flue. • Section 4.11 states that ‘the product must not come into contact with zinc or zinc- plated elements as, under certain environmental conditions, the foam will accelerate the corrosion of such elements. Zinc or zinc-plated elements are used as fixings for timber and extensively in prefabricated roof truss constructions. In all situations when foam could come into contact with zinc, the zinc must be separated from the foam by covering the zinc plate with a suitable protective coating’. H says the spray foam was in direct contact with zinc plated truss connector plates, without any protective coatings or separation, which posed a risk of structural failure. • Section 10 states that ‘de-rating of electric cables should be considered in areas where the product restricts the flow or air. The use of suitable conduit or trunking is recommended’. H says the spray foam was in direct contact with electrical cables with no conduit or trunking evident. I’ve looked at the relevant BBA certificate of the product that was installed in Mrs O’s property and all the above sections quoted and commented on by H were quoted accurately by them. H specifically commented on why each section of the BBA certificate wasn’t complied with by T, and, as the CMC points out, there isn’t independent expert evidence that has rebutted these points. H’s report also contained photographs of the loft space linking to the comments H made about the installation. So, it seems to me that H’s report was sufficiently detailed and fact-specific to Mrs O’s property. I think that, when Halifax considered Mrs O’s Section 75 claim, they should have considered the specific contents of H’s report rather than disregarding them. And, for the reasons I set out in the section ‘Compliance with BBA Certificate’, I think the CMC was able to show reasonably compelling and persuasive evidence that the installation wasn’t carried out with reasonable care and skill. I find H’s report to be detailed and fact-specific to the installation carried out on Mrs O’s property. And although I acknowledge that the inspection was carried out a year after the spray foam was removed, I don’t think there is enough evidence to show that H’s report should be disregarded because of this. This is a finely balanced case. But, overall, I find that there was sufficient evidence to show that T breached the contract with Mrs O to provide services with reasonable care and skill. As a result, I think Halifax acted unfairly in declining Mrs O’s Section 75 claim. I note the CMC has made several other points about why the claim should succeed (which I set out in the background section of my decision), including a specific reference to Section 140B of the Consumer Credit Act 1974. But I don’t feel I need to comment on these points as that won’t affect how I think Halifax needs to put things right for Mrs O. How to put things right The CRA mentions the right to specific remedies where it’s been found that reasonable care and skill hasn’t been carried out. One of these is the right to repeat performance to ensure the service conforms with the contract. I don’t believe this is a fair remedy in the circumstances, bearing in mind the spray foam was removed in 2024. I feel the right to a price reduction is the more appropriate remedy and I think that should equate to 100% of the full contract price. I also think it reasonable that Halifax should refund what Mrs O paid to remove the spray foam, and to refund her the cost of the report from H assuming Mrs O paid that cost. Halifax can ask for suitable evidence of this if they wish.

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Therefore, Halifax should: • refund Mrs O the full contract price of the insulation - £3,300. • refund Mrs O the price of the removal - £3,360. • refund Mrs O the cost of H’s report - £1,020. Interest of 8% simple each year should be added to the above payments, from the date each payment was made to the date of settlement’. I asked all parties to provide me with any further evidence or comments they wanted me to consider. Mrs O, via the CMC, replied saying she agreed with my provisional decision. Halifax replied saying they agreed to refund Mrs O as I had set out but said the interest I had provisionally awarded should be applied and payable from the date Halifax originally declined the Section 75 claim. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As Mrs O and Halifax agree with my provisional findings about how the spray foam was installed, I won’t be revisiting them in this decision. Halifax has asked for Mrs O to provide them with evidence she paid H for the independent report, which is a reasonable request, and I would ask the CMC to provide that evidence to them, assuming Mrs O accepts my decision. The outstanding point for me to clarify is when interest should be applied and payable. I’ve considered what Halifax has said, and I am happy to agree to this. I’m satisfied that had they upheld the s75 claim as they should, Halifax would have applied interest to the financial losses at the point they upheld the claim. Putting things right Halifax should: • refund Mrs O the full contract price of the insulation - £3,300. • refund Mrs O the price of the removal - £3,360. • refund Mrs O the cost of H’s report - £1,020. Interest of 8% simple each year should be added to the above payments, from the date Halifax originally declined the s75 claim, to the date of settlement.

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My final decision I uphold this complaint and direct Bank of Scotland plc trading as Halifax to take the action I’ve set out in the ‘putting things right’ section of my decision. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs O to accept or reject my decision before 23 April 2026. Daniel Picken Ombudsman

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