Explanation of CMA Guidance on Weddings & Refunds
By the Association of British Wedding Businesses (ABWB)
Last updated: 28th May 2020
Recent guidance by the Competition & Markets Authority (CMA) on business refunds due to COVID-19 have spurred refund requests across industries. A number of couples have contacted wedding venues and professionals requesting refunds based on this CMA guidance, and it has become apparent that there is inconsistent information circulating in the media regarding what this means for weddings.
The Association of British Wedding Businesses (ABWB) has been in direct communication with the CMA and legal experts to seek clarification on how the refund guidance relates to contracts between wedding venues / professionals and their clients. An explanation of how these guidelines pertain to weddings follows.
What are the CMA guidelines on refunds?
The Competition & Markets Authority (CMA) issued guidance published on 30 April 2020 that restates existing principles of consumer protection law. These guidelines are not new, they are simply reminders of existing law. Additionally, the CMA “acknowledges that most businesses are trying to do the right thing in these unprecedented circumstances.”
The CMA makes two critical points in its guidance:
A. “…where they have already received something of value, consumers should generally be expected to pay for it and they will not usually be entitled to get all their money back.”
B. “…the business may be able to deduct a contribution to the costs it has already incurred in relation to the specific contract in question (where it cannot recover them elsewhere).”
Based on the above guidance, as well as multiple direct conversations with the CMA and consultations with legal experts, the Association of British Wedding Businesses (ABWB) seek to summarise the implications for wedding businesses and clients they serve.
Note that whilst these guidelines are presented by the CMA to encourage reasonable and fair behaviour, the final determination of individual scenarios would only be given by a judge via a court escalation.
Our wedding has not yet occurred. If we cancel it, are we entitled to a full refund?
The short answer is “no, you are not entitled to a full refund”, because your wedding venue and suppliers have likely met both the above points A (have provided something of value) and B (have incurred costs already in relation to the contract in question). Of course, every relationship between a venue or a supplier and a client is unique, but broadly speaking your wedding professionals have likely already started preparing for and incurring costs related to your wedding, in one way or another, even though it has not taken place yet.
Therefore in most circumstances, it is unlikely a full refund is applicable. The figure may vary from business to business depending on their individual costs and services provided.
How could we have received ‘something of value’ if we haven’t had our wedding yet?
In general, the services that wedding professionals provide to clients begin from the moment a contract is signed, and build throughout the engagement. There are a number of services, which are direct costs, that are associated with helping each couple plan their day, far in advance of the wedding date itself. For example, opening up for visits, facilitating and providing tastings, accommodating engagement shoots, advanced planning support and so on. The wedding day itself represents the culmination of all of these efforts, but the on-the-day services to carry out the wedding itself are not the only services of value that the clients receive throughout the average 12+ month contract.
Per the guidelines above, if your booked venue and/or suppliers have begun providing services of value to you, which they likely have in the form of consultations, planning support, visitations etc., then you should generally expect to pay for it and not be entitled to get all your money back.
How could our venue or suppliers have ‘incurred costs related to our contract’ if the wedding hasn’t taken place yet?
For any wedding venue or professional, delivering services to the high standard expected by clients requires significant investment in the business and assets such as the venue, maintenance, equipment, technology, operating licenses, training and product development, etc. all of which are made over a substantial period of time. These costs are in addition to the substantial overheads, which are incurred by any business, and can far outweigh the advanced payments and deposits taken.
These irrecoverable costs are associated with the upkeep of the business and are necessary to ensure that the wedding services can be delivered to the standard expected of the clients. Venues, for example, require advanced preparation and maintenance of its grounds, buildings, furnishings, facilities and equipment in order to ready the premises to deliver each wedding, and couples would understandably feel let down if standards were not as promised.
Additionally, given the long lead times for booking weddings venues and professionals, dates become ‘locked’ early on and can not easily be re-sold in the event of a cancellation, especially as the date draws near. Consider these statistics:
0.9% of weddings are booked with less than 3 months lead time
5.4% of weddings are booked with less than 6 months lead time
14.4% of weddings are booked with less than 9 months lead time
26.9% of weddings are booked with less than 12 months lead time
One can therefore conclude that if a couple chooses to cancel 3 months before their wedding, the chance of a new couple taking that date is less than one percent. (Sample: 15,590 weddings, Source: Bridebook)
Our insurance provider advised us to pursue a refund from our venue / professional, and claim that they as insurers are not responsible. Is this accurate?
The ABWB have specifically asked the CMA to clarify its advice for couples who have wedding insurance, due to misinformation provided to clients by their insurance providers. The ABWB believe insurance companies are shirking their responsibilities and abandoning both businesses and couples.
Insurance providers form a business-to-consumer contract and it is vital that insurers do not renege on their obligations, leaving clients out of pocket and depriving them of their rightful ability to claim.
Wedding businesses are now experiencing circumstances where insurers are interpreting the broad CMA guidance to say that all businesses should refund in full and therefore there is no loss to insure. This is inconsistent with the CMA’s position and the ABWB have requested clarification to ensure that wedding providers are not being taken advantage of by insurers in an attempt to avoid paying out claims.
We’re not sure what circumstances or restrictions will be in the future, so we want a refund. Are we entitled to a full refund based on uncertainty of future events?
While it is unsettling for everyone involved that future government restrictions are unknown, these circumstances do not relieve parties of a future contract and do not entitle consumers to refunds far in advance of the future contracted wedding date.
The CMA guidance for future contracts explains how clients’ rights to refunds for future contracts depend on certainty when the time comes, and that in the meantime the business can continue to require consumers to make payments. Specifically, CMA guidance states “where the business reasonably expects to provide the service as agreed, the CMA’s view is that, in general, the business can require consumers to carry on making these payments for the time being...Consumers’ rights to refunds will depend on whether the services can be provided when the time comes.”
Until timely circumstances are better known, the businesses and consumers involved in a future contract are still bound by their contractual terms and conditions. Per CMA guidance, businesses should not be expected to offer refunds or postponement terms outside their contractual terms and conditions until it is clear that government instructions or legislation will ultimately affect their ability to deliver on the contract.
Unfortunately, the roadmap to recovery presented by the government does not clarify when or how restrictions on weddings might be lifted. Wedding venues and service providers are reacting to new information at the same time as their clients, but businesses are still working with the expectation that they will provide wedding services to the clients that have booked contracts for future dates.
What are our options if our wedding date might be affected by COVID-19?
Think about postponing to a new date with your existing venue and professionals
Recognise that postponing your wedding to a future date creates significant challenges for the wedding industry, but they are still doing this despite the future financial losses that this means for their businesses. The wedding industry has been devastated and will lose almost an entire year’s revenue whilst carrying significant costs. The industry has continued to serve clients throughout this difficult time, handling a huge volume of enquiries and organising postponements, prioritising this over the survival of their own businesses. In addition, the ‘opportunity cost’ of postponing this year’s weddings to future years which can then no longer be sold means that the industry is bearing the impact of this for years to come.
Within the bounds of your contract, try to work together with your venue and professionals to find wedding date options, and come up with a solution that works given the circumstances. Both parties have an obligation to uphold their parts of the contract, and hopefully by working together the parties can come to an agreement that honours their contract.
Be fair and understanding, within the bounds of your contract
The ABWB agrees wholeheartedly that businesses should continue to try to do the right thing and act fairly in unprecedented circumstances, and that our couples, whom we care passionately about, should have their rights appropriately protected.
Unfortunately, it is a reality that there may be some ripple effects from COVID-19 affecting weddings for some time to come. Your guest count or perhaps guest travel plans, for example, may be affected. This is sadly a reality, but doesn’t mean that you can’t have a fantastic wedding despite these circumstances. Know that your venue and professionals always do their best to ensure clients have a happy and memorable wedding experience, and that they are often in this industry because they love helping couples celebrate this beautiful day.
According to Hamish Shephard, chairman of the ABWB, the industry has rescheduled a large number of weddings already, and continues to support couples as much as possible. “Wedding venues and professionals are working incredibly hard to reschedule their couples’ wedding plans in a fair and reasonable way. So far, our businesses have successfully worked with over 61,000 couples to reschedule their wedding plans up to the end of June at a considerable cost to their own businesses. This shows the industry’s commitment to supporting couples at their own expense, and I’m confident our sector will continue to extend such goodwill to couples.”
The ABWB have shared this explanation with the CMA prior to publication.
Please note this explanation should not be taken as legal opinion nor professional advice. The Competition & Markets Authority (CMA) does not comment on external statements and this statement is not endorsed by them. The CMA is a government body that will release guidance and clarifications if and when it deems necessary in the future. Learn more about their valuable work and statements here.
The Association of British Wedding Businesses (ABWB) (https://www.abwb.org) is an industry body that supports all members of the British wedding industry. Our mission is to support our industry with insights and advice, advocate for growth, and serve as liaison between the industry and government. Wedding businesses can join the ABWB for free here.