One letter for three kinds of dispute
Most money disputes fall into one of three situations. Something you bought or paid for is faulty, late or not as described. You are owed a refund that the trader keeps putting off. Or someone owes you money: an unpaid invoice, a deposit that was never returned, a loan between friends. In each case the tool is the same: a written letter that sets out the facts, states what you want, cites the rule that backs you, and gives a deadline.
A written letter creates a dated record and is the document an ombudsman or a judge will ask to see later. Regulated firms in the UK (banks, insurers, energy suppliers, telecoms providers) must log written complaints and issue a final response within 8 weeks, after which you can go to the relevant ombudsman. The clock only starts once your complaint is in writing, so send it on day one rather than after weeks of calls nobody logged.
The escalation ladder
A dispute usually moves through four steps. You rarely need all of them.
- First request. A polite, factual complaint, refund request or payment reminder. Assume good faith, attach the receipt or invoice, and ask for a reply within 14 days.
- Reminder. If the deadline passes, a short chaser that refers to your first letter, encloses a copy, and sets a new, firm date.
- Formal demand (letter before action). The final letter before court. It states the exact sum or remedy claimed, the legal basis, the deadline, and that you will issue proceedings without further notice if it is ignored.
- Ombudsman, ADR or court. A free ombudsman for regulated sectors, a chargeback or Section 75 claim through your card issuer, or a claim in the small claims track of the County Court.
Court procedures below are those of England and Wales.
Situation 1: a faulty purchase or a poor service
Under the Consumer Rights Act 2015, goods bought from a trader must be of satisfactory quality, fit for purpose and as described (sections 9 to 11). If they are not, your remedies follow a set order:
- Short-term right to reject (s. 22): within 30 days of delivery you can reject the goods and get a full refund.
- Repair or replacement (s. 23): after 30 days, or if you prefer, the trader gets one chance to repair or replace, at its own cost and within a reasonable time.
- Final right to reject or price reduction (s. 24): if that single repair or replacement fails, you can reject the goods for a refund or keep them at a reduced price.
If the fault appears within six months of delivery, it is presumed to have been there from the start, and it is for the trader to prove otherwise. Services must be carried out with reasonable care and skill (s. 49). If they are not, you can ask for the work to be redone, and if that is impossible or not done within a reasonable time, for a price reduction.
Do not confuse these rights with the 14-day cancellation right under the Consumer Contracts Regulations 2013. That right only covers online, phone and doorstep purchases, needs no reason at all, and runs from delivery of the goods. A fault is a different matter: it falls under the Consumer Rights Act whether you bought in a shop or online.
Situation 2: getting a refund you are owed
The trader's first answer is often company policy: store credit only, exchange only, no refunds on sale items. Policy does not override the law. When you are entitled to a refund under the Consumer Rights Act, it must be paid within 14 days of the trader agreeing that you are entitled to it, using the same payment method you used, and without a fee (s. 20). A voucher is not a refund unless you agree to it.
After a 14-day cancellation of a distance contract, the trader must refund the price and the standard outbound delivery within 14 days of receiving the goods back or proof that you sent them (Consumer Contracts Regulations 2013, reg. 34). Your refund request should name the order, the date, the amount, the right relied on, and the date by which the money must reach your account.
If you paid by credit card and the item cost between £100 and £30,000, the card issuer is jointly liable with the trader under Section 75 of the Consumer Credit Act 1974. For debit cards and smaller purchases, ask your bank for a chargeback. It is a card-scheme rule rather than a legal right, and it has strict time limits, often 120 days, so raise it early.
Situation 3: money owed to you
Whatever the debt, only the tone changes as you move up the ladder. A first reminder assumes an oversight. A second reminder states that the sum is overdue and sets a new date. The formal demand is the last word before court.
Between businesses, the Late Payment of Commercial Debts (Interest) Act 1998 applies automatically, even if your terms say nothing about it. You can claim statutory interest at 8% above the Bank of England base rate from the day after the due date, plus fixed compensation per invoice: £40 for debts under £1,000, £70 from £1,000 to £9,999.99, and £100 from £10,000. If your contract is silent on payment terms, payment falls due 30 days after the invoice or delivery, whichever is later.
When the debtor is a consumer or a private individual, that Act does not apply. You can charge interest only if your contract provides for it; otherwise the County Court can award simple interest, usually at 8% a year, when it gives judgment (County Courts Act 1984, s. 69). Say in your formal demand that you will claim it.
If the debtor is an individual, including a sole trader, the Pre-Action Protocol for Debt Claims requires a letter of claim before you issue proceedings, enclosing the protocol's information sheet and reply form, and giving the debtor 30 days to respond. Skipping it can cost you your legal costs even if you win. If they cannot pay in one go, a signed payment plan is usually worth more than a judgment you then have to enforce.
What a formal demand must say
- The full legal names and addresses of both parties, with a company number where there is one
- A short, dated chronology of the facts, without adjectives
- The exact sum claimed or the specific action required, with the invoice, order or contract reference
- The legal basis: the section of the Consumer Rights Act, the contract clause, the Late Payment Act
- Any interest and compensation claimed, itemised
- A calculable deadline, such as within 14 days of the date of this letter, or 30 days where the protocol applies
- What happens next if the deadline is missed: ombudsman, card issuer or court proceedings
- A numbered list of enclosures
Keep the tone calm. A factual, well-referenced letter is taken far more seriously than capital letters or threats to go to the press. Never threaten criminal proceedings to recover a civil debt.
Evidence and sending
Keep the receipt or invoice, photos of the fault, screenshots, chat transcripts, and a note of every call with its date and reference. Enclose copies, never originals.
Send the first request by email if you like, but send the formal demand by Royal Mail Signed For or Special Delivery and keep the proof of postage. Email a PDF copy at the same time. Address it to the registered office or the published complaints address, not a generic info@ inbox. Then diary the deadline.
Next steps if nothing happens
For regulated firms, after 8 weeks without a final response, or as soon as you get one you disagree with, you can refer the complaint free of charge to the Financial Ombudsman Service (banking, insurance, credit), the Energy Ombudsman, or the Communications Ombudsman or CISAS for phone and broadband. Many other traders belong to an approved ADR scheme; the letter should ask them to name it.
Otherwise, claims up to £10,000 go to the small claims track of the County Court, where you do not need a lawyer and most money claims can be issued online through Money Claim Online. The court fee depends on the amount claimed and is added to what the other side owes if you win. Time limits apply: six years for most contract claims (Limitation Act 1980, s. 5).
In the US, the same ladder applies with different rules: a demand letter, then a complaint to the state attorney general or the FTC, a credit card dispute under the Fair Credit Billing Act, and small-claims court, whose limits vary by state.
Mistakes to avoid
- Burying what you want at the bottom of a long letter
- Leaving out the deadline, so the file never closes
- Accepting store credit when you are entitled to your money back
- Using the 14-day cancellation right for a fault, or letting the chargeback window close
- Forgetting statutory interest and compensation on a business debt
- Sending the formal demand by ordinary post, with no proof it arrived
- Suing an individual without a protocol-compliant letter of claim
What Lettrio writes for you
Choose your situation (a problem with a purchase or service, a refund, or money owed to you) and your stage (first request, reminder or formal demand). The letter changes with them: a first request stays courteous, a formal demand states the sum, the legal basis, any interest and the step you'll take next. Send the PDF by Royal Mail Signed For, or have us post it.