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consumer law overhaul in the UK

5 June 2014

Over the last year, steps have been taken to implement a sweep of changes into UK consumer law. The changes can broadly be grouped into five categories:

  1. Completion of the implementation of the EU Consumer Rights Directive through the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013
  2. Introduction of Consumer Rights Bill (likely to be implemented in 2015)
  3. Amendments to the handling of Misleading or Aggressive Practices in the Consumer Protection from Unfair Trading (Amendment) Regulations 2013
  4. Non-legislative government initiatives
  5. Structural reform (removal of the OFT and creation of the Competition and Markets Authority).

The following paragraphs will review each of these categories of change in turn, focusing first on the most imminent and one of the most sweeping legislative changes being implemented.

1. The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 (the ‘Regulations’)

From when will the Regulations apply?
From 13 June 2014, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the ‘Regulations’) will come into force and will apply to all contracts entered into from that date.

Who will they apply to?
The Regulations will apply to contracts made between businesses (referred to as ‘Traders’ in the Regulations) and consumers only.

All mediums of contract are captured by these Regulations meaning contracts formed in retail outlets, over the phone, online, or any other means.

Who are ‘consumers’ under the Regulations?
Consumers are defined as individuals acting for purposes which are wholly or mainly outside of his or her trade, business, craft or profession. This point is important for businesses to understand as whether or not a client is a consumer or not will have far reaching implications.

What are the key changes?
In summary, these Regulations:

  1. replace the previous law on distance selling;
  2. replace the previous law on doorstep selling; and
  3. introduce new provisions regarding provision of information to consumers prior to contract.

Key changes to the current laws include:

  • an extension of the ‘cooling off period’ under distance selling contracts from 7 days to 14 calendar days
  • a requirement on businesses to provide a ‘model cancellation form’ in their consumer terms and conditions
  • an extension of the default cancellation period (in the event that a business doesn’t communicate to the consumer their right to cancel the contract) to 12 months from 3 months – a failure for business to provide such pre-contract information could result in prosecution
  • a requirement for goods ordered at a distance to be delivered within 30 days of order
    an extended list of pre-contract information is required to be given to consumers for example, a copy of the trader’s complaint handling policy and details of relevant after-sales services or guarantees
  • a prohibition on the use of premium rate phone numbers (where the trader provides a telephone line so that the consumer can contact them about a contract concluded, there should be a number available on which the consumer can call for this purpose at no more than the basic rate)
  • the requirement in online mediums for explicit consent to be obtained in relation to additional charges (so no pre-ticked payment boxes) – this must be obtained at the point of order and a failure to do so will make the contract unenforceable
  • the requirement for refunds to be made to consumers within 14 days from the date the consumer provides evidence of having returned the goods or the day which the business receives the goods back (and in the case of digital content, the deadline for refunds ends 14 days from receipt by the business of notification that the consumer wishes to cancel provided this notice was given within the cooling off period)
  • new concept of digital content and new rules on the cancellation of contracts not on a tangible medium.

What do businesses have to do?
Businesses need to review their sales contracts and processes generally to ensure that they are compliant with the Regulations and in particular that their cancellation and returns policies are compliant. Failing to comply with the Regulations could result in contracts being unenforceable and, at the extreme, business leaders could face a criminal conviction and fine for failing to adhere to the Regulations.

2. The Consumer Rights Bill (the ‘Bill’)

The Consumer Rights Bill was presented to Parliament on 23 January 2014. It is now speculated that the Bill could pass at the end of 2015. If introduced the Bill would streamline and consolidate over 40 different pieces of consumer legislation and address matters such as unfair terms in consumer contracts and the statutory rights and remedies of consumers (including in the digital medium).

Key elements
As currently drafted (although subject to change) the Bill includes:

  • new definitions (such as gas and electricity included in the definition of ‘goods’)
  • a requirement for goods to match the model seen (unless differences are brought to the attention of consumer before contract entered into)
  • the concept of ‘tiered remedies’ providing a finite opportunity for businesses to correct a fault in the goods or services provided therefore breaking the ‘cycle of faults’ many consumers experience when goods or services are not properly delivered initially
  • price reductions in the case of slow services
  • stronger requirements for businesses to have clear and transparent contracts in place with their customers.

What do businesses have to do now?
At present, it would be wise for businesses to start thinking about the contracts and processes they have in place with consumers to ensure that they are sensitive to the types of change which the government is keen to implement. Indeed, the Bill is at present just a bill, however, there is a clear appetite for change and progression in the area of consumer rights in the UK.

3. Amendments to the handling of Misleading or Aggressive Practices in the Consumer Protection from Unfair Trading (Amendment) Regulations 2014

There will soon be a civil right of redress for consumers against businesses for misleading and aggressive practices to include aggressive demands for payment, and false advertising.

Consumers will have the rights to claim damages in respect of distress and inconvenience caused by aggressive and misleading practices.

These Regulations will come into force on 1 October 2014.

4. Non-legislative government initiatives

The Government has expressed a concern about the degree to which consumers have power and control over elements of their purchasing experience. A number of government led initiatives to encourage businesses to improve the services they provide to consumers (including in particular in relation to accessing their personal data) have been implemented. It is hoped that businesses will voluntarily get on board with such initiatives so to improve consumers’ experiences and the general culture of business to consumer interfacing in the UK.

As alluded to above, one of the initiatives is to give consumers greater access to their personal data under the “midata” strategy. These initiatives are currently voluntary however; the government has given itself the ability to compel suppliers of goods and services to provide to their customers (when requested), historic data demonstrating their transaction and usage information.

5. Structural reform

Since 1 April 2014, the Office of Fair Trading has ceased to exist, and instead has been replaced by the creation of the Competition and Markets Authority which together with Trading Standards will have the authority to pursue businesses not interfacing with their consumers in a lawful and fair manner, in particular in relation to the enforcement of unfair terms legislation.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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