17 March 2017 by

Extending Consumer Protection

An announcement in last week’s budget proposed that the Competition and Markets Authority (CMA) are to be given additional powers to take concerted action against businesses that fail to comply with the Consumer Rights Act 2015 (CRA). As a consequence businesses need to ensure that (i) their current terms of business, and business practices generally, comply with the CRA, and (ii) their staff understand the requirements of the CRA, especially in relation to unfair terms.

The Chancellor announced that the government will bring forward a green paper to examine those consumer markets which “are not working efficiently or fairly”.  It will look at the potential introduction of various new consumer protection measures, including:

  1. A crackdown on so-called “subscription traps” to protect consumers from unexpected payments for subscription services (e.g. when a free trial ends and converts to a paid-for service) and to reduce the difficulties that can be faced by consumers trying to cancel services/payments.
  2. Action to make consumer terms and conditions jargon-free, clearer, shorter and simpler.
  3. New legislation to extend the powers of consumer enforcement bodies, like the CMA, to seek sanctions against businesses who breach their legal obligations to consumers, including where they mislead or mistreat consumers.

The proposed green paper, coming less than 2 years after the CRA came into force, is believed to be a response to the publication in October 2016 by the CMA of research data showing:

  • 54% of UK businesses don’t fully understand the rules on unfair terms in consumer contracts
  • only 15% of UK businesses are familiar with the CRA
  • only 40% of UK businesses provide their customers with written terms of business
  • 20% of UK businesses do not communicate any terms of business at all to their customers

There were also likely to have been concerns that currently the CRA only gives the relevant enforcement bodies (such as the CMA) quite limited powers. Many businesses are therefore not complying with the CRA and then not facing any repercussions. Equally, many consumers are either unaware of their rights or reluctant to try to enforce them through the courts.

What next?

While the exact details of the proposals are not yet know and it may be some time before they are the best advice currently available is to start undertaking a review of your existing terms of business and practices now to ensure you are well prepared.

If you have any questions on current consumer protection laws, or the government’s proposed green paper, please contact us on 0207 288 4700

You can also contact one of our other solicitors in the Corporate and Commercial team here.

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