Changes to Consumer rights: Key Issues for the 2015 Parliament
With impressive speed, the system that defines, upholds and protects consumers' rights has been reviewed, dismantled and completely rebuilt. The objective of these changes has been to empower consumers by creating a simplified and enhanced legal regime that affords greater rights when buying goods and services.
Taken together, the legislative changes and structural reforms of the last Parliament have created a new consumer landscape. Whether they will now succeed will depend crucially on how well consumers and traders understand their rights and responsibilities under the new regime.
The biggest legislative overhaul for decades
There were two principal factors behind the legislative changes in the 2010 Parliament. First, the adoption in October 2011 of the EU Consumer Rights Directive required, among other things, that consumers be comprehensively informed before any contract is entered into.
Most of the requirements of the Directive have now been implemented in the UK through the ‘Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013'.
The second driver was the findings of a series of consultations on consumer laws held in the UK between March and November 2012. Responses not only highlighted areas of duplication, inconsistency and uncertainty in law and enforcement, but also evidence of consumer detriment.
This has led to the Consumer Rights Act (the ‘CRA'), expected to come into force on 1 October 2015.
The Act, which represents the biggest overhaul of consumer law for decades, sets out in one place key consumer rights covering contracts for goods, services, digital content and the law relating to unfair terms in consumer contracts. It introduces important new protections for consumers alongside measures designed to lower regulatory burdens for business.
The Government estimates that reform of consumer law will bring quantifiable net benefits of £4 billion to the UK economy over 10 years.
For the ‘man on the street', the Act is intended to create a simple, modern framework of consumer law across all sectors. Of course, for the full impact and purported economic benefits to be realised, consumers and traders will need to become adept at using the new regime.
Core consumer rights under the new regime:
- Right to get what you pay for - all information about the main characteristics of the goods, including statements made in advertising or on labels, to form part of the contract.
- Right to have faults in what you buy put right - clearer tiered remedies in the event that a consumer's rights are breached, including a mandatory 30-day period in which to reject faulty goods. Traders limited to one opportunity to repair/replace faulty goods (if possible), following which the consumer can demand a discount or return the goods and demand a refund.
- Right that digital content is fit for purpose - digital content to have its own separate regime of rights and remedies to be applied both to paid-for content (including where paid with ‘virtual' currencies) and content that is provided free with paid goods, services or other digital content (e.g. apps and in-app purchases and open source software). Provisions have been drafted to accommodate future developments (for example, content provided in return for consumer data).
- Right that traders perform services with reasonable care and skill, within a reasonable time, with the consumer obliged to pay a reasonable price. The consumer has the right to ask for a repeat performance of services not performed properly or, if that is not possible or done within a reasonable time, a right to a price reduction.
- Drawing on the recommendations of the Law Commission, the Consumer Rights Act replaces and expands on the current rules regarding unfair terms in consumer contracts.
Alongside significant organizational changes
The Office of Fair Trading (OFT) closed its doors on 31 March 2014. Its functions have been split between a number of public sector and voluntary bodies, as illustrated in the diagram.
Most notably, consumer law enforcement has been split between the new Competition Markets Authority (CMA) and Trading Standards. The CMA is responsible for unfair terms enforcement (for instance, unfair ticket terms and conditions), while Trading Standards is responsible for preventing unfair trading practice (for instance, advertising, promotion and selling practices).
And if things still go wrong?
The hard-done-by consumer can always try Alternative Dispute Resolution (ADR). A new ADR Directive, adopted in June 2013, aims to provide in every Member State a fast, cheap and informal way for consumers to settle disputes with traders out of court, through the intervention of an approved ADR entity (such as an arbitrator, conciliator, mediator, or ombudsman). The Directive must be transposed into UK law by 9 July 2015.
Diagram of new consumer bodies