Consumer protection: implications of Brexit for your business

Consumer and product regulation currently include a large proportion of EU-derived law. Some of the key issues that will need to be resolved as the UK exits the EU are as follows:

• The extent to which the consumer protection regime may change immediately post-Brexit.  For businesses, having to navigate dual regimes when operating in both the UK and the EU would be burdensome and most likely costly. Immediately upon exit, we do not expect the UK to adopt anything other than what is on the statute books at the time, by virtue of the Great Repeal Act. Nevertheless, there will be issues that need to be addressed, including whether the UK establishes equivalents of EU institutions immediately, or whether there is a transition period until the UK has in place all of the necessary infrastructure to support consumer and product regulation.
• What the UK’s consumer regime will look like in the longer term. Currently, there is a great deal of change on the horizon, most notably in the shape of the EU’s ‘Digital Single Market’ strategy. Although it was initially thought that a lot of this change would have been implemented by the time of Brexit, progress has been slower than expected, and we do not expect that much of the proposed legislation will have been adopted by then. The question is therefore whether the UK will in effect ‘mirror’ whatever is implemented at an EU level in order to try and offer a regime that matches its EU counterparts, making it easier for any multi-territory business to operate a more standardised model across the UK and EU. We would hope and expect this is the case, but it remains to be seen. One of the potentially more significant issues in the meantime though is how much of a ‘voice’ the UK will now have in shaping that DSM legislation. A lot of it has far-reaching ambition, and is likely to be hotly debated before it is finalised, but with Article 50 having now been triggered, will the UK actually have any say in influencing that legislation, and be able to assert its sometimes more liberal voice against the often more conservative approached of some Member States? The impact of this could be a pressure to later to ‘mirror’ some measures that that UK may have ordinarily fought against.
• Brexit presents an opportunity to remove some onerous consumer protection regulatory requirements, particularly around consumer product innovation. With a regulatory landscape that is more welcoming to innovation, we could start to see new, exciting areas and opportunities open up in product development in the UK. This could present opportunities for UK-based companies looking to develop new and exciting technology and steal a march on EU counterparts, particularly in areas like AI, robotics, Connected and Autonomous Vehicles, 3D printing and drone tech. That said, for companies that want to trade outside of the UK, reducing regulation in the UK could mean having to comply with a dual consumer protection regime.
• The inevitable change in trade tariffs, which means that the cost of raw materials could increase. As many have had to do as a result of a weaker Sterling since the Brexit referendum, businesses will need to consider whether an alternative and potentially cheaper source can be found in the UK or elsewhere. If not, and if businesses can’t reduce production costs, we could see an increase in consumer product prices.

What should businesses be doing now to prepare?

• Understand which areas of current consumer regulation are EU-derived, and track these in the run-up to Brexit, to see if any changes are proposed from a UK perspective immediately post-Brexit.
• Track the progress of all EU initiatives, and where the opportunity is available, be prepared to engage with government to make your voice heard, if any proposals seem like they may have a significant future impact.
• Look longer term to how your business can stay up-to-date with dual regimes to ensure it can continue to supply into the wider EU market.
• Think about who in your supply and distribution chains will assume the role and obligations of “importer”.