Regulatory Outlook: Consumer Protection - November 2016

Current Issues

The Digital Single Market: In May 2015, the European Commission published its Digital Single Market (DSM) strategy for Europe. Based around ‘three pillars’, including providing better access for consumers and businesses to digital goods and services across Europe, some of the DSM’s proposed measures include harmonising consumers’ rights across the EU for online purchases of goods and digital content, preventing website geo-blocking, and allowing ‘portability’ of digital content services. Overall, measures are going to affect consumers across the EU by enhancing their online and digital rights.

See our dedicated Digital Single Market site for more information.

European Commission Fitness Check: As part of its Smart Regulation policy, the European Commission runs a Regulatory Fitness and Performance Programme (REFIT) aiming to simplify law, reduce regulatory costs and contribute to a clear, stable and predictable regulatory framework. This process includes a review of a number of consumer protection directives, including the Unfair Commercial Practices Directive, the Sales and Guarantees Directive and the Unfair Contract Terms Directive. The consultation period has ended and the Commission’s report is expected in the second quarter of 2017.

Consumer Rights Act: On 6 September 2016, the government confirmed that the Consumer Rights Act 2015 will apply to all transport services, including passenger rail services, from 1 October 2016. The government had initially provided a 12-month exemption from one of the compensation provisions in the Act to allow time for operators to move to a consistent compensation scheme.

Digital Economy Bill: The Digital Economy Bill was introduced in the House of Commons on 5 July 2016 and the government is aiming for Royal Assent in 2017. The Bill aims to (amongst other things): empower consumers and provide better connectivity, to ensure everyone has access to broadband, regardless of where they live; enable better public services, using digital technologies; provide important protections from spam email and nuisance calls; and protect children from online pornography.

Consultation on terms and conditions in consumer contracts: Between 1 March and 25 April 2016, the government ran a consultation seeking views from the public, consumer representatives, businesses, trade bodies and regulators with a view to making terms and conditions more accessible for consumers. Simultaneously, the Department of Business, Energy and Industrial Strategy is investigating whether fair competition between businesses could be better supported by a wider range of enforcement tools, including the ability to issue fines for breaches of consumer protection legislation. We are currently awaiting the feedback from these consultations.

In Focus: Enforcement

Consumer law is enforced in the UK by various authorities, using powers including criminal prosecutions and injunctions. Two of the main bodies are the Competition and Markets Authority (CMA), which took over many functions of the Office of Fair Trading, and Trading Standards. Consumer protection laws are also enforced through claims brought by private individuals (on their own or collectively).

Public enforcement

The CMA focus remains centered on consumer protection: its responsibilities include enforcing consumer protection legislation to tackle practices and market conditions that make it difficult for consumers to exercise choice.

Trading Standards, on the other hand, gathers information from around the country to combat those in breach of consumer protection laws. It has set up a National Tasking Group in order to deal with intelligence development, assign investigations and take on enforcement matters both nationally and regionally.

Recently, the CMA is becoming more active in its enforcement and market study activities, and over the past 18 months it has looked at (amongst others) online reviews and endorsements, terms and conditions and, most recently, online gambling. Trading Standards, by contrast, has traditionally been seen as less active in enforcement, although this may change as the National Tasking Group gets up and running.

Private enforcement

Following the adoption of the Consumer Rights Act (CRA) in October 2015, the UK is also about to see its first key test of the new legislative framework for private and collective enforcement of competition law infringements.

On 8 September 2016, a collective action claim was filed with the Competition Appeal Tribunal (CAT) over the fees charged by MasterCard between 1992 and 2007. This was one of the first claims to be filed under CRA on behalf of UK consumers generally, taking advantage of the new opt-out mechanism it introduced. If the claim is successful, it could see MasterCard paying out around £14bn to consumers.

Now that the CAT has one of its first high-profile cases under this new scheme, it will be a chance to see the pros and cons of the new procedure and whether it opens the floodgates to more claims of this nature. If so, this could significantly increase the risk exposure for consumer-facing businesses when it comes to practices that infringe competition law.

Energy and Industrial Strategy is investigating whether fair competition between businesses could be better supported by a wider range of enforcement tools, including the ability to issue fines for breaches of consumer protection legislation. We are currently awaiting the feedback from these consultations.

Dates for the diary

Late 2016                   

European Parliament report expected on the European Commission’s draft Directive relating to online and other distance sales of goods.

January 2017            

European Parliament decision expected on portability of digital content.

Q2 2017                      

Planned completion of the European Commission’s REFIT programme.

H1 2017                      

Finalised European Directive relating to digital content.

For more information and details of all of the other areas covered by the Regulatory Outlook click here.