Regulatory Outlook | June 2022
Published on 20th Jun 2022
Welcome to the Regulatory Outlook, providing you with high-level summaries of important forthcoming regulatory developments to help you navigate the fast-moving business compliance landscape in the UK.
Key developments this month include:
- The Law Commission publishes options paper on corporate criminal liability;
- European Parliament and EU Member States agree on a Directive on measures for a high common level of cybersecurity across the Union; and
- The European Commission have launched a call for evidence on effectively banning products produced, extracted or harvested with forced labour.
Contents
Bribery, fraud and anti-money laundering
Environmental, social and governance
Advertising and marketing
ASA announces new AI project to tackle unlabelled influencer marketing
In its Annual Report 2021, the Advertising Standards Authority (ASA) announced a new project which uses artificial intelligence (AI) to capture and analyse the social media posts of high-risk influencers for failing to clearly and consistently label ads as such. The use of technology is enabling the ASA to review approximately 20,000 Instagram Stories per month.
Alongside this new project, the regulator is increasingly turning its attention toward companies that partner with these influencers and is holding them to account. Repeat offenders will face enforcement action and the ASA is engaging with social media platforms to delete the accounts of the most prolific offenders. For more on ASA's annual report, read our Insight.
ASA clarifies its stance on plant-based green claims in advertising
In two recent rulings, here and here, the ASA has confirmed that advertisements with general claims that a plant-based diet can reduce environmental impact are more likely to be acceptable than those which are product-specific. Also, advertisements that make comparative claims are likely to be misleading without robust evidence backing up the claims.
ASA statement on World Environment Day
To coincide with World Environment Day on 6 June 2022, the ASA published two statements:
- The first statement detailed the outcome of the ASA's review of environmental claims in the Heating/Energy and Transport sectors, research results of consumers' understanding of carbon neutral and net zero claims for electric and hybrid vehicles, a look at greenwashing rulings and the CMA's investigation into fast fashion. The statement then turned to what is coming up next, including: research into consumer understanding of "sustainable" and "eco-friendly" in summer 2022, a review into waste claims such as "recyclable" and "biodegradable" in late 2022 and most notably, a review into meat, dairy and plant-based substitute claims in 2023.
- The second statement is an opinion piece in which the ASA underlines that precision matters. The key takeaways are:
- The ASA is not interested in what an advertiser intended to say by the wording of a claim used – it's what consumers would understand a claim to mean that is important to the ASA.
- The ASA has suggested businesses "put [them]selves in the shoes of the average member of the public [it's] talking to".
- The ASA emphasises that consumers won’t have spent days, weeks or months, like the advertiser would have, thinking about the product or service. So green claims need to be (1) simple; (2) precise; and (3) limited to what the advertiser is really trying to draw attention to.
ASA commences new programmatic paid-for advertising pilot to improve online transparency
Further to an announcement issued earlier this year, the ASA has now commenced a one-year pilot titled “Intermediary and Platform Principles” that explores the regulator’s role online alongside some of the largest companies in the programmatic paid-for advertising supply chain. The pilot is the result of a collaboration between the ASA and various members of the Internet Advertising Board UK (a member of the Committee of Advertising Practice (CAP)), including various social media platforms. It runs alongside the ASA’s existing collaborative “More Impact Online” strategy, twin-track regulation, and transparent and accountable regulation, and is focused on bringing more transparency to the role online advertising intermediary companies play in the ASA system via programmatic paid-for advertising to help deliver better outcomes for consumers.
The pilot will run for one year from 1 June 2022, following which the information provided by participating companies and collected by the ASA will be analysed and reported on. The reports will be used to identify areas for improvement and evaluate whether there are any gaps in the ASA’s ability to enforce the CAP Code. Further details of this pilot can be found here.
For more of the latest marketing law updates, see our latest edition of Marketinglaw.
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Bribery, fraud and anti-money laundering
Law Commission publishes options paper on corporate criminal liability
Since November 2020, the Law Commission has been tasked by the government with reviewing the law on corporate criminal liability. Following several consultations and a period of analysis, the Law Commission has now published its options paper for the government which provides a number of options for law reform. As set out on the Law Commission's project page, the overriding principles include a need for one or more general rules of attribution to cover offences generally; a need for conviction on the basis of collective negligence within a corporation, without needing to identify a single natural person; the introduction of various "failure to prevent" offences, including failure to prevent fraud by an associated person and failure to prevent computer misuse; and a suggestion that neglect as the basis of a director's liability should only come into play in offences of strict liability or negligence.
The government will now review and consider the options paper before deciding whether to implement the suggestions.
For more information on this, see our Insight.
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Competition
Digital markets in the UK
As we have previously reported, digital regulation is a fast-moving topic in both the UK and the EU. This poses a number of potential competition law hurdles for businesses.
On 28 April, the Digital Regulation Cooperation Forum (DRCF) published its workplan for 2022/23. The DRCF is a collaboration between the Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), the Information Commissioner's Office (ICO) and the communications regulator, Ofcom. It is tasked with driving greater cooperation between these regulators. For more details on its founding, previous activity and creation of a digital regulatory research repository please see our previous Insight.
Alongside its 2022/23 work plan the DRCF published a call for inputs on two papers on algorithmic processing: one on the benefits and harms of algorithms, and the other on the landscape of algorithmic auditing and the role of regulators. (Please see our Insight for more on these papers.)
In 2021 the CMA identified a number of anti-competitive impacts that can result from the use of algorithms. This includes personalising prices to customers in an opaque way, manipulating customer choice architecture so that customers make choices that are not in their best interests, discriminating against individuals based on protected characteristics and abusing a dominant position by self-preferencing in ranking algorithms.
As part of its current work stream the DRCF intends to continue focusing on promoting competition and privacy in online advertising. Going forward, the DRCF proposes to review a number of developments in privacy and online advertising. This review will be done with collaboration between the CMA and ICO.
Given the increasing digitalisation of business, these developments could have an impact on all businesses, even if they do not consider themselves to be a "digital business".
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Consumer credit and payments
FCA's decision not to amend PARs Linked Services List
As we looked at in last month's Regulatory Outlook, on 19 May 2022, the Financial Conduct Authority (FCA) updated its webpage on its Linked Services List.
The FCA has now updated the webpage to provide more information on stakeholder feedback to its review and next steps for firms. Points of interest include:
- The FCA received responses from five key stakeholders, who were generally supportive of the terms and definitions on the list. Some stakeholders suggested the FCA could consider adding further services, and that services like cancelling a cheque have become outdated and should be removed. In response to this feedback, the FCA explained that it does not consider it appropriate to add or remove any of these services at this time, and notes that cheques remain an established payment method that can incur significant fees compared to other account services.
- The FCA confirms that payment services providers (PSPs) do not need to take any action by way of next steps. Under the Payment Accounts Regulations, PSPs which offer payment accounts to consumers must use the terminology in the list in certain information and documentation, where applicable.
- The FCA explains that, following Brexit, it is no longer bound to use the standardised terminology set out in the revised technical standards adopted by the European Commission in the published list.
- The FCA will review the list next within four years (by April 2026).
HM Treasury publishes consultation on administration regime for digital settlement asset firms
On 31 May 2022, HM Treasury published a consultation seeking views on adapting the Financial Market Infrastructure Special Administration Regime (FMI SAR) to become the primary legal framework through which to address the failure of systemic digital settlement asset (DSA) firms.
DSAs include stablecoin as well as wider forms of digital assets used for payments/settlement. The term “systemic DSA firm” refers to systemic DSA payment systems and/or an operator of such a system or a DSA service provider of systemic importance. In the case of stablecoin, this might include the issuer of a stablecoin, a wallet, or a third-party service provider.
The consultation notes that both the FMI SAR and the Payment and E-Money Special Administration Regime (PESAR) are capable of being applied to systemic DSA firms, but the government considers the FMI SAR to be the most appropriate regime. This is primarily because it believes the Bank of England, rather than the FCA, should be the lead regulator in such administrations.
The government therefore intends to legislate to the effect that the appropriate regime for systemic non-bank DSA firms will generally be the FMI SAR, which will take precedence over PESAR for systemic DSA firms that could fall in scope of both regimes.
Responses to the consultation are due by 2 August 2022.
PSR consults on requiring more PSPs to implement Confirmation of Payee
On 24 May 2022, the Payment Systems Regulator (PSR) published a consultation paper (CP22/2) on requirements for further participation in the Confirmation of Payee (CoP) service, which outlines the regulator's proposal to give a specific direction requiring around 400 payment service providers (PSPs) to implement a system to offer CoP to their customers (both as payers and payees). Comments can be made on the proposals until 8 July 2022. If the PSR decides to proceed with the proposed direction, it plans do to so around 8-10 weeks after the deadline.
This follows on from Specific Direction 10 (SD10), which required the six largest banking groups to send and respond to CoP requests. Since SD10, a number of PSPs have joined the service voluntarily – there are now a total of 33 PSPs offering CoP. However, the PSR is keen to see more firms providing CoP protection; it is concerned that PSPs have been slow to implement CoP, while there are still many consumers who are not protected from authorised push payment (APP) fraud and misdirected payments.
Because of the number of PSPs involved, the PSR proposes a direction that splits PSPs into two groups:
- The first group will be prioritised based on the complexity and size of the firm where the adoption of CoP could have the biggest impact in preventing APP fraud. This group consists of almost 50 PSPs (listed in Annex 1) who would need to have implemented CoP by 30 June 2023. This group would see an increase of CoP coverage from 92% of transactions made via Faster Payments to 99%.
- The second group includes all other firms which use either unique sort codes, or which are building societies using a Secondary Reference Data reference type. This group, which consists of over 350 PSPs, would need to have implemented CoP by 30 June 2024.
Chapter 4 of CP22/2 outlines a number of CoP-related areas the PSR may consult on in the future.
The PSR’s work on card fees: next steps
On 7 June 2022, the PSR published a piece talking about next steps for the regulator's work on card fees.
Later this month, the PSR intends to consult on draft terms of reference for two market reviews of card fees – one will look at scheme and processing fees, and one at cross-border interchange fees, focusing on the impact of card fee increases on UK merchants and consumers.
These documents will set out the purpose and proposed scope of the market reviews, and will be open to feedback.
UK moves to regulate cloud providers to financial services sector
HM Treasury has published a policy paper entitled "Critical third parties to the finance sector: policy statement" (8 June 2022), which responds to the concerns among UK financial regulators about so-called "cloud concentration" risk. The paper proposes the introduction of a new regulatory regime applicable to designated cloud providers, bringing material services they provide to the finance sector under the direct supervision of the Prudential Regulatory Authority (PRA) and the FCA. Read our Insight for further details.
Alternative payment methods offer value for the UK retail sector
New financial services products can help retailers and shoppers choose how goods and services are paid for online and in-store, including buy now, pay later and open banking. Our Insight provides details of the pros and cons of these two common alternative payment methods.
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Consumer law
European Commission seeks feedback on EU consumer law 'fitness check'
The European Commission has launched a call for evidence seeking feedback on its "fitness check". The "fitness check" analyses whether further action is required to ensure an equal level of fairness both online and offline.
Three pieces of legislation are being evaluated in the "fitness check": the Unfair Commercial Practices Directive 2005/29/EC, the Consumer Rights Directive 2011/83/EU and the Unfair Contract Terms Directive 93/13/EEC.
The aim of the call for evidence is to determine whether these pieces of legislation ensure a high level of protection in the digital environment. Feedback must be provided by 14 June.
Ofcom launches consultation on proposals to revise its Regulatory Enforcement Guidelines
Please see Telecoms.
Government launch consultation on units of measurement
Please see Products.
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Cyber security
European Parliament and EU Member States agree on the NIS2 Directive
The Directive on measures for a high common level of cybersecurity across the Union (the NIS2 Directive), which was adopted by the Commission in 2020, has been agreed upon by the European Parliament and EU Member States.
The NIS2 Directive aims to address the deficiencies of and future-proof the existing NIS Directive – the first EU-wide law on cybersecurity - through measures such as: expanding the sectoral scope; introducing a clear size cap; eliminating the distinction between operators of essential services and digital service providers; strengthening security requirements for companies; and requiring companies to address cybersecurity risks in supply chains and supplier relationships.
The agreement reached is now subject to formal approval by the European Parliament and Council, and will enter into force 20 days after publication in the Official Journal. Following this, Member States will have 21 months to incorporate the Directive into national law.
EDPB publishes new GDPR fining guidelines
On 12 May, the European Data Protection Board (EDPB) published its Guidelines on the calculation of administrative fines under the GDPR, introducing a standardised method for calculating fines which has been in the works since at least 2020.
Data Protection Authorities should follow the five-step method contained within the guidelines: (1) establish whether there were one or multiple infringing acts; (2) identify the appropriate fining category – certain offences can warrant fines of up to €20 million or 4% of turnover; (3) account for any aggravating or mitigating circumstances, such as action taken to mitigate the damage suffered by data subjects; (4) identify the relevant legal maximums for the different infringements; and finally (5) analyse the effectiveness, proportionality, and dissuasiveness of the fine.
All companies that have customers in the EU may be subject to enforcement action by a European data protection watchdog, so it is important to be aware of the potential penalties.
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Data protection
EU Data Governance Act will apply from 24 September 2023
On 3 June, the EU Data Governance Act (DGA) was published in the Official Journal of the European Union, after having been adopted by the Council of the EU on 16 May. The DGA will come into effect on 23 June 2022, and will apply in full from 24 September 2023.
The act was initially proposed in November 2020 (please see our earlier Insight for further details) and has a number of intended purposes including:
- Establishing robust mechanisms to enable data sharing by public authorities where the data in question is subject to rights such as intellectual property, data privacy, confidentiality or trade secrets;
- Encouraging data sharing through profit-making data intermediaries, where data is shared by businesses or individuals; and
- Promoting "data altruism", where data would be made available voluntarily by companies or individuals for the common good, such as for scientific research.
The DGA is part of the European strategy for data, which aims to create a single market for data.
European Commission publishes FAQs on new standard contractual clauses
On 25 May, the European Commission published a set of questions and answers which provides practical guidance for organisations on using the EU's two sets of standard contractual clauses (SCCs), namely (a) SCCs for use between controllers and processors (for compliance with Article 28 of the EU GDPR); and (b) SCCs for use for the transfer of personal data outside of the EEA (for compliance with Chapter V of the EU GDPR).
The guidance provides clarity on a number of topics, including (among others):
- requirements for signatures, modifications to the SCCs and relationship with other commercial terms;
- for the SCCs between controllers and processors, the requirements on the form the controller's instructions should take, appointment of sub-processors, time periods for reporting data breaches and how a processor can demonstrate compliance with the SCCs; and
- for the SCCs for transfers of personal data outside of the EEA, the scope and application of the SCCs, including for which transfers the SCCs can be used, rights of data subjects under the SCCs, the obligations on data exporters and importers under the SCCs, and obligations under the SCCs relating to local laws and government access requests.
NYOB publishes open letter on new EU-US Transatlantic Framework
As reported in our April edition, the European Commission and the US government announced that they had reached political agreement on the Trans-Atlantic Data Privacy Framework which would enable the free flow of personal data between the EU and the US.
Following this announcement, Max Schrems' digital rights organisation, NYOB, has published an open letter setting out its preliminary observations on the announcement.
Notably, NOYB highlighted that it has concerns that the new framework will not fully meet the standards required to protect EU personal data when transferred to the US and that it is "prepared to challenge any final adequacy decision that would fail to provide the needed legal certainty" before the European Court of Justice.
At this time, we are still awaiting further detail on the framework and clear timings for when it will be finalised.
ICO fines facial recognition company Clearview AI £7.5 million for GDPR breaches
On 23 May, the UK Information Commissioner's Office (ICO) announced that it had fined facial recognition company, Clearview AI Inc, over £7.5 million for scraping facial images of individuals in the UK from the web for the purposes of providing facial recognition services to its customers (including the police), in breach of UK data protection law. The ICO has also ordered Clearview AI to stop collecting this data of UK individuals and to delete data of UK residents.
ICO launches AI and data protection risk toolkit
Further to the ICO's guidance on artificial intelligence (AI) and data protection (published in July 2020), the ICO has launched its AI and data protection risk toolkit. It is designed to assist organisations with assessing data protection risks within their AI systems. The toolkit, as well as a webinar introducing the toolkit, can be found on the ICO's website.
European Parliament and EU Member States agree on the NIS2 Directive
Please see Cyber security.
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Employment and immigration
New inquiry into the UK labour market: is current employment law fit for purpose?
We previously commented on the new Future of Work review announced following the Queen's speech in May. Following on from this, the Business, Energy and Industrial Strategy (BEIS) Committee has launched an inquiry into the UK labour market. The committee wishes to understand whether the UK has enough workers with the right skills in the right places to do the jobs required in our economy, including issues related to an ageing population, migration changes and the impact of technology. The committee also seeks to understand whether current employment law is fit for purpose or requires reform.
The areas for comment, as detailed in our Insight, are:
- The state of play in the UK labour market post-Brexit and the impact of the Covid-19 pandemic on recruitment, skills shortages and the growth of the labour market
- Artificial intelligence (AI) and technology in the workplace
- Workers’ rights and protections
- Employment status and modern working practices five years on from the Taylor review
- The impact of an ageing population on the labour market
Submissions are welcomed up to 8 July 2022.
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Environment
Guidance issued on new extended producer responsibility for packaging
On 7 June, the Department for Environment, Food & Rural Affairs (Defra) and the Environment Agency published guidance on preparing for the new extended producer responsibility (EPR) for packaging.
The guidance provides information on which businesses will need to take steps to ensure they collect the correct packaging data from 1 January 2023 and what is required under the new EPR regulations. Businesses who are caught within the scope of the EPR are:
- Small organisations – with annual turnover of between £1 million and £2 million, that handle and supply more than 25 tonnes of empty packaging or packaged goods through the UK market; or annual turnover is over £1 million and responsible for handling and supplying between 25 tonnes and 50 tonnes of empty packaging or packaged goods through the UK market.
- Large organisations – with annual turnover of £2 million or more and responsible for handling and supplying more than 50 tonnes of empty packaging or packaged goods in the UK.
- Parent companies, groups or subsidiaries that meet the turnover or tonnage requirements.
The guidance provides information on what should be included when collecting and submitting packaging data, this includes:
- individual materials in the packaging being handled and supplied;
- materials used in "primary", "secondary" and "transit" packaging;
- packaging likely to become household or non-household waste; and
- packaging likely to end up in street bins.
While data does not need to be collected until 2023, businesses should be familiarising themselves with this guidance and with which measures they need to be putting in place to ensure the correct data is collected so it can be submitted properly next year.
Single use plastics in Scotland
The Environmental Protection (Single-use Plastic Products) (Scotland) Regulations 2021, implementing a ban on many single-use plastics in Scotland, came into force on 1 June 2022. It is now an offence for businesses in Scotland to provide items including plastic cutlery, plates and stirrers. Guidance on the implementation of these regulations can be found here.
The regulations make it an offence to manufacture and to supply the following items:
- single-use expanded polystyrene beverage cups including their covers and lids;
- single-use expanded polystyrene beverage containers including their caps and lids;
- single-use expanded polystyrene food containers;
- single-use plastic cutlery including forks, knives, spoons and chopsticks;
- single-use plastic plates; and
- single-use plastic beverage stirrers.
The regulations also make it an offence to supply:
- single-use plastic straws (where the straws are supplied to an end-user); and
- single-use plastic balloon sticks.
Failure to comply with the regulations carries a maximum fine of £5,000.
Consultation on improved reporting of food waste by large food businesses in England
On 13 June, Defra published a consultation which seeks views on options to improve food waste reporting by large food businesses in England.
It is seeking views on the following: options for improving food waste reporting; types of businesses in scope; material in scope to be reported; the reporting process which businesses in scope will need to follow for any regulation; costs and impacts of any regulation; and enforcement of any regulations. The consultation closes on 5 September 2022.
Government responds to consultation on implementing due diligence requirements for forest risk commodities in UK supply chain
Please see ESG.
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Environmental, social and governance
Government responds to consultation on implementing due diligence requirements for forest risk commodities in UK supply chain
On 1 June 2022, Defra published its response to its December 2021 consultation on implementing due diligence requirements for forest risk commodities introduced under the Environment Act 2021.
The requirements are intended to help tackle illegal deforestation through the UK's international supply chain by prohibiting forest risk commodities or products derived from that commodity.
In its response, the government has confirmed its intention is to lay secondary legislation to implement due diligence regulations in the Environment Act at the earliest opportunity. The secondary legislation will be brought forwards for the forest risk commodities in scope, which are cattle (beef and leather), cocoa, coffee, maize, palm oil, rubber and soy. The responses collated will also help the government to design this legislation and guidance, which will include details on how long businesses will have to prepare for regulations.
Businesses that will be caught within the scope of the legislation will be large businesses, with a turnover over a specified threshold. The government confirmed that it will align the definition of turnover in secondary regulations with the Companies Act, and set a threshold based on turnover in the previous financial year.
No plans for the UK to replicate the EU's proposal for Corporate Sustainability Due Diligence Directive
Please see Modern Slavery.
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Food Law
Government food strategy
On 13 June, the government published its food strategy setting out its objectives which include focusing on food security and ensuring a secure supply chain in an unpredictable world, in light of the impact of the conflict in Ukraine and the Covid-19 pandemic. It also outlines a number of initiatives in line with its objective to provider healthier options for the population and also deliver sustainable food systems in line with the government's net zero targets.
Notably, the strategy sets out a number of measures the government intend to take regarding reporting requirements and labelling of products which will impact businesses in this sector.
Labelling:
- The government plans to develop a mandatory methodology that must be used by those who want to produce eco labels or make claims about the sustainability of their products in order to prevent "greenwashing" claims.
- The government will look at the current regime for nutrition labelling, such as front of pack traffic light nutrition labelling, and consider whether the regime needs to be strengthened in order for consumer to make more informed and healthier choices.
- In 2023 the government will consult on proposals to improve and expand current mandatory labelling requirements on animal welfare. This will build on responses to the government’s recent call for evidence on food labelling for animal welfare. Proposals will cover domestic and imported products, consider the UK's international trade obligations, and will help consumers identify when products meet or exceed UK animal welfare standards.
Reporting requirements:
- By the end of 2023, the government will streamline for industry all reporting requirements relating to the production and sale of food and drink. The government intends to capture scope 3 emissions (those associated with a company's supply chain) and bring these in line with the reporting requirements already in force for scope 1 and 2 greenhouse gas emissions.
- These requirements will initially be targeted at large companies across retail, manufacturing, out of home, food to go and online delivery businesses, and the government intends to consult on changes prior to implementation.
The food strategy has outlined changes that the government is looking to introduce that businesses in this sector should be aware of. As noted above, a number of these initiatives are to be consulted on and the team at Osborne Clarke will be monitoring these closely.
BRC category guidance on HFSS promotional restrictions
With the placement of foods high in fat, salt and sugar (HFSS) still coming into force on 1 October 2022 (see more in our Insight) the British Retail Consortium (BRC), in consultation with Food and Drink Federation members, has produced its own guidance to help identify whether a product falls within a category in scope of the Food (Promotions and Placement) Regulations (England).
The BRC guidance provides a detailed table of the categories that fall within the scope of the regulations and gives various examples and exclusions within each category, with the aim to expand on the government guidance so there is a consistent approach to the interpretation of the regulations across the industry. It is important to remember that BRC is an industry body so unfortunately this is not government guidance, but is nevertheless interesting and may be useful for businesses.
Precautionary allergen labelling: the ‘may contain’ consultation responses
On 6 June, the Food Standards Agency (FSA) published the responses to its consultation on the provision of precautionary allergen labelling (PAL) and precautionary allergen information, such as "may contain" on many types of food sold in England, Northern Ireland, and Wales.
The following outcomes were found from the feedback:
- Precautionary allergen labelling and information should be communicated more clearly and consistently in an understandable way and be based on proportionate and standardised processes for assessing, managing, and communicating the risk of allergen cross-contamination.
- Most stakeholders are open to regulatory change, as long as it does not impede on UK and international trade.
- Allergen thresholds need to be set to support the standardisation of risk analysis of allergen cross-contact for prepacked foods and that a PAL with standardised wording should be provided when set thresholds for allergens are exceeded.
- Support for improving and standardising allergen information within supply chains, so that all food businesses receive the precautionary allergen information they need, alongside the ingredients they source, to help enable any communication of allergen cross-contact risk to their customers to be as accurate as possible.
The FSA will now use this feedback to develop a range of options to enable food businesses to understand their responsibilities and the steps that must follow prior to providing precautionary allergen labels and information.
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Health and Safety
HSE Strategy 2022/2023
Last month the Health and Safety Executive (HSE) published its strategy for 2022 to 2023, "Protecting People and Places".
Within this, the regulator set out the following objectives for the next ten years:
- Reduce work-related ill health, with a specific focus on mental health and stress.
- Increase and maintain trust to ensure people feel safe where they live, where they work and in their environment.
- Enable industry to innovate safely to prevent major incidents, supporting the move towards net zero.
- Maintain Great Britain’s record as one of the safest countries to work in.
- Ensure HSE is a great place to work, and it attracts and retains exceptional people.
The HSE focuses on the point of new innovative technologies and processes to transition to a carbon neutral economy and how these will present new risks. It highlights that an early priority is going to be to address the safety implications of using hydrogen for decarbonisation. It is positive to see the regulator responding to external movements and this will be welcomed by businesses who are also adapting to these changes. This can also be said for the HSE's recognition of greener building and battery technologies that will present challenges that businesses are less familiar with. The regulator wants to ensure that health and safety legislation does not prevent innovation and progress, which again will be well received by businesses who are looking to develop their working practices in line with this technological development.
Fire safety guidance strengthened for new high-rise homes
On 1 June, new improvements to fire safety guidance and building regulations were introduced to ensure tall buildings are made safer in England.
All new residential buildings over 11m will now have to include a Secure Information Box to give fire and rescue services access to important details about a building in the event of a fire. This change has been implemented to meet the recommendations from Phase One of the Grenfell Tower Inquiry and is hoped to help fire and rescue services. Secondly, Evaluation Alert Systems must be installed in new residential developments over 18m to help fire and rescue services inform residents of a change in evacuation strategy during an incident.
Consultation on the Higher Risk Buildings (Descriptions and Supplementary Provisions) Regulations
The Department for Levelling Up, Housing and Communities has launched a consultation on proposed Higher Risk Buildings (Descriptions and Supplementary Provisions) Regulations which complete the definition of higher-risk building for the new building safety regime. It seeks views on the following areas:
- the overall definition of a building for the purposes of both the design and construction and occupation parts of the new more stringent building safety regime being brought forward by the Building Safety Act;
- which buildings are included and excluded in relation to the design and construction part of the new regime and the definitions of these buildings;
- which buildings are excluded in relation to the occupation part of the new regime and the definitions of these buildings; and
- the method for measuring height and number of storeys.
The consultation does not relate to buildings included in the leaseholder protection scheme or the building remediation funds. The consultation closes on 21 July 2022.
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Modern slavery
No plans for the UK to replicate the EU's proposal for Corporate Sustainability Due Diligence Directive
Following the European Commission's adoption of the proposal of a directive on corporate sustainability due diligence (see more on this in our earlier Regulatory Outlook), the UK government has now commented on it.
In a letter written on 23 May, Lord Callanan (Minister for Business, Energy and Corporate Responsibility in the Department for Business, Energy and Industrial Strategy) stated that the UK government has no plans to replicate the EU proposal. Lord Callanan went stated that the government is "sensitive to the overall burden of regulation on our businesses", but supports approaches taken by UK businesses that conduct due diligence of their supply chains.
He further noted that the International Sustainability Standards Board is looking to develop international standards to harmonise environmental, social and governance reporting, which may include due diligence disclosures. He added that the UK government intends to bring forward proposals in order for the UK to adopt these standards for use by UK businesses.
The letter states that it is unclear how many UK businesses will be caught under the scope of the EU's directive, but considering it is only at an early stage of the legislative process, it will become clearer as it progresses and the government will be keeping on top of this.
Commission launches call for evidence on prohibiting products produced using forced labour
On 23 May, the European Commission launched a call for evidence on effectively banning products produced, extracted or harvested with forced labour. The initiative aims to prohibit making available products, produced with forced labour, on the EU market, whether they are made in the EU or elsewhere in the world. As announced by Commission President, Ursula von der Leyen, in her State of the Union speech on 15 September 2021, further EU legislative action is needed to tackle the use of forced labour in the value chains of companies operating in the single market.
The call for evidence outlines that the existing legislation does not tackle the issue of products being placed on the EU market that are made with forced labour. It further states that the current initiatives on due diligence "do not address the products directly but rather target the economic operators, such as companies above a certain size or in certain sectors, and their supply chains (e.g. the proposed corporate sustainability due diligence directive and the responsible minerals regulation)." This therefore means that products made using forced labour could still be present on the EU market.
The call for evidence sets out that legislative measures will be adopted to effectively ban the placing on the EU market of products made wholly, or in part, by forced labour. The ban would cover both EU and imported products and it would be combined with a robust, risk-based enforcement framework.
The feedback period closes on 20 June 2022.
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Products
Common Charger agreed by European Commission
On 7 June 2022, the European Parliament and Council announced that they had agreed that USB type-C will become the common charging port for all small and medium sized electronic devices in the EU by Autumn 2024.
The press release also states that fast charging speeds will be harmonised, and laptops will need to be adapted forty months after the entry into force, which differs from previous updates that noted devices already on the market would not be affected by these amendments.
We await further details on these new amendments. The final version agreed by the Parliament and Council will be made publicly available after the summer recess.
UK government launches consultation on units of measurement
On 3 June, the Office for Product Safety and Standards (OPSS) and Department for Business, Energy & Industrial Strategy (BEIS) launched a consultation inviting views on the choice over the units of measurement used in consumer transactions. The consultation is in line with the government's plan to review the law on units of measurement following the UK's exit from the EU. The consultation will explore the appetites of businesses and consumer to buy and sell in imperial units.
The consultation is specifically seeking views from those who are affected by the legislation, including:
- Businesses – the consultation would like to understand the likely uptake of selling solely in imperial measures, or in imperial units with a less prominent metric equivalent; and the costs and benefits related to both options. It also asks for businesses views on potential impacts to their customer base and suppliers.
- Consumers – whether the introduction of imperial unit as the only or primary unit of measurement would change their shopping habits.
- Local Authority Trading Standards – interested in knowing if there will be any potential impact on their regulatory activity, including any costs or benefits.
The consultation closes on 26 August.
It should be noted that the consultation has been wildly criticised by retailers for the burdens this initiative could introduce, as products would need to be relabelled, and could also push up the price of goods for consumers. Moving away from metric measurements and reintroducing imperial is also likely to confuse consumers who have been bought up with metric units and are unfamiliar with imperial measurements. With the consultation already facing a lot of backlash from stakeholders, it will be interesting to see whether the government takes further steps to make any changes.
OPSS: Study on the impact of artificial intelligence on product safety
On 23 May, the Office for Product Safety and Standards (OPSS) published a research report, Study on the Impact of Artificial Intelligence on Product Safety. The report focuses on the current and future impacts of artificial intelligence (AI) on consumer products and product safety.
The paper highlights that the use of AI brings both opportunities, as well as challenges and risks. For example, AI technology can advance products by making them more efficient and effective, which can improve product safety. Other indirect opportunities include improved data collection, improved cyber security protection, AI powered product design and an increasing potential for personalised products.
On the other side, the report notes the potential challenges around robustness and predictability, transparency and explainability, security and resilience, fairness and discrimination, and privacy and data protection. It also sets out the potential harms, which includes "material harms", such as an AI-driven robot causing physical injury, and "immaterial harms" such as the replacement of human contact for older people with autonomous products causing mental health issues.
The regulatory challenges are also explored. The report highlights that the more complex AI products challenge many of the definitions detailed in the current regulatory regime, and that this legal uncertainty will need to be addressed.
MHRA updates medical device clinical investigations guidance
The MHRA has updated its guidance on notifications about clinical investigations for medical devices. A new section on study deviations has been added to the guidance outlining that medical device manufacturers must give notice to the MHRA of all deviations as soon as they have been made aware of them. The notice should include details about the nature of the deviation, when it occurred, where it occurred, and the corrective and preventative actions proposed by the manufacturer. Manufacturers should use this excel template when reporting deviations and keep this as a "live" document so that new deviations can be added.
MDCG issues guidance on application of IVDR to 'legacy' and 'old' devices
The Medical Device Coordination Group (MDCG) has published guidance on the application of Regulation (EU) 2017/746 on in vitro diagnostic devices (IVDR) to "legacy" and "old" devices.
The document outlines that under 110(3) of the IVDR, "legacy" devices are those that:
- Are placed on the market or put into service after 26 May 2022 and up to the end of the relevant transition periods.
- Were authorised under Directive 98/79/EC on in vitro diagnostic devices (IVDD), meaning that they are the subject of either a valid EC certificate issued by a notified body or a declaration of conformity without notified body involvement (but in a situation that would require notified body involvement under the IVDR).
- Comply with the further requirements of the IVDR specified by Article 110(3); that is, they continue to comply with the IVDD and have not undergone any significant changes in their design and intended purpose.
"Old" devices are those that were placed on the market or put into service prior to 26 May 2022, and are still on the market or in use after 26 May 2022 The guidance outlines that the IVDR requirements are in principle not applicable to "old" devices. However, IVDR provisions should generally apply if they do not directly impact the device, its documentation or the conditions for the placing or making available of devices on the market.
Guidance issued on new extended producer responsibility for packaging
Please see Environment.
Single use plastics in Scotland
Please see Environment.
Commission launches call for evidence on prohibiting products produced using forced labour
Please see Modern Slavery.
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Regulated procurement
Procurement Bill
The Procurement Bill, which you can read about here, has reached the Committee Stage in the House of Lords.
Government Commercial Function have also published, on 16 June, a summary guide of the proposed provisions of the Procurement Bill. The guides covers: devolved administrations; coverage; defence and security; principles and objectives; undertaking a procurement; exclusions and debarment; contract management; transparency notices and remedies. See the guide here.
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Sanctions and Export Control
OFSI updates enforcement guidance
The Office of Financial Sanctions Implementation (OFSI) has published an updated version of its enforcement and monetary policy guidance. The updates reflect the measures contained in the Economic Crime (Transparency and Enforcement) Act 2022, the provisions of which were detailed in the March edition of our Regulatory Outlook.
The changes, which came into effect on 15 June 2022, include (1) the removal of the requirement for OFSI to prove that a person had knowledge or reasonable cause to suspect they were in breach of financial sanctions, (2) a new ability for OFSI to publish details of breaches where monetary penalties have not been imposed, and (3) a more flexible review process relating to monetary penalties. See our Insight for more.
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Telecoms
General Conditions of Entitlement Update
Ofcom has released an update of its General Conditions of Entitlement which comes into force on 17 June 2022, together with revised guidance.
The relevant customers covered by the new protections are consumers, micro and small enterprise customers (that is, businesses with 10 individuals or less working for them) and not-for-profit organisations.
The new measures include:
- A requirement on providers of public electronic communications services to share key contractual information with relevant customers before they enter into the contract; and
- A requirement to notify customers of changes to their contract, and a right for customers to terminate for such changes other than those that are:
- exclusively to the benefit of the customer (previously a change had to be of material detriment to the customer);
- purely administrative in a way that has no negative effect on the customer; or
- imposed by law.
Ofcom launches consultation on proposals to revise its Regulatory Enforcement Guidelines
On 24 May Ofcom published a consultation on proposed revisions to its Regulatory Enforcement Guidelines. The Regulatory Enforcement Guidelines set out how Ofcom approaches the enforcement of the regulatory requirements and consumer protection laws which relate to the industries that it is responsible for.
The proposals put forward by Ofcom include:
- expanding the Regulatory Enforcement Guidelines to cover new enforcement powers;
- restructuring the Regulatory Enforcement Guidelines to make them easier to follow;
- updating and clarifying the text of the Regulatory Enforcement Guidelines; and
- including information about civil liability for a breach of regulatory requirements.
The consultation closes on 19 July 2022.
Ofcom likely to take on responsibility for regulation of phone-paid services
Ofcom and the Phone-Paid Services Authority (PSA) have announced that, subject to DCMS approval, responsibility for regulating phone-paid services is to be transferred to Ofcom.
Ofcom has stated that the move follows long-term market trends and the current low levels of consumer harm in this area, and that the move will provide an opportunity for both organisations to address future challenges as the market develops.
The change is anticipated to take effect in the second half of 2023.
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