As mentioned in Part 1, on 20 April 2022, the government published its response to the Department for Business, Energy and Industrial Strategy’s (BEIS) consultation on consumer and competition issues.
Last time, B P Collins’ corporate and commercial team looked at the proposals relating to consumer protection law. This week, we focus on the proposed reforms to consumer law enforcement.
Stronger enforcement powers
One of the key proposals is to allow the Competition and Markets Authority (CMA) to enforce consumer law directly without having to enforce the rules via the courts.
This will reflect the powers that the CMA already has for competition law enforcement and will bring its powers in line with similar authorities in countries such as France and Canada.
The government believes that by giving the CMA the power to directly enforce consumer protection law, this ‘would improve its capacity to take action against more of the highest-impact breaches of the law, which in turn has greater potential to safeguard the wider interest of consumers across the economy.’
Under the proposals, the penalties that the CMA could impose are significant. At a glance, these would be:
- up to 1% of a business’s annual global turnover and an additional daily penalty of up to 5% daily global turnover for continuing non-compliance (or up to £30,000 and an additional daily penalty of £15,000 for individuals) for failing to comply with CMA requests for information, concealment, falsification or destruction of evidence, or providing false or misleading information;
- up to 5% of a business’s annual global turnover and an additional daily penalty of up to 5% daily global turnover for continuing non-compliance (or up to £150,000 and an additional daily penalty of £15,000 for individuals) for breaching an undertaking given to the CMA or a direction imposed by the CMA without a reasonable excuse; and
- in addition to imposing directions such as awarding redress to consumers or requiring positive action to improve compliance, the CMA would be able to fine a business up to 10% of its annual global turnover (or up to £300,000 for individuals) for breaching consumer protection law.
If public consumer enforcers (such as the CMA) make an application to court, then the courts would also be able to impose similar penalties to those described above. Applications may be made to court against a business for a number of reasons, including but not limited to non-compliance without a reasonable excuse, breach of an undertaking given to an enforcer and infringements of the consumer protection legislation.
Another reform, that was not in the consultation but instead arose from consultation feedback, is to introduce a statutory duty of expedition for the CMA. This will mean that the CMA has to reach a decision as soon as reasonably practicable in relation to consumer protection law (as well as competition law).
Resolution of disputes
The government supports the use of alternative dispute resolution (ADR) and will work to raise consumer awareness of the benefits of ADR. The government wants to make consumers aware of the options available to them such as mediation, ombudsmen and arbitration.
The government referred to the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (ADR Regulations) and the accreditation process it provides. To improve the quality of ADR, all consumer ADR providers will need to be approved under the ADR Regulations and the government intends to standardise the application of the ADR Regulations.
Supporting trading standards authorities
The government will look at how best to support Local Authority Trading Standards Services (LATSS) and ensure that there is greater coordination between LATSS and National Trading Standards (NTS), Trading Standards Scotland (TSS). The government is also looking to increase the time limits that LATSS can bring a prosecution under the Consumer Protection from Unfair Trading Regulations 2008.
Support for business to comply with the law
The government recognises ‘educating businesses about their obligations as an important tool for increasing compliance with consumer law’. Respondents to BEIS’s consultation raised the issue that business guidance is often out of date and needs to be more consistent. The government appreciates this and will work to improve the Business Companion service, which is supported by BEIS and the Chartered Trading Standards Institute. This service provides impartial legal guidance consisting of general rules and summaries of the law for businesses.
As previously mentioned in Part 1 it is likely these proposals will likely be implemented gradually.
Whilst many changes may be included in the recently announced Digital Markets, Competition and Consumer Bill, not all proposals will be included in the bill. Changes such as improving the Business Companion service will likely be worked on over time.
For more advice or information on consumer protection, contact our Corporate and Commercial team on email@example.com or call 01753 889995.
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