Consumer legislation overhaul

The EU is set to standardise and extend consumer legislation. Jennifer Edwards, an associate at law firm Thomson Snell & Passmore, looks at what that means for UK businesses.

This month, legislation is to be debated that will provide a uniform set of consumer rights across the EU. The Consumer Rights Directive is not all one-way, however, as some of the regulations are in favour of businesses.

Changes which favour UK consumers include: the right not to pay any additional charges not notified to them at the outset; a longer cooling-off period of 14 days; the right to a refund within seven days (currently 30 days) for late or non-delivery and the right to require a price reduction or refund in certain circumstances.

Changes which favour UK businesses include: the right, when a customer cancels the contract, to withhold reimbursement until the goods have been returned (currently, a refund within 30 days is required);  the right to refuse a refund for minor defects and a reduction in the statutory liability period for defective goods from six to two years (one year for second-hand goods).

The Consumer Rights Directive follows the Provision of Services Regulations 2009 and the Consumer Protection from Unfair Trading Regulations 2008. The ultimate aim of all this paperwork is to encourage consumers to buy goods across the EU, and existing sector-specific legislation will prevail over the generic standards.

The Provision of Services Regulations 2009, which come into force at the end of December, are double-edged. On the one hand, they make life easier for businesses, requiring a single point of contact to be established in each member state (for example, Business Link in the UK) to deal with enquiries and applications to trade in that country. But they also encourage co-operation between regulatory bodies across the EEA, particularly in relation to businesses which pose a danger to the environment, public health and/or safety – and introduce new sanctions.

More sweeping are the Consumer Protection from Unfair Trading Regulations 2008. These create an EU-wide list of commercial practices which are deemed unfair if they affect a consumer’s decision and a blacklist of 31 banned practices. The regulations apply to all consumer contracts but may also affect contracts between businesses which have a close connection with consumers – for example, a distribution agreement where the end-user is a consumer.  The regulations encourage the free flow of information across the EU, particularly in relation to enforcement action. The UK’s Office of Fair Trading (OFT) now has the right to request that its equivalent body in, say, France takes enforcement action against a French company which has breached the Regulations in relation to a consumer located in the UK. The OFT also has additional investigative powers and can, for example, inspect goods without a warrant.

Surprisingly, or perhaps as a result of the scale and nature of the changes, the OFT has stated that it wishes to encourage self-regulation where it is more appropriate than enforcement or intervention. To this end, it has set up the Consumer Codes Approval Scheme and the Local Authority Assured Trader Scheme Network. In addition, the OFT will support industry-based schemes which require a higher standard of compliance than the legal minimum, but will not guarantee a “safe harbour”.

As with all new regulation, the hope is that the benefits will outweigh the additional administrative and legal burden, but it remains to be seen whether cross-border buying increases significantly as a result.

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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