Important changes are being made in the area of consumer law in the UK, as a result of consumer law reform at EU level.
The framework of consumer protection laws is fragmented across the EU, with twenty-seven different sets of EU consumer contract laws comprising different obligations on businesses and rights for consumers. For example, EU member states have different cooling off periods, information obligations, and refunds and repairs. The costs in complying with cross-border requirements may discourage businesses from selling across the EU, in general, and ultimately may limit consumer choice and stifle competition. Significant changes have been made at EU level in an attempt to remedy this problem of inconsistent rules on consumer contracts.
The UK has an obligation to ensure its own legislation is in line with measures adopted at the EU level, and as a result has brought in various pieces of legislation, including the Consumer Protection from Unfair trading (Amendment) Regulations 2013 and the Consumer Contracts (Information, Cancellation & Additional Payments) Regulations 2013. Key changes in these regulations are set out below. As a result of consumer law reform, in general, businesses in the future will need to look closely at their contracts with consumers, including how their consumers are formed, the content of their consumer contracts, and what pre- and post-contract information is provided to consumers.
On 6 August 2013, the Department for Business, Innovation & Skills (BIS) published two sets of regulations relating to the overhaul of consumer contract rules. The first set of regulations, the Consumer Protection from Unfair Trading (Amendment) Regulations 2013, includes a key change in relation to consumer redress against businesses for misleading and aggressive practices. The current Consumer Protection from Unfair Trading Regulations 2008 (CPRs) generally prohibit unfair commercial practices but do not provide consumers with a direct right of redress. Under these draft regulations, consumers would be entitled to various remedies, including a right to terminate and receive a full refund, or the right to a discount and, in some circumstances, a right to receive compensation. This key change would bring UK in line with other member states (e.g. Ireland) that currently provide consumers with a direct right of redress for misleading and aggressive practices.
The second set of draft regulations, the Consumer Contracts (information, Cancellation & Additional Payments) Regulations 2013 will implement some parts of the new EU Consumer Rights Directive (CRD) into UK law. Two key areas covered by these draft regulations in relation to distance contracts (e.g. contracts formed online or over the phone) are as follows:
Information requirements
Businesses are required under existing UK legislation to provide pre-contract and post-contract information to consumers. The new draft regulations consolidate current rules and bring in further information requirements. For online contracts, businesses would be required to set out detailed information set out in Schedule 2; and ensure that consumers are aware of obligations to make payment and of delivery restrictions (where applicable). Failure to comply with requirements could lead to consumers not being bound by the contract, or to an injunction to enforce compliance (where a complaint is made to a public authority).
Cancellation rights
As with the existing rules, consumers would have a right to cancel a distance contract for any reason during a certain period. The current rules state that, in general, consumers have 7 working days in which to cancel the contract. The new regulations will extend this 'cooling-off period' to 14 calendar days for distance contracts. The cancellation period extends to a 12-month period (from the current 3-month period) if the business fails to provide specific information on the right to cancel. The regulations also provide an optional model cancellation form which may be used by businesses when notifying consumers of their right to cancel.
It will be interesting to how the draft regulations develop over the next few months. The deadline for comments on the draft regulations is 11 October 2013.
Lesley Larg is a Partner in our Intellectual Property Team. If you would like further information on any of the issues raised in this article, please email Lesley on llarg@thorntons-law.co.uk or contact our Intellectual Property, Media and Technology team on 01382 229111.
