The White Paper was presented to Parliament on 22nd July 1999. In launching the White Paper, Stephen Byers stated that it contained 70 measures on top of the powers which have already been given to the OFT to tackle anti-competitive behaviour. He said that, "a fair deal for the consumer and creating a successful economy go hand in hand. Confident, informed and assertive consumers will be a key lever to improving the competitive position of business".
The White Paper was produced in close consultation with consumer organisations, business and local authorities.
On the day the White Paper was launched:
· regulations amending the Unfair Terms in Consumer Contracts Regulations were laid before Parliament. Trading standards authorities, the Consumers' Association, the industry regulators for gas, electricity, water, telecommunications and rail and the Data Protection Registrar will all be allowed to enforce the Regulations;
· the new Consumer Gateway (www.consumer.gov.uk) went live. It steers people to consumer information on the internet.
The White Paper’s central theme is that knowledgeable consumers lead to a more competitive business environment. This is to be achieved in the following ways.
Codes of Practice
The Government will place emphasis on codes of practice. How do consumers know which businesses offer good value and service? The Government proposes to:
· provide core principles for effective codes of practice, designed wherever possible to prevent problems from happening in the first place;
· encourage trade associations to tailor the principles to the specific circumstances of their industries or selling methods, ensure that members stick to them, and take effective action if they do not;
· enable the OFT to approve codes which are effective in protecting consumer interests.
The OFT will have to:
· promote the core principles;
· approve or reject codes and publicise the decisions;
· publicise the benefits of the overall scheme; and
· provide and market the seal of approval.
The most crucial aspect of this, insofar as consumers are concerned, is that there will be some visible seal of approval which businesses will be able to use and which will help consumers in choosing reputable businesses from the likes of Yellow Pages.
There is also to be an e-commerce code with an e-hallmark which businesses will be able to place on their website whether that business is based in the UK or not. The "e-Code" will be based on the same core principles referred to above but also meet additional requirements of allaying consumers' concerns about buying goods or services on-line. The Government is working with the Alliance for Electronic Business and the Consumers' Association, in consultation with the OFT, to develop by the end of 1999:
· any additional core principles relevant to e-commerce;
· a new body, "TrustUK", to accredit e-commerce codes;
· a "hallmark" for use on websites;
· the use of existing links to establish international complaints handling networks;
· a way to market the e-commerce hallmark internationally.
Rogue Traders
The law dealing with rogue traders is to be strengthened to enable swift action to be taken. It has been clear for some time that Part III of the Fair Trading Act does not deal effectively with those traders who demonstrate their lack of regard for their legal obligations. As the White Paper rightly states, the profits to be gained by the rogue flouting his obligations outweigh the occasional judicial setback.
The Fair Trading Act is to be amended, when Parliamentary time permits, to provide:
· a power for the courts to grant injunctions against specific practices carried out by specified traders;
· a power for the courts to ban from trading for a period traders with a history of disregarding their legal obligations;
· a power for the Secretary of State to make orders by secondary legislation to specify that certain unfair practices should become criminal offences.
The new powers should be available to the trading standards services in local authorities as well as the OFT.
Better advice for consumers
There are various measures announced in the White Paper to ensure that consumers are well-informed:
· information on products must not be false or misleading - this is effectively covered in existing legislation. However, the information must be understandable and relevant to consumers' needs. The Government wants to research these needs and test proposed warnings, instructions, and so on;
· the Government will amend the rules on price marking by March 2000, so that goods offered on sale within a shop will have an easily identifiable price without the consumer having to ask for it;
· regulations on displaying food and drinks prices in bars and restaurants will be reviewed;
· the Comparative Advertising Directive (97/55/EC) is to be implemented by April 2000, permitting such advertising on an equal basis to enable consumers to compare prices across various suppliers in Europe;
· the Government is to consult on making the offence of misdescribing services one of strict liability. The offence can only be committed at present if the trader does so knowingly or recklessly;
· there is to be a new website on consumer rights for consumers and businesses - www.consumer.gov.uk.
Consumer research
There is to be better consumer research. There is to be a full survey of international price comparisons involving 100 products across four countries (UK, France, Germany and USA). The Government is stung by the headlines of "Rip-off Britain". The Paper states that many believe the prices of UK goods are higher than the equivalent goods in other countries, particularly in the US. The Government is determined to get at the facts and act accordingly. The results of the survey are to be published by January 2000. If the survey shows that there is evidence of any anti-competitive practices then the DTI will ask the Director General of Fair Trading to investigate. It is clear that a lot of work has to be done to get below the headlines and get to the actual facts.
A review of consumer protection legislation
The Government is keen to conduct a review of the consumer protection legislation in the UK and has launched a review of the weights and measures legislation. It is keen to ensure that the legislation still achieves the required levels of consumer protection whilst not imposing unnecessary burdens on business. The Government is looking for suggestions as to the areas of consumer protection legislation that may be causing particular problems for consumers or businesses.
E-commerce
A key issue to consider is that of e-commerce. The White Paper stresses the importance of consumer protection in this area. However, businesses are concerned that the raft of European legislation (the draft directives on the distance selling of financial services and e-commerce and the review of the Brussels and Rome Conventions) which is being negotiated at the moment will hinder the development of e-commerce.
This would be the case if the legislation may result in a business having to comply with 15 different sets of rules if it wants to market to consumers resident in all 15 member states. This will prevent the free development of e-commerce in Europe and restrict the number of suppliers who are able to enter the marketplace.
It was to be expected that the White Paper would focus on the consumer protection aspects of e-commerce, but without a maximum harmonisation approach in respect of the rules which need to be complied with, there will be no level playing field for businesses. Consumer protection measures will be of limited assistance if the marketplace is failing and uncompetitive.
The National Consumers Council (NCC)
The first part of a five-yearly review of the NCC has now been completed. The review has concluded that the NCC can play a key role in bringing the consumer voice more fully into the heart of government policy-making. Although it is not clear how it is to operate, the Government states that it will help the NCC relaunch as "a dynamic and more effective force in UK consumer affairs to achieve these objectives". This is to be welcomed.
The Office of Fair Trading
The White Paper proposes major changes to the way in which the OFT enforces consumer protection:
· approving and marketing codes of practice;
· review of the way in which it administers the licensing regime under the Consumer Credit Act;
· powers being shared with other bodies.
The OFT is therefore undertaking a fundamental review of its consumer affairs functions. The Director general is to lead the review, involving consumer and business representatives as well as government departments. The review will cover:
· consumer affairs objectives and powers, including on consumer education;
· resources;
· liaison and co-ordination with other government departments;
· and co-ordination with other enforcement agencies.
Comment
The White Paper has accomplished:
· a commitment to amend the rogue trader rules. This will be useful for the majority of businesses provided the new powers are targeted at the real rogues and there is consistency of enforcement;
· raising the profile of codes of practice. However, a great deal of work will have to be done before this proposal can become a reality;
· putting a review of consumer protection legislation on the agenda.
However, the Government has missed the opportunity to:
· give a clear message to businesses on co-ordinated enforcement - the reality may be very different. The White Paper talks in terms of "encouraging" closer co-operation between enforcement bodies and LACOTs (the Local Authorities Co-ordinating Body on Foods and Standards) is "currently consulting" on the issue;
· commit enough resources to ensure that the OFT and the local authorities can do their job effectively. Introducing the White Paper to the House on 22nd July 1999, Stephen Byers stated that £30M had been allocated to provide extra resources to local authorities but with their extra responsibilities to come under the Fair Trading Act, the Unfair Terms in Consumer Contracts Regulations and in supporting the Food Standards Agency in addition to all their existing functions, it is doubted whether this money will be anywhere near what is needed. It is unclear how much of this money, if any, will be going to the OFT. It has already received increased funding to reflect its new responsibilities under the competition Act.
One suspects that the review of the OFT’s consumer affairs functions will have to focus on reorganising and prioritising within its existing available resources.
A lot of work has to be done on co-ordinating the enforcement powers of the various bodies - Consumers' Association, the Financial Services Authority, trading standards authorities, the Office of Fair Trading, and so on. The White Paper hails a high level Enforcement Forum to bring representatives of the relevant bodies together every six months to consider matters of common interest. The thinking is yet to be fleshed out. There is a danger of inconsistent enforcement and businesses are concerned as to how this will work in practice. The Government continues to mention the Enforcement Concordat but Local Authorities have not yet all signed up to it.
There is a lot of good intention in the White Paper on the review of legislation and on the developments to come in the field of e-commerce. However, in a crowded legislative timetable, it is difficult to see how all the measures can be achieved. Precedence will undoubtedly be given to implementing the various European directives which are coming on-stream. To the extent that European developments have been driving consumer protection legislation since the 1980s, there is nothing new here.
This truth emphasises the importance of the measures which do not require primary or, for that matter, secondary legislation. The White Paper is a good starting point and the message is to be applauded. The fact that the Government is working with the likes of the Alliance for Electronic Business, the Consumers’ Association and the CBI and the fact that it has published its intentions and proposals leads to accountability and a greater chance of at least some of the goals being achieved.
For further information contact David McCahon, senior lawyer and head of the Consumer and Retail Finance Group at Cameron McKenna, on tel: 0171 367 2984 or e-mail: davm@cms-cmck.com
