The Government has published its Draft Consumer Rights Bill, through which it proposes a significant overhaul of UK consumer protection legislation.
The Bill will undergo a period of consultation before Parliament, allowing interested parties to comment and scrutinise the proposals.
When passed into law, the substance of the Bill will have the effect of enhancing the rights of consumers of goods and services, providing for additional civil remedies and public enforcement provisions that will impact on businesses across the UK. The Bill will be good news for consumers and consumer-focused pressure groups.
What rights will consumers have?
The concern for businesses will be the potential cost exposure and reputational damage the Bill may expose them to.
Key parts include:
- Clarity as to the standard of goods and services provided - the rules on the supply of goods and services will now be consolidated into a single piece of legislation which will outline the standards required. Within the realm of services, businesses are now required to charge reasonable prices and that the services must be performed within a reasonable time;
- Early right to reject - consumers will have a right to reject goods that do not conform to a contract (this is limited to 30 days).
- Two-tier remedial scheme in the case of contracts for hire/hire-purchase agreements - consumers will have the right to the following:
- The first tier - a repair or replacement of the goods, with a business having one opportunity to satisfactorily repair or replace.
- The second tier - if the repair or replacement is defective then the consumer has the right to request a price reduction or reject the goods. (Note that in relation to goods with digital content, there is no final right of rejection, only the right to a price reduction or refund).
- Right to request repeat performance of a defective service or, if this is impossible or not done within a reasonable time, the right to a price reduction;
- Unfair terms - all written terms of a consumer contract must be transparent (meaning plain and intelligible language); and
- Enhanced enforcement powers - the Bill grants public enforcers, such as Trading Standards, enhanced investigatory, redress and compliance measures (known as "enhanced consumer measures"). These include the power to request undertakings from breaching businesses to require them to comply with these enhanced consumer measures including offering consumers compensation or other redress in respect of any loss sustained or offering consumers the right to terminate the contract. These measures must be just and reasonable as considered by the enforcement body or the court. If a business refuses to comply, the public enforcer may escalate the matter to the court.
What are the concerns for businesses?
Businesses will need to be aware of these changes and the challenges they present:
- There is the risk of additional costs of repairing/replacing goods, repeating services and providing refunds/reductions in price to consumers, with a consequential impact on cash-flow;
- Businesses should finesse their complaints and repair procedures in order not to fall foul of the two-tier remedy system; and
- Contracts may need to be revisited and revised in order to ensure that they meet the transparency requirement of the new regime.
What should you do?
It remains to be seen what impact the enhanced consumer measures will have in practice and whether public enforcers will have an appetite to bring businesses to account.
However, if as we might assume, the enforcement is taken up with gusto, the Bill represents a danger to unprepared and uncooperative businesses carrying with it not only potential cost implications, but also the risk of reputational damage as well.
If you have any questions about the Bill and how it might affect your business, please do not hesitate to get in touch.