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The Consumer Rights Bill: Progression or Regression?

About The Author

Georgia Mitchell (Writer)

Georgia is in her second year of Law at Newcastle University. She is currently pursuing a career as a commercial solicitor, and hopes to work abroad within the EU at some point in her future career. Outside of her studies, Georgia is an avid tennis fan.

The Consumer Rights Bill: A piece of legislation which aims to modernise and simplify consumer protection law whilst clarifying consumer rights. The main purposes of these amendments are to make consumers better informed and protected when purchasing an item and entering into a contract. Supposedly, the draft bill will enlighten customers about what they can expect when purchasing an item; whilst also establishing what they can do when goods, services or digital content do not meet the requirements set out in the piece of legislation.

Acclaimed as the most radical overhaul to consumer law for over three decades, the draft bill was announced in the Queen's Speech in May. Nonetheless, as it still has to undergo parliamentary scrutiny in the Commons and the Lords it is unlikely to become law until early next year.

Regulatory expert, Pauline Munro recently remarked that, “Not only does the draft Bill bring consumer law into the digital age, and streamline a single piece of legislation on consumer rights and the law relating to unfair contract terms, it will also provide clarity in respect of the rights of consumers to redress”. The new bill has generally been seen as a necessary and positive piece of legislation and should, in theory, make for a better and more efficient system within consumer protection law.

This being said, it is necessary to explore whether the bill actually does protect consumers sufficiently. If so, are these implemented safeguards too restrictive on businesses? Do regulators have too much power over businesses? Moreover, are consumers even aware of their rights?

The bill visibly outlines the protections and rights of the customer. S 32 (1) of the bill clearly sets out where liability cannot be excluded or restricted. Whilst these prohibitions are welcome, some of the protections provided in the bill are arguably not sufficient, rendering the utility of liability limitation somewhat limited. Little improvement has been made to preceding legislation. For instance, it is argued that the term ‘satisfactory’ is too broad, allowing companies to continue to sell products that are not made to a sufficient standard. Many consumers will remain to receive low quality goods/services without the option to hold the sellers accountable by receipt of a refund or some other type of compensation.

However, a more commonly held view is that the draft bill has the potential to be detrimental towards businesses, giving regulators too much authority. It appears to award much wider powers to regulators, such as the Trading Standards Institute, to take action following suspected breaches within consumer law. A Freshfields note highlights that under the bill, regulators are entitled to go to court to get an order to ensure a business compensates consumers. However, the regulators only have to show that the supposed breach has “more likely than not” been committed, in comparison with the “beyond reasonable doubt” threshold that regulators must comply with if they were to seek a fine. The difference in the required level of proof is somewhat strange: the compensation which would be received in a national case would be appreciably greater than that of a fine in a criminal prosecution. Therefore, compensation should surely necessitate a high level of certainty in whether a breach has actually occurred. Further from this, regulators can also enforce compensation without even going to court. Many traders are being coerced into providing compensation without even being allowed the opportunity of fair discussion. Court is not typically an ideal situation for traders/small businesses – it can provoke bad publicity and is generally a very costly process.

However, the restricted approach regulators adopt over companies unquestionably possesses an array of positive improvements. The draft bill, combined with regulators’ more stringent approaches with companies, is successfully reversing recent price hikes. Energy regulator, Ofgem, has told five of the six electricity distribution companies to cut costs for consumers. It has rejected their investment plans, believing they should be able to "deliver more for less". Western Power Distribution’s eight million customers will see a £11.30 reduction in their electricity bills from April 2015, following Ofgem’s recent price controls. In respect to my previous article this decline in price is a very positive sign for consumers and reflects that regulators are able to successfully control larger suppliers to protect consumers further.

This considered, it should be asked whether the bill benefits businesses at all.

The main gain for business is simplicity. Eight separate regulations and pieces of legislation are being combined into one whole act. Undeniably, it will be easier for businesses to certify that their staff are fully aware of the rules. “Statutory guarantees” are now replacing implied contract terms: the aforementioned s 32 ensures sellers must guarantee that goods are of satisfactory quality, fit for their purpose and match any descriptions. These ‘guarantees’ further simplify the law and make consumer rights clearer and definitive, as opposed to the current ‘implied contract’ terms which have proved to be vague and inconsistent.

Unfortunately, alongside the advantages, the improved clarity of the new rules can also act as a detriment towards companies. For example, previously, buyers had to return goods within a ‘reasonable time’. This proved to be unclear. The draft bill now states that if a customer returns faulty goods for repair but the goods become faulty again in the future, they will be entitled to a full refund. This new rule does not assert any particular time period. The term ‘reasonable time’ is not mentioned in the draft bill. It can be assumed that provided a product has become faulty again, (regardless of the length of time that has passed since the original purchase) the consumer will still be entitled to a full refund. Despite being clearer, consumers have the potential of taking advantage of the more flexible statutory rights, returning items months after purchase which may have been damaged purely through fault of their own. Moreover, online retailers will be required to give consumers a fourteen day “no questions asked” right to return goods. Considering that the current rules permit only seven days, this is another example of consumer’s rights becoming stronger and prone to abuse.

Undeniably, the amendments made in the bill are set to improve the clarity of consumer law and make for a more efficient system. Currently, a majority of the public remains unaware of consumer law protection. New research shows that Brits are ill-equipped and poorly-informed when it comes to knowing their consumer rights. “While 4% claim to have a strong grasp, almost half (47%) admit to being in the dark, leaving them at risk of losing out. As a result, uSwitch is urging the Government to not just simplify and modernise consumer law, but to now ensure that consumers are educated about their rights too”. The draft bill will hopefully improve this issue and provide for a more comprehensible piece of legislation; ensuring that many more consumers are aware of their rights. The Consumer Rights Directive (which was passed by the EU in 2011) states that all EU member states must have the directive implemented by the end of 2013. Considering this is an EU directive, the UK is not awarded much flexibility in altering the law to ensure alignment and consistency of the rules across all EU member states. The implementation of this directive will inevitably assist in ensuring that UK legislation is certain and definitive, making it simpler for consumers to become more informed about their rights.

The current lack of knowledge could be a result of the lack of media coverage on consumer law or simply due to the public’s apathetic stance towards this area of law. A lot of people are discouraged by the thought of reading such legislation; either due to the time-consuming nature of it or simply because they believe they would not comprehend the wording. This could be a potential opportunity for businesses to exploit customers by excluding themselves from all liability within their contracts, without consumers even noticing. However, online retailers will have to inform consumers of their rights upfront. If they fail to tell the consumer about their rights then the consumer has the option to return goods for up to one year after purchase, as opposed to the aforementioned fourteen days. This is a minor but significant step to improving the situation and making consumers more aware of their legal rights.

Furthermore, the government is also improving this situation by delivering better information and protection to consumers, by publishing reports on consumer empowerment strategies and reorganising the ‘consumer landscape’ to make consumer organisations (such as the Citizens Advice bureau) simpler to understand and more efficient. Although these actions are a positive start, it could be argued that alterations in legislation alone may not be the best vehicle in educating consumers across the board. Many consumers may still be deterred from legislation for the same previously mentioned reasons, regardless of any declared amendments. Whilst the improvements in the draft bill should be commended, it is important for consumer information to be delivered through means other than directives and reports alone.

Some key legislation has unusually been excluded from the bill. Changes are needed to implement the EU’s Consumer Rights Directive and to also implement legislation to “provide new rights of redress for consumers who have been victims of a misleading or aggressive practice.” The government has decided that these two sets of changes will be brought forward as secondary legislation and will not included in the draft Bill. The reason to this remains unknown and perhaps demonstrates that consumer law still remains slightly unclear. Overall, despite the draft bill proving to be slightly too harsh on businesses, it indisputably condenses the consumer law and for the most part clarifies it for companies and more importantly, for consumers.

Further Reading

Rebecca Smithers, The Guardian, New consumer rights bill unveiled

Nicholas Watt, The Guardian, Queen’s speech: consumer bill of rights to cover faulty apps or downloads

Out-law, Draft Consumer Rights will streamline complex consumer protection legislation

Keep Calm Talk Law, OfWhat? Are regulators protecting consumers sufficiently?

BBC News, Ofgem tells energy distribution companies to cut costs

Ofgem, Ofgem requires electricity network companies to deliver more for less

uSwitch, Almost half of Brits in the dark about consumer rights

Andrew Austin, Proposed new rights for consumers to sue for misleading and aggressive practices

Gov.co.uk, Implementing the Consumer Rights Directive 2011/83/EU

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Tagged: Commercial Law, Consumer Rights, Contract Law, Regulators

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