Enhanced UK consumer protection enforcement expected soon

In 2021 the UK Government launched a consultation on the reform of UK Competition and Consumer Policy. Last year, the Government indicated that it would introduce major changes to the way consumer law can be enforced. We may soon have sight of the legislative proposals. This article summarises the current status of consumer law and its enforcement in the UK, then outlines the upcoming changes planned by Government.

Current framework

UK consumer protection law stems from various sources. For example, the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) prohibit misleading and aggressive sales practices by traders; the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 address (among other things) the information that traders must provide to consumers; and various sector-specific pieces of legislation impose standards and obligations in relation to the sale of certain types of products and services (e.g. in relation to telecoms). A large bulk of UK consumer protection legislation is contained in the Consumer Rights Act 2015 (CRA), which consolidated into one place consumer rights covering contracts for goods, services, digital content and the law relating to unfair terms in consumer contracts. The Government’s view, expressed in its 2021 consultation, is that this body of law works well in creating within the UK one of the world’s strongest consumer protection regimes.

In terms of putting consumer protection into effect, the Competition and Markets Authority (CMA) is the UK’s principal authority responsible for competition and consumer protection, but shares its consumer enforcement powers with other bodies, such as the Trading Standards Service (which has responsibility for most consumer law enforcement) and sectoral regulators such as Ofcom, the FCA, and Ofgem. The CMA works in partnership with other bodies having consumer functions through the Consumer Protection Partnership, whereby various bodies with consumer functions work to jointly identify the areas that may cause severe consumer harm and agree and coordinate collective action where necessary.

At present, the CMA’s main consumer enforcement powers are shared with other bodies and include:

• Civil powers to stop infringements of certain consumer laws, by accepting undertakings or seeking an enforcement order from a civil court against traders breaching certain laws, including the CPRs and the CRA
• Criminal powers to prosecute traders engaging in serious unfair commercial practices under the CPRs (for example, traders deliberately or recklessly using aggressive, intimidating or coercive practices)
• The ability to seek an injunction to stop businesses using unfair terms or notices with consumers
• Certain investigatory powers; including to require a person or business to provide information, and to apply for a court order requiring compliance, should the person / business refuse

The CMA has historically looked to exercise these powers in particular: where breaches of the law point to systemic failures in a market;where there is an opportunity to set an important legal precedent;where there is a strong need to secure compensation for consumers; and to uphold the effectiveness of the unfair contract terms regime embodied in the CRA.

The case for reform

The Government’s 2021 consultation noted that the consumer protection regime should accommodate continual changes to markets, including an increase in online transactions and particularly in those mediated by online platforms, so consumers remain protected and confident in engaging with new services and ways of doing business as new technologies and practices emerge in the e-commerce environment. The Government identified particular concerns relating to subscription contracts, the commissioning of fake or misleading reviews and the exploitation of behavioural biases.

The consultation also highlighted weaknesses in the system of consumer law enforcement. Currently, the CMA and other enforcers may have to go to court at all stages of an investigation – including when: evidence gathering; taking action when negotiated undertakings have been breached; seeking to force a trader to end an infringement; or even to enforce a court order in relation to an infringement. This creates cost and delay for enforcement action. More generally, the available sanctions for breaching consumer protection laws are relatively weak in comparison to those for breaches of competition law.

Anticipated changes

The Government’s 2022 consultation response set out the various reforms it is planning in order to strengthen the enforcement of consumer protection law; detail for which will be set out in the upcoming legislative proposals:

• Giving the CMA power to enforce ‘core’ consumer protection law directly (rather than through the courts)
• Granting the CMA power to impose turnover-based or fixed monetary penalties on traders that breach certain consumer protection laws, breach undertakings agreed with the CMA, or fail to comply with information requests
• Enabling the CMA to make ‘directions’ to address infringements

These plans will align consumer protection enforcement more closely with the CMA’s existing competition enforcement powers – in particular with the potential for very large fines (up to 10% of the offender’s global turnover). Proposed safeguards for procedural fairness are similarly aligned with competition enforcement, with the Government indicating that investigated parties will have be able to conduct ‘full merits’ appeals of CMA infringement decisions in the High Court.

The Government shall, more generally, provide greater support to consumers in directly enforcing their rights, through: improved consumer awareness and signposting; increasing the quality and oversight of Alternative Dispute Resolution (ADR); and improving the take-up of ADR in non-regulated markets.

To keep pace with market developments, the Government also plans to introduce reforms to the consumer protection regime to:

• Tackle fake online reviews, by including various associated practices within the list of presumed unfair practices in the CPRs
• Enhance protection for consumers on subscription contracts, to help consumers to understand how these operate and when ‘auto-renewal’ is imminent
• Increase the protection available to consumers who make use of prepayment schemes

What to watch out for

There will be a lot to look out for in the detail of the proposals. We are particularly interested in the interplay between these proposals and other areas of the CMA’s agenda, including sustainability, the protection from online harms, and private actions that might draw upon CMA decisions. Watch this space.