The UK government has unveiled a series of proposals to modernise regulation of consumer markets, including stronger action against scams and making terms and conditions simpler to understand.
In the Modernising Consumer Markets Green Paper, the government is consulting on proposals such as ensuring new technology and data are beneficial to consumers, rather than disadvantage them.
For example, in regulated markets such as energy and telecoms and water it wants to ensure that consumers benefit from competition and do not face excessive penalties for loyalty.
The government claims suppliers increasingly hold detailed information on the habits of consumers that can be used positively to refine the service offered to them, but can also be used against them. For example, loyal consumers may be put on to the highest tariffs - even though they may be vulnerable - and will end up subsidising other consumers.
Instead, it aims to ensure consumers can access their own data held by companies so that they can use it to obtain better deals. It also wants consumers to use their data securely with the help of emerging technologies, such as automatic switching services and apps to find the most suitable product.
Additional proposals include providing access to high-quality dispute resolution services for redress to avoid costly court hearings by:
- improving consumers’ awareness of and access to alternative dispute resolution and their experience of the process;
- consulting on whether the current consumer advocacy arrangements in the telecoms sector - the Communications Consumer Panel - remains the right approach, or if a different model could more efficiently support and protect consumers, including the vulnerable; and
- considering strengthening national enforcement of consumer rights, while maintaining strong levels of consumer protection at a local level.
Meanwhile, it is also seeking views on the best methods of protecting vulnerable consumers, such as identifying and sharing best practice policies.
The proposals also look at developing a set of principles to improve the service that consumers with mental ill health and Alzheimer’s disease should expect to receive and developing guidance for companies dealing with vulnerable consumers who rely on power of attorney.
Business Secretary Greg Clark says: “Britain has long been a world leader in ensuring that markets work in the interests of consumers, taking innovative approaches to regulation that have been taken up by other countries across the world. I am determined that we should renew that innovative, pro-consumer approach as new technologies present new challenges and opportunities.”
The consultation on the proposals will close on 4 July 2018.
A 'new deal for consumers' outlined
Meanwhile, in a separate package of proposals the European Commission has outlined a ‘new deal for consumers’ to ensure a fairer single market for both consumers and businesses across the whole of the EU.
A review of the existing consumer rules, conducted last summer, showed the current legalisation works well, but the rules were not applied and enforced effectively across the EU. There was also a need to raise awareness among consumers and businesses about their rights and obligations.
Among the key changes is increased transparency in online market places, so consumers know whether they are buying from a trader or a private person, and more clarity around search results on online platforms.
To improve transparency, platforms must clearly distinguish between results that are paid for by traders and 'natural' search results, and also explain how the results are ranked.
The Commission is also extending consumer protection to ‘free’ digital services, such as cloud storage, social media and email accounts, where customers provide their personal data instead of paying money. It argues consumers should have the same right to cancel the contract within a 14-day 'cooling off' period, regardless of whether they pay for the service with money or by providing personal data.
To improve consumer redress, theCommission is proposing new legislation that would allow a representative action against an organisation on behalf of a group of consumers. Collective actions are already possible for consumers in some member states, but this would extend the option to all EU countries.
This will differ to the US-style class actions, as they will not be open to law firms. Instead, they will only be open to consumer organisations that are non-profit, fulfil strict eligibility criteria, and are monitored by a public authority that will be able to bring an action.
Meanwhile, the Commission acknowledges the level of penalties for violating consumer law differs widely across the EU and “is often too low to actually have a deterrent effect”, especially on large cross-border companies.
Therefore, it is proposing authorities will have powers to impose “dissuasive” penalties in a co-ordinated manner. For widespread infringements that affect consumers in several EU member states, the available maximum fine will be at least 4% of the trader’s annual turnover in each respective member state. However, each country will be free to introduce higher maximum fines.
The Commission is calling on the European Parliament and Council to work together and enact the measures before the European Parliament elections in May 2019. However, with the UK set to exit the EU in March 2019, it is unclear how much of the proposals would be transferred into UK law.
A spokesperson for the Department for Business, Energy and Industrial Strategy, points out the proposals are at an early stage and would need to be discussed among all the member states, which currently includes the UK, although it was clear that some of the measures “do dovetail” with the UK’s latest proposals.
Meanwhile, the Green Paper states on the issue of cross-border enforcement: “We are also committed to ensuring that high standards of consumer protection in the UK will be maintained after we leave the European Union.
“Through the European Union (Withdrawal) Bill, we will implement measures to ensure that existing consumer protections provided through EU laws implemented in the UK will be maintained. This will mean that UK consumers buying within the UK, either online from a UK-based business or on the high street, will have exactly the same rights as now.
“The way consumer protections apply when buying across borders in future is a matter for negotiations. We will seek the best possible deal after we leave the EU.
“After our exit from the EU, our aim is that UK consumers can continue to buy with confidence from traders in the EU and vice versa.”