16. November 2018
The government has published draft Regulations setting out proposed changes to consumer protection laws after Brexit.
As we hurtle towards the 29 March 2019, there is still an alarming lack of clarity around what Brexit will look like. Will we have a deal (with or without a blind Brexit), will we crash out of the EU without a deal, or will Article 50 negotiations be extended or temporarily suspended? There is very little certainty for any of us.
Consumer Protection law in the UK derives partly from EU law and partly from UK-specific law. In many ways, the impact of Brexit will be less keenly felt in the consumer protection space because there is regulatory fragmentation across the EU. Member States are used to having to consider specific requirements in cross-border situations. This does not, however, mean there will be no impact for consumers (and, consequently for businesses).
The UK government has published a series of technical notices to help businesses prepare for a no deal Brexit. In October 2018, the UK government published a technical notice on consumer protection and cross-border enforcement setting out the impact on consumer protection in the event of a no-deal Brexit.
The government has also published the Draft Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018 and the Draft Consumer Protection (Enforcement) (Amendment etc. (EU Exit) Regulations 2018. These will apply (largely) from exit day.
The draft Amendment Regulations amend EU-derived consumer protection legislation to ensure that it will work after Brexit. The changes relate mostly to the removal of references to EU legislation and institutions and to ensuring that contracts which deal with imports from the EEA to the UK are treated in the same way as those dealing with imports from non-EEA countries. The Regulations also revoke the operation of the Online Dispute Regulation in the UK.
The draft Enforcement Regulations provide for the removal or amendment of references to EU legislation relating to enforcement of consumer protection law and cross-border enforcement and investigatory powers. They:
It is unlikely that consumer protection law will be impacted more severely under a no deal scenario than with a deal, so the technical notice is relevant in both situations, as are the draft Regulations.
UK consumers will suffer some impact in terms of their protection when buying goods and services in the EU. They will also no longer be able to use UK courts to seek redress from EU-based traders and may find enforcement of UK judgments more difficult. There will no longer be reciprocal obligations between the UK and Member States to investigate breaches of consumer law or progress enforcement actions.
The UK will no longer have access to the EC Online Dispute Resolution platform (although it's extremely debatable as to whether this will really affect anyone as there has not been significant take up of this platform since its inception). Obligations on ADR will not change aside from the fact that UK-based ADR organisations will no longer be required to act in cross-border disputes.
For UK businesses, the consumer protection aspects of Brexit present more of a compliance issue than a high risk area. For starters, online traders to consumers will need to remove references to the ODR platform from their terms and conditions and websites. The most important aspect going forward will be to stay on top of any changes, both to the UK regime, EU-wide law and in other EEA Member States, and to be prepared for any changes needed to terms and conditions.
The main changes to UK consumer protection law set out in the Amendment Regulations are as follows:
Consumer Rights Act 2015
When a consumer contract for the sale of goods has a close connection to the UK, certain protections in the CRA have effect even where the parties choose the law of a non-EEA State (s32).
Contracts where the parties have chosen to use the law of an EEA State will be treated in the same way as where parties have chosen the law of other non-EEA countries.
For the purposes of the definition of "producer", an importer into the EEA is covered (s59(1)).
The definition of "producer" will include an importer into the UK (rather than the EEA).
The unfair terms provisions in the CRA apply to contracts governed by the law of a non-EEA State which have a close connection with the UK (s74).
The unfair terms provisions in the CRA apply to contracts governed by non-UK law where the contract has a close connection with the UK.
Consumer Protection from Unfair Trading Regulations 2008
Consumers have a right to redress where an importer into the EEA engages in prohibited practices (reg27).
The right to redress will be available when an importer into the UK engages in a prohibited practice.
Traders must not undertake to provide an after-sales service to customers with whom they have previously communicated in a language which is not an official language of the EEA state where the trader is located unless this has been clearly disclosed and businesses must not create a false impression that after sales services are available in an EEA state other than the state in which the product is sold (Schedule 1, paras 8 & 23).
Language and service location requirements will continue unchanged.
Consumer Rights (Payment Surcharges) Regulations 2012
Definitions of which contracts are caught by the Regulations cross-refer to EU legislation.
Protections against payment surcharges will apply where the provider (or in some cases both providers) are located in the UK.
Consumer Contract (Information, Cancellation and Additional Charges) Regs 2013
Excluded contracts are defined by reference to EU legislation.
Excluded contracts will be defined by reference to UK statutory instruments.
The model cancellation instructions refer to Euros.
The model cancellation instructions will refer to GBP.
Online Dispute Resolution Regulation
UK online traders are required to provide information about the ODR platform to consumers.
The Regulation will be revoked so the information requirement will fall away.
Alternative Dispute Resolution (Competent Authorities and Information) Regulations 2015
UK competent authorities have to make available the list of ADR entities published by the EC.
UK competent authorities must publish list of UK ADR entities.
Reporting requirements to EC on Secretary of State.
Requirement to offer cross-border dispute resolution.
No requirement to offer cross-border dispute resolution.
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