What's the issue?
The European Commission announced a New Deal for Consumers in April 2018. This is an initiative aimed at strengthening enforcement of EU consumer law and modernising consumer protection rules. The Omnibus Directive, finalised last year, has been the most significant element to date.
What's the development?
As part of the New Deal for Consumers, there has been a rush of activity on consumer protection issues from the EC over the last few weeks. This is centred on a roadmap and related consultations for the New Agenda for Consumers (the current one expires at the end of 2020), a review of the General Product Safety Directive, and progress towards a Directive on collective redress for consumers.
What does this mean for you?
Consumer protection law is not fully harmonised across the EU but as the EU's position evolves, the UK will no longer be required to implement incoming legislation after the end of the Brexit transition period. This means there is potential for significant divergence. The UK will have to decide as a matter of policy, whether to follow the EU in order to make cross-border selling as smooth as possible. It is, however, difficult to see the UK diverging significantly from revised product safety standards, particularly if the conclusion of the consultation is that product safety should be harmonised in the EU by a Regulation.
Businesses supplying to consumers in the EU will need to continue to follow changes in this area, whatever the terms of trade may be in future.
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Roadmap on a New Consumer Agenda and consultations
The European Commission has adopted a Roadmap on a New Consumer Agenda as the last one, adopted in 2012, comes to an end this year. The Roadmap is open for feedback until 11 August 2020. The New Consumer Agenda should be tabled later this year. It is intended to update EU consumer policy to:
- tackle new challenges brought about by digitalisation and environmental issues
- protect vulnerable consumers in the new economic circumstances resulting from the COVID-19 crisis
- change legislation in areas including:
- consumer information about goods and services
- consumer credit
- product safety.
It will address gaps in effective enforcement of consumer rights and look at differences in approaches across Member States, looking beyond legislation to capacity building and stakeholder engagement.
Following the adoption of the Roadmap, The EC launched a public consultation on:
- communication on a New Consumer Agenda
- empowering the consumer for the green transition
- review of the Consumer Credit Directive
- review of the General Product Safety Directive.
The consultation runs until 6 October 2020.
Product Safety Directive review
The Commission also adopted an inception impact assessment launching an evaluation of the General Product Safety Directive. It aims to update the GPSD to:
- regulate non-food safety challenges linked to new technologies including AI and online markets
- update provisions on market surveillance and bring them into line with Regulation (EU) 2019/1020 on market surveillance and compliance of products
- simplify processes and ensure better enforcement.
The evaluation will assess whether the GPSD fulfils its objective of ensuring non-food safety of products. Policy options range from no change, to full revision, or merging the market surveillance rules and the GPSD into a single piece of legislation. The impact assessment is available for feedback until 1 September 2020 and the GPSD is included in the consultation on the New Consumer Agenda mentioned above.
Draft Directive on representative actions for protection of the collective interests of consumers
Informal political agreement has been reached on the proposed Directive on collective redress for consumers. Among other things, it will enable "qualified entities" like consumer organisations or independent public bodies to take collective action to protect the collective interest of consumers. The new Directive will provide that:
- each Member State should have at least one representative action procedure for injunction and redress available, allowing representative action at a national and EU level
- qualified entities (organisations or public bodies) will be empowered and financially supported to launch actions for injunction and redress on behalf of consumers and will guarantee consumer access to justice.
- designation criteria for qualified entities will distinguish cross-border from domestic cases. Cross-border qualified entities will need to comply with a set of harmonised criteria, demonstrate 12 months' activity in protecting consumers' interests prior to designation, be non-profit and independent from parties whose interests oppose those of the consumers
- businesses should be protected from abusive legal action under the 'loser pays' principle and by the power of courts or administrative authorities to dismiss manifestly unfounded cases at an early stage in proceedings
- the scope of collective action will include data protection, financial services, travel and tourism, energy, telecommunications and health as well as air and train passenger rights, in addition to general consumer law.
The Commission will address whether to establish an Ombudsman for collective redress to handle cross-border representative actions at Union level.
Next steps are for the European Parliament and Council to approve the political agreement. The Directive will enter into force 20 days after publication in the Official Journal and Member States will have two years to transpose it and an additional six months to apply it. This means that it will not be retained law in the UK following Brexit.
