13 December 2021
Radar - December 2021 – 6 of 10 Insights
Both the UK and EU have been considering the effectiveness of their consumer protection and product safety regimes this year moving towards new legislation which is likely to be a focus next year.
In July, the government published a consultation on Reforming Competition and Consumer Policy which contains the long-awaited proposals for reform of UK consumer protection law. Some of these were first set out in a 2018 Green Paper and some recommendations were made in the Penrose report. As we discussed, fake online reviews and subscription terms are an important focus of the proposals.
Interestingly, in its response to the consultation the CMA suggested the government should go further in certain areas including by adopting most of the changes being made to EU consumer protection law, where they would improve UK consumer protection as we discussed here.
The Chartered Trading Standards Institute also published its response to the consultation. Many of its comments relate to its stretched resources which limit its ability to operate effectively. See here for more.
The EU's Digital Content and Services Directive and Sale of Goods Directive must be applied under local transposed law from 1 January 2022. Their provisions will apply (subject to minor exceptions) to all digital content and services and goods supplied in the EU after that date.
The EU laws are similar but not identical to the rules which apply in the UK under the Consumer Rights Act.
Also coming into focus in 2022, is the Omnibus Directive. This introduces GDPR-level fines for breaches of consumer protection law (up to 4% annual turnover in all EU countries in which the breach had an impact). The Directive amends four existing EU consumer protection Directives. It introduces new information obligations on online traders and new categories of contract - digital services and goods with digital elements. Member States must introduce implementing legislation by 28 November 2021 to come into effect by 28 May 2022.
For more information, see our Download update on consumer protection law.
The Law Commission published a report on the outcome of its July 2020 consultation on possible new rules around the transfer of ownership in consumer sales contracts, together with an updated Bill. The Bill would introduce new provisions into the Consumer Rights Act 2015 to deal with rules around transfer of ownership of goods to consumers. These are currently dealt with under the Sale of Goods Act 1979 and are not specific to consumer sales.
The Bill would provide for ownership to transfer to consumers when specific goods are selected by the consumer or, if goods are not selected specifically, when the retailer identifies the goods to fulfil the contract. These would be mandatory provisions which could not be altered by contractual arrangements although the trader would be able to withhold delivery pending full payment. However, the Law Commission said that as current rules do not cause significant consumer detriment because other rules around refunds help protect them, it might not be justifiable to legislate at the moment.
The Commission also looked at retailer practice of delaying contract formation until goods are dispatched. While it said this could potentially affect consumer rights, it concluded there is no evidence of significant negative impact on consumers.
The CMA published a call for inputs to help inform its response to the government on the question of whether changes to consumer law would help achieve the UKs Net Zero and environmental sustainability goals. The CMA also looked at whether current rules are a barrier to meeting the goals.
The CMA suggested a number of ways the consumer protection framework could be strengthened to support sustainable consumption including:
The CMA is also considering the same issues with respect to competition law.
The CMA published compliance principles for anti-virus software businesses which use auto-renewal contracts. While these are targeted at a particular industry, the principles are useful for anyone using a consumer-facing auto renewal contract and reflect the CMA's response to the recent government consultation on the subject.
The Office for Product and Safety Standards (OPSS) published a call for evidence seeking views on the prospective reform of product safety laws. It focused on five areas:
The National Audit Office then published a report on whether the UK product safety regime adequately protects consumers and keeps pace with market practice. It focuses on effectiveness at preventing unsafe goods from being purchased, responding to product safety problems, and adapting to new and changing risk.
Overall the NAO concluded the OPSS has done a good job since its establishment three years ago but identified a gap in regulators' powers over products sold online (particularly on platforms), inadequate data or intelligence to enable a more proactive response to product safety, and scope to improve industry awareness and consumer engagement with product safety. There is also an issue with some standards being out of date or not suited to new technologies like AI and smart devices.
In November, the OPSS published the results of its call for evidence setting out next steps. The responses suggested that the UK regime does require modernisation, particularly in light of the growth of online markets and sales, platforms and people buying directly from outside the UK. The future framework will need to be adaptable to allow for safe innovation and ensure there are no enforcement gaps. The OPSS also says the current landscape could benefit from greater consistency, coherence and clarity in areas including definitions and enforcement powers. The government will now shape policy proposals. Read more about the proposals here.
The majority of the Ecodesign Regulations came into force on 1 July 2021. Among other things, they require manufacturers, representatives and importers of certain white and electric goods, to make spare parts available for minimum periods of seven to ten years. They are also required to ensure repairs can be made using commonly available tools, and to provide repair information to professional repairers. The measures are designed to prolong the life of these goods so that they can be repaired rather than replaced when they break down.
We discussed the UK government's consumer product safety approach after Brexit in April. Since then, the government decided to extend the acceptance period of the CE mark until January 2023.
The EC adopted a proposal on a Regulation on General Product Safety, to amend the Regulation on European Standardisation 2021, repeal the 1987 Directive concerning products which appearing to be other than they are, endanger the health and safety of consumers, and the 1995 Directive on general product safety.
The impact assessment on the Product Safety Directive concluded it remained essential for consumer protection but required updating to remain relevant to eCommerce.
The GPSR will apply to the general framework for the safety of non-food consumer products but the GPSD will continue to apply to manufactured non-food consumer products.
The EC has prioritised completion of the Regulation during 2022.