New powers for Trading Standards

Government proposals could give public enforcers such as Trading Standards a range of new powers to enforce consumer law on behalf of consumers. The proposals appear in the Civil Enforcement Remedies consultation, which was launched on 5 November by the Department of Business, Innovation and Skills (BIS), and form part of the Government’s wider programme of consumer law reform.

The proposals will help ensure businesses comply with consumer law, and make it easier for consumers to be reimbursed if they are overcharged or mis-sold products. Under the current system, trading standards can take action against the business in question but there is no provision to compensate the consumer.

In a statement from BIS, the aim of the proposals is “to make businesses address the cause of the consumer’s complaint, meaning they cannot simply make a superficial change to solve the individual problem”. The consultation includes proposals to make businesses appoint someone internally to consider how well the business complies with consumer law. Another suggestion is to introduce a clear complaints-handling scheme so customers know who to contact if they have a problem, making it easier for victims of malpractice to recover money.

The consultation also details a proposed enforcement process for trading standards and other public enforcers. This involves trading standards approaching the business to help them achieve compliance and negotiate an agreement on how to improve its practices. If no agreement can be achieved the case can be referred to the courts for an application for an Enforcement Order.

When a breach causes a number of consumers to suffer a significant loss, businesses could be required to put in place schemes to provide collective redress. Identifiable consumers could be compensated directly and where consumers could not be identified, a business could advertise, in a similar way to a product recall notice, to inform them of the breach and offer compensation.

To encourage confident consumers, the proposals look at providing more information on the businesses they use. One suggestion is the naming and shaming of businesses that breach consumer law. Businesses could also be required to sign up to customer review/feedback sites and inform customers of any breaches, explaining what remedial action they have taken. In cases where products and services are mis-sold (eg a mobile phone contract) consumers will be able to terminate ongoing contracts without penalty. It is not clear whether or not micro-businesses will be subject to the new enforcement regime, but if they are, it will go against the Government’s policy to exempt them from the burden of new legislation.

If adopted, the proposals will be included in the proposed Consumer Bill of Rights due to be introduced in Parliament next year. The consultation closes on 31 December 2012.

Contact Janine Paterson, 020 7291 3360.