The new Consumer Rights Act comes into force in October this year and with it it brings a raft of new sanctions which may be applied against companies that infringe the rights of consumers.
Enforcers of consumer law (which include Trading Standards Services and bodies such as Ofcom, Ofwat, Ofgem, the Competition and Markets Authority, the Financial Conduct Authority and the Information Commissioner) already have remedial powers against offending companies. In particular, enforcers may seek to obtain civil injunctions under the Enterprise Act 2002 ordering the cessation of infringing acts. They may, furthermore, bring criminal prosecutions. The Consumer Rights Act extends the civil remedies available to enforcers by setting out a number of “Enhanced Consumer Measures” which may be sought (each to be backed by an enforcement order of the court). What may be of interest to many readers about these new sanctions is their positive, rather than prohibitory, nature.
The incoming Enhanced Consumer Measures (“ECMs”) include:
- reimbursement of financial loss (either to the consumer or to a consumer charity if the aggrieved consumers cannot be identified);
- publication of the breach on the company’s website, in its stores, or within the press;
- publication of the breach on the Trading Standards website; and
- orders for the remediation of the company’s internal practices.
As suggested above, what is striking about the ECMs is the level of proactivity which they may require from the subject company. The guidance published by the Government in relation to ECMs makes a point of stating that “details of possible measures are not included in the legislation. This ensures that the enforcer or the court retain the flexibility to find the most appropriate measure or measures to deal with a business that has broken the law“. The example measures which are set out in the guidance demonstrate that the Government has in mind the application of on-going, mandatory obligations. Example measures set out in the guidance include:
- setting up a redress scheme and advertising/notifying it to customers;
- signing up to a Primary Authority scheme;
- appointing a compliance officer;
- providing better staff training/guidance to staff;
- undertaking internal spot checks (and maintaining records of these);
- improving record-keeping;
- collecting (and acting on) customer feedback;
- introducing a robust customer complaints-handling scheme; and
- signing up to a certified ADR scheme and committing to be bound by its decisions.
Limitations on the application of ECMs should, however, be considered. In particular, it should be noted that the guidance makes clear that:
- the ECMs will only apply where there has been a breach of consumer law and consumers have suffered loss;
- enforcers must consult with the infringing company and seek to resolve the issues by way of cooperation and undertakings proffered by the company before resorting to the ECMs; and
- enforcers should consider, before making an application for an ECM to be enforced by the court, whether the measures would be (i) in the public interest; (ii) just; (iii) reasonable; and (iv) proportionate.