New enforcement powers for UK consumer protection laws ('the Bill')
1. INTRODUCTION
The Digital Markets, Competition and Consumers Bill (the “Bill”) was introduced in the House of Commons on 25 April 2023. It is expected to receive Royal Assent in early 2024 and to come into force by the end of that year.
The Bill is very substantial, comprising six parts, 317 Sections and 26 Schedules providing:
• A significant expansion of UK competition and merger law;
• A new competition regime for digital markets; and
• New enforcement powers for UK consumer protection Laws.
The Bill is scheduled to complete its passage through Parliament by the Spring of 2024. However, with the General Election due to take place before November 2024, there is a risk that the legislation may not get on to the statute book this side of the Election.
Given the size of the Bill and its broad coverage, this Briefing Note will cover the new enforcement powers for UK consumer protection. The proposed changes to UK competition and merger law and the new competition rules for the digital sector are dealt with in separate MW Briefing Notes.
2. THE CURRENT WEAKENSSES IN ENFORCEMENT OF CONSUMER PROTECTION LAWS
The Government has recognised that the enforcement of consumer protection laws is inadequate. Currently where the Competition and Markets Authority (“CMA”) finds that there has been a breach of consumer protection law, it may seek undertakings from a trader but cannot fine the trader for breach. The only alternative is for the CMA or consumers suffering loss to issue legal proceedings in the court to enforce those laws, which is a time consuming and expensive process.
In addition, the Government has identified some weaknesses in consumer protection legislation, notably “subscription traps” (where subscriptions automatically renew), the publishing of fake reviews and unregulated consumer saving schemes (eg Christmas Savings Clubs).
3. PROPOSALS FOR CHANGE
The Bill proposes the following important changes in the law to facilitate the civil enforcement of consumer protection laws:
(a) a court-based regime which would simplify and enhance the court enforcement procedure and give the court the power to impose monetary penalties om traders who breach consumer laws or do not comply with a CMA undertaking;
(b) a CMA direct enforcement regime. The CMA would be given new powers in respect of infringements of certain consumer protection laws, breach of undertakings and non-compliance with CMA directions. In addition, the CMA would be given power to impose civil fines on traders breaching consumer protection laws in the same way as it can impose fines for breach of competition law.
The Bill will revoke the Consumer Protection from Unfair Trading Regulations (2008) (“CPUTR”) (retained EU law) but will reintroduce substantially the same measures with minor amendments, prohibiting unfair commercial practices in business to consumer relationships. The CPUTR contains a list of specified banned practices that are automatically considered unfair. The Bill largely replicates that list but significantly will empower the CMA to make regulations to make additions to that list. This power will no doubt be used to address the issues of subscription traps, fake reviews and consumer savings schemes described above.
Julian Maitland-Walker
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