Is consumer protection failing?

Alan Conroy asks whether or not the current consumer protection regime is up to the job.

The brave new world of consumer protection promised by the changes in legislation driven by the EC still seems as far off as ever. The current regime can be said to have started with the Stop Now Orders (EC Directive) Regulations 2001. The SNORs, as they amusingly became known, were a requirement that each Member State provide injunctive remedies for breaches of specific legislation. This was largely a process of designating existing legislation, either in whole or in part, with the addition of some more general coverage e.g. regulation of misleading and comparative advertising, except regulation specifically in relation to food, tobacco and tobacco products.

While the power to seek injunctions for these Community Infringements was a welcome development the SNORs failed to make any great impact on consumer protection as a whole. There were some superb examples of using these new powers but most enforcers were held back by lack of confidence in what was largely an alien process. The majority of consumer enforcement was, and still is, carried out by the Trading Standards Service (“TSS”) whose experience and background was largely criminal. The training that was provided by the Government was good in terms of quality but was far too little to cover the UK to the level necessary for such a major addition to the consumer protection regime.

Before the SNORs had any real time to become widely used a further major change came in 2003 when the provisions of Part 8 Enterprise Act 2002 (“Part 8 EA2002”) came into force. This absorbed the Community Infringements covered by the SNORs and added in another list of purely domestic legislation. A few additions together with information gathering powers provided a powerful regime which covered a very wide range of practices causing consumer detriment. By this time the training need had been recognised and a small team at the OFT provided a range of training materials and courses which included instructional DVDs and as much hard copy examples as was possible.

Gradually much of the early widespread resistance was overcome but the lack of resources, continuing confidence issues and perceptions that a civil approach was somehow less effective than the criminal process were still a major obstacle. Many opportunities to bring an end to some of the nastier trading practices were lost due to indecision. Delay where injunctive relief is thought necessary is often fatal and so it proved to be here. Cases where there was overwhelming evidence that urgent applications should be made for Interim Orders frequently became mired in long drawn out debates with the other side with the impact on the outcomes that could be expected.

Once again though the TSS gave frequent examples of their ability to use the new powers effectively but taken as a whole Part 8 EA2002 remained the Cinderella of consumer protection. In 2007 the The Enterprise Act 2002 (Amendment) Regulations 2006 came into force with very significant new powers of investigation for Community Infringements. Powers of entry with and without warrant and penalties for obstruction of authorised officers were perhaps the most important. This Amendment was the result of yet another Directive which created a network across the EC generally known as the Community Protection Co-operation (“CPC”) regime.

What this meant in practice was that an Enforcer in one Member State could seek the assistance of another and that there was, as far as the laws of each Member State permitted, a commonality of powers. Although initially believed to be only exercisable in pursuit of a request from another Member State it quickly became clear that any Community Infringement could be pursued using these provisions even if solely within the UK.

The final stages of the regime as it is in 2012 came with the introduction of the Consumer Protection from Unfair Trading Regulations 2008 (“CPUTRs”). The CPUTRs prohibit a wide range of conduct and practices. This radical departure from previous legislation which looked at specifics, and thus offered opportunities for avoiding compliance, has made it much more difficult for a trader to engage lawfully in anything that causes detriment to a consumer.

It is fair to say that the harder a trader tries to circumvent the CPUTRs the more likely they are to infringe them. The CPUTRs are a massive subject in their own right but in short it is prohibited to lie or mislead, withhold material information, act aggressively, act without professional diligence or breach one of the 31 ‘banned practices’ contained in Schedule 1. The Regulations are effective before, during and after purchase and come with their own set of investigation powers.

What we have in the UK is without doubt one of the most powerful, flexible and comprehensive regimes for consumer protection in the world. Taken together with the highly skilled and experienced TSS, which is rightly the envy of many others in the world, we ought to be seeing major disruption, and quickly, to those traders who continue to prey on consumers.

The fact that we are not is the result of a number of factors. Damage to the TSS through swinging staff cuts over the last two to three years have reduced available resources to crisis level. The oft heard mantras of ‘working smarter’ and ‘better for less’ unsurprisingly are meaningless where informed and experienced human responses are necessary.

A longstanding complaint concerns Government failure to issue any guidance in a form that would be useful to the courts or the legal profession. There is no Practice Direction for the conduct of Part 8 EA2002 actions and no notes for the CPUTRs of the kind that the CPS issue. It almost beggars belief that nine years after introduction that there is no Practice Direction for the one of the main elements of the current regime. The attitude appears to be ‘it will be alright on the night’. Sadly, it is often not all right and there have been some decisions which can best be described as difficult to understand.

The responsibility for addressing these problems lies squarely with central Government. At the moment there is a wealth of material created largely by the private sector designed to assist enforcement. There is, however, very little that can be used to direct the courts to the meaning of the new provisions and the expectations about interpretation.

Until there is an appropriate response to this problem local authorities may often wish to consider prosecution rather than seek enforcement orders under the EA2002 except where it can clearly be used rapidly when urgent interim relief is justified. At the very least it might be sensible to maintain the default start point as prosecution and only deviate from that position of strength. It may also be that local authorities should consider the use of perhaps the Fraud Act 2006 where appropriate instead of Regulations 5 and/or 6 CPUTRs as interpretation difficulties continue to create uncertainty. This would at least put the offending into a context that the courts understand. Where the current regime is working it works extremely well but unfortunately there simply is not enough activity and little sign of any growth.

Alan Conroy is a tenant at 7 Bell Yard Chambers where he specialises in consumer and regulatory work. He spent over 20 years at the Office of Fair Trading and the last 9 of those were with responsibility for the legal advice and training to the TSS and certain other enforcers on EA2002 and CPUTRs matters. He is contactable via Chambers on 0207 831 0636.