Amended UK consumer regulations in advance of Brexit
What consumer protection provisions are being put in place to prepare for Brexit?
The background
Consumer protection law in the UK is currently governed partly by EU derived law and partly by UK national law. At present, the existing cross-border consumer protection frameworks across EU member states are largely similar and allow consumers to safely make purchases from other member states. In addition, the judicial co-operation framework allows civil claims for breaches of consumer rights to be dealt with in the appropriate member state and the harmonised dispute resolution mechanisms allow complaints to be dealt with properly. However, this position will undoubtedly change as a result of Brexit.
The Government has been making preparations to ensure the seamless continuation of UK consumer protection laws following the UK’s exit from the EU, and on 10 December 2018 the government set forward The Consumer Protection (Amendment etc) (EU Exit) Regulations 2018 (Amendment Regulations), which will be given effect immediately before exit day in the event that a Brexit deal is agreed. Note that the Government had previously issued a notice, in October 2018, on what would happen in a no-deal Brexit scenario, the upshot being that it is unlikely there will be significant differences in consumer protection laws between a deal or no deal scenario.
The developments
The Amendment Regulations mostly remove references to EU legislation and institutions in UK consumer protection legislation and seek to ensure that EEU to UK consumer import contracts are treated in the same way as those dealing with imports from non-EEA countries. The Regulations also affect the enforcement and complaints rights available to UK consumers.
Amendments to the Consumer Rights Act 2015
At present, the Consumer Rights Act 2015 (CRA) covers contractual consumer rights in respect of the sale of goods, services and digital content and contains express provisions in respect of consumer relationships with non-EEA member states. The CRA provides that, where a sales or consumer contract has a close connection to the UK, certain mandatory UK protections will be afforded to the UK consumer, even in circumstances where the parties have agreed that the contract will be governed by the law of a non-EEA state. The CRA will not however, imply mandatory protections from seemingly unfair contractual terms, where such terms reflect international conventions to which the UK or EU is a party.
The Amendment Regulations will remove the preferential treatment for EU Member States over non-EEA countries. Instead, consumer contracts which are governed by the law of an EEA state will now be treated in the same way as third country contracts and international conventions to which the UK is not a signatory will no longer be excluded from mandatory protection against unfair term provisions even if the EU is a signatory.
Amendments to the Consumer Protection from Unfair Trading Regulations 2008
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) protect UK consumers from traders importing into the EU who engage in prohibited unfair commercial practices (ie by being misleading or aggressive). The Amendment Regulations now mean that consumers will no longer have a direct right of redress against importers into the EU, and instead rights of redress against prohibited practices will only be available against importers into the UK.
Amendments to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR) currently harmonise the contractual rules across the EEA, so that traders and consumers face only one set of requirements across the EU in respect of pre-contractual information for in-store, distance, and off-premises contracts for goods and services. The Amendment Regulations will amend CCR to make reference only to UK legislation and authorities and to operate in pounds rather than Euros.
Enforcement and complaints
The Amendment Regulations will remove reference to EU member states, legislation and authorities from UK legislation. As such UK consumers will no longer be able seek redress from EU-based traders in the UK courts, and it will become more difficult to enforce UK judgments in EU member states, as there will no longer be an obligation on them to investigate breaches of UK consumer law or progress enforcement actions.
ADR organisations based in the UK will no longer be required to act in cross-border consumer disputes and consumers will no longer have access to the EC Online Dispute Resolution (ODR) platform to make complaints, which means that seller businesses may have to remove any (previously mandatory) links to the ODR from their terms and conditions.
Why is this important?
Although currently similar, UK and EU consumer laws are likely to diverge post Brexit.
It is clear that consumers purchasing goods from EU member states will lose certain protections, particularly in relation to the rights of redress under UK complaint and legal systems; however, they will continue to benefit from the mandatory protections under the CRA. Conversely, for EU-based sellers, the scope of the CRA has widened, (ie the CRA will apply in the event that the UK is not a signatory to the same convention as the EU) causing certain contracts to fall under the scope of the mandatory CRA provisions, where previously they would not have.
It remains to be seen whether consumer confidence in cross border purchases will suffer post-Brexit and whether there will be a dip in trade on the basis that consumers are deterred from making cross-border purchases with limited protections. In reality, it is unlikely that lack of access to the ODR system will have a significant impact on trade as there has not been a high volume of consumer claims using the system and instead this change will benefit sellers by removing the burden to have to link to the ODR system on their platforms. The government has, however, accepted that the most costly amendment for businesses under the Amendment Regulations will be re-training staff on new legal and ADR complaints procedures.
Any practical tips?
It is clear that, following exit day, UK consumer rights law and practices will change as a result of the Amendment Regulations (or in a no-deal scenario). When preparing UK consumer contracts that will be governed by the laws of a country other than the UK, EU sellers should carefully consider whether mandatory consumer protection provisions under the CRA will be triggered. Conversely, consumers should check the protections available under the governing law of the chosen EU country prior to purchase, to ensure that they are adequately protected. Cross-border seller businesses should review their ADR and complaints procedures to ensure that proper rights of redress are available to consumers (and look to remove any references to the ODR from their T&Cs) to ensure that consumers remain confident in making purchases from them as businesses.