In depth

Consumer Protection

The Bill proposes fundamental changes to the UK consumer protection enforcement regime. It will give the Competition and Markets Authority (CMA) increased powers and flexibility to conduct faster and robust investigations. It will also replace the current UK legislation that controls unfair practices (Consumer Protection from Unfair Trading Regulations 2008) and introduce new subscription rules.

We highlight some of the key proposed changes below:

Enforcement Regime

• The Bill provides for two regimes for civil enforcement of consumer protection law: a court based regime (a simplified and enhanced version of the current Part 8 Enterprise Act 2008 procedure) and a direct enforcement regime to be administered by the CMA.

Investigation Powers

•  The CMA will have a new express power to investigate suspected infringements and to decide whether an information notice has been complied with, and if not, impose a fine for any non-compliance.
• Providing false or misleading information or the destruction or falsification of requested information will constitute a failure to comply with an information notice.
• A premises entry warrant will cover documents accessible from the premises as well as documents located on the premises (to reflect work from home practices).

Significant fines for breaches of consumer law

• The UK courts and the CMA will have the right to impose fines of up to 10% of global annual turnover for breaches of UK consumer law.

New rules for subscription contracts

• Businesses offering consumer subscriptions will need to:

  • provide consumers with clearer pre-contractual information (including length of any fixed term, costs during and after any introductory period, minimum total amount the consumer will be liable for under the contract and how the consumer can cancel the contract);
  • obtain the consumer’s express acknowledgment that the contract imposes an obligation to make payments to the business if signed up on-line;
  • honour the consumer’s 14 day statutory right to cancel the contract on initial sign up, first renewal following any introductory period and on renewal of an annual (or longer period) contract; 
  • issue consumers with a reminder that a free trial or low-cost introductory period is coming to an end and a reminder before the contract auto-renews;
  • ensure consumers can exit the contract easily without involving any unnecessary steps; and
  • provide a consumer who has cancelled with an end of contract notice.

What does this mean? 

• The Bill, if passed in its current form, would bring a big change to the enforcement landscape - both to the ease with which the CMA can enforce the law and the penalties it can impose.
• Currently, the CMA has no power to issue fines directly and must go through the courts to hold businesses to account. The potential fines are also higher than those recently introduced in the EU where the fines are up to 4% of annual turnover in the Member State(s) where the breach took place.
• The new rules on subscriptions will require businesses to review and change their subscription sign up and cancellation processes, as well as update subscription terms and ensure they can issue end of contract notices.

What doesn't the Bill include? 

The expectation had been that the Bill would include new provisions to prevent the publication of fake online reviews. The Bill does not include these provisions but the Government press release indicates that new rules for the publication of reviews are still under consideration. There will be a further consultation that will look at new prohibitions on:

• commissioning fake reviews;
• posting reviews without taking reasonable steps to ensure that they are genuine; and
• offering or advertising to submit, commission or facilitate fake reviews.

Next Steps

The Bill will now make its way through Parliament and will be debated in the House of Commons and House of Lords. It is possible that it will receive Royal Assent and enter the statute books by the end of the current Parliamentary session in Autumn 2023. We will continue to monitor the progress of the Bill.