Changes to Consumer Law - How Will They Affect Me?
The Government is looking at changes to consumer law that will give consumers protection from rogue traders and credit practices designed to get people into debt, such as unsolicited credit card cheques, as part of a range of the measures announced in the Consumer White Paper in July 2009.
Formal consultations are taking place over the period 2010 to 2012, and the plans are outlined in the White Paper written by the Department for Business, Innovation and Skills (BIS), called “A Better Deal for Consumers – Delivering Real Help Now and Change for the Future.”
The plans to simplify consumer law and introduce more resources to help consumers are part of a wider plan to deal with sharp business practices. They also look ahead to ways of tackling consumer credit issues that take lessons from the current economic situation and try to help consumers make better borrowing decisions.
Protection From Online ScamsThe Government plans to set up a single complaints register in 2010, which it will call Enhanced Intelligence System. This register is intended to help anyone who comes across an online scam, or any other problems with online transactions. It’s planned that the register will be set up as part of the existing Consumer Direct advice service – and any information that’s on the database will be used by the police, Trading Standards and the Office of Fair Trading (OFT) – hopefully simplifying the current system where every area has separate records.
Consumer law organisations like Trading Standards may also be given powers to close down illegal websites, act against online traders who misuse personal data, and take action against the use of spyware and malware online.
The Consumer AdvocateIt’s also planned that a new Consumer Advocate will be created, and given the powers to take legal action on behalf of consumers. This Consumer Advocate will only be able to take on group actions where it’s thought to be in the public interest to do so – not individual claims. The role will also include advising on consumer law and appearing in the media to bring attention to scams, bad practices and generally raise awareness of consumer rights.
Another proposed power that the Consumer Advocate could have when appointed in 2010 would be the power to distribute compensation to UK consumers who have been taken in by foreign companies – and deal with unfair consumer credit agreements.
Helping Consumers Avoid Unnecessary DebtThe White Paper looks closely at consumer credit, after criticism of the way that banks and credit providers made credit too easy to get hold of – and get into trouble with – in recent years.
There will be more regulation of credit and store cards, which should help prevent vulnerable people running up credit and store card debts which they have no ability to repay. Unsolicited credit card cheques are likely to be banned completely, as there are seen as a way to tempt consumers who moth not know about the sky high interest rates to borrow money they really shouldn’t.
The review will also look into changing the rules on interest rate increases on existing debts; raising the amounts payable on minimum monthly repayments; putting a stop to automatic credit limit raises without a request from the account holders, and the order in which debts run up on a credit card should be paid off.
Lenders will be forced to check consumers’ creditworthiness before they let them have any money, and to properly explain financial products – including what happens if they miss payments.
Although the consumer law reforms predominantly focus on credit and online scams, there are also plans to look into the laws on misrepresentation, to make it easier for consumers to take action if they feel they have been misled, and it's likely that the current consumer legislation covering the Sale of Goods, and the Supply of Goods and Services will be simplified, so that the same rules effectively cover goods and services in the same way.
The planned Consumer Rights Directive is expected to take the place of three current pieces of consumer law - the Supply of Goods (Implied Terms) Act 1973; the Sale of Goods Act 1979; and the Supply of Goods and Services Act 1982. It will give contracts for buying goods and services equal status in law, and remove distinctions between sale, hire and hire purchase contracts, making it easier for consumers to understand the law.