12th May 2018

A blueprint for a better Brexit?

In a fast-moving, digital and global consumer landscape, could the debate around the Government’s consumer green paper help us to lay better plans for a post-Brexit UK that better supports its consumers and businesses?

By Craig McClue
Head of Policy, Chartered Trading Standards Institute

If you cast your mind back to the spring of 2017, political turmoil had left consumer protection with a very uncertain outlook.

Brexit’s seismic impact was still being keenly felt some ten months after the vote, not least by consumer and business groups who questioned how more than forty years of EU laws and policies would be saved or replaced. Then, just as the Article 50 negotiations got underway, direction appeared when the Chancellor announced in his Budget that he would bring forward a consumer green paper, “to examine markets that are not working efficiently or fairly”.

Suddenly Theresa May felt she needed a ‘stronger hand’ to negotiate with the EU and called a snap election. History shows this as a failed gamble and as the Government’s overall majority disappeared – so too did the consumer green paper. An unclear future for consumer protection turned decidedly opaque.

Opening a conversation
Thankfully, spring one year on and there is more certainty, albeit limited, about what Brexit might mean for consumers. Mercifully too the green paper is now restored with all the consumer protection improvements trailed in the 2017 Budget seemingly intact. Published in April 2018, Modernising Consumer Markets: A Green Paper is an ambitious conversation document that will spark strong debates over the summer.

For trading standards, the key issues are under “strengthening our system of public enforcement”. Acknowledging the asymmetry between local resources and national priorities, it has serious questions about the arrangements for trading standards’ capacity and powers. With a backdrop reduction of more than 50% in around 7 years, the decline in numbers and expertise has become critical and unsustainable. This is especially true if we wish to regulate businesses and protect consumers in the uncertain post-Brexit landscape. The capacity for local market surveillance, regulation, intelligence and enforcement must be maintained.

The green paper also opened an important debate on improvements to UK systems of alternative dispute resolution (ADR). As the title suggests, these are alternatives to the court system with statutory and private complaint schemes for consumers in areas such as energy, telecoms, finance and furniture. The paper highlights that the ADR system could be more effective with concerns about the length of time taken to reach decisions – or even a failure to adhere to them. ADR is also constrained by a lack of engagement from vulnerable consumers and there are residual concerns that there is a bias towards business members.

Greater powers
Retained from the published highlights of the 2017 green paper is the option to introduce civil fining powers for consumer enforcers such as the Competition and Markets Authority and trading standards services. At first these appear to add significantly to the enforcement arsenal, complementing the civil regime’s choices such as legal orders to cease infringements, corrective actions and redress. If implemented, no longer would enforcers be restrained by binary decisions of prosecution or warning – but instead would have a range of proportionate civil and criminal actions to tackle rogue trading. The question remains though, might the slump in local enforcement resources reduce their effectiveness, leaving them to gather dust on the shelves of local services?

The green paper has clearly stated ambitions to target market failures and areas of consumer detriment. In particular, there are long overdue proposals to curb the dodgy commercial practices known as ‘subscription traps’. These are the deceptive use of continuous payment authorities (CPAs) for goods and services such as beauty products, gym memberships or ‘free trial’ diet pills that mislead as to their commitment – ‘trapping’ unwitting consumers into unwanted payments and lengthy deals.

We also still have the possibility of tackling unfair terms such as those hidden in the impenetrable and lengthy agreements that we consumers ‘agree to’ simply by clicking a box online. The paper will consider how to make contractual terms and conditions simpler, shorter and easier for consumers to engage with. This will perhaps act on the Government’s call for evidence on terms and conditions in 2016.

Brexit-tinted glasses
Whatever the discussions on the future of UK consumer markets it must all be viewed through the prism of Brexit. The green paper reasserts the commitment to no less protection for consumers after we leave the EU – but also acknowledges that “the way consumer protections apply when buying across borders in future is a matter for negotiations.”

That is the dichotomy – how can the UK preserve domestic consumer protections and confidence in markets that are digital and global? As CTSI’s Brexit Think Tank found, the challenges for reciprocal EU enforcement, access to justice and data sharing networks are not unilaterally the gift of the UK. Throw in a degraded local capacity for enforcement, market surveillance and potential regulatory divergence and suddenly the outlook for consumer protection and business confidence becomes muddied again.

The UK is entering a crucial period in the Brexit negotiations with the EU trading future taking shape. An opportunity exists to use the green paper debate to align enforcement capabilities and routes to redress in the interests of consumers and legitimate businesses. This is especially important if we want a better, clearer future for UK consumers in a world that is increasingly digital, fast and borderless.

Read Craig’s full breakdown of the green paper here.

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