A long-overdue update of consumer law and the competition regime has been announced by the government.
In a move to stamp out rip-offs, the government has revealed a number of reforms to improve consumer protections and rights.
Here we explain five of the biggest proposed changes and what it could mean for you.
1. New powers for the competition regulator
For many years Which? has highlighted the inability of the regulator, the Competition and Markets Authority (CMA), to take immediate action over breaches of consumer law, such as dodgy secondary ticketing websites or unfair care home contracts.
The pandemic has exposed many shortfalls in consumer protections allowing unscrupulous businesses to exploit customers – we’ve seen this time and time again with people being unfairly treated over cancelled holidays, price gouging, weddings and ticketed events.
Frustratingly, the regulator has been unable to take much-needed immediate action, often resorting to the lengthy process of taking companies to court.
New measures will see the CMA given greater flexibility to address competition issues. It will also be able to directly fine companies that fail to provide information for competition and consumer investigations. Fines will amount to up to 10% of global turnover if a company is found to breach consumer law.
While these are welcome and long-overdue improvements, enforcement of consumer law often falls to local authority trading standards teams that do not always have the resources needed to take action. We need our central and local regulators appropriately funded to make sure we are all properly protected.
The government has also announced the creation of a new Digital Markets Unit to improve the competition regime in the tech sector. This unit will have powers to introduce pro-competitive interventions and also enforce a new code of conduct on SMS companies.
Reforming the competition regime will help build a fairer and more competitive tech sector, giving you more control and more choice – including over how your data will be collected and used.
2. Alternative Dispute Resolution changes
The government wants to make significant changes to Alternative Dispute Resolution (ADR) schemes, including improved signposting, quality and oversight of all approved ADR providers.
ADR schemes are a means of resolving a dispute you may have with a company or trader without having to go to court.
Home improvement traders and used car salesmen will also have to be signed up to an ADR scheme to help resolve disputes out of court.
With the ongoing delays to court hearings as a result of the pandemic, these changes to ADR for used car sales and home improvements will help level the playing field for consumers.
3. Beefed up fake review laws
It will be made even more clearly illegal to post fake reviews online.
Which? has exposed the harm caused by fake reviews that litter the internet, negatively influencing our shopping habits and distorting our ability to make an informed decision.
Cracking down on unscrupulous sellers who pay for reviews will go some way to tackling the problem, but online platforms must also be given greater legal responsibility for tackling fake and fraudulent content hosted on their sites – including fake reviews.
- Read more about fake reviews and what to watch out for
4. Cancelling subscription traps
In a bid to tackle subscription traps, the law will be further clarified on pre-contractual information when you take out a subscription of any kind.
Changes to improve choice with auto-renewals on contracts will include measures such as nudging consumers so they are aware of ongoing subscriptions and making it easier to exit a subscription.
This move will help you know exactly what it is you are signing up for and how to cancel easily.
Money saving tip
If you’re not sure what subscriptions you’re signed up for, log in to your online banking and check the direct debits you have set up.
It can be a good idea to cancel anything you’re not using. But it is best to cancel with the company itself, instead of only cancelling the direct debit.
5. Savings clubs that protect your money
Prepayment schemes such as savings clubs will have to protect their customers’ money.
In 2006, the Farepak collapse saw around 116,000 people lose their Christmas savings after the company went bust. Sadly, the absence of appropriate protections for its customers saw only a half of people’s savings reimbursed by the liquidators in 2012.
Many have warned about the lack of change after the Farepak collapse so this added protection will hopefully prevent people such as those Farepak customers from losing out when a savings club goes bust.
What happens now?
Which? director of policy and advocacy, Rocio Concha, said: ‘It is positive that the government is moving to give the competition and consumer regulator greater powers to take strong enforcement action which will address issues with the current system and help tackle business practices that harm consumers.
‘The pandemic has highlighted weaknesses in UK consumer protections that have allowed unscrupulous businesses to exploit customers, while our competition regime has been in need of an update to deal with the challenges of digital markets.
‘The government must now ensure that these proposals are swiftly implemented, and are underpinned by the right resources at a local and national level, so that consumer protection is strengthened.’
The consultation period for these proposed changes runs until 1 October 2021 before new laws are brought before Parliament.