EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations amend the Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277) (“the 2008 Regulations”) which implement Directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices (OJ No L 149, 11.6.2005, p22). They provide consumers with rights to redress in respect of misleading and aggressive commercial practices. These changes come into force on 1st October 2014 and apply to contracts entered into, or payments made, on or after that date.
The Regulations also make minor amendments to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“the 2013 Regulations”). Those changes come into force on 13th June 2014 immediately prior to the coming into force of the 2013 Regulations.
Regulation 2 makes various amendments to the definitions of “consumer”, “trader”, “goods” and “product” in the 2008 Regulations.
Regulation 3 inserts new Part 4A which contains provisions on when the rights to redress are available, what they entail and how they can be enforced. New regulation 27A sets out when a consumer has a right to redress. First, the consumer must enter into a contract for the sale or supply of a product by a trader (a “business to consumer contract”) or for the sale of goods to a trader (a “consumer to business contract”), or they must make a payment to a trader for the supply of a product (a “consumer payment”). Second, the trader must engage in a prohibited practice in relation to the product. Third, the prohibited practice must be a significant factor in the consumer’s decision to enter into the contract or make the payment. Finally, the consumer must satisfy any specific conditions which apply to the right of redress they are exercising.
The table below sets out the rights to redress which are available to the consumer if the conditions in regulation 27A are met:
| Consumer transaction | Right to redress |
|---|---|
| Business to consumer contract | The right to unwind (regulation 27F) The right to a discount (regulation 27I) The right to damages (regulation 27J) |
| Consumer to business contract | The right to unwind (regulation 27G) The right to damages (regulation 27J) |
| Consumer payment for product within regulation 2(1A) and (1B) | The right to unwind (regulation 27H) The right to damages (regulation 27J) |
| Consumer payment for any other type of product | The right to damages |
New Regulation 27B defines a “prohibited practice” as being a misleading action under regulation 5 or an aggressive commercial practice under regulation 7 of the 2008 Regulations. The meaning of “transactional decision” is modified for the purposes of new Part 4A.
New Regulations 27C and 27D modify the definition of “product” to the extent that it applies to new Part 4A. For the purpose of new Part 4A, the definition of “product” does not include immoveable property (other than a relevant lease) or financial services (other than certain types of regulated credit agreements).
New Regulations 27E to 27F covers the right to unwind a business to consumer contract. New regulation 27E provides that the consumer must exercise the right to unwind within a period of 90 days and while the product remains capable of being rejected. New regulation 27F provides that the effect of unwinding such a contract is that it comes to an end and the consumer has a right to a refund (and, where applicable, any goods are restored to the trader).
New regulation 27G sets out how the right to unwind applies in the case of a consumer to business contract. For such contracts the consumer has a right to return of the goods, or if they cannot be returned in the same condition, to be refunded any difference between the amount the trader paid and the amount the goods were worth.
New regulation 27H provides that consumers have a right to unwind a consumer payment which they were not required to make and that this entitles them to receive that money back from the trader.
New regulation 27I sets out when the right to a discount is available and what it entails. The right to a discount is available in respect of past or future payments under a contract for the supply of a product to a consumer. It entitles consumers to a 25%, 50%, 75% or 100% discount on such payments. The level of the discount depends on the seriousness of the prohibited practice which is assessed by reference to behaviour of the trader, the impact of the practice on the consumer and the time which has elapsed. If the consumer paid in excess of £5,000 for the product then the discount they receive will be the difference in value between the market price of the product and the amount they paid. The exercising of the right to the discount has no effect on any other rights and liabilities under the contract.
New regulation 27J sets out when the right to damages is available and what it entails. The right to damages is available for additional financial losses and alarm, distress, physical discomfort and inconvenience caused by the prohibited practice. Traders have a due diligence defence in respect of the right to damages.
New regulation 27K makes provision for consumers to be able to bring civil proceedings to enforce their rights to redress under new Part 4A. Regulation 7 makes a related amendment to the Prescription and Limitation (Scotland) Act 1973 to deal with the prescription period which applies in relation to Scotland.
New regulation 27L makes clear that the new rights to redress do not affect existing causes of action which consumers may have in respect of the same conduct save that they cannot recover twice for the same loss.
Regulation 4 makes consequential amendments to other provisions in the 2008 Regulations. Regulations 5, 6 and 8 repeal section 2 of the Misrepresentation Act 1967, section 2 of the Misrepresentation Act (Northern Ireland) 1967 and section 10 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 to the extent a consumer has a right to redress under Part 4A of the 2008 Regulations. Those provisions will however continue to have effect in cases where a consumer is bringing a claim under section 75(1) of the Consumer Credit Act 1974.
Regulation 9 makes minor amendments to correct provisions in the 2013 Regulations.
An impact assessment of the effect that the instrument will have on the costs of business, the voluntary sector and the public sector is available from the BIS website at www.gov.uk/bis.