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Agenda Item No. 6

 

The Vale of Glamorgan Council

 

Shared Regulatory Services Joint Committee: 3rd November 2015

 

Report of the Head of Shared Regulatory Services

 

The Consumer Rights Act 2015

 

Purpose of the Report

  1. To advise the Joint Committee of the important changes taking effect with the coming into force of the new Consumer Rights Act.

Recommendation

  1. The Joint Committee notes the content of this report and the implications of the new legislation for the Shared Regulatory Service.

Reason for the Recommendation

  1. The Consumer Rights Act 2015 updates and replaces longstanding legislation on consumer rights and remedies and is welcome news for residents. However, it is important to note that while the new law brings with it no additional funding yet it will significantly impact on the Shared Regulatory Service in two respects. Firstly an increased demand is anticipated for business advice; complaints about business and enforcement of the new provisions. Secondly, the Act amends and consolidates the investigatory and entry powers of authorised officers and so will affect the way in which officers of the Shared Service conduct their work.

Background

  1. The enactment of the Consumer Rights Act 2015 follows the UK Government's Consumer Landscape Review and the requirement to implement the EU Consumer Rights Directive.
  2.   The Act consolidates consumer rights which had been contained in different pieces of legislation, and updates the law to cater for the trade in digital technology. It also contains additional measures that require property letting agents to display clearly their charges, and in respect of the online resale of tickets for sporting, recreational and cultural events, clear information must be provided to prospective purchasers.
  3. In addition, the Act amends and consolidates officers' investigatory and entry powers which are currently derived from different Acts and regulations.

Relevant Issues and Options

  1. Consumer Rights and Remedies - the supply of goods and services

The Act replaces existing consumer civil law, principally the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. The new measures under the Act echo many of the existing provisions with some additional rights for consumers. From 1st October 2015:

Goods supplied as part of a trader to consumer contract must

  • Be of satisfactory quality;
  • Be fit for their purpose;
  • Match any description, sample or model

Where goods do not meet the above requirements, there will be a 30 day period during which consumers have a right to reject the goods. The consumer can also ask for repair or replacement during this period.

It is anticipated that this right to reject goods within 30 days should a fault occur will have a particularly significant impact in respect of car sales. Previously, car traders have generally offered to correct faults appearing shortly after purchase. The new 30 day window for a consumer to reject goods in the event of a fault occurring could see new car dealerships faced with giving a full refund whilst the value of the car will have reduced significantly during this period.

Further provisions for faults occurring after 30 days but within 6 months allow the trader one opportunity to repair or replace the goods but thereafter the consumer can reject the item. The only exception allowed for car traders is that in this case the refund will be reduced to reflect use of the vehicle whereas with other goods, customers can still request a full refund. This is likely to generate more requests for advice from car traders across the region where consumers seek to exert their enhanced rights to reject the car rather than accept a repair.

When a consumer enters into a contract for the supply of services, the trader must meet the following standard:

  • The service must be carried out with reasonable care and skill;
  • Information said or written to the consumer is binding where the consumer relies on it;
  • The service must be carried out for a reasonable price;
  • The service must be carried out within a reasonable time

Where the trader fails to meet the above standards the consumer can expect the trader to put things right or be entitled to a price reduction. The level of the price reduction would depend upon the seriousness of the breach. The Act does not prevent consumers claiming compensation.

The new law will, for the first time, specifically cover the supply of digital content (for example computer software, films, downloaded music or mobile phone apps).

Under the Act, the consumer must be supplied with pre-contractual information and the digital content supplied must be:

  • Of satisfactory quality;
  • Fit for a particular purpose;
  • As described

The minimum remedies include right to a repair or replacement and to a price reduction. Any agreed price reduction must be refunded within 14 days.

Where the digital content causes damage to a device then consumers can request repair of the damage or payment of compensation.

  1. Enhanced Consumer Measures

Currently under part 8 of the Enterprise Act 2002 Trading Standards can seek civil injunctions (undertakings or Court Orders) against businesses persistently breaching consumer protection legislation. The Consumer Rights Act (Part 3 and Schedule 7) widens the orders that can be sought, to include redress for consumers who have suffered loss from breaches of consumer law.

As a result, not only can Trading Standards seek an order from the Court instructing a trader to cease practices detrimental to consumers, but the Order can be widened to order compensation to be paid to victims. The Act also introduces new measures such as compliance measures and choice measures, to widen the practical tools that Trading Standards can use to prevent or reduce risk of repeated unfair conduct.

Individual traders or directors of a company who breach a Court Order can be committed to Crown Court for contempt of court which is punishable by up to 2 years imprisonment.

  1. Requirements relating to Letting Agents

One of the new provisions in the Act is the requirement for letting agents and property management businesses clearly to display their fees and charges to clients.

This should allow both landlords and tenants to make effective comparisons of charges when selecting letting agencies and reduce the possibility of unexpected charges arising during the tenancy. The fees must be displayed at a letting agent's premises and on their website if applicable. The types of fees include charges for:

  • Introducing tenants to landlords;
  • Arranging assured tenancy agreements;
  • Managing rented properties

The Service is empowered to enforce these new provisions with letting agents facing penalties of up to £5,000 for failing to comply. However, no additional funding or resources have been provided for local authorities to enforce these new provisions.

  1. Requirements relating to the online resale of tickets

The Act sets out additional rules that apply where event tickets are resold through a secondary ticketing facility on a website or app intended for the resale of tickets. The following information must be given to the prospective buyer before a contract is made and the ticket sold:

  • Where the ticket is for a particular seat or standing area, there must be enough information to allow the buyer to identify that seat or area
  • Information about any restriction as to who can use the ticket (for example that the ticket is for a child or student, or that no under-18s are admitted)
  • The amount stated on the ticket as its price (its 'face value')

These rules apply even where the person selling the ticket is a private individual. If the seller is, or is acting on behalf of, the operator of the secondary ticketing facility, a connected business or person, or the organiser, then this fact must be made clear.

A person contravening these provisions is liable to face a fine of up to £5000 for each breach. Again, no additional funding or resources have been provided for local authorities to enforce these new provisions.

  1. Investigatory Powers

The powers of Trading Standards Officers to investigate offences have been contained in the various pieces of consumer protection legislation. The Consumer Rights Act largely consolidates officers' investigatory powers into one place. Certain exceptions will still continue such as powers under the Weights and Measures Act 1985 and product safety legislation which contains provisions for suspending unsafe goods.

An additional measure that has been introduced is the requirement for officers to give notice in writing at least two working days in advance of an inspection stating why entry is necessary. This will apply to 'routine' inspections. The requirement to give the two day notice does not apply where:

  • The officer has reason to suspect a breach of legislation enforced by Trading Standards has taken place
  • Giving notice would defeat the purpose of entry
  • It is not practical because the officer suspects there is an imminent risk to public health or safety.

Trading Standards works on the basis of an intelligence led model, meaning that the majority of inspections or visits to traders are as a result of intelligence or complaints indicating there may be a breach of consumer legislation. However, the measures will require Trading Standards to produce and serve notices on businesses with the required information in good time where the exemptions do not apply.

Finally, the Act enables officers to exercise their powers and bring proceedings for consumer offences outside of the local authority area (but still within England or Wales). While this means that it is no longer necessary to seek permission or delegated authority to prosecute offences committed in multiple local authority areas e.g. doorstep crime and e-Crime), local authorities will still liaise with each other to ensure the most appropriate authority investigates and instigates proceedings.

Resource Implications (Financial and Employment)

  1. As outlined above, an increase in the Shared Regulatory Service workload is anticipated following introduction of the new Act, in respect of:-
  • The provision of guidance and education for both consumers and businesses
  • Additional requests for consumer advice/complaint resolution
  • Additional requests for business advice and mediation in consumer disputes
  • Additional enforcement demands arising from the new provisions around letting agents and online resale of tickets
  • Administration of paperwork where notice is required to be given prior to 'routine' inspections being conducted

Government has provided no additional resource for enforcement, advice and administration.

  1. There are no other resource implications associated with this report at this time.

Sustainability and Climate Change Implications

  1. None

Legal Implications (to Include Human Rights Implications)

  1. The necessary paperwork has been developed to ensure that the Shared Regulatory Service complies with the new requirements placed upon enforcement agencies.
  2. The Head of Shared Regulatory Services will ensure that in the case of offending extending beyond the boundaries of the service, the most appropriate authority investigates and any initiates proceedings; and that this is in line with the principle contained in section 222 of the Local Government Act 1972 that taking such a prosecution is expedient for the promotion or protection of the interests of the inhabitants of the area.

Crime and Disorder Implications

  1. None

Equal Opportunities Implications (to include Welsh Language issues)

  1. Advice and enforcement around the new provisions will promote the protection and growth of legitimate businesses and empower consumers.
  2. Adverse impact on equality is very unlikely, likewise, positive impact in relation to equalities, beyond the protection if an individual's human rights is unlikely.
  3. On the basis of the above, it is not considered that a detailed Equality Impact Assessment is required.

Corporate/Service Objectives

  1. This area of work links strongly with the participant authorities' stated objectives around economic growth which are reflected in the Shared Regulatory Service themes of 'Promoting economic development' and 'Supporting reputable businesses to thrive'.
  2. In addition, the education and guidance given to consumers and businesses in the run up to the change in the law is in line with the Shared Regulatory Service theme of 'Providing the skills to empower citizens, consumers and businesses in the future'

Policy Framework and Budget

  1. None

Consultation (including Ward Member Consultation)

  1. None

Relevant Scrutiny Committee

  1. TBD

Background Papers

None

Contact Officer

Helen Picton, Operational Manager (Enterprise and Specialist Services)

Officers Consulted

Head of Service, Bridgend County Borough Council

Assistant Director, City of Cardiff Council

Director of Environment and Housing Services

Legal Services, Vale of Glamorgan Council

Accountant, Vale of Glamorgan Council

Responsible Officer:

Dave Holland, Head of Shared Regulatory Services

 

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