On 6 September 2016, the UK government announced that the Consumer Rights Act 2015 (the Act) will apply in full to all mainline passenger rail services from 1 October 2016.
This represents a significant U-turn on government policy: whilst the majority of the services provisions in the Act were due to apply to consumer rail services from 1 October 2016, the proposed 12-month exemption from one of the compensation provisions has now been dropped.
The accelerated provision
Section 57(3) of the Act states that a service provider cannot limit the compensation payable to consumers for any breaches of their rights under the Act to anything less than the price paid for the services. The government had planned to delay this provision coming into effect for mainline rail passenger services until October 2017 to allow operators time to review their compensation arrangements. However, the draft legislation that would have granted this grace period has now been withdrawn. This means that, from 1 October 2016, train operators will not be able to cap liability for delays and cancellations to anything less than the full ticket price when they are in breach of the Act.
It is worth noting that operators will still be able to limit the amount of compensation to less than the ticket price where delays or cancellations are not caused by the operator. Where the operator has breached the provisions of the Act, this will not necessarily result in passengers being entitled to a full refund - the Act provides that compensation should be an "appropriate amount" which in some circumstances may be the total ticket price. Passengers will also have the right to pursue claims for refunds through the courts if agreement with the operator cannot be reached.
Consumer rights under the Act: a closer look
It is worth recapping the enhanced consumer rights that were already scheduled to apply to mainline rail services from 1 October 2016:
Service to be performed with reasonable care and skill
The Act will effectively imply a term into contracts for consumer rail services that the operator must provide those services with reasonable care and skill. The Act does not define what "reasonable care and skill" is, but generally operators will need to perform services to the standard considered acceptable in the rail industry.
Information about the trader or service to be binding
The Act states that anything said or written to a consumer about the service will be included as a term of the contract, provided that the consumer takes this into account when (i) deciding whether to enter into the contract or (ii) making any decision about the service after entering into the contract. This is subject to any qualifications made to the consumer, or any changes that have been expressly agreed. Operators will therefore need to be careful about the information they provide to customers (e.g. in advertising materials) and ensure they sufficiently caveat anything that they do not want included as a term of the contract.
There are various statutory remedies available to consumers if the above terms are breached. In the rail industry, the appropriate remedy will be the right to a refund. This must be made within 14 days of the operator agreeing the passenger is entitled to a refund and must not impose any fee on the passenger.
Significantly, the refund must be paid using the same means of payment as was used to purchase the original ticket (unless the customer agrees otherwise). Travel vouchers will therefore not be considered an acceptable way to compensate passengers for breaches under the Act.
Interaction of new rules with current compensation arrangements
The government has confirmed that existing rail industry compensation arrangements (under the National Rail Conditions of Carriage and Delay Repay) will continue to be the main means of redress for rail customers. Under the Delay Repay scheme (which is more widely used), passengers are entitled to a 50 per cent ticket refund for delays of 30 minutes, which increases to 100 per cent at 60 minutes. Compensation is payable regardless of the cause of delay (unlike under the Act, where the operator must be at fault). The existing schemes therefore provide greater certainty, as there are clear and specific criteria for when passengers will be eligible for compensation for delays and cancellations and how much they will receive.
There are instances where existing compensation schemes may be incompatible with the Act. For example, a delay of 20 minutes would not entitle a passenger to any compensation under Delay Repay (even where the operator is at fault). Under the Act, a passenger may be entitled to anything up to the full ticket price if they could demonstrate that the operator did not exercise reasonable care and skill in performing the service. Operators should therefore be aware of the possibility of such claims being pursued and should also review their existing compensation arrangements to determine any inconsistencies with the Act.
Following the government's recent decision, rail passenger operators will no longer enjoy a 12-month exemption from the compensation provisions in the Act. From 1 October 2016, where a mainline rail passenger service is not performed with reasonable care and skill or in line with certain information provided, customers may be entitled to a refund up to the full value of the ticket. Operators should therefore seek to harmonise their compensation schemes with the Act as soon as possible and must be prepared for the possibility of customers commencing legal proceedings against them.