This month the Department for Business Innovations and Skills (BIS) announced it was opening a consultation on improving Terms and Condition, with the aim of producing recommendations on next steps later in the spring.
As part of the consultation BIS hopes to understand how T&Cs are used by businesses, if they can be made more user-friendly and if a wider range of enforcement actions, including the provision of civil fining powers for breaches of consumer protection regulations, will create fairer competition.
The review follows the results of its 2014 Consumer Engagement and Detriment Survey which showed that over 60% of consumers never look at T&Cs before accepting them. BIS hopes to uncover what can be done to empower consumers by making T&Cs clearer and more transparent so they are able to make better informed transactional decisions.
The consultation is seeking input on the following specific issues:
- The requirement for key terms to be presented "bold and upfront". For example, in shops this might consist of key terms being made succinctly clear in leaflets or on signs. For online this might be having key terms pop-up on screen prior to confirming a purchase.
- A standardised format for tick boxes which would see a tick always meaning that a consumer agrees to whatever is being asked.
- How greater transparency can be achieved at the point of purchasing technology if the proprietary owner places constraints on its compatibility with third party media and/or software.
- Is there scope for businesses to incentivise consumers to engage more thoroughly with T&Cs?
- Access to tracked changes in terms and conditions for long term contracts.
- Where consent for use of personal data should be covered and are consumers clear about who their personal data is being shared with.
- Teaser rates and the need for greater transparency in pricing for contracts with varying monthly rates.
On the introduction of fining powers the consultation acknowledges that current civil enforcement action is limited in scope with businesses only facing prosecution in instances of serious deceptive or aggressive commercial practices. BIS suggest the current position does not incentivise businesses to stop using unfair terms and proposes that giving consumer protection enforcers the authority to impose fines would act as a more visible deterrent to non-compliance. BIS want to know if giving enforcers more powers would promote fairness to consumers and competition; what drawbacks, costs and benefits would come from introducing civil monetary penalties; how such penalties would be introduced; which bodies should be empowered and whether fining powers should extend to cover all consumer protection rules including unfair terms.
The implications for businesses are huge with the outcome having the potential to seriously impact any business that transacts with consumers. If changes are brought about, businesses will be faced with having to carry out yet another wholesale review of their consumer facing terms and conditions to ensure they are simplified, transparent and fair. Any subsequent failure of compliance will bring with it the real risk of being fined by a consumer protection enforcer.