A few days after it unveiled its consumer protection White Paper on 2 July 2009 setting out, among other things, proposals for a Consumer Rights Bill, the Department for Business Innovation & Skills published the UK Government’s response to the Consultation Document on the EU Proposals for a Consumer Rights Directive. While the Government welcomes reform of the EU consumer protection framework, it makes clear that there are key proposals that it will vehemently resist, as they will erode significantly the rights and protections of the UK consumer.

BACKGROUND

On 10 November 2008 the Department for Business, Enterprise & Regulatory Reform (BERR) published a Consultation on EU Proposals for a Consumer Rights Directive. BERR is seeking views on the European Commission’s proposal for a Directive aimed at overhauling and upgrading the existing EU consumer rights regime and at removing the inconsistencies caused by the “minimum requirement” approach to harmonisation under current consumer directives by providing for a fully harmonised regime under umbrella legislation.

More recently, the Government published its consumer protection White Paper, A Better Deal for Consumers: Delivering Real Help Now and Change for the Future which, among other things, discussed the introduction of a Consumer Rights Bill. As the form of that legislation will be shaped by the reforms under the Commission’s Directive, the Government’s response document published a few days later indicates that the United Kingdom will do its level best to ensure that it is not forced to introduce a bill that in any way diminishes traditional UK consumer protections.

DISTANCE SELLING

In the response document, the Government says that it is “generally happy” with the information requirements in Article 9 of the proposed Directive. It nevertheless expresses concern that the application of the Directive’s information requirements in specific areas, particularly financial services, will mean a reduction in consumer protection.

First, the Government is concerned that there is no explicit requirement that information on the right of withdrawal be prominent within the information supplied. The Government believes that this requirement is essential to ensuring that consumers are adequately informed of their cancellation rights. It also considers that there is a strong case for amending the information requirements to require traders to inform consumers who will bear the cost of returning goods in the event of withdrawal. The Directive provides that consumers will bear this cost unless otherwise agreed.

The Government, nevertheless, supports the extension of the withdrawal period to 14 days. The Government suggests that this change is appropriate as part of the package of measures designed to balance the rights and responsibilities of consumers and traders.

The response document also refers to the new provision under the Directive proposing that traders may make a deduction for diminished value of returned goods where that decrease in value is as a result of the consumer handling the goods other than is necessary to ascertain their nature and functioning. The Government harbours concerns about how this provision will operate in practice and sees it as an area that could result in disputes between traders and consumers.

SALE OF GOODS

The Government opposes strongly the removal of the right to reject faulty goods and is “actively seeking an amendment to the Directive” to ensure this right is retained. The Government will also seek an amendment to give the consumer rather than the trader the choice of remedies (repair, replacement, refund).

The Government will also be seeking greater flexibility in relation to the period during which the trader is liable for faults that existed at the time of delivery. The Directive proposes a two year period, while the Government suggests that for complex and expensive products such as cars, it is not unreasonable that where faults appear after two years and it can be proved that the fault existed at the time of sale, the trader should be liable.