All retailers will be aware of the Office of Fair Trading (OFT), many will be familiar with the OFT’s tripartite role in enforcing competition law, enforcing consumer protection legislation and monitoring and licensing consumer credit; but since the closure of the OFT on 31 March this year who should retailers now be looking to for guidance and regulation on each of these areas?
Out with the old and in with the new(ish)
The OFT was established in 1973 as a non-ministerial government department with the aim of regulating markets for the benefit of consumers. As part of the UK Government’s reforms to the competition and consumer regimes the OFT ceased to exist on 31 March 2014. Rather than a single new body to take on its role, the OFT’s functions have been spread between a number of different bodies, some old some new.
Although the closure of the OFT came to pass on 31 March this year its winding down has in fact been going on for some time. As early as April 2012 the Citizens Advice consumer service took over from the OFT’s Consumer Direct in providing advice to consumers and sharing information it receives with UK enforcement authorities.
In April last year local authority Trading Standards Services took on a greater role in the enforcement of consumer protection law at a national level. The OFT retained all of its consumer enforcement powers but with the intention of using those powers where breaches of consumer protection law demonstrated systemic failures in a market, rather than individual cases, unless that case would have a wider market impact.
In addition to taking over from the Competition Commission the new Competition and Markets Authority (CMA) has also taken over the competition and certain consumer functions of the OFT. Although the CMA only took on its full powers and responsibilities as of 1 April this year, it was established in October 2013 and has been working with the OFT up to the full handover this year.
The OFT’s responsibility for licensing and enforcement of the consumer credit regime has moved to the Financial Conduct Authority as of 1 April 2014. This move has resulted in a number of changes to the licensing regime. For further details on consumer credit please see Eversheds’ website which also contains appropriate contact details for further advice on this topic.
The only new body established as of 1 April 2014 was the CMA. However, the theme of the CMA’s 2014/15 Annual Report, certainly at the outset, appears to be a continuation of the OFT’s role.
In relation to enforcing consumer protection law the CMA will, as the OFT did before it, “pursue complex and precedent-setting cases where [it] can expect to achieve an impact across markets”. The CMA will also retain the OFT’s lead role in providing guidance to business on unfair contract terms legislation. The CMA will continue the cases and projects initiated by the OFT before 1 April 2014. This includes following up on the OFT’s work on online games and monitoring pricing practices in the furniture and carpets sector.
With regards to competition law enforcement, the CMA will inherit the OFT’s portfolio of markets work and continue those market investigations, for example, in the private motor insurance, payday lending and private healthcare sectors. The CMA will also work with sectoral regulators which will continue to share competition and consumer powers with the CMA as they had done with the OFT previously.
So what does this mean for retailers?
In reality, it appears that the real change to the OFT came long before its demise with the most significant change being the Trading Standards Services taking on a greater role on consumer protection enforcement from April last year. Retailers can take comfort from the fact that the end of the OFT should not therefore result in a dramatic overnight change to the regulation and enforcement of consumer protection and competition law.
However, as with any new body it is likely the CMA will want to make its mark on the regulatory regime. The looming changes to consumer law (the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 come into force on 13 June 2014 and the Consumer Rights Bill is currently going through Parliament – both of which seek to consolidate consumer law in the UK) may present an opportunity for the CMA to do just this. It is therefore important that retailers are aware of the changes to consumer law and confident that they can and will comply.