and address concerns

about the behaviour of

bailiffs, fees charged and

proposals for regulation of

the industry.

By the end of this year the Government

will introduce interim measures on training

and on a bailiff register. We will also

consult stakeholders on a package of

measures to address concerns about the

bailiff industry in 2010. An impact

assessment on the proposals will be

published at the same time. Subject to the

outcome of this consultation, we will set

out draft regulations on seizure of goods

and a standardised fee structure in 2011.

Any changes arising will be implemented

in April 2012.

Ministry of

Justice

Ch 1,

Page 27

LONDON: THE STATIONERY OFFICE

A Better Deal for Consumers

Delivering Real Help Now and

Change for the Future

JULY 2009

Presented to Parliament by

July 2009

Cm 7669 £19.15

© Crown Copyright 2009

The text in this document (excluding the Royal Arms and other departmental or agency logos) may be

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ISBN: 9780101766920

1

Foreword 3

Executive Summary 5

Introduction 11

Chapter One: Real Help for Vulnerable Consumers 14

Chapter Two: A New Approach to Consumer Credit 30

Chapter Three: Empowering Consumers through Better Enforcement and

Information 45

Chapter Four: Modernising Consumer Law 75

Chapter Five: Next Steps 86

3

Consumers are central to the success of the UK economy. The downturn has had an

impact on all consumers and put unprecedented strain on many family budgets. We are

already providing targeted real help now to protect people from falling into debt and to

support those who do get into difficulty. We need to do more, not only for the remainder of

the downturn, but also to prepare for the future. Together with the Treasury’s forthcoming

financial services paper, this White Paper brings a new approach to personal finance.

In our report on Digital Britain we highlighted the digital revolution that is transforming the

world in which consumers live. In the last ten years, the way that people buy goods and

services has changed enormously. Many consumers have embraced the benefits and

flexibility of internet shopping, downloading music and video and browsing for good prices

and information. When consumers know they are getting a fair deal, and they are

confident that things can be put right when transactions go wrong, then that is good for

business, good for the economy and good for them. We need to make sure that our

consumer framework is flexible and fit to deal not only with today’s markets, but also

those of the next 10 years.

“A Better Deal for Consumers” responds to this dual challenge, providing both real help now to

those in financial difficulty, and also building a consumer policy that will work in years to come.

The help we are providing for consumers now aims to help keep people in their homes, offer

advice to those in debt, deal with sharp business practice and help people cope with essential

bills. Looking further ahead we set out a new approach to consumer credit that learns the

lessons from recent events and aims to help consumers make better borrowing decisions.

Our consumer policy will be active in identifying and dealing with new consumer markets;

proportionate in its approach to business regulation and concentrate resources on rooting

out the minority of rogue businesses.

The proposals and actions in this White Paper will form the basis of a consumer policy

that responds to change and helps all consumers make informed and responsible choices.

Rt Hon Lord Mandelson Kevin Brennan MP

5

6

The last ten years have seen significant growth in levels of household debt, both secured and

unsecured. There is evidence that consumers are starting to reduce their exposure to debt –

the debt to income ratio fell by almost 10 percentage points during 2008. Nevertheless,

significant numbers of people are struggling with the finances. The Government has taken

urgent action at the macroeconomic level to support business during the recession, and has

To achieve this we are delivering:

protection for mortgage holders and tenants

and other unsecured debts

repayment proposals with their creditors themselves

make better financial decisions and avoid problem debt

recession-related stress and anxiety

health problems and overburdened with debt

from disconnection and help customers with problem debt

the vulnerable in debt

1 YouGov Debt Tracker, October 2008

7

Consumers have been seriously affected by the past two years of turmoil in the financial

markets. UK consumers currently owe around £1.4 trillion to banks and other financial

institutions. The vast majority of this borrowing is for mortgages on houses. However, £230 billion is consumer credit, which includes personal loans, overdrafts, credit cards, store cards and some other forms of specialist lending.

The Government is determined that we learn lessons from the experience of the credit

crunch and the past two decades and we will take decisive action now to improve the

regime for the future. We want to see a credit market emerge in a better shape, with

fairer outcomes for consumers, and contributing to, rather than potentially operating

against, wider financial stability.

Our key objectives for the future are:

Actions to support these objectives include:

– to explain their products to consumers adequately before they enter into a contract, including the consequences of any failure to repay

– to check the credit worthiness of consumers before they lend to them

– to follow guidance from the OFT to tackle irresponsible lending practices

8

services purchased in the year to April 2008, representing a loss of £6.6 billion to

consumers. Many respondents to the Consumer Law Review highlighted the need for

further support for vulnerable consumers taking action, and the need for a faster redress

mechanism for disputes involving small sums of money. Consumers also need clearer

information and better enforcement in order to take advantage of (and not be taken

advantage by) new and rapidly developing markets.

The Government’s objectives are to:

compensate consumers appropriately

goods and services

resort to achieve compensation.

Actions to support consumers in a changing world include:

consumers

champion for groups of consumers who have suffered a loss at the hands of a

business

overseas scams

consumers can more easily find the support they need

2 Consumer Detriment: Assessing the frequency and impact of consumer problems with goods and services,

Office of Fair Trading, April 2008, http://www.oft.gov.uk/news/press/2008/49-08

9

Modernisation of consumer law is the final piece of the jigsaw which will enhance and

protect consumer rights in a changing world. The actions here are based on the Consumer

Law Review, carried out in 2008 by the Department for Business Enterprise and

Regulatory Reform (BERR), the predecessor of the Department for Business, Innovation

and Skills (BIS) (see box).

The Government’s aims are that:

principles of consumer protection

and selling that develop in the future

Actions include:

protection apply

transparent and accessible to business and consumers

diluting consumer protection

modern trading conditions

proposed EU Consumer Rights Directive and modernise and simplify UK consumer

sales law.

This Consumer White Paper has been produced in consultation with the Devolved

Administrations. In those policy areas where the Government’s responsibilities extend,

the proposals outlined will apply across the UK. However, other aspects of policy

highlighted in the document are devolved, in differing settlements, to the administrations

in Scotland, Wales and Northern Ireland. It is the benefit of devolution that the Devolved

Administrations can tailor their policies and thus deliver public services to meet the

specific needs of their countries.

10

In May 2008 the Government issued a consultation paper calling for evidence on a

comprehensive review of the UK’s consumer protection regime. The Consumer Law

Review looked at whether there were new approaches to deliver better outcomes for

consumers, whilst at the same time reducing unnecessary burdens for business and

promoting fair and competitive markets.

We received around 100 responses from a wide range of business associations, individual

businesses, regulatory and enforcement bodies (including many local trading standards

departments), consumer interest groups, legal and academic institutions, professional

organisations and individual consumers. A summary of these responses has been

published with this White Paper. The responses have informed the proposals set out in

chapters 3 and 4 on empowering consumers through better enforcement and information

and modernising consumer law.

proposal, please use BIS’s dedicated email address:

Consumer.White.Paper@bis.gsi.gov.uk

or contact

Consumer Policy Directorate

Department for Business Innovation and Skills

1 Victoria Street

London SW1H 0ET

020 7215 5000 (BIS switchboard)

3 www.berr.gov.uk/whatwedo/consumers/index.html

11

12

The proposals in this paper are in part a response to an economic downturn that is unlike

any other; a global slowdown in growth accompanied by a global contraction in credit

available to consumers and business. The Government has acted quickly to restore

confidence, through stabilising the banking system to protect savings, get credit flowing,

this paper outlines what help we are providing now for people in financial difficulties, and

longer term support for consumers as Britain emerges from the downturn.

Although many people have felt the impact of the economic downturn most acutely in

relation to financial products, its effects have pervaded other consumer markets.

As families tighten their belts, they become more conscious of every pound they spend.

Evidence gathered by Consumer Focus suggests that consumers now perceive as risks

Increasing numbers of consumers are seeking out value by using the internet to research

For consumers, value for money, perceived risks, word of mouth about good and bad

service and confidence in the future will remain key factors in their purchasing decisions.

The changing nature of consumer markets brought by globalisation, such as greater

cross–border purchasing and increased use of the internet, are challenging Britain’s

consumer legislation and enforcers to respond to new and constantly evolving methods of selling.

Businesses now face tighter margins and more competitive markets, which can act as an

incentive to provide greater choice and lower prices leading to increased transparency,

greater profitability for the most efficient and an opportunity to build and develop

customer loyalty. It is also important at all times, but particularly in these challenging

economic times, that Government is committed to minimising the burdens – including

regulation – on business.

A difficult economic climate can, however, also provide an incentive to a small number of

disreputable firms to bend the rules, mislead consumers and gain an unfair advantage

over the vast majority of businesses which behave legally and competitively. We take

action where this has occurred (through intervention by regulators) and are determined to

ensure that Britain remains a country where businesses thrive in fair and competitive

markets, and consumers benefit from these. The Government’s long-standing policy

remains to promote open, competitive and independently regulated markets in an

economy that is open to the world.

Competitive markets provide the best means of ensuring that the economy’s resources

are used to encourage enterprise, efficiency and choice for consumers. For example, new

technologies will drive consumer demand, transforming existing products, and changes in

demographic patterns will affect consumer demands for new products and services from

4 Unpublished research from Consumer Focus. Courtesy of Consumer Focus, May 2009.

5 The Insight Report – An Experian Report Q1 2009

13

competitive markets. Four out of five consumers, for example, pass on news of their good

This paper explains the Government’s plans to maintain the UK’s record of one of the best

consumer frameworks in the world. Consumer confidence is essential to the smooth

functioning of business and this paper sets out the Government’s role in helping

consumers deal with the challenges of a modern economy and how we will provide clarity

and transparency for businesses and consumers alike.

In developing this strategy we have followed a number of key principles:

Where relevant, we will consult fully with business and consumer groups

protectionism and anti-competitive practices and structures will continue to be resisted

6 “Building Britain’s Future – New Industry, New Jobs” HMG April 2009. www.berr.gov.uk/files/file51023.pdf

7 “Streetwise: real people, real issues” Consumer Focus, March 2009.

www.consumerfocus.org.uk/en/contents/cms/publications

14

15

To achieve this we are delivering:

protection for mortgage holders and tenants

and other unsecured debts

repayment proposals with their creditors themselves

make better financial decisions and avoid problem debt

recession-related stress and anxiety

health problems and overburdened with debt

from disconnection and help customers with problem debt

the vulnerable in debt

The last ten years have seen significant growth in levels of household debt, both secured

and unsecured. People are also carrying higher levels of debt compared to their income.

Along with overall rising debt levels, the use of credit has increased, with more people

having access to credit facilities and more borrowers using multiple credit products.

Survey data shows that the number of people with four or more credit commitments has

There is evidence that consumers are starting to reduce their exposure to debt – the

debt-to-income ratio fell by almost 10 percentage points during 2008. With interest rates

at historic lows, the cost of servicing debt is also low. Nevertheless significant numbers of

people are struggling with their finances. Personal insolvencies grew by about 5% during

2008 to just under 130,000, with the first quarter of 2009 showing a further quarter-onquarter

rise of 5%.

8 Kempson E, Personal Finance Research Centre (2002) ‘Over-indebtedness in Britain’

9 YouGov Debt Tracker, October 2008

16

The Government has taken urgent action at the macroeconomic level to support

consumers and business during the recession, stabilising the banking system to protect

savings and increase the flow of credit and cutting the rate of VAT to reduce the cost of

consumers.

One of the most significant risks for people in difficulty with their debts is the loss of the

family home. A large number of people are struggling to pay their mortgage as a result of

the recession. 220,000 people were in 3-months arrears with their mortgages at the end

been to deliver real help and better legal protection for homeowners in financial difficulty,

and also for tenants whose landlords have their properties repossessed.

1.2.1 Help for homeowners struggling with mortgage arrears

The Government introduced Financial Services Authority (FSA) regulation of mortgages in

2004. The FSA’s regime provides important protections for borrowers. It requires lenders

to treat their customers fairly and to treat repossession as a last resort.

FSA regulation is now supported by the new mortgage pre-action protocol introduced in

November 2008. This sets out clear guidance on what actions judges expect lenders to

take before bringing a claim in the courts. This will help ensure that lenders have tried to

discuss and agree other alternatives with the borrower.

We have also introduced further key measures to provide real help to homeowners in

financial difficulty:

help with interest payments on eligible capital up to £200,000 (twice as much as

before), and we have shortened the waiting period so that households can now receive

help 13 weeks after claiming benefits at Jobcentre Plus instead of the previous 39

weeks, and there is no waiting period for pensioners

vulnerable households, where local authorities step in to help people stay in their

homes

that experience a significant loss of income to defer a proportion of the interest due on

their mortgage for up to two years, temporarily reducing their monthly payments to a

more manageable level.

10 According to Council of Mortgage Lenders

17

The Welsh Assembly Government has introduced a £9.5 million Mortgage Rescue

Scheme to assist in the most urgent cases where repossession and consequent

homelessness will lead to additional pressures on social housing waiting lists.

Alongside these measures, the Government is providing:

Homeowners Mortgage Support scheme

facing possession proceedings

or one off payments to help prevent repossession or eviction.

These measures, along with low interest rates, will help prevent thousands of

repossessions and will help provide reassurance to households that there is real help

available to help keep them in their homes.

1.2.2 Improving legal protections for mortgage holders

Since May 2009, following a cross-Whitehall review of the legal protections afforded to

homeowners by the law, the Government has started taking forward a series of measures

to ensure that current protections are operating as they should and to improve those

protections where necessary:

powers available to the court in possession cases and the circumstances in which they

can be used. This will help consumers by clarifying the present law. We expect this to

be available in the autumn

of residential mortgage law. Much of the current law is based on Victorian

conveyancing reforms and 1970s consumer legislation. A detailed review would be an

opportunity to bring the law up to date

introduced in late 2008. This evaluation will assess the extent to which lenders are

treating court action as a last resort and will be complete by the end of the year

homes cannot be sold by lenders without taking court proceedings.

18

1.2.3 Help for tenants

This year the Government has introduced real help to tenants falling behind with their rent

and acted to protect those at risk of eviction because their landlord has defaulted on

mortgage payments:

housing tenants in rent arrears. Tenants are invited to a meeting with a local advice

provider to explore the reasons behind the arrears and to try to reach agreement with

their social landlord on a sustainable repayment plan

receive decent notice of a repossession hearing, regardless of their landlord’s actions.

The Civil Procedure Rules were amended from 6 April 2009 to ensure that tenants

receive up to 7 weeks notice of the date of any repossession hearing

for private tenants whose landlords are repossessed. This will ensure that those

tenants receive adequate notice to vacate the property, regardless of whether their

tenancy has been authorised by the landlord’s lender.

Figure 1: Fact box

Scotland has had its own Mortgage to Rent Scheme for homeowners at risk of

repossession since 2003. Further measures to support homeowners at risk include:

were launched in March 2009 by the Scottish Government with £35 million over

two years

in Scotland of the support available through the National Debtline, and action has been

taken to expand in-court advice services and significantly increase access to legal aid in

Scotland

protection for homeowners in Scotland following the report of an independent review

of the legislation.

The Scottish Government’s Wider Role Fund supports Registered Social Landlords (RSLs)

to undertake projects in their local communities, beyond their principal role as landlords,

which make life better for the people living there. A number of RSLs provide tenants with

welfare rights and money advice, either by employing specialists themselves or by buying

in services from local providers. The Wider Role Fund has helped fund the development of

a best practice guide for the RSL sector in Scotland.

19

Increasing numbers of people are in difficulty with their debts, and struggling to regain

control of their finances. Recent survey results suggest that the proportion of the

population falling behind with any payment had risen from 13% in July 2008 to 15% by

February this year. Roughly two thirds of those in arrears are more than three months

behind in paying their creditors and 16% of households consider their repayments to be a

People in financial difficulty often need time to make plans for settling their debts without

being pursued by creditors for payment. They can also benefit from professional support

in assessing their financial situation and dealing with their creditors. Yet rising demand for

debt advice, linked strongly to unemployment during the economic downturn, has put

increasing pressure on the advice agencies. Capacity is likely to be stretched even further

in the coming months.

That is why the Government is focusing efforts to ensure that:

financial difficulty

clients with problem debt

1.3.1 A“breathing space” to help people plan their debt repayments

The Government has been in discussion with a range of lenders and other creditors about

what relief they can offer people who are in difficulty with repayments in order to help

them sort out their financial situation:

space during which debts will not be pursued for people who had approached them

through a not-for-profit debt adviser. In March the Credit Services Association, which

represents debt collectors, put a similar 30 day breathing space for borrowers into its

Code of Practice. If approached through a not-for-profit debt adviser, the major banks

are now also offering consumers a 30 day grace period during which debts are not

pursued on unsecured loans and overdrafts. This should give people time to work

with an advisor to arrive at a credible and sustainable repayment plan to take control

of their finances.

11 YouGov Debt Tracker, February 2009

20

space offered to over-indebted consumers if they have sought help from a debt advice

agency in managing their debts. Suppliers may also extend this grace period during

which they will not disconnect the customer. This will help such consumers by

lessening the short term pressures, allowing them to sort out their affairs, and will help

businesses by helping to bring about agreed regular payments in place of erratic and

uncertain receipts.

1.3.2 Good practice by local authorities to help the indebted

The Government wants to ensure that consumers in financial difficulty are treated with

consideration by all their creditors. Council tax is rightly considered a priority debt and

given precedence over other debts by people unable to pay all their debts when drawing

up a repayment schedule. But local authorities recognise that some people will face real

difficulties in meeting their obligations during the downturn. Council tax benefit is available

for those on low incomes and we are keen that everyone entitled should claim it. Councils

have discretion to agree a payment arrangement with any taxpayer to enable them to

clear arrears. They can also, and frequently do, make such arrangements instead of

pursuing formal enforcement measures. Two further initiatives are underway:

in their council tax debt recovery and enforcement policy. The protocol, to be launched

in July, will be used as part of a more formal, structured engagement between local

authorities and advice agencies to provide better help for customers in difficulty with

council arrears.

been issued by the Office of Fair Trading (OFT) on minimum standards expected of

those engaged in debt collection practices in respect of debts arising from regulated

consumer credit agreements.

In Scotland, councils have a corporate debt strategy. This aims to ensure consistent

corporate treatment towards the recovery of arrears of council tax, council house rents,

and other council charges by council staff, council funded voluntary organisations, and

council appointed sheriff officers, and allows councils to balance their social

responsibilities with their requirement to collect debts owed to them by citizens.

12 The Department for Communities and Local Government (CLG), in discussion with the Local Government

Association, the Chartered Institute of Public Finance and Accountancy, the Institute of Revenues Rating and

Valuation, Citizens Advice and other organisations

21

Leeds City Council believe they can improve collection rates for council tax and other

council debts whilst also improving the financial circumstances of its residents. It has

brought together the five main debt advice agencies, Leeds City Credit Union, the

Council’s housing providers and in-house welfare rights and benefits teams to help

residents experiencing financial difficulties.

The Council’s Corporate Debt Team assist customers who are struggling with council

and other debts by ensuring that customers receive all the benefits they are entitled

to and free independent debt advice. Whilst this process takes place, the team helps

customers by coordinating their Council debts, suspending further recovery action

(including evictions) where possible, and negotiating interim arrangements to prevent

further debt.

One example of this policy at work involved a single woman on a low wage, whose

monthly income was £780, with a monthly expenditure of £714. She had debts of

£23,000, including £1,000 in rent arrears, 2 years Council Tax arrears, £600 in parking

fines and £7,000 on overpaid housing benefit.

Working in partnership with Burley Lodge Centre Advice Service, the Corporate Debt

Team secured payment arrangements for her priority rent and Council Tax debts, and

arranged a minimal payment to her overpaid housing benefit. The parking debt was

recalled from the bailiffs and written off, due to her severe financial circumstances.

1.3.3 Advice for those struggling with problem debt

The Government has invested significant funds to strengthen the provision of debt advice,

including:

financially excluded people between 2006 and 2011. Since summer 2006, over

220,000 clients have been counselled by the 500 face-to-face debt advisers funded

through this scheme.

Report for advice for those suffering in the economic downturn. This covered

£10 million to support longer opening hours at over 330 Citizens Advice Bureaux and

£5.85 million for the National Debtline to increase staffing levels on the helpline by

50% and thereby enable them to handle 1,600 calls a day.

13 Courtesy of Leeds City Council

22

This is in addition to investment in legal advice available through the Legal Services

Commission (LSC) to help those most in need in the current economic climate:

be financially eligible for civil legal aid. Up to 750,000 additional people could become

eligible for help and representation with their debt, housing and related problems.

more than 330,000 people in 2008/09, an increase of more than 30% on the previous

year. This service offers help with a wide range of issues such as debt, welfare

benefits, housing and employment. From April 2009, opening hours have been

extended to include Saturday mornings and week day evenings. In July 2009, a new

CLA Family Service will be launched. This will help a further 25,000 people a year with

family law problems.

housing and employment cases towards the end of 2008/09.

The Government will deliver further support for those overburdened with debt, particularly

the most vulnerable, to help them regain control of their finances:

those with debt problems to consider their options. The Guide will explain what the

alternatives are, how they work and their pros and cons. It will provide vital assistance

to individuals with consumer or business debts, or a combination of both. In Scotland,

the Accountant in Bankruptcy currently publishes debtor and creditor guides on the

bankruptcy process, including “Debt and the Consequences”, which gives important

Advice Trust on behalf of the money advice sector and in conjunction with creditors.

Available in the autumn, the toolkit will enable people to negotiate debt repayments

with creditors themselves with more targeted advice agency support. The toolkit, to be

accessed through debt advisers, will offer creditors reassurance that clients have gone

through an approved debt advice process. This assisted self-help approach should

allow over-indebted consumers to reach agreement more speedily and start making

regular payments to reduce their debt. Use of the toolkit will also reduce pressure on

the debt advice agencies and allow many more debtors in need of advice to be

assisted.

immediate boost to debt advice capacity for six months and enable the equivalent of

12 full-time debt advisers to help an extra 1,200 people struggling with crisis debt.

14 www.aib.gov.uk

23

with financial distress, the Department for Health is providing £1.5 million from the

people experiencing stress and anxiety related to the economic situation and refer

them to local health and other appropriate services including, where their difficulties

relate to problems with debt, to debt advice agencies.

Figure 3: Fact box

confidential service to members of the general public across the whole of Wales who are

experiencing any kind of mental health problem, such as depression. They also give advice

on the local services available to help with depression in the local area. CALL maintains a

comprehensive, annually updated information database of organisations and the service

they provide.

dedicated free housing debt telephone helpline for people in Wales. The all-Wales helpline

will offer advice and support to people who face the threat of repossession of their

property or eviction from their home in both the private and social housing sector.

It provides a full debt advice service with the aim of minimising the number of

repossessions and evictions and offering people an appropriate solution to their housing

problems.

1.3.4 Help to avoid getting into financial difficulty

As well as help for those already in difficulty with debt, the Government is committed to

helping consumers to stay in control of their finances and make informed financial

choices:

those at risk of getting into unmanageable debt. The service, currently being trialled in

the North West and North East of England, under the Moneymadeclear brand, is

available on the phone, online and face to face. In addition, the FSA’s Moneymadeclear

to evaluation findings from the pathfinder trial, the Money Guidance service will be

rolled out across the UK from 2010.

15 CALL: Freephone 0800 132 737; Text HELP and question to 81066; www.callhelpline.org.uk

16 www.moneymadeclear.fsa.gov.uk

24

1.3.5 Best practice in debt repayment planning

One of the difficulties that people in debt have in negotiating with a range of creditors is

working out and agreeing a repayment schedule that is realistic for their income and

outgoings. The Government welcomes the progress being made by the financial services

industry, the advice community and other parties to develop more effective ways of

agreeing these repayment schedule. In particular, we support the development of:

Finance and Leasing Association and the British Bankers’ Association, as a common

basis for debt advice agencies and their clients to communicate with creditors. The

CFS allows all parties to work on solutions with common data and from a common

standpoint. From August, debt advisors will help consumers by adopting an improved

approach to assessing current and reasonable costings of their expenditure in working

out their budget for repayments. Creditors are adopting improved new procedures to

let consumers know whether or not their repayment offers have been accepted or

rejected or are subject to query, providing clear reasons for any rejection.

People with mental health issues are far more likely to fall into debt and difficulties with

debt can lead to a worsening of mental health condition; the mentally ill are a particularly

vulnerable group during the current downturn. One in four adults in the UK will suffer

impossible to cope with their debts and the stress that they cause. In order to help those

with mental health problems who are in debt:

order that proportionate and sensitive approaches are adopted. The guidelines will be

underpinned by the release of a new supporting pack aimed at helping advisors and

creditors to resolve debt problems.

a booklet for health and social care workers to support people with debt and mental

health problems and help them obtain the advice they need to cope with their financial

health clinics and job centres.

17 NHS Information Centre for Health and Social Care (2009).

18 Jenkins, R et al (forthcoming). Journal of Public Health as cited in “Final Demand” published by Royal College of

Psychiatrists (2009)

19 www.mhdebt.info

25

A Financial Inclusion Fund debt adviser recently helped a client with learning disabilities

who suffered from paranoid schizophrenia and post traumatic stress disorder. Her health

conditions affected her ability to manage money and assess financial risk. She was

receiving threatening letters and multiple phone calls demanding payment of outstanding

debts which she found extremely distressing.

The client attended Bristol Citizens Advice Bureau with her support worker seeking advice

about an unsecured loan, her credit card debt and an overdraft she had with a major high

street bank.

Banking Code and the Consumer Credit Act 2006 to request a write off for all accounts

due, to which the bank agreed.

1.3.6 Alternative remedies for those in debt

The Government is working on a number of new statutory schemes to assist the overindebted:

package of measures included in Part 5 of the Tribunals Courts and Enforcement Act

2007. The DRO, which does not apply in Scotland, is designed to assist those who will

never be able to pay their debts and who have minimal assets. This provides a low

cost way out of debt for people who would otherwise be trapped because of too low

an income though there are consequences for the debtor.

(DMP) currently operating. A DMP is an informal and flexible agreement set up by a

provider, who re-negotiates repayment terms for a debtor with creditors, so that all

payments are consolidated into one affordable monthly payment, which the provider

collects and distributes. The Ministry of Justice (MOJ) and Insolvency Service

consultation will consider whether to bring into force regulations allowing the Lord

Chancellor to approve operators of a statutory DRP that would stop the addition of

interest/charges and restrict enforcement without leave of a court. Such plans could

compel creditor participation and allow debts to be partially written off. The

consultation will also ask what form of regulation is needed to ensure the introduction

of effective plans that strike an appropriate balance between providing better

protection for debtors and the best possible return for creditors.

20 Courtesy of Bristol Debt Advice Centre

26

1.3.7 Better safeguards for debtors at risk of losing their home

A creditor can apply to the courts for a “charging order” to place a charge on an asset,

usually the debtor’s property. Charging orders, which are not available in Scotland, do not

require debtors to sell their property but a creditor can then apply to the court for an order

for sale to enable the property to be sold to repay the debt.

Recent evidence shows that only a very small proportion of charging orders result in an

order for sale application. However, there has been a steep rise in charging orders in

recent years as creditors seek to secure arrears against debtors’ homes. It is important to

ensure all appropriate safeguards are in place to avoid debtors unfairly losing their homes

as a result of what might have been originally relatively small, unsecured borrowing.

The Government will therefore:

highlighting the risk of losing your home if you default on repayments

applying to cases where the original debt arose under regulated consumer credit

agreements.

The Government is committed to taking tough, swift action against those who exploit the

vulnerable through misleading advertising and who undermine individual responsibility to

repay debts; and to pressing for better practice by the debt collection sector.

1.4.1 Tougher enforcement against those exploiting the vulnerable

alike” websites to lead consumers to believe that they are charity-based sources of

free debt advice. More recent examples of bad practice include firms using unsolicited

and misleading calls to advertise debt management services. The OFT has taken action

against rogue firms seeking to exploit people in debt by advertising their services in a

misleading way.

management companies, debt management companies or solicitors. For example,

some of these businesses are engaged in highly questionable practices and often

misleading consumers by offering to help borrowers get out of their commitments

by using powers on unenforceable loan agreements in consumer credit legislation.

The MOJ, the OFT and the Solicitors Regulation Authority are working together to

inform consumers about the dangers of being misleading advertising or marketing,

and to take enforcement action against firms who breach regulatory requirements.

27

1.4.2 Better compliance by the debt recovery sector

section 1.3.1, following discussions in March, the Credit Services Association has also

reinforced to members that they must investigate disputed debts seriously and

suspend collection while doing so. They have further introduced a suite of advice

leaflets for their members and debtors to remind them of their legal and other rights,

and updated their website to provide similar advice for enquirers.

regulation, including minimum training requirements and competences for bailiffs and

an online certificated bailiff register which can be checked by debtors. Similar training

and transparency requirements for the debt collection industry are already set out in

the Credit Services Association code of practice.

charged and proposals for the regulation of the bailiff industry. The MOJ will not now

implement measures to extend the powers of entry and the use of force by bailiffs and

enforcement officers. The consultation will set out draft regulations on seizure of

goods, and allow for detailed consideration of a standardised fee structure. We intend

to implement the changes in April 2012 which will provide clarity for debtors and

certainty for creditors.

Increases in fuel prices during 2008 have had an impact on poorer households with

increases in numbers in fuel poverty. The number of vulnerable households facing fuel

poverty in 2008 was approximately 3 million, up from 1 million in 2004. Water bills,

similarly, have increased above the rate of inflation. By 2009/10, 40% of households on

the lowest income are likely to be paying more than 3% of their income on water and

sewerage charges, compared with 29% in 2004/5.

The Government is therefore dedicated to ensuring help for vulnerable families as they

continue to cope with their utility and other essential bills. We want to see people helped

to avoid debt in the first place, and for those who still get into difficulty to have their

problems managed more effectively.

1.5.1 Support and protection for vulnerable energy consumers

Following a voluntary agreement between the Government and the energy suppliers in

2008, the big six energy suppliers now offer programmes of assistance to their most

vulnerable customers:

28

they will spend £125 million, rising to £150 million in 2010/11

supplier offers in the customer’s area, including online. In December, Ofgem estimated

that around 800,000 customer accounts were benefiting from a social tariff securing

significant annual savings. Suppliers’ social programmes also include discounted tariffs,

debt relief advice and trust funds for their most vulnerable customers.

During winter, gas and electricity companies are not allowed to disconnect pensioner

households knowingly and have to take all reasonable steps to avoid disconnecting

households where someone is sick or disabled. Ofgem and Consumer Focus are

undertaking two reviews:

The review will be reporting its findings and recommendations later this year.

ability to pay into account when agreeing debt repayment levels; practices around the

installation of prepayment meters for debt recovery; and promoting best practice

amongst suppliers on how to help customers on low incomes.

1.5.2 Affordable household bills

new actions are needed to ensure a sustainable and fair system of charging,

particularly for the more vulnerable consumers. The interim report was published in

June 2009 and the final report is expected in autumn 2009. We will provide a full

response to the final report, including possible consultation on the recommendations.

the poorest and most vulnerable households. We will consider whether there are any

suitable policy interventions by autumn 2009.

29

Figure 5: Fact box

The Government has programmes in place which contribute to reducing household energy

bills and tackling fuel poverty. The Warm Front Scheme, Carbon Emissions Reduction

Target and the Decent Homes Programme primarily address household energy efficiency

through the installation of insulation and heating improvements. Winter Fuel and Cold

Weather Payments increase qualifying household incomes during the winter months.

Warm Front, the Government’s flagship scheme in eradicating fuel poverty, has assisted

nearly 2 million vulnerable households since its inception in June 2000. This has included

500,000 households in the last two years alone. On average, each household receiving

Warm Front assistance, including insulation and heating measures along with a Benefit

Entitlement Check, has the potential to save £300 per year on energy bills.

Winter Fuel Payments give reassurance to older people that they can afford to turn up

their heating in the winter months without worrying about the cost. We spent over

£2 billion on Winter Fuel Payments in winter 2007/08. An additional payment for last

winter (2008/09) of £50 for households with someone aged between 60 and 79 and £100

for households with someone aged 80 or over was made. This payment will be retained

for winter 2009/10.

Cold Weather Payments are part of the Social Fund scheme. They help towards extra

heating costs during a week of very cold weather. From 1 November 2008 to 31 March

2009 actual expenditure in the UK (excluding Northern Ireland) was £210 million with

8.4 million payments made.

30

31

The Government will achieve this by a series of measures that will ensure the right

balance between protection for consumers and a market in which business can continue

to meet diverse consumer needs. This will involve:

sending of unsolicited credit card cheques

– to explain their products to consumers adequately before they enter into a contract, including the consequences of any failure to repay

– to check the credit worthiness of consumers before they lend to them

– to follow guidance from the OFT to tackle irresponsible lending practices

consumers and lenders.

The past two years have seen extraordinary turmoil in financial markets. As well as leading

to significantly reduced access to credit for financial institutions and for businesses,

consumers have also been seriously affected. Chapter One set out what the Government

is doing to help people who find themselves in financial difficulty.

This chapter sets out our plans for the longer term for consumer credit. It looks at:

32

Figure 6: Fact box

The Treasury is leading the Government’s thinking on how to restore confidence in

financial markets and will publish a paper shortly on renewing financial markets.

As part of this, the Government will look to pursue the objective of building consumer

trust and confidence in financial markets, to support:

industry

their needs

UK consumers currently owe around £1.4 trillion to banks and other financial institutions.

The vast majority of this borrowing is for mortgages on houses. However, £230 billion is consumer credit, which includes personal loans, overdrafts, credit cards, store cards and some other forms of specialist lending.

The amount we all borrow on an unsecured basis has increased dramatically over the past

twenty years; in 1993 total consumer credit borrowing was only £70 billion. This period saw considerable growth in the use of credit cards. Interest rates were low which kept

the cost of repayments, even on larger debts, manageable for most people.

As a result of the credit crunch and the recession, total levels of consumer borrowing

are currently flat or even in decline. Many people who can afford to are paying back

their debts. Lenders are adopting a more cautious approach to accepting new business.

Some lenders have found it difficult to fund further lending, with the number of

companies offering personal loans halving over the last two years.

Despite these current trends, we fully expect confidence in the credit market to return in

due course. As house prices recover and we emerge from the recession, people will want

to borrow again. Lenders will also regain confidence in this market, building on the

measures that we have taken to support the financial sector along with recovery in the

real economy.

33

The Government is determined that we learn lessons from the experience of the past two

decades and the credit crunch and will take decisive action now to improve the regime for

the future. We want to see a credit market emerge in a better shape, with fairer

outcomes for consumers and contributing to, rather than potentially operating against,

wider financial stability.

Consumer credit regulation should support access to credit and fair treatment for

consumers while helping to prevent people from becoming over-indebted. We recognise

that any move to strengthen regulation and reduce the risk of over-indebtedness carries

the risk of making credit more expensive and less readily available.

Nonetheless, the Government believes that some limited reform may be necessary.

We entered this recession with higher levels of household debt as a proportion of income

than ever before. There are four sources of particular concern:

borrowing decisions for confidence in the whole financial system, particularly at times

of wider economic uncertainty.

that we are yet to see the full effects of the easy availability of credit during the past

decade.

falling. This is causing anger amongst consumers, but partly reflects the difficulties

facing all participants in the credit market.

families on lower incomes who have to pay more for their credit.

34

Figure 7: Fact box

Even before the current crisis, the Government was already concerned about the number

of people with too much debt. In the early years of this decade we identified an

increasing risk of over-indebtedness. This led to a major push across Whitehall with:

placed to deal with the currently high levels of demand

lenders as a low cost alternative for financially excluded people

people, allowing them to spread the payment of unexpected costs

of the regime since the seventies

people becoming trapped in debt.

The Government has been working closely with consumer groups and lenders to understand the scale of the challenge facing UK consumers and to identify how best to respond. The issues are complex but we are already clear that both credit cards and the high cost credit sector need to be looked at particularly closely.

Interest rates for loans and overdrafts have begun to drop, but credit card rates have

changed little during the recession and the Government is concerned that continuing high

interest rates are putting pressure on household budgets and leading to increased levels

of indebtedness. Credit card complaints amounted to 75% of the 24,300 complaints

received on consumer credit issues by the Financial Ombudsman Service in 2008/09 –

34% of all the banking and credit complaints they received last year.

2.3.1 Review of how we regulate credit and store cards

Consumers value the flexibility of credit cards and their use has risen dramatically in the past decade. There are now 66 million cards in circulation, accounting for around 22% of all unsecured borrowing. Outstanding balances on credit cards amount to around £53 billion with the average card holder owing approximately £1,800. Store cards are a smaller market with about £2 billion of outstanding debt.

35

Most consumers use their credit and store cards responsibly but a significant minority

consistently owe large sums, often including balances transferred from other lenders.

People who regularly make only the minimum payment are using what should be a short

term product for longer term borrowing needs, even where a personal loan could be much

cheaper. Some people can lose control and take on unsustainable debts, particularly if

they have several cards or are refused more appropriate forms of credit.

The Government has already taken decisive action to deal with the emerging practice of

credit card companies imposing significant increases in the interest rate for riskier

customers, (sometimes as much as 10-15%), often with little warning. As a result of our

intervention, credit card providers have developed a set of Fair Principles governing how

and when they will change a customer’s interest rate when his or her risk profile alters.

We understand the need for regulation to strike the right balance between protection

against indebtedness and having cards that are useful and accessible for the majority of

consumers. It must result in products that are simple for consumers to use and understand

while allowing firms the freedom to innovate in response to changing customer needs. We

are also aware of the need to guard against unintended consequences when considering

reform of a complex area such as consumer credit. However, we believe the time has come

to examine whether the balance we currently have is right.

In particular we are concerned that a minority of consumers carry high levels of

unsustainable debt with no prospect of paying it off in a reasonable time or at all. Better

off, less vulnerable consumers are generally benefiting from free use of their cards or

from 0% balance transfer deals, while customers who don’t pay their card off in full each

month now account for a large share of lender revenue. The complexity of cards is a real

barrier to consumers looking to make the best use of their cards or to shop around

effectively before selecting their card provider.

The flexibility of cards is at the heart of what makes them useful, but it can also allow

consumers to quickly accumulate unsustainable debts. This is of particular concern at this

time when people are facing financial pressures as a result of the downturn. We want to

be sure that the commercial incentives of lenders are aligned with the best interests of

borrowers, preserving the most positive features of credit cards while at the same time

limiting the potential for borrowers to incur serious financial difficulty.

We will therefore review the regulation of credit and store cards, considering, in particular, where indebted consumers may be most at risk of incurring increased costs as they try to repay their debts. This includes whether future regulation should explicitly:

36

lenders should be required to provide more information to consumers when they raise

rates, or even whether regulation should restrict the circumstances in which such

increases can be introduced.

minority of card companies allocate any payment from a consumer to their cheapest

debts first. We will look at whether debts should be paid off on a pro-rata basis, or

whether the most expensive debts should be paid off first.

majority of minimum payments are set very low. In some cases it can take 25 years or

more to pay back. We will also consult on whether more information could help

consumers understand the implications of making only minimum payments.

As part of the review, the Government will also look at the benefits and risks of banning

the practice of increasing borrowers’ credit limits without their consent. We plan to publish a consultation document on the future of credit cards in the autumn for discussion with industry and other stakeholders.

2.3.2 Unsolicited credit card cheques

There have been concerns for some time that the practice of sending out unsolicited

credit card cheques to customers could tempt people to over-borrow when they may

already be in financial distress. Earlier this year, the Government announced that it would

legislate to ban this practice. We propose that the ban would prevent the credit card

issuer sending out cheques except in response to a specific request from a customer at a

particular time. The credit card issuer would be able to offer cheques to the customer but

would require the customer to opt into receiving them.

2.3.3 Helping consumers make informed decisions about credit cards

Credit cards are complex products and it can be difficult to choose between them,

especially as providers calculate and charge interest in different ways. Currently, only

consultation and feasibility, an impartial comparison tool for credit cards will be included

on the Moneymadeclear website to help consumers make an informed decision about

This is part of a wider aim to expand the Moneymadeclear website, working towards the

Thoresen Review’s vision of an impartial and non-commercial ‘one-stop-shop’ Money

21 “Credit Card Comparisons” Office of Fair Trading, February 2008 http://www.oft.gov.uk/shared_oft/reports/financial_

products/oft978.pdf

22 www.moneymadeclear.fsa.gov.uk

37

service will not be subject to certain statutory provisions intended for the regulation of

commercial credit firms.

Even for people on low incomes, access to credit can be vital at times. It allows families

to respond to unexpected events such as their washing machine breaking down. It also

allows people to pay for expensive items like a car that they would otherwise have to save

for years to buy.

2.4.1 Review of high cost credit market

There is considerable political, media and stakeholder concern about the role of high cost

credit (with typical APRs of 50% or more) particularly against a backdrop of rising credit

exclusion. People on low incomes or with poor credit records can struggle to obtain

access to cheaper credit from high street banks and building societies. Instead, they may

use home credit (also known as doorstep lending), unauthorised overdrafts or sub-prime

personal loans, all of which are typically more expensive than mainstream credit, reflecting

the flexibility of the product, the cost of collecting the debts and the higher risk of default.

The review will identify: the level and drivers of competition in this market; the sources of

suppliers’ revenue; the choices faced by consumers; and the factors that influence their

decisions. It will look across the range of options available to consumers, including payday

lending and home credit, and examine the impact that the current crisis is having on both

suppliers and consumers.

Some people would like to see a cap on the level of interest which can legally be charged

on these types of credit. When we have previously considered the case for this, we have

concluded that caps could be detrimental to consumers, resulting in lenders withdrawing

products or substituting the reduced interest with higher charges on late payment or

default. Higher-risk consumers could be denied access to legitimate sources of credit and

have no option but to resort to illegal, unlicensed lenders, exposing them to much higher

borrowing costs and potentially violent methods for obtaining repayment. The OFT review

will, among other things, look at the experience of other countries including those that

have introduced interest rate caps.

23 http://www.hm-treasury.gov.uk/thoresen_review_index.htm

24 Consistent with its obligation to keep under review developments relating to the provision of credit to individuals,

the OFT invited comments earlier this year on the scope of a review of the consumer credit sector which sought to

assess the effectiveness of competition; examine the offerings of suppliers; and examine the behaviour of, and

decisions made by, consumers. The review’s scope has been refined to focus on high cost credit.

38

Figure 8: Fact box

Evidence from previous studies of other countries has indicated that caps restrict access

to credit for sub-prime groups as specialist lenders stop offering certain products or

increase other charges to compensate for the cap on interest rates.

in their household, had used an illegal lender than in the UK (7% in France, 8% in

Germany and 3% in the UK).

loan amounts are typically much higher than in the UK, and loans are only given to

those in regular employment or with guarantors.

behaviour. In France, for example, the stated typical APR on a credit card in 2004 was

20.8%, in line with that country’s cap. However, the de facto APR if the account was

properly managed was on average 29.4%, but if payments were missed, charges

brought the rate up to 47.9%.

2.4.3 Government funded loans for the vulnerable

The Government is committed to providing a safety net for people in need who are

struggling to find affordable credit. In the recent Budget, we allocated:

which provides grants and interest free loans to millions of people at times of pressure

or crisis. In 2007/08 alone the Social Fund provided over three million grants and loans in the UK.

access mainstream credit. The additional investment, which is in addition to the

£80 million already committed, will make 45,000 more loans available in 2009/10

and 40,000 more in 2010/11, reaching more families all over the country in these difficult times.

In addition, we will publish a consultation document on the long term reform of the Social

Fund. This will consider improvements to the administration of the scheme and also look

at how we can provide customers with help in managing their finances.

39

Consumers face a bewildering choice of credit products and different credit providers.

They can borrow money in traditional ways from their banks or by using their credit cards.

Many people borrow money when they shop, e.g. taking out 0% interest deals on a new

sofa, or on a car. Department stores and other retailers will offer their own store cards,

sometimes with a significant discount on that day’s purchases for people signing up for

the first time. Other consumers might want to cover a very short term problem with a

payday loan or by using a home credit company or catalogue credit.

Figure 9: Fact box

The UK is currently implementing the European Consumer Credit Directive which will

come into force in June 2010. This Directive is intended to support the development of a

single market in consumer credit based on standard levels of consumer protection across

the EU. It covers how credit products are advertised, the provision of consumer

information, a right of withdrawal, termination of agreements, early repayment and

creditors’ liability for defective goods/services.

Many aspects of the Directive are similar to existing UK provisions, which will therefore

require a degree of modification rather than complete overhaul. However, there are some

new provisions, including in particular:

The Government is currently considering the responses to its recent public consultation

on how to implement this Directive and will be publishing draft regulations later in the summer.

In the face of this choice and complexity, the majority of consumers find it difficult to

make informed decisions. This is particularly true when they are being sold a product in a

pressured environment such as a busy shop, or by inexperienced staff. Individual lenders

have also tended to base their lending decisions on whether they are likely to be paid

back, rather than on whether the consumer can really afford the credit that is on offer.

40

Initiatives such as Money Guidance should help consumers feel more confident,

knowledgeable and better able to identify the pros and cons of particular products when

making borrowing decisions in the longer term. However, the Government is concerned

that, in some cases, consumers are currently being encouraged to sign now and read

the small print later, and that completing the sale is taking precedence over the full

consideration of the long term consequences for individuals who may already be

struggling with their finances. However, we want to ensure that any new requirements

are fit for purpose and do not encourage a “tick box” approach which creates bureaucracy

without offering real protection to the consumer.

With a view to helping consumers to make better borrowing decisions and forcing

consumer credit providers to be more responsible, the Government will introduce:

The requirement to provide a consumer with an adequate explanation of their credit

product is one of the major provisions of the EU Consumer Credit Directive (CCD).

We want to see consumer credit providers face up to their responsibilities to explain

products properly even if it means a change in the way some lending takes place,

particularly for in-store credit. We will publish draft regulations implementing this

provision later in the summer.

implementing this provision will also be published later in the summer. We want to see

all consumer credit providers checking consumers’ creditworthiness before lending.

The requirement not to lend irresponsibly is a cornerstone of the reforms introduced by

the Consumer Credit Act 2006. The new guidance will apply to all steps in the

transaction process from advertising and marketing through to the handling of arrears

and default. The OFT will consult on draft guidance this summer with a view to issuing

final guidance early in 2010.

These three measures, taken together with the other requirements being introduced by

the CCD, will create a new, stronger foundation for the regulation of all consumer credit

requirements introduced by the CCD, and similarly if they fail to follow the OFT’s

Irresponsible Lending Guidance.

credit licensing fee with a view to ensuring that fees are equitable and proportionate

41

for licensees. Options to be considered will include whether there is a case for

differential pricing, taking account of the potential risk to consumers of different

licensable activities. The OFT will consult fully and report to the Secretary of State

for Business in early 2010.

The UK consumer credit market is complex and diverse. It has been shaped in recent

decades by significant economic, social, and technological change. We have witnessed

increased social acceptance of borrowing and widening access to credit, coupled with the

growth of online delivery channels and high levels of automation. As markets continue to

evolve and new innovative products are developed, the regulatory regime must be

enabled to respond in ways that it has not been able to in the past, which are both fair to

borrowers and minimise burdens on industry. For example, the system has been slower

than is desirable to establish clear precedents to tackle emerging unfairness, undermining

consumer trust in financial services and the regulatory system. At the same time,

regulation has created technical difficulties where the rules do not easily fit with industry

practice, difficulties which can be costly to resolve in a highly automated world.

To tackle areas of emerging bad practice, we will:

being used to support “log book” lending, which has been the subject of relatively high

levels of complaints to consumer groups and the OFT. Bills of Sale are written in

complex language that consumers often cannot understand and can lead to consumers

having their assets – often their car – repossessed without the need for a court order.

The Government therefore intends to consult this autumn on banning the use of Bills

of Sale for consumer lending.

Consumer Advocate should have powers to address unfairness in consumer credit

agreements, including the possibility of challenging unfair relationships through the

courts on behalf of consumers. (See Chapter 3 for more detail on the Consumer Advocate.)

often those worst hit by high costs for unauthorised borrowing or missed payments,

leaving them deeper in debt. This system can mean that a relatively small number of

borrowers who incur default charges are providing a disproportionate share of lender

revenues. We consider that all arrears and default fees and charges (and similar or

analogous charges such as charges for unauthorised borrowing) on credit accounts

42

should be transparent, cost reflective and reasonable. The fairness of charges levied by

banks for unauthorised overdraft borrowing is currently the subject of a test case

brought by the OFT and seven banks and building societies. Litigation on this issue

could take several years to reach a final conclusion. The Government calls on the

regulators and the banks to explore whether there is a quicker way of resolving

consumer complaints about unauthorised overdraft charges. Following the forthcoming

decision of the House of Lords in the test case brought by the OFT and the banks, we

will work with interested parties with a view to moving the market to a more efficient,

equitable, and transparent system as quickly as possible.

Credit reference agencies perform a vital role in credit markets. They provide consumers

with a simple and efficient way of demonstrating their past record of managing credit

when applying for new loans and give lenders a view of a consumer’s existing financial

commitments so they can take these into account when deciding to grant new credit.

Where they work well, credit referencing systems can help support more accurate lending

decisions and provide incentives for borrowers to manage their commitments responsibly.

effective credit information registries to a regulatory environment which supports

enterprise and competitiveness, ranks the UK system of credit referencing second out of

181 countries studied. Nonetheless, the Government believes there is scope for

improvement. Data is not currently shared on certain types of credit commitment,

meaning that lenders do not have the full picture of their customers’ financial situation.

Consumers can also find the system complex and confusing. To promote more effective

lending and borrowing decisions, we will:

commitments and about the way they use their available credit facilities can help

lenders to make more accurate decisions, promote competition in credit markets, and

may help prevent some consumers from taking on too much debt. We will work with

industry to identify ways in which data sharing can be improved in a way that respects

the privacy of individuals’ personal information.

The Government wants to ensure all consumers have access to the right tools to help

them better understand their credit reference files, protect themselves against identity

fraud and, if necessary, take legitimate steps to improve their credit rating. Currently,

consumers have a statutory right to write to any credit reference agency and request a

paper copy of their credit reference file for a £2 fee. We will work with industry to look

at improving people’s access to (and understanding of) their file, including whether files

can be made available online under the existing statutory scheme.

26 http://www.doingbusiness.org/

43

To improve the credit framework, balancing the interests of both consumers and lenders,

we will:

concerned that sending regular statements to consumers who may have moved house

without informing them could lead to fraud. Similarly, there is a risk that consumers

who have entered into an Individual Voluntary Arrangement (IVA) to pay their creditors

could be confused if they continue to receive a standard statement. We will consult in

the autumn on proposals to amend the law so that, in these cases, only a reduced

amount of information needs to be sent while ensuring that consumers still receive

important information about their accounts.

Finally, to tackle the exploitative practices of loan sharks:

sharks prey on some of our most vulnerable communities, often using violence and

intimidation to keep poor families locked into extortionate repayments they cannot

afford. The launch of a national telephone hotline and the Stop Loan Sharks campaign

on Directgov in March 2009 was part of our longstanding programme of action to warn

against the dangers of illegal lending. More cases are now being prosecuted in England

and Wales. As part of our ongoing work to raise awareness, we will consider how best

to increase understanding of the crime of illegal money lending and the impact it has on communities.

Figure 10: Fact box

44

Figure 11: Case study

In February 2009 the South East of England illegal money lending team organised an

event in Gosport where £17,000 of money confiscated from a local loan shark was handed

back to the community.

The family ‘Fun and Finance Day’ was held to encourage people in the community to open

accounts and save, as well as giving them the opportunity to talk to organisations about

debt and finance issues. New account holders were each offered £20 of the seized and

forfeited cash, to be deposited directly into their account if they hold savings for at least a

year. Over 300 people attended the event and 80 accounts were opened on the day.

Due to the success of the event the local credit union will now be holding a surgery at the

community centre once a week so that people can access advice and support in managing their money.

45

The aims are:

encouraged to compensate consumers appropriately

of selling goods and services

a last resort to achieve compensation

46

There are a number of key actions which the Government intends to take to achieve these aims:

champion for groups of consumers who have suffered a loss at the hands of a business

consumers can more easily find the support they need

When consumers suffer at the hands of traders who treat them unfairly, it is not

unreasonable for them to expect to get some or all of their money back. In the current

economic climate, consumers can ill afford to lose money on sharp practice, shoddy

goods or poor services.

Traditionally public enforcement of consumer law has focused on stopping bad practice

through enforcement orders (equivalent to injunctions or, in Scotland, interdicts) and

prosecuting offenders. This is important and can be effective but it rarely helps the

consumer who has suffered the frustration and financial loss of being ripped off.

47

Figure 12: Fact box

Enforcers of consumer protection legislation include the Office of Fair Trading and local

authority Trading Standards Services. These enforcers ensure that businesses comply

with consumer protection legislation through advice and/or enforcement. The more

serious breaches are dealt with through civil action such as obtaining undertakings from

the business or enforcement orders to prevent the business carrying on the unfair activity,

or by taking criminal prosecutions which can be punishable by either a fine or even

imprisonment. In this way enforcers ensure that businesses act in a fair and competitive

way, and also protect consumer interests.

Responses to the Consumer Law Review highlighted three key reasons why consumers

are not always getting the compensation that they are due when things go wrong:

element of redress for individuals, leaving consumers to take their own civil actions to

they should receive redress

where to apply, or they may not have the confidence or resource (financial or time) to

take an action forward in the courts.

Figure 13: Fact box

The Consumer Law Review has been looking at whether there are new approaches to

deliver better outcomes for consumers, whilst at the same time reducing unnecessary

burdens for business and promoting fair and competitive markets. In May 2008 the

Department for Business, Enterprise and Regulatory Reform (BERR) issued a consultation

paper calling for evidence on a comprehensive review of the UK’s consumer protection regime.

27 Representative Actions and Restorative Justice: A Report for the Department for Business, Enterprise and

Regulatory Reform (BERR), Professor John Peysner and Angus Nurse Lincoln Law School, University of Lincoln,

December 2008, http://www.berr.gov.uk/files/file51559.pdf

48

Over recent years, the Government has looked hard at this problem and acted to develop

to develop an enforcement culture that focuses first on compliance, second on restoring

any damage done to consumers by breaches of the law, and only third on punitive prosecution.

The Government proposes to take significant steps to build on and accelerate this new

approach, placing the consumer at the heart of our enforcement framework.

3.2.1 The problem

Research by the OFT has estimated that there were 26.5 million problems with goods

or services purchased in the year to April 2008 with consumers suffering a detriment

Many respondents to the Consumer Law Review outlined that vulnerable consumers

need more support in taking action. It was also pointed out that there is a need for a faster

redress mechanism for disputes involving very small amounts of money for all consumers.

A significant proportion of Trading Standards Services’ enforcement actions originate from

consumer complaints. However, research we commissioned from the Lincoln Law School

in 2008 has shown that whilst consumers generally benefit from public enforcement

through prevention of the spread of malpractice, victims seldom obtain compensation as a

of civil justice and victims have to pursue separate action.

In 2008, the Regulatory Enforcement and Sanctions Act (RES Act) introduced a framework

for new powers for regulators so that there was more choice in how they enforce,

ensuring that action taken could fit the offence and the harm caused to the victim. Under

these new powers, a range of new civil sanctions including fixed monetary penalties,

restoration orders, stop notices and enforcement undertakings can be imposed.

28 Reducing administrative burdens: effective inspection and enforcement, Philip Hampton, HM Treasury, March 2005,

http://www.hm-treasury.gov.uk/bud_bud05_hampton.htm;

Regulatory Justice: Making Sanctions Effective Final Report, Professor Richard B. Macrory, Cabinet Office,

November 2006,

http://www.berr.gov.uk/whatwedo/bre/reviewing-regulation/compliance-businesses/page44102.html

More information about the Regulatory Enforcement and Sanctions Act 2008, including Impact Assessments can

be found at: http://www.berr.gov.uk/whatwedo/bre/inspection-enforcement/implementing-principles/sanctions-bills/page44047.html

29 Consumer Detriment: Assessing the frequency and impact of consumer problems with goods and services,

Office of Fair Trading, April 2008, http://www.oft.gov.uk/news/press/2008/49-08

30 Representative Actions and Restorative Justice: A Report for the Department for Business, Enterprise and

Regulatory Reform (BERR), Professor John Peysner and Angus Nurse Lincoln Law School, Univeristy of Lincoln,

December 2008, http://www.berr.gov.uk/files/file51559.pdf

49

But the Government does not want to see a surge in monetary penalties as the new

powers are used more and more. Rather it wants companies who have infringed legal

provisions to take the opportunity to put things right before any formal public enforcement

takes place. Many good businesses do this already.

This is a fundamental tenet of the Macrory Review and Part 3 of the RES Act, which

implements a number of the review’s recommendations.

Enforcement authorities should take into account any compensation awards by the

business in their decision making. They should use the new powers to help persuade

businesses to do the right thing, reserving formal action only for those who refuse to do

so. But if businesses break the law and yet refuse to compensate, they should not be

allowed to gain from this refusal.

Criminal powers should be reserved for more serious breaches and real rogue traders

who set out to scam and defraud the public.

3.2.2 Compensation pilots for enforcers – a new approach

The Government proposes to work with the Local Better Regulation Office (LBRO) to test

the new powers described above to encourage compensation for consumers through a

number of pilots. The pilots will focus on delivering consumer compensation through

voluntary compensation offers by business when breaches of consumer law are discovered.

The Government will start to use these new powers through a series of pilot projects.

The pilots are expected to start in autumn 2010 or spring 2011 and we will consult on the

detail later this year. Only those enforcers who carry out their regulatory activities in a way

which is transparent, accountable, proportionate, consistent, and targeted only at cases in

which action is needed will take part in the pilots. This is a requirement of the RES Act

and so it is important to ensure they meet these criteria. LBRO is currently working to

establish a system for assessing local authorities’ compliance with the criteria.

It is hoped that around 10 Trading Standards Services and the Office of Fair Trading will

be able to participate in the pilot across the whole of Great Britain. Before the pilots can

begin, we will need to complete arrangements for an appeal body to be put in place to

hear any appeals against any sanctions which may be imposed under the pilots.

The pilots will be evaluated carefully in order to shape best practice and guidance prior to

decisions being made about the continued application of the new powers.

The Government will ensure that the new approach will offer benefits for consumers,

reputable traders and enforcers alike.

50

The internet has transformed the way millions of us buy goods and services. It presents

opportunities but it also harbours threats. In the area of consumer protection, problems

from non-delivery of goods to online scams and fraud shake consumer confidence and

must be addressed effectively if the significant opportunities offered by the internet are

not to be undermined by a lack of confidence. We need to tackle the full range of issues

which have the potential to cause problems for the consumer in an online environment.

The UK is the leader in Europe in terms of size of the internet shopping market. In the UK

in 2008, 57% of individuals had ordered goods or services over the internet for private use

Despite the UK’s success compared to other European countries, almost one in three UK

internet users are not shopping online, with a lack of trust in the internet the biggest

reason. Of these internet users, 30% identified lack of trust as the main factor holding

them back, whilst 20% cited fears over personal security and 15% said they did not trust

3.3.1 Digital Britain Report

culmination of a six month period of in-depth consultation with stakeholders and analysis

of the UK’s digital economy and society.

The DBR set out actions to strengthen the nation’s digital infrastructure and support the

development of high quality content in the UK, as well as measures to support take-up,

skills and confidence among users of technology. The Report highlighted the importance

of consumers’ confidence in official measures to prevent crime and poor consumer

practice in an online environment, and in particular pointed out the need to ensure

consumer interests were properly addressed.

3.3.2 Cost of problems in online transactions and e-crime

E-crime is a threat to all of us who use, or want to use, the internet for buying goods

and services.

31 http://ec.europa.eu/consumers/strategy/docs/com_staff_wp2009_en.pdf

32 UK Plastic Cards 2009, The Way We Pay, The UK Cards Association, 2009, www.theukcardsassociation.org.uk

33 Findings from consumer surveys on Internet Shopping A comparison of pre and post study consumer research,

Office of Fair Trading, May 2009, http://www.oft.gov.uk/news/press/2009/52-09

34 “Digital Britain: final report”. The Department for Culture, Media and Sport and the Department for Business,

Innovation and Skills, June 2009 See http://www.dcms.gov.uk/what_we_do/broadcasting/5631.aspx

51

The impact of e-crime reduces consumer confidence and the costs to consumers can be high. For example:

worth £650 million in 2006; and the trade in counterfeit goods is estimated to be worth

Below are two examples which illustrate the types of online scams that can affect

consumers across the UK.

Figure 14: Online ticket scam

In 2008, two online tickets agencies offered tickets for the Beijing Olympics and other

events including well known music festivals in the UK, such as the V Festival, Reading

Festival and Leeds Festival. However, the tickets failed to turn up. The families of UK

Olympic contestants were amongst 4,000 customers in 60 countries who paid for tickets

but did not receive them. The companies entered liquidation in September 2008.

Following complaints from the public an investigation was started looking into a suspected

online ticket fraud. In November 2008, the Serious Fraud Office searched premises and

35 UK Plastic Cards 2009, The Way We Pay, The UK Cards Association, 2009, www.theukcardsassociation.org.uk

36 The Gowers Review of Intellectual Property, HM Treasury, 2006,

http://www.hm-treasury.gov.uk/gowers_review_index.htm

37 Internet shopping: An OFT Market Study, Office of Fair Trading, June 2007,

http://www.oft.gov.uk/advice_and_resources/publications/reports/consumer-protection/oft921

38 Taken from a Serious Fraud Office press release, 26 November 2008,

http://www.sfo.gov.uk/news/prout/pr_592.asp?id=592

52

Figure 15: Problems with distance learning materials

The sale of poor quality distance learning and skills training is a consumer problem

exacerbated by the economic downturn and one where the internet plays a role. Between

January and March 2009 Consumer Direct recorded 563 complaints about distance

learning/correspondence courses. 98 of these complaints related to such courses sold

over the internet. The main causes of complaint, around 70%, were substandard services,

misleading claims/omissions and cancellation rights. Around 10 complaints involved

consumers who had paid some money, but are now having difficulty contacting the trader

or because the materials supplied are extremely poor. The internet is another way in

which such products and services can be sold to unsuspecting consumers.

This growth in the proportion and absolute value of consumer transactions taking place

over the internet poses new challenges for consumer protection enforcement structures.

Recognising these challenges the Government has set up the National Fraud Authority,

and through the City of London Police is establishing the National Fraud Reporting Centre

(NFRC) and the National Fraud Intelligence Bureau to tackle the most serious and harmful

fraud, including mass marketed fraud. We have also launched the Police Central eCrime

Unit within the Metropolitan Police to tackle large scale internet crime, including online

fraud. The OFT has also set up an embryonic internet team and co-ordinates internet

But it is recognised that more must be done. We must learn from the most advanced

consumer protection authorities around the world in how they monitor and supervise the

internet, tackle internet scams and other online issues, and dedicate more resource to

help make it safe for consumers even when resources overall are tight. We must also

gather better data and intelligence on the problems consumers encounter when purchasing online.

As the internet is a borderless medium, it may not always be most effective for individual

Trading Standards Services to respond locally. There are also special problems of

jurisdiction and the need for cross-border co-operation with other EU and international enforcement agencies.

3.3.3 Enhanced Intelligence System

The Government will set up a single complaints register for any citizen encountering an

online scam, breach of consumer laws or other problems with online transactions.

This will form part of the Consumer Direct service and online complaints will become very

easy to register and information will be available for use by the police, Trading Standards

Services and the OFT. This work will also complement the work of the NFRC. The new

online complaints system will go live in 2010.

39 Either through OFT-led initiatives or with the International Consumer Protection and Enforcement Network (ICPEN)

53

3.3.4 New Enforcement Team

A new enforcement team will be set up to tackle online consumer protection issues and

protect consumers from e-crime. The Government will ensure that enforcers work

together, whether in the OFT, Trading Standards Services or the police, to share

information, build up the ability to investigate potential crimes and take action to protect

consumers from online rogues and scams.

The Government is this year investing in the OFT and regional Scambuster teams in order

to analyse the complaints data and pursue problems consumers experience online and to

provide advanced equipment and other resources to lead a new drive towards electronic

consumer protection and enforcement.

The new team will comprise members from the OFT and regional Scambuster teams.

There will be joint training and a secondments programme with the Police Central eCrime

Unit. We will also encourage businesses to play a role in sharing information and training

enforcers, making the most of best practice across the industry. The OFT will also

dedicate resource from its market studies programme to investigate online consumer

markets, looking at where consumers are getting a raw deal and why.

This team will ensure that consumers and online retailers will both benefit from

establishing a high degree of trust in the online marketplace.

Figure 16: Case study internet enforcement

eBay has created a Global Law Enforcement Operations Team (GLEO) that is a worldwide

organisation consisting of investigators, security engineers and law enforcement

relationship managers located in various cities and countries. The company has built close

relationships with law enforcement agencies around the world, including the Serious

Organised Crime Agency, the FBI, and Interpol. The company works with these agencies

to offer assistance and refers potential matters to them and provides them with

information to actively fight against fraud and counterfeiting through a dedicated Fraud

Investigations Team. eBay also has a Special Investigation Group which is able to

investigate matters and, where appropriate, can prepare detailed cases to be presented to authorities.

In 2008, the GLEO team assisted law enforcement in 71,332 investigations and

proactively referred 505 cases to law enforcement. In the UK in 2008, the team assisted

in 6,876 investigations which led to 162 arrests and convictions.

In addition, GLEO trained approximately 4,200 law enforcement officials around the world

on eBay’s platforms and how it partners with law enforcement. This co-operation has

resulted in the arrest or conviction of 567 individuals in 2008 from a total of 86 million

users trading on eBay in the same period.

54

3.3.5 Enforcement Powers fit for the 21st century

The legal powers enforcers use need to be constantly updated to ensure they are fit for

do not reflect the latest technologies and rogue practices. In order to keep up to date with

these changes, the Government will review the powers available to consumer law

enforcers in an online world. For example, the OFT and Trading Standards need to be able

to act against online scammers in the UK even if they are targeting consumers overseas

and we need to consider whether abuse of personal data should be a breach of consumer

law and whether current laws adequately allow enforcers to act against such scammers,

for example, in the way they use “spyware” and “malware” attached to some commercial websites.

The powers of the OFT and Trading Standards Services to require internet service

providers to close down websites used for illegal purposes may also need to be clarified.

Finally, the Government will consider whether to empower the OFT, in particular to

prosecute online offences under the Fraud Act and the Computer Misuse Act.

3.3.6 Developing a Strategy for Protection and Enforcement in the Internet Age

The Government has asked the OFT to develop a longer term national strategy for

consumer protection and enforcement on the internet. This strategy, to be delivered by

the end of 2010, will enable the OFT, Trading Standards and other agencies to work

together even more effectively and will consider the implications in terms of resources,

training and staffing requirements.

The credit card industry will need to be involved in any discussions given that the major

security for consumers buying online is the ability to have recourse to their credit card

company in the event of online losses. As credit card companies are liable for losses they

clearly have an interest in improving enforcement in the online environment.

The objective must be to make UK online enforcement as good as anywhere else in the

world and to maximise consumer confidence in online shopping. Legitimate online

businesses will benefit from enforcement tackling unfair competition presented by rogue

traders operating on the internet and increased economic activity by confident consumers.

3.3.7 Banning orders – strengthening action against rogue traders and stronger penalties

The Government will bring forward legislation to give the courts the power to prohibit

traders who persistently breach their obligations, whether individuals or a company, from

carrying on business with consumers. We will consult on the best way of achieving this

so that the court should be able to target the order at particular kinds of activity (e.g.

supplying particular kinds of goods and services to consumers), or in extreme cases

consideration may also be given to a total prohibition on dealing with consumers.

55

Persistent rogue traders are a menace who take advantage of consumers and cause

damage to legitimate traders. These few unscrupulous traders often treat criminal fines as

a business overhead; ignore county court judgements made against them; and alter their

practices to avoid breaching a specific enforcement order or apply similar malpractices to

a different trade.

In certain cases, banning orders will be a more effective deterrent and punishment for

breaches of consumer protection law than existing enforcement mechanisms.

3.3.8 Promoting joint working and shared services within Trading Standards

Trading Standards Services are run through local government because they provide a

valuable service in our local communities. Local enforcement capacity is vital for spotting

rogue traders and ensuring that enforcement practice is targeted and proportionate.

Responses to the Consumer Law Review showed that there was concern over the level

of resources for some Trading Standards Services. The need for prioritisation can result in

a limited service for consumers and diminished opportunities, particularly in smaller

services, to take enforcement action, for example. The Government will therefore

encourage Trading Standards Services to work across local authority boundaries and to

share resources and overheads with their neighbours. There are already some excellent

examples of joint working, co-operation, and sharing of resources between Trading Standards Services.

Figure 17: Fact box

West Yorkshire Joint Services is a joint body set up by agreement between 5 local

authorities: Bradford, Calderdale, Kirklees, Leeds, and Wakefield.

West Yorkshire has a population of 2.2 million with 492 high risk businesses. The Trading

Services; the service has 66 staff involved in direct service provision with others providing

support services including legal, HR and ICT support. The shared services model provides

a Trading Standards Service that is efficient, effective and provides real value for money.

But a report by the LBRO on best practice indicates that national leadership is needed to

The Government has supported the regional Scambuster teams and the regional illegal

money lending teams to encourage pooled resource for particular enforcement priorities.

40 Information provided by West Yorkshire Joint Services, June 2009

41 The full report is due in summer 2009 and will be available on the LBRO website, www.lbro.org.uk

56

The Government will work with the Local Government Association Group, the Local

Authorities Co-ordinators of Regulatory Services (LACORS), LBRO and local government

to promote efficient and effective cross-border working, and the greater use of shared

services where this is what local councils want and where it would provide a real benefit

to consumers, business and enforcers alike.

3.3.9 A Fighting Fund for new and innovative enforcement

We will establish a central Fighting Fund so that consumer enforcers can afford to fight

cases where rogue traders have affected consumers across the UK.

Enforcers have reported to Government cases where their resources were stretched

when acting against rogue traders who cause detriment to large numbers of consumers

across the country. Stakeholders from smaller Trading Standards Services also told the

Consumer Law Review that they would avoid a prosecution case as it ties up their

resources for too long. Respondents also referred to the Food Standards Agency’s

Fighting Fund as a model which could be copied to ease these constraints.

The regional Scambuster teams have demonstrated that tackling rogue traders who

operate across local authority borders, such as tarmac gangs, is very resource intensive.

Figure 18: Case study

One case involving a rogue trader summonsed for alleged conspiracy to defraud and Trade

Descriptions Act offences, is the largest prosecution undertaken by a Trading Standards

Service, and involved 130 police and Trading Standards professionals across the country.

It involves more than 6,500 customers across the UK, with the victims suffering around

£2,000 detriment each, amounting to a total detriment of around £13 million. The case is

due to start in September 2009; there are 30 victims who are prosecution witnesses and

the local authority will, in this case, ask the Court for compensation for them. The

authority will also seek to seize the assets of the defendant arising out of the defendant’s

criminal activities. The defendant is already banned from being a company director, and

has been a recipient of a Stop Now Order which bans the defendant continuing that unfair

conduct. The case involved forensic analysis and thousands of documents and is likely to

cost around £3 million to bring to court.

The criteria for providing funding from the Fighting Fund could include cases where:

57

The Government intends that this Fighting Fund should assist as many Trading Standards

Services’ investigations of national or regional importance as possible. To this end the

Government proposes that the agreement to provide funding for a case will include an

agreement on the part of the local authority to pay a proportion of any proceeds they

of proceeds from such cases to be paid into the Fund.

The Government will consult stakeholders on this proposal, including the criteria on how to

assess the types of cases which are appropriate to receive support from the Fighting Fund.

3.3.10 Safer consumer goods – product safety testing of imported goods at major ports

We will provide more money to test more consumer products at key ports helping those

local authorities that perform a service for the whole country.

A number of local authorities are responsible for checking goods entering the EU through

UK ports. Effective enforcement at borders is key to preventing unsafe products entering

the UK market place. However, with the exception of fireworks, this is not co-ordinated

nor funded on a national basis.

For example, the Port of Felixstowe is the UK’s busiest container port, and one of the

largest in Europe, dealing with 40% of the UK’s import and export trade. Research

commissioned by LBRO has shown that, approximately 2.86 million consignments are

imported through Felixstowe each year with an estimated 5,200 consignments containing

42 Proceeds from the asset recovery incentivisation scheme under the Proceeds of Crime Act 2002 (does not apply to Scotland).

43 Addressing national threats through local service delivery, report commissioned by the Local Better Regulation

Office, Matrix Knowledge Group, 2009. The full report will be available on the LBRO website www.lbro.org.uk

58

goods originate from third countries. Suffolk Trading Standards Service is responsible for

targeting incoming goods for surveillance.

Experience from the sampling of consumer goods coming into the EU through Felixstowe

over the past five years has demonstrated that 40% of the goods tested infringe EU

product safety legislation requirements. Furthermore, almost half of those infringing

goods are found on testing to be unsafe. Approximately 64% of product recalls in the UK

are for goods that Suffolk County Council prioritises as high risk, such as electrical goods

and toys. It is important to be able to detect and intercept unsafe products before they are

widely distributed around the UK.

Figure 19: Case study

In one case a product called the G-wheel, was imported through the port of Southampton

from China and was offered for sale through a number of foreign websites. HM Revenue

and Customs alerted Hampshire County Council which in turn alerted Bournemouth

Trading Standards Service which tracked the product to a secure storage facility in the

town. The G-wheel is powered by a 50cc engine and is a cross between a mini motor-bike

and a motorised scooter. The rider steers it with their front foot and can reach 45mph.

The results of laboratory testing funded by BERR indicated that the product failed on 16

safety related points, including a leaking petrol tank, excessively hot exhaust and one

inadequate brake. There was also concern as to how it could be controlled when ridden,

particularly by children. Indeed it is illegal to use them on the road.

Investigations led to swift action being taken by enforcers to remove these products from

sale and alerts were sent across the EU to ensure other consumers were aware of this

From the research carried out on behalf of LBRO, it is estimated that:

contribute to:

– 95,000 injuries each year

– 100 fires each year

– 3 deaths each year and

44 ts today, The Trading Standards Review, Volume 116 Issue 2 February 2008, Trading Standards Institute,

www.tsi.org.uk

45 Addressing national threats through local service delivery, report commissioned by the Local Better Regulation

Office, Matrix Knowledge Group, 2009. The full report will be available on the LBRO website www.lbro.org.uk

59

The research by LBRO also suggests that when scaled up to the national level, the net

value of these impacts is in the order of £155 million.

The Government is therefore committed in these circumstances to providing support for

targeting product safety sampling and testing of imported goods at the most effective

points; i.e. at ports of entry, where regulation can be effectively delivered at the source of

the problem. This should also reduce the need for duplication of effort at other local

authorities. The Government will work with LBRO to determine how to achieve the best

outcomes, based on an analysis of risk.

Legitimate businesses will benefit from a reduction in supply chain costs due to product

withdrawals and recalls and damage to their reputation as well as from the reduction in

unfair competition presented by unsafe products.

3.3.11 Consumer prepayments

The collapse of Farepak in October 2006 caused financial and emotional loss to many

consumers. The Government has therefore done all it can to ensure that it does not

happen again. Working closely with the remaining Christmas savings clubs, we have put

in place effective protection specifically for customers’ prepayments. Independentlycontrolled,

ring-fenced trust accounts have been introduced by the companies for

customers’ payments, and these new arrangements are overseen by a new body, the

Christmas Prepayments Association.

The Government has also given the OFT funding for a consumer awareness campaign

so that consumers are better informed of their options for Christmas savings, and

empowered to make decisions that are right for their own circumstances.

The Government will also reassess the regulatory framework for prepayments in general,

taking account of advice from the OFT and the Financial Services Authority and the

recommendations to be contained within Consumer Focus’s forthcoming report on the

prepayments market. The Consumer Focus report is expected this summer. The

Government will work with the full range of stakeholders to assess what regulatory action

would be sensible and practicable.

3.3.12 Action on silent calls

Silent calls occur when call centres with automated systems dial more numbers than staff

can deal with. When a consumer answers the telephone, and no agent is available to take

the call this results in silence on the line. Consumers are left frustrated as they do not

know who the call is from and this can cause distress especially to vulnerable groups.

The Government will consult on possible regulations to increase the maximum fine for

silent calls which is currently £50,000, in order to crack down harder on this harmful activity.

60

3.3.13 Low quality and bogus colleges

The Government is concerned that some organisations are preying on the vulnerable,

especially as a result of the downturn, by offering training and education which is of poor

quality or simply does not meet the specifications which are claimed.

Some of the victims are students from overseas drawn to this country by its high

educational reputation, but who are unable to judge the quality of courses and facilities

before they have to pay for them. Others are unemployed people seeking retraining who

are vulnerable to false claims about new qualifications and enhanced job prospects. Some

so-called “colleges” are also suspected of being fronts for illegal immigration. The shady

and low quality operators damage the reputation of the sector as a whole as well as

creating significant consumer detriment.

We will convene a Task Force to address these problems. It will involve consumer

enforcement agencies, immigration officials and officials from the Department for

Business Innovation and Skills who will draw in the necessary educational expertise.

It will review policy, including accreditation options, and enforcement practice, including

exchanges of intelligence and co-ordinated enforcement actions, where possible.

As far as potential breaches of consumer law are concerned, the Government has asked

the OFT to consider whether a market study of this sector would be worthwhile and to

look at upgrading its enforcement activity in this sector.

3.4.1 Championing education, information and enforcement

In a climate where consumers are under pressure it is important that they are empowered

to assert their needs clearly and make the best purchasing decisions possible. It is also

important to reduce the cost to the economy of problems after sales have been made.

Empowered consumers are confident consumers. Yet too often the help that is available

to consumers is scattered and hard to find. We need to find new ways to better signpost

the information that is out there and to champion consumers through the enforcement

process.

A Consumer Advocate will be appointed to bring a national profile to improving the

co-ordination of education and information campaigns. The Advocate will also monitor and

champion the new approach to consumer-focused enforcement described in Section 3.2

of this Chapter.

The Consumer Advocate will be part of Consumer Focus and subject to consultation the

Advocate will, in due course, be equipped through new legislation with the following

specific powers: (i) the power to take legal actions on behalf of a group of consumers

following a breach of consumer protection law if other routes for obtaining compensation

have been tried or judged inappropriate; (ii) the power to distribute compensation to UK

61

consumers from ill-gotten funds seized by overseas enforcement agencies; and (iii) the

power to tackle unfairness in consumer credit agreements.

Figure 20: Consumer Focus

Following the Consumers, Estate Agents and Redress Act 2007, Consumer Focus came

into being at the end of 2008 as a new statutory consumer agency. Consumer Focus was

formed out of a merger of the National Consumer Council, Postwatch and energywatch.

Alongside the enhancement of the consumer advice service Consumer Direct, complaints

handling standards for business in energy and postal sectors and better rights of redress,

were designed to strengthen and streamline consumer advocacy and give a better service to consumers.

In its first period of operation, Consumer Focus has proved to be a vocal and effective

champion for the interests of consumers. Its achievements include partnership

campaigning which has helped to deliver:

successful introduction of the Home Report

garages signed up to a tough new code

3.4.2 Improving the effectiveness of consumer education and information

In the area of consumer education responses to the Consumer Law Review gave much

praise for the good work being done by a number of different organisations but seemed to

indicate a fragmentation amongst providers. The Consumer Minister met representatives

from consumer organisations, business organisations, enforcers and others involved in

education on 8 May 2009 to discuss how best to improve the effectiveness of consumer

education and information campaigns.

62

Figure 21: Fact box

In Northern Ireland, a number of consumer education initiatives have been successful at

raising awareness of consumer rights. Over 150,000 Shoppers’ Rights Cards have been

distributed throughout Northern Ireland since their launch in 2003. This credit card sized

resource explains consumers’ rights under the Sale of Goods Act 1979 and gives a

reminder of shoppers’ responsibilities. The card also provides the Consumerline telephone

number and website address for expert advice with queries and complaints.

Every youth worker in Northern Ireland received a free copy of the Buy Rights – Have Your

Say DVD and support pack, produced in partnership with the Curriculum Development

Unit of the Youth Service. The 12 minute film and support materials aim to increase young

people’s consumer knowledge, confidence and communication skills, enabling them to

deal positively with everyday consumer problems and situations. This resource is also

widely used by teachers and the uniformed youth sector i.e. Scouts, Girls’ Brigade and Boys’ Brigade.

26,785 children in Northern Ireland aged between 11-14 years have access to Ecoworld –

an interactive 3-D web-based resource developed by the Consumer Council and Council

for Curriculum Examinations and Assessment for Key Stage 3 Education for Sustainable

Development module. Visit www.ecoworld.org.uk

The consensus was that specific initiatives to raise consumer awareness about rights and

what to do when things go wrong are best provided by a range of organisations in

response to need. However, there is a need for the Government to provide greater

co-ordination of all the different initiatives at both a strategic and national level.

The Government believes that this co-ordination can be best delivered through the

appointment of a new high-profile figure: a Consumer Advocate.

The Consumer Advocate will provide a strategic overview of consumer education

activities and seek to deliver real benefits by identifying synergies and sharing best

practice. The Advocate will also engage directly with consumers through the media to,

for example, warn consumers about the latest scams.

The Advocate will have a particular responsibility to look after the vulnerable. He/she will

work with community groups and others to deliver messages to the least confident

consumers about how to protect their interests.

63

3.4.3 Championing compensation and collective actions

Alongside the role to co-ordinate consumer education the Consumer Advocate will also

have a role to champion the work of enforcers (and others, for example, businesses) to

deliver appropriate compensation to consumers where breaches of consumer law are

discovered. Specifically the Advocate will champion and monitor the pilots of new

enforcement approaches described in Section 3.2.2 of this Chapter. The new powers to

be tested in these pilots should be a strong tool to deliver consumer compensation but

there may be cases where business is unwilling to compensate. There may be

circumstances that will make it difficult for enforcers, in practice, to use their new powers

to order compensation, especially if amounts of loss vary and consumers are numerous

and hard to identify and trace.

The Consumer Advocate’s role will be to monitor cases where a large number of

consumers have been affected in a similar way by a business breaking the law. The

Advocate will liaise with relevant enforcers and seek to help the business in question to

propose a satisfactory compensation package on a voluntary basis. For the few cases

where a business is not prepared to provide compensation voluntarily despite having

been found liable of a breach of consumer protection law, the Government will consult

on equipping the Advocate with an effective and workable power to take collective actions

to obtain compensation on behalf of a group of consumers.

Subject to this consultation the power will be to allow the Consumer Advocate to take

forward a collective action following a breach of consumer protection law once a

significant number of named consumers have agreed to join the action to obtain

compensation. There would however be a possibility for other consumers to join the

action at a later stage after exact liability had been established but before the final

compensation awards had been made. This would ensure clarity for business but at the

same time reduce the barriers to compensation for more vulnerable consumers.

The Government consulted on the possibility of allowing private bodies to take

2006 consultation was that, although there was support from a number of consumer

organisations, there was a lack of clear evidence for introducing representative actions.

The Government commissioned further research in 2008 which suggested that there is

a gap between successful enforcement action and adequate consumer compensation and

that representative actions by an independent publicly-funded figure could be a way to

The Civil Justice Council (CJC) produced a report on Collective Actions on 12 December

2008 as formal advice to the Lord Chancellor. The report recommended amongst other

46 Representative actions in consumer protection legislation, Consultation, Department of Trade and Industry,

July 2006, http://www.berr.gov.uk/consultations/page30259.html

47 Representative Actions and Restorative Justice: A Report for the Department for Business, Enterprise and

Regulatory Reform (BERR), Professor John Peysner and Angus Nurse, Lincoln Law School, University of Lincoln,

December 2008, http://www.berr.gov.uk/whatwedo/consumers/enforcement/index.html

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things the introduction of a generic collective action that could be brought by a wide range

of representative bodies. The Government is currently considering in detail the

recommendations made by the CJC and intends to issue its formal response before the

summer recess.

The model of establishing a publicly-funded figure to negotiate compensation on behalf of

groups of consumers is one that has been working effectively in some Scandinavian

countries for a number of years.

Figure 22: Fact box

In Finland the Director General of the Consumer Agency is the Consumer Ombudsman.

The role of the Finnish Ombudsman is to monitor compliance with legislation that has

been enacted to protect consumers. In 2007 the Consumer Ombudsman was given the

power to initiate legal action on behalf of a group of consumers. However the Consumer

Agency took the decision only to use this power when all other means to obtain

appropriate compensation for consumers had been exhausted. The experience of the

Consumer Agency has been that the desired result for the consumer has in all cases

been reached through negotiation rather than going down the more onerous route of group action.

In Sweden the Director General of the Consumer Agency is the Consumer Ombudsman.

The role of the Swedish Ombudsman is to represent consumer interests to the business

world and pursue legal action on behalf of consumers. The Swedish Ombudsman has had

the power since 2003 to take action on behalf of a group of consumers. In 2007 an

evaluation of this power was conducted which included interviews with several hundred

Swedish businesses. No information emerged to suggest the power was being misused,

i.e. to force a business to make unjust settlements out of court. There was evidence that

the power had enabled consumers to take forward cases that without the power they

would have been unable to pursue.

In Denmark the Consumer Ombudsman heads a separate agency, the Office of the

Danish Consumer Ombudsman. The Danish Ombudsman seeks to induce trade and

business to comply with the law. The Ombudsman has had the power to take collective

actions since January 2008. The experience in Denmark so far has been that there has

been a much greater willingness of business to settle because the Ombudsman has the power to take group actions.

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3.4.4 Distributing compensation to consumers

In order to help consumers obtain compensation that is due to them from overseas

enforcement, and which has already been secured, the Government will consult on giving

the Consumer Advocate the power to receive, hold and distribute compensation for UK

consumers.

The primary aim of this power is for cases where UK consumers have been the victims of

an overseas scam and overseas enforcement bodies have seized or confiscated funds

that they have identified as belonging or due to UK consumers. There have been just a

handful of cases of this kind in the past few years but in these cases it has proved difficult

for that compensation to be sent for onward distribution to UK consumers. The Consumer

Advocate will be well-placed to provide this role given the clear fit with the Advocate’s

work to champion compensation for consumers.

The Advocate would be expected to use a third party to carry out the detailed work to

identify and distribute the compensation to consumers and would need to be able to

recover costs. In some cases the Advocate might conclude that the administrative costs

of identifying relevant consumers and distributing the compensation to them would be

disproportionate to the amount of compensation available. In these circumstances the

Advocate would need to have the power instead to use the compensation to finance, for

example, relevant consumer awareness/education activities.

3.4.5 Addressing unfairness in consumer credit agreements

There is concern amongst some consumer organisations that the consumer credit

protection regime has been slower than is desirable in tackling emerging unfairness and

needs to be enabled to respond in ways that it has not been able to in the past when

evidence emerges of issues causing widespread unfairness which may affect many

consumers. In order to address this concern the Government will consult on equipping

the Consumer Advocate with further, specific powers to tackle unfairness such as a

power to take cases under the unfair relationships test on behalf of consumers.

The Consumer Law Review asked businesses, consumer groups and regulators for their

views on improving consumers’ understanding of their rights.

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Responses to the Review highlighted:

when things go wrong

including a lack of co-ordination between web and helplines, with vulnerable

consumers worst affected.

There was broad consensus among respondents that more could be done to raise

consumers’ awareness of their rights and responsibilities and on the scope for more

effective and widespread education. Research carried out by BERR in the summer of

2008 found 60% of a representative sample of adults across the UK claimed to have been

While most in the sample said they were fairly well informed about their rights, almost a

making a complaint or returning goods, they were much less confident about dealing with

problems when buying on the internet, compared to buying from a high street or local

independent store. Furthermore, less well educated adults and those aged 16-24 said

they were less informed, knowledgeable or confident about using their rights generally.

Personal confidence plays a key role in influencing usage of consumer rights. And while

confidence is partly driven by knowledge, an individual’s approach to “challenging

situations” will also determine their ability to use the protection system available.

This section looks at:

3.5.1 Consumer Rights Publicity Campaign

To raise awareness of key rights and the availability of advice provided by Consumer

Direct, the Government will launch a new consumer rights publicity campaign.

48 For more information about the provision of information see, Warning: Too much information can harm, A final report

by the Better Regulation Executive and National Consumer Council on maximising the positive impact of regulated

information for consumers and markets, November 2007, http://www.berr.gov.uk/files/file44588.pdf

49 The survey was carried out by TNS System Three during the period 11 – 15 June 2008. A total of 2012 interviews

were conducted amongst a representative sample of adults aged 16+ across the UK,

http://www.berr.gov.uk/whatwedo/consumers/page51180.html

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BIS has joined forces with Consumer Focus, the Office of Fair Trading and Consumer

Direct to develop a campaign to improve awareness of consumer rights, and to direct

consumers to Consumer Direct as the source of online and telephone advice and support

on consumer issues. The campaign will reach its peak in September 2009 during National

Consumer Week.

The campaign is divided into two distinct elements. Firstly it will be targeted at those

consumers with the lowest levels of understanding of, and confidence in using, their

consumer rights. These are less well-educated adults, but we will also target 16-24 year olds within this group.

Messages will outline some of the key legal rights for consumers and the ways in which

they can be more confident shoppers. The essence of these key rights is that goods must:

In addition services must be carried out with reasonable care and skill in a reasonable time.

Our intention is to work in partnership with retailers in store and online to convey these

messages, complemented by a media campaign.

The second element of the campaign is designed to improve awareness of consumer

rights among businesses who deal directly with consumers, particularly small and

medium-sized enterprises (SMEs). This will involve providing SMEs with messages

around their need to understand better the rights their consumers have through education

and training for staff. The aim here will be to foster a culture of better and more informed

interaction with customers.

This will use businesslink.gov and the local Business Link face-to-face network to increase

knowledge on what different types of businesses need to do to comply, as well as

improving advice available to address needs of businesses as consumers.

3.5.2 Improving access to information and advice

Government policy is to change public services so they meet the needs of the people

who use them, rather than the needs of those who provide them and by doing so reduce

the frustration and stress of accessing them. As part of this, DirectGov, which currently

has over 16 million visitors a month, will become the single point for citizens to access

Government information and services on the web.

A new consumer area will be created on the DirectGov website. This will present in one

place guidance, self-help tools and templates, with clear signposting to where to find

further support, including access to redress and Good Trader Schemes. The new area will

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be created by the end of 2009 and we will work with all of our delivery partners to

converge all consumer content from across Government to DirectGov by March 2011.

Information on DirectGov is available on Freeview, Teletext, Virgin Media and Sky and can

be accessed on any internet enabled mobile phone, but we must ensure that all

consumers, particularly the most vulnerable, can get access to the right information and

support first time in the way that they prefer to receive it.

BIS will therefore lead a wider programme of work to bring together all key providers of

consumer advice to enable closer integration of digital, phone and face-to-face channels.

Where providers give telephone support, the Government will improve referral

mechanisms between these helplines, as well as the transition to specialist face to face

support. Consumers will get access more quickly to the information they need, particularly

detail on complaint/redress mechanisms, including Alternative Dispute Resolution and

guidance to enable easier use of courts where this action is the last resort.

3.5.3 Better information for consumers in specific situations

Since March 2009, the Ministry of Justice (MoJ) has provided additional information for

people going to court about repossession of their homes. This information strongly

encourages borrowers to take early action to resolve their debt and to attend the court

hearing. Defendants are provided with a list of free local advice providers and are also

advised, in particular, if there is a Housing Possession Duty Court desk scheme that can

provide support on the date of the hearing in the particular court. MoJ is currently

exploring the options for providing similar information for other types of claims.

Working in partnership with DirectGov, MoJ is also developing new web-based step-bystep

guides in the form of civil justice “walkthroughs”. These will tell the public what to

expect of various dispute resolution processes, including the county court and

enforcement processes. The walkthroughs will provide information to help people make

informed decisions about resolving disputes that they may have over goods and services,

banks and financial services, money or housing. The walkthroughs will explain the

alternative dispute resolution options available to consumers, for example, through

mediation or ombudsman services. They will highlight the importance of obtaining early

independent advice and of engaging with the problem and attempting to resolve it without

the need for court intervention, where possible. In the event that court action is necessary

as a last resort, the walkthroughs will also “demystify” the court and enforcement

processes to help individuals actively engage in resolving their disputes. The new

walkthroughs are currently scheduled for deployment on a rolling schedule starting in autumn 2009.

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The Government held a Home Improvement Summit on 8 June 2009 to explore possible

solutions to the issues facing those considering having work done in their home. The

objectives were to identify ways in which consumer awareness of problems in the sector

can be improved, to improve awareness of recognised “Good Trader” schemes and to

raise the profile of these schemes among business to encourage wider participation.

As a result we have agreed to work with enforcement authorities, business, and scheme

operators over the coming months on a range of issues, from helping and encouraging

consumers to make good decisions about local home improvement traders and finding

good advice and information, to how scheme operators and other agencies can work

together to provide clear messages on the roles and benefits of different schemes and

about the benefits of dealing with accredited scheme members.

The failure of XL Leisure Group in September 2008 revealed the need for better

information for consumers affected by airline or tour operator failure. The Civil Aviation

Authority (CAA), which runs the Air Travel Organisers’ Licensing (ATOL) scheme, mounted

a very effective exercise to provide flights home for XL customers abroad but in the

immediate aftermath of the failure there was confusion amongst those customers about

their entitlement to financial and practical assistance for their journey back to the UK.

The Department for Transport (DfT), with the CAA, BERR and the travel trade, undertook

a ‘lessons learned’ exercise to review the failure of XL. It became clear that the financial

protection of air travel was difficult for consumers and even for some working in the trade

to understand because of complexities of the legal framework surrounding it and

developments in the ways people book their holidays, notably via the internet.

This spring DfT launched a campaign to increase public understanding of the options for

protection against airline or tour operator insolvency and what to do in the unlikely event

of being affected by the collapse of an air travel company. Clear and comprehensive

guidance targeting consumers booking their holidays is now available on the DirectGov

website at www.direct.gov.uk/holidayprotection.

Other measures resulting from the lessons learned exercise include clearer information on

the documentation received after a holiday booking is completed and better

communications in resorts in the unlikely event that an airline or tour operator should fail.

For the longer term, DfT is working with the CAA, other Government Departments and

the travel trade, to explore whether financial protection for air travellers can be clarified.

The measures under consideration include:

ATOL scheme

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ATOL or parallel arrangements.

Depending on the outcome of its work, DfT expects to consult on options for reform,

including any legislative changes required, later in 2009.

Energy prices have risen dramatically – gas prices rose 49% over 2008, electricity by

Energy Supply Probe that identified a number of important areas where competition in the

gas and electricity industry could work more effectively, particularly for more vulnerable

consumers. Following responses to that report Ofgem are now proposing a range of remedies:

decisions about the choices that they make in the energy market. These include having

better information on bills including the exact tariff name that the consumer is on and

their yearly consumption. This will make it easier for consumers to accurately use

comparison and switching sites to decide the best supplier and tariff for them.

estimates of the cost of the new deal, to ensure that consumers have good quality

information before deciding whether to sign up with a particular supplier and tariff.

to switch supplier if they wish to do so and that this will not affect their supply.

FirstStop is a free, independent national information and advice service for older people,

their family and carers funded by the Department for Communities and Local Government

(CLG). It provides joined-up advice across a range of housing, care and finance rights and

issues. The FirstStop partnership brings together resources from Help the Aged, Counsel

and Care, Elderly Accommodation Counsel and NHFA Ltd.

CLG will invest in up to ten local FirstStop partnerships to offer more intensive local

support and advocacy services for older people and to broker links with the national service.

The FirstStop website is at: www.firststopadvice.org.uk

Telephone: 0800 377 7070

e-mail: info@firststopcareadvice.org.uk

50 Source : Consumer Focus, 2009

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In July 2009 the Government will publish a White Paper on climate change and energy.

This will set out our vision of a future that is fair, low-carbon, prosperous and energysecure,

and will detail the policies to help get us there.

Actions are also being taken in the Devolved Administrations. The Climate Change

(Scotland) Bill was passed by the Scottish Parliament on Wednesday, 24 June. June also

saw publication of Scotland’s Climate Change Delivery plan which identifies the high level

measures required in key sectors to meet Scotland’s statutory climate change targets, to

2020 and in the long term. In addition, following its Programme of Action consultation this

summer, the Welsh Assembly Government will be launching a Climate Change Strategy at

the end of the year and the Renewable Energy route Map focuses on how Wales might

exploit its own renewable energy resources over the next twenty years.

However, past emissions mean we are already committed to 30 years of temperature rise

and over 100 years of sea level rise. Therefore it is important that all sectors, including

consumers, adapt to increase our resilience to these impacts, but also to take advantage of any opportunities.

The Department for Environment, Food and Rural Affairs (Defra) and the Devolved

Administrations launched the UK Climate Projections in June 2009, which describe how

the UK’s climate might change through the 21st century.

As the impacts of climate change will vary from place to place as well as across sectors,

so consumers will need to take decisions that reflect their particular circumstances and

vulnerabilities to the impacts of climate change.

advice and information for consumers about how they can reduce the impact of their

food and so help consumers to reduce their energy, water (as water metering becomes

more widespread) and shopping bills.

51 The Act on CO2 campaign applies in England only; customers in Wales can find similar advice through the “Help

Wales reduce its carbon footprint” campaign.

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A campaign will be launched in summer 2009 to inform consumers of the best sources of

relevant climate change information, and provide tips that they could consider to increase

their resilience to a changing climate.

To support this, the Government funds the Energy Saving Trust and its network of advice

centres to provide advice for consumers on what they can do in the home to use less

energy and water, as well as to minimise their waste. The Trust advises consumers on

action they can take to save energy and reduce their fuel bills by installing household

insulation and other energy efficient products and informs consumers of the help available

through Government schemes including the Carbon Emissions Reduction Target and Warm Front.

People can find advice on the changes they can make across their life on the DirectGov

website, alongside wider information and advice for consumers.

http://www.direct.gov.uk/ActOnCO2

Defra’s voluntary “Green Claims Code” was developed in 2003 to provide guidance to

businesses on how to present their environmental credentials in their marketing claims.

However, over time the market has evolved, consumer awareness of environmental

issues has heightened and there have been a growing number of complaints to the

Advertising Standards Authority over green claims, prompting concerns that some

businesses are marketing unfairly on green credentials.

Defra is currently updating the code in order to create a constructive framework to assist

business to understand the main responsibilities in applying environmental claims and to

protect consumers from misleading claims in order to:

products underpinned by robust environmental practices

to expand into new markets

guidance does not exist and to ensure a level playing field

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environmentally-positive consumer action by increasing availability of more

environmentally-friendly products

eradicated through provision of guidance.

Working with major retailers, the lighting industry and UK energy suppliers the

Government is phasing out traditional energy guzzling bulbs, replacing them with energy

efficient light bulbs, which now come in all shapes and sizes and will fit most electrical

fittings. All lamps now have alternative, energy efficient bulbs that will bring forward the

energy savings that will result from mandatory measures across the EU that will begin in

September 2009.

The Government is helping consumers by ensuring that products that are lagging behind

others and have become inefficient and therefore costly to run, are no longer allowed to

be placed on the EU Single Market. For example, the minimum product standards agreed

in the last year in Europe on simple set-top boxes, external power supplies, domestic

lighting, commercial and street lighting, stand-by televisions, fridges, washing machines,

motors and circulators are expected to generate a net benefit of over £900 million per

annum to the UK as a whole, mostly in the form of reduced energy bills to householders.

We will continue to argue hard in Europe for new and dynamic products standards that

can generate further saving to UK consumers and businesses.

We will support the extension of the Energy Labelling Directive, known as the ‘A to G’

label to help consumers choose those products that can help them reduce their energy bills.

The Waste and Resources Action Programme (WRAP) are running “Love Food Hate

Waste”; a consumer facing campaign to encourage behaviour change, and working with

the UK grocery sector, food industry, Government and organisations such as the Food

Standards Agency to develop practical solutions and improved communications to enable

consumers to get the most from the food they buy and waste less of it.

The Government is committed to reducing the environmental impact of carrier bag usage

(in 2008 UK shoppers took nearly 9.9 billion new carrier bags) and ultimately phasing out

the unnecessary distribution of single-use carrier bags of all material types.

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In order to achieve this, the Government has legislated to give itself the power to make

retailers charge for bags, but favours a voluntary approach, giving individual retailers

flexibility in achieving 50% reduction in bag distribution by the end of May 2009 (and

aspiring towards an ultimate reduction of 70%). Alongside this, in April 2009 the

Government, BRC (the British Retail Consortium) and WRAP launched Get a Bag Habit, a

consumer facing campaign to promote reuse of all types of bags by consumers.

Defra, BIS and the Devolved Administrations recently published a new strategy for

packaging, which explores how the overall environmental impact of packaging can be

reduced. In the current economic climate, resource efficiency is one of the key issues for

the strategy. Making this a central theme for businesses will help reduce the costs.

Savings may be passed on to the consumer, and consumers may also benefit from lighter

or less bulky packaging, more of which is recyclable, which ultimately means less waste in their bins.

The Government’s new water strategy for England (Future Water: the Government’s

Water Strategy for England, February 2008) sets out our plans for water in the future

including how we intend to reduce demand for water and the need to value water more

and use it more wisely. Consumers are at the heart of policy making in this area and fair

charging and affordability are key issues for the Government. Wales, which has a

separate, strategic policy position statement on water, also places consumers at the heart

of water service delivery.

‘Environment and Greener Living’ information on the DirectGov website provides

consumers with advice on the measures that can be taken to improve energy and water

efficiency in the home and as water metering becomes more widespread, this will help

(see above) has highlighted the contribution that hot water saving in the home can make

to reducing carbon emissions.

To support this, the Government is now asking the Energy Saving Trust to develop advice

for consumers on water saving in the home.

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Our aims are that:

core principles of consumer protection

ways of buying and selling that develop in future

Photo: Neil Watson

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We will achieve these aims by:

protection apply

transparent and accessible to business and consumers

diluting consumer protection

modern trading conditions

proposed EU Consumer Rights Directive and modernise and simplify UK consumer

sales law.

Consumers enter into contracts every day and in the vast majority of cases, these

contracts are successful and we get what we pay for with no problems.

There are occasions though when things go wrong and as consumers we have important

protections to ensure that we are treated fairly. We also have important duties to be

responsible consumers and to act reasonably.

While the law can often be complex the underlying principles are relatively

straightforward: traders must not mislead consumers or unfairly pressurise them into

making wrong choices; consumers should not be given less than they paid for; products

should be safe and do what they are supposed to do; contracts need to be clear, and not

unduly weighted in favour of the business.

When problems arise, however, consumers and shop assistants often find themselves

talking at cross-purposes; confusing legal rights with what we think is fair and muddlingup

store policies with “statutory rights”.

Rights that match the reality of our consumer experiences are central to ensuring

consumers get treated fairly. Knowing your rights, and having the confidence to state

them, improves the ability of consumers to get the best outcome when something goes wrong.

Rights need to be accessible if we are to use them in our everyday lives.

Simple enough for the average consumer to read and understand, straightforward enough

for the shop assistant to explain, strong enough to protect consumers from the rogue traders.

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The Consumer Law Review conducted in 2008 demonstrated that the UK has a generally

well established and mature framework of consumer legislation which provides a high

level of consumer protection and a reasonable balance of rights. But the law is complex,

fragmented and inflexible. This can lead to higher levels of consumer detriment as well as

unnecessary costs for business and less effectiveness for enforcers. This complexity has

to a considerable extent arisen because of overlaying EU legislation on UK law.

The Government is committed to a fundamental modernisation of the consumer law

framework to fit the modern, interconnected and interdependent world. This will ensure

consumer rights are fit for purpose in the age of the internet. It will provide consumers,

business and enforcers with the clarity and confidence to explain, to exercise and to

enforce the protections and responsibilities we all have as consumers.

This commitment includes:

modernisation of consumer sales law, while retaining important consumer protections.

invited to advise on a possible restatement and simplification of the law on

misrepresentation, incorporating developments in case law to make it more

transparent and accessible to business and consumers. They will also be asked to look

at the law on duress in order to clarify whether aggressive commercial practices under

the Consumer Protection from Unfair Trading Regulations 2008 should be automatically

classed as a form of illegitimate pressure. The overall effect will be to ensure that

business liability under public and private law is aligned as far as possible.

legislation, in order to address the longstanding criticisms that years of piecemeal

changes have resulted in complicated legislation, difficult for business and consumers

to understand and costly to comply with.

more flexible qualification requirements for the Trading Standards Service to reflect

modern trading conditions, together with better sentencing guidelines for trading

standards offences.

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4.2.1 A new EU Consumer Rights Directive

In October 2008, the European Commission published a proposal for a Consumer Rights

Directive, as an outcome of the “review of the consumer acquis”. The Directive would

replace four existing consumer directives on doorstep and distance selling, unfair contract

terms and sale of goods and associated guarantees. The Directive would set out simpler

and more consistent rules for both business and consumers across the EU through use of

a maximum harmonisation clause, whereby Member States could not maintain or adopt

provisions providing different protection than those laid down in the Directive.

The Consumer Rights Directive will, if taken forward as proposed, provide important new

or strengthened protections, including a 14 day cooling off period for off-premises and

distance sales during which consumers can cancel the agreement without penalty.

This mirrors the similar 14 day cooling off period in the Consumer Credit and Timeshare

Directives. Having the same length of cancellation period in all circumstances where such

a right exists will make it easier for consumers to understand how long they have to exercise their cancellation rights.

Figure 23: Fact box

The internet has revolutionised the way many of us shop. It gives consumers easy access

to many more retailers than they could ever have reached before, both at home and in

other Member States. But often traders are reluctant to sell, and consumers to buy,

across borders because of the fragmentation of national laws regulating consumer

transactions. The Consumer Rights Directive is intended to harmonise these national laws

to boost consumer confidence and at the same time make it easier for traders to sell their

products to consumers in other Member States. This will contribute to the creation of a

genuine cross-border retail market where consumers will be able to shop around to obtain the best value on offer.

4.2.2 A Consumer ‘Bill of Rights’

Once the EU Consumer Rights Directive is agreed this will provide the framework for

setting out all the key consumer rights in a practical and accessible way.

The recent Unfair Commercial Practices Directive has already set out a principles-based

approach to deal with traders whose marketing and sales practices treat consumers

unfairly. The new Consumer Rights Directive takes this a step further by providing

contractual rights for consumers across a range of areas including shopping online,

doorstep selling, unfair contract terms and sale of goods.

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Our intention is to place all these European protections within a simplified domestic

consumer law framework that will provide UK consumers with a set of principles-based

consumer rights that are fair, understandable and can be enforced. We will also eliminate

overlaps, conflicts and duplication between domestic and European inspired rights; a

principled rather than a patchwork approach.

The Europe-wide rights will form the heart of the legislation and we will bring together

those rights not covered by the Directive to create a one stop shop for consumer law.

We will set at the heart of this legislation four key consumer principles:

In doing so we propose to bring together consumer rights into a coherent legislative framework:

4.2.3 Consumer rights in the digital age

Consumer legislation also needs to be flexible to keep pace with technological

developments. In the last decade we have seen a revolution in the way we purchase

goods and services. The growth of the internet and new technologies has seen exciting

opportunities for business to reach new markets and for consumers to access a greater

choice of products at different prices.

Consumers are embracing the digital economy; downloading music, films and software.

Yet it is not clear what rights consumers have in these circumstances, and how their

rights differ from buying a CD or DVD. Our consumer legislation has sometimes struggled

to keep pace with this constantly developing marketplace.

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Figure 24: Fact box

Computers are an essential part of modern living. Usually they are supplied with certain

software already preloaded but which must be correctly configured on first using the

machine. However, the current uncertainty about the legal status of software can cause

difficulties for consumers on the few occasions the installation fails. Consumers may

assume that, as with any other good, they are entitled to return the computer to the shop

and get, for example, their money back or a replacement computer. But the seller may

argue that, as software is not a good, he or she is not liable to the consumer for the faulty installation.

The Government intends to streamline and update consumer law to deliver better

outcomes for consumers and business, whilst at the same time reducing unnecessary

burdens for business and promoting fair and competitive markets. In taking forward this

strategy, we intend to ensure that our new consumer law regime is adapted to the internet age.

4.2.4 Sale and supply of goods and services

Consumers have extensive rights when they buy goods and services, but their rights are

spread across a number of statutes which overlap and interact. This law evolved before

the development of digital technologies and is therefore not well suited for dealing with

“digital” products such as music, films and digital content to be used in mobile phones

(e.g. ring tones and games) in the form of data files legally downloaded from the internet.

Responses to the Consumer Law Review suggested that there would be strong benefits

for business, consumers and enforcers from a coherent consolidated law which as far as

possible minimised the differences between different types of contract and different manners of purchase.

The proposed Consumer Rights Directive covers part of this law: the sale of goods,

including goods supplied as part of a mixed goods/services contract, but at present it does

not fully cover, for example, sales of services or digital downloads. The Government

would have preferred the Directive to include sales of services and “digital” products.

The Government proposes to use the resulting Directive as the basis for a wider reform to

consolidate the various pieces of legislation on the sale and supply of goods and services

to consumers into one measure to make it more accessible to consumers, business and their advisers.

The Government intends to:

Directive while maintaining necessary protection for consumers

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sales law, replacing three current Acts, removing unnecessary distinctions between

goods and services contracts (and combined contracts) and between different types of

provision to ensure appropriate consumer protection

but consider updating business to business law to keep it in line.

An important first step on simplifying the consumer framework was taken with

implementation of the Unfair Commercial Practices Directive (UCPD) which is based on

principles together with a list of 31 specific practices which are banned outright. The

Consumer Protection from Unfair Trading Regulations (CPRs) 2008 implementing the

Directive came into force in May 2008.

The CPRs are enforceable by public enforcement authorities. The Government said it

would review, two years after the Regulations came into force, whether business should

also be given the right to enforce the CPRs, e.g. in relation to copycat packaging which mislead consumers.

The CPRs do not, however, provide consumers with an individual right under private law

to claim compensation when they have been harmed by an unfair commercial practice.

In order to achieve a remedy for a breach of these new Regulations, consumers will have

to rely on existing rights introduced before the new UCPD was agreed.

In the Consumer Law Review, consumer groups argued strongly that a new private law

right of action would provide an easier avenue of redress for wronged consumers than the

current inaccessible law, and would provide new rights in some circumstances. This

would encourage compliance. Business expressed concerns that new private rights would

risk increasing the number of claims made by consumers, including vexatious cases, and

would make existing civil law even more complex.

In 2008, the Government asked the Law Commission to consider whether adopting a

private law right of action for the whole of the CPRs might have unintended and adverse

consequences, or might lead to confusing overlapping remedies.

52 Supply of Goods (Implied Terms) Act 1973; Sale of Goods Act 1979; and Supply of Goods and Services Act 1982

82

Their paper, which was published on the Law Commission website on 10 November

2008, recognises that while there would be some advantages in giving consumers a

private law private law right of action for the whole of the CPRs there are real dangers it

could also produce unintended and undesirable consequences.

The Government now believes that the law could be improved without introducing a new

private law right of action. This would reduce the risk of unintended consequences.

invited to advise on a possible restatement and simplification of the law on

misrepresentation, incorporating developments in case law to make it more

transparent and accessible to business and consumers. They will also be asked to look

at the law on duress in order to clarify whether aggressive commercial practices under

the CPRs should be automatically classed as a form of illegitimate pressure. The

overall effect will be to ensure that business liability under public and private law is

aligned as far as possible.

similar to those in the Regulatory Enforcement and Sanctions Act 2008 can be applied

to breaches of the CPRs, and compensation awarded to consumers.

The Government will simplify and modernise existing UK legislation at the same time as it

implements the new Consumer Rights Directive. We will consult further about

amendments to the following legislation:

simpler, clearer unified regime on unfair business to consumer contracts and consider

wider protections for consumers.

ineffective or where international or EU standards (which may be called up under EU

law) are equivalent. Where there are not international or EU equivalent measures for

specific UK consumer product safety requirements (for example, children’s nightwear,

plugs and sockets, flammable furniture) we will continue to ensure UK citizens remain

fully protected by UK law.

bodies to develop measures that will provide the same level of consumer

product safety across the EU that the UK enjoys. In the event that any such new EU

measures provide equivalent consumer safety and enforcement powers, we will

strongly consider removing the UK specific requirements.

83

be sold, removing potential duplication of standards, and providing manufacturers with

greater freedoms to place new instruments on the market and better methods for

in-service controls, and reviewing the case for National Measurement Office to have

concurrent enforcement powers. This shift of compliance control to manufacturers/

producers should reduce the risk of non-compliance and the level of inspections

required; firmly in line with Hampton principles.

broadly equivalent protections.

approaches in financial services legislation.

consultation on the regulation of letting agents, landlords etc with a view to

announcing new regulation in due course.

The Government is committed to bringing forward proposals to modernise Trading

Standards’ powers to reflect modern trading conditions; we will look at developing a

new single set of powers for Trading Standards Services. In relation to enforcement

practice, we recognise that the objective is to encourage compliance; a proportionate

enforcement response to breaches; and to effectively stop and where appropriate,

penalise deliberate malpractice and fraud. We also need to ensure that Trading Standards’

powers will promote cross-boundary working and cooperation.

Figure 25: Fact box

Lessons from Scambusters – cross border working

For Scambusters to operate effectively, they have to be able to work across local authority

boundaries. Trading Standards officers are empowered to enforce legislation in their own

local authority area. Formal approval to work outside their area can be sought through, for

example, a section 101 Local Government Act 1972 agreement with the authority

concerned. However, this can be a very bureaucratic and time consuming process and

some teams have had difficulties in obtaining cross border authorisations.

84

The powers will be aligned in equivalent areas to reduce complexity and there will be

provision for further flexibility in qualifications and competencies for Trading Standards

Services. The Government is also committed to ensuring that there are no unnecessary

barriers to local authorities taking enforcement action for breaches which have occurred outside their own local authority boundary.

The trading environment is rapidly changing as a result of technologies such as the

internet and mobile phones and itinerant traders who operate across local authority

boundaries. We need to ensure that enforcement powers reflect the modern trading environment.

The Government will:

together current powers scattered in different pieces of consumer protection

legislation. This will help improve consistency as well as providing clarity and

transparency to business in any circumstance. Such powers will also need to take into

account the new EU regulation setting out the requirements for the powers of

officers’ authorisations are clear in every case.

serious breaches and other responses, notably civil enforcement action, may be more

proportionate for other particular breaches under investigation, in line with Hampton

powers the Government will seek to ensure that the powers can be used to determine

whether there has been a breach of consumer laws, and not merely in relation to a

criminal offence. This will ensure that use of the powers does not determine how the

breach will be tackled: either criminal or civil enforcement routes can be used.

of the Consumer Bill of Rights. Trading Standards Officers’ powers need to reflect

modern trading conditions, including the online trading environment. Continuing to

provide less prescriptive and more proportionate qualifications and competency

requirements will enable more flexible staffing for local authorities. This will need to be

balanced by defining a competency standard as part of a wider common framework for

53 Regulation (EC) No 765/2008 of the European Parliament and Council setting out the requirements for accreditation

and market surveillance relating to the marketing of products and repealing EEC No 339/93, Official Journal of the

European Union, 13 August 2008, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:218:0030:0047:

EN:PDF, http://www.berr.gov.uk/consultations/page38188.html

54 The Government’s response to the consultation on the draft Consumer Protection from Unfair Trading Regulations

implementing the Unfair Commercial Practices Directive, February 2008, http://www.berr.gov.uk/files/file39705.pdf

55 “The few businesses that persistently break regulations should be identified quickly and face proportionate and

meaningful sanctions” – Reducing administrative burdens: effective inspection and enforcement, Sir Philip Hampton,

2005, http://www.berr.gov.uk/whatwedo/bre/inspection-enforcement/assessing-regulatory-system/page44042.html

85

competency to help ensure that officers in local authority regulatory services,

including Trading Standards Services, have the necessary knowledge and skills to

enforce the requirements of legislation, support businesses effectively and to deliver

successful outcomes for consumers and business. LBRO is working with professional

bodies and national regulators to implement a common competency framework.

and we are engaging with the judicial community to determine what skills and training

are needed in order for this to be delivered.

The Government will be consulting on these proposals to ensure that enforcers are able

to meet the challenges of the modern trading environment.

4.5.1 Sentencing Guidelines

In response to the Consumer Law Review, a number of businesses, business

representative organisations, and Trading Standards Services expressed some concern

that there was inconsistency in sentencing for trading standards offences. There was a

broad call for sentencing guidelines, to assist courts and to provide for greater

consistency.

At present, the Sentencing Guidelines Council (SGC) and the Sentencing Advisory Panel

are responsible for setting sentencing guidelines following consultation. The Government

plans to replace the Sentencing Guidelines Council and the Sentencing Advisory Panel

with a single body, the Sentencing Council for England and Wales.

Given the degree of support from Trading Standards and businesses alike, the

Government will ask the new independent Sentencing Guidelines Council to consider the

need for guidelines for trading standards offences.

86

87

The table below gives an overview of the main policy proposals set out in the White Paper

with an indication of the future course of action for each of these proposals, including

details for the timing of forthcoming legislation and or consultation, where relevant. It also

includes a small number of proposals that have not been specifically mentioned in this

White Paper but that are still relevant to wider consumer policy. The table is by no means

a comprehensive list of all the proposals outlined in the White Paper, but gives an

indication of the wide scope of the policy areas that it covers.

cannot be sold by lenders

without taking court proceedings.

The Government will hold a

formal consultation with

stakeholders in summer

2009, with a view to

amending legislation via the

Civil Law Reform Bill.

Ministry of

Justice

Ch 1,

Page 17

inviting tenants with rent arrears

to attend a meeting with a local

advice provider to agree a

repayment plan and avoid court

action where possible.

The pilot of the Housing

Advice Pre-action Scheme

is ongoing. If the scheme

proves successful, national

rollout will follow in 2010.

Ministry of

Justice

Ch 1,

Page 18

ensure that tenants receive

adequate notice to vacate the

property.

Consultation is due to be

published over the summer

of 2009, with a view to

legislate at the next

opportunity.

Department

for

Communities

and Local

Government

Ch 1,

Page 18

borrowers and customers time to

repay debts or work out a

repayment plan.

In place. Department

for Business,

Innovation

and Skills

Ch 1,

Page 19

those with debt problems to

consider their options.

The Debtors’ Guide will be

published by The

Insolvency Service in July

2009.

The

Insolvency

Service

Ch 1,

Page 22

88

help approach with advice agency

input to help those in debt to

reach agreement more quickly

with creditors and to start making

regular payments to reduce their

debt.

The toolkit will be funded

by Government and

developed by the Money

Advice Trust on behalf of

the money advice sector

and in conjunction with

creditors. The toolkit

process will be launched in

autumn 2009.

Money

Advice Trust

and

Department

for Business,

Innovation

and Skills

Ch 1,

Page 22

the equivalent of 12 full-time debt

advisers to counsel 1,200 cases

in need.

The funds will be used to

provide an immediate boost

to adviser capacity over the

next 6 months on the

face-to-face debt advice

programme, targeting the

financially excluded.

Department

for Business,

Innovation

and Skills

Ch 1,

Page 22

provide help and support to

people with mental health

problems who are suffering

financial distress.

Operated by NHS Direct,

the dedicated helpline will

go live with a soft launch in

July 2009 followed by a

three month review.

Department

of Health

Ch 1,

Page 23

Common Financial Statement to

help consumers work out a

realistic debt repayment

schedule.

The new improvements in

the use of the Common

Financial Statement will

start to be introduced from

August 2009.

Industry and

money

advice

community

Ch 1,

Page 24

89

encourage good practice by

creditors, the debt advice

community and local government

in supporting people with mental

health problems struggling with debt.

The new evidence form

which will be used to

underpin the Money Advice

Liaison Group voluntary

guidelines for creditor and

debt collection agencies

received a soft launch in

June 2009 at Money Advice

Scotland and will be

launched officially in July

2009 at the Institute of

Money Advisers’

conference in London.

The Royal College of

Psychiatrists and the

Financial Services Authority

published a booklet on debt

advice for health and social

care workers in May 2009.

Industry Ch 1,

Page 24

those who will never be able to

pay their debts and who have

minimal assets.

The Debt Relief Order was

introduced on 6 April 2009

under powers in Part 5 of

the Tribunal Courts and

Enforcement Act 2007.

The

Insolvency

Service

Ch 1,

Page 25

debtors to access advice, money

handling, debt solution options

and, where appropriate,

management of debt all in one

place.

A consultation paper on

Debt Management

Schemes will be issued

before summer recess with

a view to possible

introduction of statutory

Debt Repayment Plans

under powers in the

Tribunal Courts and

Enforcement Act 2007 in

Ministry of

Justice and

The

Insolvency

Service

Ch 1,

Page 25

90

ensure that all appropriate

safeguards are in place so that

Charging Orders only become an

order for sale application where

absolutely necessary.

The Government will

consult on introducing a

financial limit, below which

a creditor could not apply

for an order for sale, by the

end of 2009. The

consultation will explore the

implications of the

threshold only applying to

cases where the original

debt arose under regulated

consumer credit

agreements. An impact

assessment on the

proposals will be published

as part of the consultation.

Ministry of

Justice

Ch 1,

Page 26

address concerns about the

behaviour of bailiffs, fees charged

and proposals for regulation of

the industry.

The Bailiff Code will be

implemented by the end of

2009.

The Government will

consult stakeholders on a

package of measures to

address concerns about the

bailiff industry in 2010. An

impact assessment on the

proposals will be published

at the same time. Subject

to the outcome of this

consultation, we will set out

draft regulations on seizure

of goods and a standardised

fee structure in 2011. Any

changes arising will be

implemented in April 2012.

Ministry of

Justice

Ch 1,

Page 27

91

how effectively they are

protecting vulnerable consumers

and helping customers with

problem debt.

The Ofgem review will

report its findings and

recommendations later this year.

Ofgem and

Consumer

Focus

Ch 1,

Page 28

whether new actions should be

taken to ensure there is a

sustainable and fair system of

charging in place, particularly for

more vulnerable consumers.

The interim report was

published in June 2009. The

final report is expected in

autumn 2009. The

Government will provide a

full response to the final

report, including possible

consultation on the

recommendations, once

published.

Department

for

Environment,

Food and

Rural Affairs

Ch 1,

Page 28

The Government is

exploring the impact of food

price rises and the

economic downturn on low

income and vulnerable

households. We will

consider whether there are

options for potential policy

interventions by autumn

2009.

Department

for

Environment,

Food and

Rural Affairs

Ch 1,

Page 28

92

The Government will consult stakeholders formally in autumn 2009.

An impact assessment on the proposals will be published with the consultation.

Subject to the outcome of the consultation, firm proposals will be brought forward in spring 2010.

The Government will publish an impact assessment on the proposal to ban unsolicited credit card cheques in autumn 2009 and will introduce legislation to give effect to the ban at the earliest opportunity.

Subject to consultation and

feasibility, an impartial

comparison tool for credit cards

will be included on the

Moneymadeclear website to help

consumers make an informed

decision about which credit card

would suit them, based on their

The Financial Services

Authority will publish a

timetable for the launch of

an independent price

comparison tool for credit

cards on the

Moneymadeclear website

by the spring of next year.

This timetable will set out

details of consultation on

the proposed tool, to be

accompanied by an impact

assessment.

The Financial

Services

Authority

Ch 2,

Page 36

There will be additional funding of

around £270m in the Social Fund

and additional funding of

£18.75m in the Growth Fund

over the next two years.

Announced in the 2009

Budget.

Department

for Work and

Pensions

Ch 2,

Page 38

consider improvements to the

administration of the scheme and

look at how it can provide

customers with help in managing

their finances.

A consultation document

will be published in 2009.

The Government will

undertake a full consultation

with stakeholders.

Department

for Work and

Pensions

Ch 2,

Page 38

56 www.moneymadeclear.fsa.gov.uk

94

requirements on lenders to give

consumers adequate

explanations of any new loans.

This will be implemented

via the Consumer Credit

Directive. The Government

consulted formally with

stakeholders on the

implementation of the

Directive in spring 2009. An

impact assessment on the

proposals was published in

April 2009. The Consumer

Credit Directive will be

implemented in June 2010.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 40

This will be implemented via the Consumer Credit Directive. The Government consulted formally with stakeholders on the implementation of the Directive in spring 2009.

An impact assessment on the proposals was published in April 2009.

The Consumer Credit Directive will be implemented in June 2010.

Trading will bring forward new

guidance for all lenders setting

out what it considers to be

irresponsible lending practices.

The Office of Fair Trading

will consult with

stakeholders on draft

guidance in the summer.

Subject to the outcome of

the consultation, the new

guidance will come into

force in early 2010.

Office of Fair

Trading

Ch 2,

Page 40

95

exploring the case for differential

pricing.

The Office of Fair Trading

will consult formally with

stakeholders by the end of

2009 and will report to the

Secretary of State early in

2010.

Office of Fair

Trading

Ch 2,

Page 40

The Government will

consult formally with

stakeholders and publish an

impact assessment in

autumn 2009. Subject to

the outcome of the

consultation, the

Government intends to

bring forward legislation to

ban the use of Bills of Sale

in relation to consumer

lending at the earliest

opportunity.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 41

Following the forthcoming

decision of the House of

Lords in the test case

brought by the Office of

Fair Trading and seven

banks and building

societies, the Government

will work with interested

parties with a view to

moving the market to a

more efficient, equitable

and transparent system as

quickly as possible.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 41

96

The Government will

conclude the work of the

Expert Working Group on

Non-Consensual Credit

Data at the earliest

opportunity, and will work

with industry to assess the

potential benefits and costs

of sharing other types of

data.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 42

whether files can be made

available online under the existing

statutory scheme.

The Government will initiate

discussions with interested

parties in summer 2009.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 42

that a consumer has moved

house without informing the

lender of their new address, or

where the consumer has entered

into an individual voluntary

arrangement (IVA).

The Government will

consult formally in autumn

2009 on proposals to

amend the law.

Consultation will be

accompanied by an impact

assessment.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 43

considering how best to increase

understanding of the crime of

illegal money lending and the

impact it has on communities.

The Government and the

regional illegal money

lending enforcement teams

will continue to work with

partner agencies to build on

the existing awareness

raising strategy. The

Government will publish an

interim evaluation of the

project in 2010.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 43

97

businesses an opportunity to

refund consumers or restore the

harm done, as well as incentives

to be compliant and resolve

consumer disputes fairly and

bilaterally in the future.

The two year pilots will

start in autumn 2010 or

spring 2011 and will be

extensively evaluated

before national roll out.

The Government will

consult formally on the

detail of these pilots later

in 2009.

Regulations will be made

under s.2(2) of the

European Communities Act

1972, with provisions

drawn from part 3 of the

Regulatory Enforcement

and Sanctions Act 2008.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 49

profile single complaints register

for any citizen encountering a

breach of consumer laws.

The new online complaints

system will go live in 2010

and will be implemented via

enhancements to the

Consumer Direct online

presence.

Office of Fair

Trading

Ch 3,

Page 52

more capacity in the Office of

Fair Trading and in regional

scambuster teams to analyse the

data in the enhanced intelligence

system and to pursue online

trading scams.

Additional investment for

the OFT and Trading

Standards Services’

regional scambuster teams

will be provided from 2009.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 53

review the powers available to

them and to consider whether to

provide additional powers to the

Office of Fair Trading and Trading

Standards Services to tackle

online rogue traders.

The Government will

consult formally with

stakeholders on reviewing

the enforcement powers in

2010.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 54

98

Trading Standards Services and

other agencies to work together

more effectively.

The OFT will deliver this

strategy by the end of

2010.

The Office of

Fair Trading

Ch 3,

Page 54

consult on bringing forward

legislation to give the courts the

power to prohibit persistent

rogue traders from carrying out

business with consumers.

The Government will

consult formally with

stakeholders in 2010 on

bringing forward new

legislation. Subject to the

outcome of consultation,

the ban would be

introduced through the

Consumer Rights Bill.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 54

assist local authority Trading

Standards Services to undertake

investigations and prosecutions

of national or regional

importance.

The Government will

consult informally on

guidance to local authorities

on how to apply for funding,

and establish an

assessment panel to

assess applications against

the set fund criteria in 2010.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 56

detect and intercept unsafe

products before they are widely

distributed around the UK.

The Government will work

with the Local Better

Regulation Office to ensure

funding is provided on the

basis of risk. Funding will

be available from 2010.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 57

will take advice from the OFT, the

FSA, and the recommendations

to be contained in Consumer

Focus’ forthcoming report on the

prepayments market.

The Consumer Focus report

is expected this summer,

and the Government will

work with a full range of

stakeholders to assess

what regulatory action

would be sensible and

practicable.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 59

99

penalty which is currently

£50,000. Silent calls occur when

call centres with automated

systems dial more numbers than

staff can deal with. When a

consumer answers the telephone

and no agent is available to take

the call this results in silence on

the line, which can cause

distress, especially to vulnerable

groups.

The Government intends to

issue a formal consultation

later this year on regulations

to increase maximum

penalty for persistent

misuse which mainly

includes silent calls. An

impact assessment will be

published at the same time.

Subject to the outcome of

this consultation, regulations

will be laid in Parliament

early in the New Year and

changes implemented by

April 2010.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 59

The Government task force

will be set up in autumn

2009 to review policy,

including accreditation

options, and enforcement

practice, including

exchanges of intelligence

and coordinated

enforcement actions,

where possible.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 60

and spearhead work to educate

consumers. The Advocate will

also be a high profile media figure

in a position to warn consumers

about latest scams.

The intention is that the

Consumer Advocate will be

appointed in 2010.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 60

The Government will

consult formally on how

these new powers for the

Consumer Advocate would

be framed by the end of

2009.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 63

100

obtain compensation that is due

and that has already been

secured, primarily for cases

where UK consumers have been

the victims of overseas scams,

and possibly for compensation to

consumers by UK businesses.

The Government will

consult formally on the

most effective means to

implement this policy,

including legislative

changes required, by the

end of 2009.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 65

possibility of challenging unfair

relationships through the courts

on behalf of consumers.

The Government will

consult formally on whether

the Consumer Advocate

should have these powers

by the end of 2009.

Department

for Business,

Innovation

and Skills

Ch 2,

Page 65

awareness of key rights and the

role of Consumer Direct in

providing information and advice

on consumer issues.

The campaign will reach its

peak in September 2009

during National Consumer

Week.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 66

access to information and advice

through closer integration of

web, phone and face to face

channels.

The new consumer web

space will be created by the

end of 2009 with all content

moved from across

Government by March

2011. The Department for

Business, Innovation and

Skills will agree a

programme of closer

integration with the key

providers by the end of

2009.

Department

for Business,

Innovation

and Skills

Ch 3,

Page 67

101

information to help consumers

make informed decisions to

resolve disputes over goods and

services, banks and financial

services, money or housing.

These will highlight sources of

advice and assistance as well as

explaining options such as

mediation and ombudsman

services, and the court process.

The new walkthroughs are

currently scheduled for

deployment on a rolling

schedule starting in autumn

2009.

Ministry of

Justice

Ch 3,

Page 68

whether financial protection for

air travellers can be clarified and

improved.

The Government will

consult formally on options

for reform, including any

legislative changes

required, by the end of

2009.

Department

for Transport

Ch 3,

Page 69

implement the EU Consumer

Rights Directive and to

modernise and simplify UK

consumer sales law.

There will be a number of

formal consultations on the

various specific proposed

elements of the Consumer

Rights Bill over the period

2010 to 2012.

Department

for Business,

Innovation

and Skills

Ch 4,

Page 78

protection to reflect modern

trading conditions and

enforcement practice.

The Government will

consult formally on these

powers as part of the

consultation process for the

Consumer Rights Bill (see

above).

Department

for Business,

Innovation

and Skills

Ch 4,

Page 83

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