Change law to allow direct consumer action against businesses, say Law Commissioners

The Commissions have proposed new laws that they hope will form part of the Consumer Bill of Rights due to be published by the Government later this year.

The new laws would give consumers the right to refunds and to additional damages if they could prove a loss resulting from the misleading or aggressive practices.

Currently consumers are protected by the Consumer Protection from Unfair Trading Regulations but must rely on Trading Standards Services or the Office of Fair Trading to take action and cannot take direct action under these Regulations themselves.

There are laws on misleading and aggressive practices but they are not easy for consumers to use and are not consistent across the UK, the report (188-page / 590KB PDF) recommending the new laws said.

"In theory the law provides redress for most misleading trade practices where consumers suffer detriment, but it is fragmented, complex and unclear," it said. "It is particularly difficult to apply in a consumer context, because the law primarily evolved to deal with business disputes. Furthermore, there are differences between the law of England and Wales and the law of Scotland."

The Commissions have conducted a consultation process on the proposed changes and are convinced that they would better protect consumers and reduce compliance costs for businesses.

"There is a pressing need to improve consumer redress against aggressive practices," the report said. "We were told of many cases of consumer detriment, often involving vulnerable elderly consumers in their own homes. With the increase in people aged over 85 living alone this problem is likely to grow."

"We have an ageing population and, without reform, this victimisation of the vulnerable can only get worse," said Law Commissioner David Hertzell. "By simplifying the law, our recommended reforms will give more confidence to consumers and help drive rogue traders out of the market place, where currently they damage the reputation and livelihood of good, honest businesses.”

The 'standard remedy' proposed is that the contract be 'unwound', meaning that the consumer receives a refund. If the consumer takes three months or longer to act or the goods have been fully consumed, then a discount could be claimed.

The report proposed a second tier of remedies that would award damages but only when loss could be proved.

"Tier 2 remedies provide damages to compensate for indirect losses, including economic damage and distress and inconvenience," it said. "They are provided only if the consumer can prove that the unfair practice caused actual loss, meeting a “but for” test of causation. Furthermore, the trader can avoid this consequential liability if it can establish a due diligence defence."

The Government has separately proposed simplifying rules surrounding the operation of Trading Standards Services. The changes are designed to "simplify consumer law, seek to simplify enforcement officers’ investigatory powers into a single set, and remove barriers to Trading Standards operating efficiently", according to a Government statement.

The Department for Business, Innovation and Skills (BIS) is consulting on the plans, which involve consolidating 60 pieces of legislation; making it easier for Trading Standards Services to operate across local authority borders, and changing the rules so that Trading Standards officers can more easily pursue civil rather than criminal cases.