Out-Law News 2 min. read

Civil courts could get powers to enforce compensation for wronged consumers

New powers that could make it easier for consumers to demand reimbursement from companies who have overcharged or mis-sold them products have been proposed by the Government.

The Government is consulting on the introduction of civil enforcement remedies, which would allow civil courts to force companies to pay back money lost by individual consumers as a result of breaches of consumer law. The new remedies would be introduced under a Consumer Bill of Rights from next year.

Consumer law is enforced on behalf of consumers by enforcement bodies, including Trading Standards and the Office of Fair Trading (OFT), which have the power to bring cases on behalf of consumers. Under the current system, enforcers can seek criminal prosecution or injunctions in the civil courts, preventing the conduct in question from happening again. However, wronged consumers will not necessarily gain any benefits or have losses repaid without undertaking expensive court action themselves.

Consumer Affairs Minister Jo Swinson said that the proposal was intended to force businesses to address the causes of consumer complaints, rather than taking "superficial action" to rectify individual problems.

"When consumers, especially vulnerable consumers, have been wronged they should be able to have free access to justice quickly and simply," she said. "With these proposals, when a business has infringed your rights as a consumer the court will make sure they reverse the damage and give consumers their money back. This will put the balance back in the system and give consumers more power to exercise their choices confidently."

The consultation proposes giving courts the option of ordering a business to appoint a compliance officer or provide internal training. Businesses could also be asked to introduce clear complaints-handling schemes so customers know exactly who to contact for help when they have a problem, or to write out to all affected customers informing them of their right to a sum of money within a certain time in the case of overcharging. Businesses may also be able to offer undertakings, or formal promises, to take certain actions as an alternative to going to court.

According to the consultation, bringing a criminal prosecution for "more technical" breaches of the law is "often an inappropriate response". "Too often the result of criminal prosecutions is that the business is condemned and fined, but nothing is done to provide compensation to the consumers who have suffered loss. The enforcement regime should look not just to deterrence, but also to providing restorative justice for consumers," it said.

Consumer law expert Clare Francis of Pinsent Masons, the law firm behind Out-Law.com, said that the proposed remedies could make compliance even more important from a business' perspective.

"At present, non-compliance may be investigated by the regulator but the consumer will not necessarily see any compensation as a result of its complaint," she said. "These proposals change that; potentially giving consumers direct remedies. The aim is to ensure that consumers' rights are increased and there is greater transparency and visibility to increase consumer confidence both domestically and also within Europe when shopping online."

The proposals form part of the Government's wider programme of consumer law reform, intended to simplify and clarify the law to reduce business compliance costs and empower consumers. UK consumer law is currently laid out across 12 different Acts and sets of regulations, such as the Distance Selling Regulations and the Consumer Protection from Unfair Trading Regulations.

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