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The UK consumer law regime post Brexit

  • United Kingdom
  • Brexit
  • Consumer

04-03-2021

Consumer protection law has developed across the European Union (‘EU’) member states by way of various directives and regulations aiming to improve and co-ordinate the contractual relationships between consumers and businesses.

Despite the UK having now officially left the EU, generally speaking, the UK’s consumer protection regime (which derives partly from EU law and partly from UK-specific law) continues to align with that in place across the EU.

As a result, it is unlikely that UK consumers and/or businesses will have really noticed any immediate impact on consumer right laws and protections within the UK due to Brexit. It is however important to note that Brexit has some key implications on UK law. The key areas of change focus on the following:  

Changes to consumer protection

The main changes arising in the area of UK consumer protection law focus on:

  • the removal of references to various pieces of European legislation and bodies;
  • the making of provisions to ensure that contracts relating to imports from the European Economic Area (‘EEA’) to the UK are now treated in the same way as those relating to non-EEA countries;
  • the removal of access to the EU online dispute resolution platform – this platform allowed EU traders and consumers to resolve disputes relating to online purchases; and
  • the removal of obligations requiring UK Alternative Dispute Resolution (‘ADR’) providers to deal with disputes involving EU consumers.

In addition to the immediate legislative changes introduced, the EU-UK Trade and Cooperation Agreement (the ‘Agreement’) requires each party to put in place ongoing measures in recognition of the importance of enhancing consumer trust in digital trade. These are intended to ensure “the effective protection of consumers engaging in electronic commerce transactions” and are required to include measures that:

  • proscribe fraudulent and deceptive commercial practices;
  • require suppliers of goods and services to act in good faith and abide by fair commercial practices, including through the prohibition of charging consumers for unsolicited goods and services;
  • require suppliers of goods or services to provide consumers with clear and thorough information, including when they act through intermediary service suppliers, regarding their identity and contact details, the transaction concerned, including the main characteristics of the goods or services and the full price inclusive of all applicable charges, and the applicable consumer rights (in the case of intermediary service suppliers, this includes enabling the provision of such information by the supplier of goods or services); and
  • grant consumers access to redress for breaches of their rights, including a right to remedies if goods or services are paid for and are not delivered or provided as agreed.

Given the extensive consumer law framework already in place in the UK, it is unclear at this stage what further legislation may result from the commitments included in the Agreement (as the Agreement does not make any specific amendments to existing UK consumer law). 

Changes to consumer enforcement

Various changes have been introduced into UK law to revoke certain reciprocal enforcement and investigatory powers. This includes, for example, the revoking of the EU Consumer Protection Cooperation Regulation (EU) 2017/2394. This Regulation sought to improve EU wide co-operation on consumer protection by giving national authorities more power to enforce consumer rights. Further changes have also been made to amend references to EU legislation relating to the enforcement of various pieces of consumer protection laws.

The Agreement also sets out that, “…The Parties recognise the importance of entrusting their consumer protection agencies or other relevant bodies with adequate enforcement powers and the importance of cooperation between these agencies in order to protect consumers and enhance online consumer trust...” albeit at this stage it remains somewhat unclear what future co-operation will look like. On 1st December 2020, the CMA did however publish new guidance on its functions post Brexit. As part of this, it commented that, “the CMA will seek to continue to work with EU enforcers as far as possible, while developing relationships and working with all our other international counterparts…”.

On a practical level, UK businesses directing their business activities to EU consumers will be required to comply with local consumer law and must also continue to comply with the UK consumer law framework. UK businesses will be able to bring claims and regulatory action in an EU member state in respect of breach of local laws, albeit any judgment given will not be automatically recognised and enforceable in the UK.

Changes to e-commerce

The E-Commerce Directive (2000/31/EC) (the ‘Directive’), which was mainly transposed in the UK by the Electronic Commerce (EC Directive) Regulations 2002 (SI 2002/2013), no longer applies in the UK. The government has enacted the Electronic Commerce (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/87) to address the Directive no longer applying.

The key change for online providers is that the previous country of origin principle, allowing providers of European Economic Area (‘EEA’) information society services (‘ISS’) to operate in any EEA country subject only to compliance with the rules in place in the country in which they are established (subject to certain exceptions), no longer applies to UK based ISS providers.

Due to the removal of the country of origin principal, the UK government (in guidance published by the Department for Culture, Media and Sport in October 2020) has advised that post Brexit:

  • online providers should first check whether they are within the scope of the E-Commerce Directive (2000/31/EC);
  • online providers, if within the scope of the Directive, should check where their service is based;
  • an ISS provider established in the UK should check for the various applicable legal requirements in EEA countries in which it operates. UK based ISS providers may also become subject to "prior authorisation" schemes, such as licensing requirements, in EEA countries where they operate; and
  • UK-based ISS providers should ensure that they have processes in place to monitor ongoing compliance if other EEA countries change their requirements.

The UK government is not currently planning to change the provisions implementing the Directive that deal with intermediary liability and those that prohibit general monitoring obligations.

Future developments and divergence – the need to keep a “watching brief”

Whilst the immediate impact of Brexit on UK consumer law is likely to feel relatively minimal at this stage, it remains unclear as to what approach will be taken by the UK and/or the EU in terms of its commitments under the Agreement, including with regards to co-operation in the context of their respective enforcement regimes.

As a consequence of Brexit, there is also potential scope for there to be increased divergence between EU and UK consumer protection laws in the years to come. Key developments at an EU level include the “New Deal for Consumers” package (which includes both the Enforcement and Modernisation Directive and the EU Collective Redress Directive), and the Digital Single Market Strategy (which includes the EU Digital Content Directive and the EU Sale of Goods Directive).  From a UK perspective, the government is expected to shortly publish a White Paper on consumer policy (following the ‘Modernising Consumer Markets: Consumer Green Paper’ published in April 2018 and the statutory report on the Consumer Contracts Regulations 2013) and on the 16th February 2021 the independent Penrose report was published (containing recommendations on the reform of the UK’s competition institutions for the digital age and in light of Covid-19, aiming to increase consumer confidence and the enforcement of consumer law).  

In addition, both the UK and EU are taking steps to increase the regulation of online platforms and other intermediary service providers, with two diverging regimes beginning to emerge.  For example, the UK government recently published its full response to the “Online Harms White Paper” with the intention for the “Online Safety Bill” to be ready in 2021, giving effect to a regulatory framework which will make companies more responsible for their users’ safety online, including in relation to illegal content.

Both consumers and businesses will therefore need to keep a “watching brief” on the consumer law developments in both the UK and in the EU, as moves are made to modernise consumer law and improve the application and enforcement of consumer protection legislation.