Brexit and consumer rights: What will life be like for consumers after Brexit?
- Author: Marzena Lipman, Policy Manager
Have you ever had a problem with a faulty product, mobile bill shock or holidays abroad? You are not alone; each year 1.4 million people come to Citizens Advice with consumer problems, ranging from complaints about poor standards or faulty products, disputes over billing, problems with returns, misleading claims, unfair contract terms, cancellation rights and so on. Luckily, we can help many to resolve their problems thanks to the existence of consumer rights which make sure that people are treated fairly and protected when things go wrong.
Most people are unaware that a large proportion of UK consumer rights come from the European Union (EU), so Brexit undoubtedly has brought uncertainty over the future of many of the consumer protections we take for granted.
With the Prime Minister Theresa May setting up the timeframe to notify the EU of the UK’s intention to leave early next year, we decided to take stock of some existing consumer laws and see how they might be impacted by Brexit.
What impact does EU membership have on consumer rights in the UK?
Consumer protections are part of the fabric of the EU internal market, which all EU member states, including the UK, have to abide by. The EU consumer laws, set harmonised rules to ensure the internal market of goods and services is open, fair and transparent for consumers and traders alike.
EU consumer law sets the framework for a wide range of UK consumer rights, covering food and product safety, unfair commercial practices, consumer information such as product labelling and packaging, and consumer redress. Some of the EU consumer legislation require a full transposition by member states, such as the legislation on unfair commercial practices which is fully harmonised across the EU. Others, like unfair terms, are based on a minimal harmonisation, and member states can choose to go beyond basic EU requirements. However, so far, it has been a policy of the respective UK governments not to gold plate and go above the minimum EU regulatory requirements except in exceptional circumstances. For example, the level of the UK consumer protection for tangible goods is currently higher than the EU laws.
Much of EU law is implemented into the UK regulatory framework through either primary or secondary legislation. For example, the core of the UK consumer protection rights, which come from the EU Sales Directive on Consumer Goods and Guarantees 1999/44/EC is contained in primary legislation, the Consumer Rights Act 2015. Whereas, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 is a secondary piece of legislation, originating from the EU Consumer Rights Directive 2011/83/EC. In addition, there are also some EU rules that are in EU regulations and/or EU case law which have a direct application in the UK without any UK laws. For example, these among others include compensation for flight delays and other rights associated with flight delays.
Examples of the impact of EU legislation on selective UK consumer law provisions
|EU legislation||Status in UK law||Purpose|
|Sales Directive on Consumer Goods and Guarantees (Sales Directive)
|Consumer Rights Act 2015||Provides protections for product quality, returning goods, repairs and replacements, and delivery rights.|
|Consumer Rights Directive 2011/83/EC||Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
Payment Surcharges Regulations 2012
|Includes rights such as a 14 day distance selling and off-premises cooling off period, and rules on payment surcharges. E.g. traders can only charge consumers a fee to use a specific payment method, if it reflects their costs of using that method (exemptions apply)|
|Unfair Commercial Practices Directive 2005/29/EC (UCPD)||Consumer Protection from Unfair Trading Regulations 2008 (CPUT Regs)||Prohibits traders from engaging in unfair commercial practices that harm consumers.|
|General Product Safety Regulations 2001/95/EC||General Product Safety Regulations 2005||Requires suppliers to place only safe consumer products in the market place.|
|Unfair Terms in Consumer Contracts Directive 1993/13/EEC||Consumer Rights Act 2015||Prohibits unfair terms in consumer contracts|
|Consumer Credit Directive 2008/48/EC||Consumer Credit Act 1974 (CCA)||Requires lenders to provide borrowers with standardised key credit information before entering a contract, a 14 day cooling off period and the right to end their agreement early.|
In addition to setting up a minimum level of consumer protection in the UK domestic market, EU law also sets rules for cross border transactions, which give the UK consumers protection when travelling abroad. These include rules on passenger rights, package travel and roaming charges.
The EU legislation on passenger rights sets a harmonised minimum level of protections irrespective of the mode of transport used, which overrides the UK domestic rules on delays, cancellations, damaged luggage or special mobility needs. For example, under the EU law rules, passengers can claim compensation for certain flight delays within the EU and between EU and non-EU airports.
The EU package travel rules protect consumers who buy a package holiday consisting of two or more elements, for example a flight and a hotel, or a hotel and a car hire. The law sets requirements for clear information and identification of the liable party. Under the law the organiser of the package holiday is responsible for making sure that all the elements of the package go according to plan, even if they are not directly providing each bit.
The EU roaming rules have reduced the cost of making and receiving calls abroad within the EU. Currently the roaming costs are capped at 0.05 euro per call, 0.02 euro per sms and 0.05 euro per MB of data. The roaming charges are due to be phased out after June 2017.
Brexit also brings uncertainty about the future mechanism for cross border enforcement and market surveillance between the UK and EU. This is increasingly important as lots of companies operate across borders. At present, the enforcement of EU consumer laws is monitored through market surveillance and enforcement mechanisms carried out on a domestic and cross-border level. For example, in the UK enforcement is carried out by authorities such as Trading Standards, the Competition and Market Authority (CMA) and/or sectors specific regulators. Surveillance on the cross-border level is carried out by a number of mechanisms such as the Consumer Protection Cooperation (CPC) Network, rapid alert system (RAPEX) and consumer surveys and market investigations (e.g. Consumer Scoreboards). For example, CPC is the network of the EU national enforcement authorities which aims to detect and prevent cross-border illegal commercial practices.
|RAPEX is the European rapid alert system for dangerous products. It makes sure that dangerous products are withdrawn from the EU market. Currently 31 countries from EU and the EFTA/EEA participate in the system. In 2015, 2072 notifications by authorities in one country triggered 2,745 follow-up actions on the same products by other members of the network.|
How will consumer rights be affected when we leave the EU?
At present it is difficult to predict the exact implications of Brexit on UK consumer rights. It is important to say that nothing has changed yet – consumers still have the same protections they had prior to the referendum.
In the short term, until the government evokes Article 50 of the European Union (Lisbon Treaty), which will trigger the exit process, and until the end of the negotiations, there will be no direct legal implications on UK consumers. This means all existing consumer protection rights will remain in place.
However, over this period, uncertainty will remain over live EU issues. This includes the EU regulations which were adopted by the European Parliament, but have not been implemented yet in the UK law such as the EU data protection rules, the revised Payment Service Directive; or other regulatory proposals which are in the pipeline (e.g. the EU telecoms regulations).
In recent weeks, the Government have suggested that there will be a ‘lift and shift’ of current rules and regulation in the immediate transition In the long term, it is possible that some laws will change, but which ones and to what extent will depend on the type of EU relationship the government negotiates.
Prior to the EU Referendum, the government published a paper Alternatives to membership which highlighted possible models for the UK outside the EU, including:
- Non EU membership in the European Economic Area
- Bilateral agreements based on varying models e.g. Switzerland, Canada or Turkey
- World Trade Organisation membership
All these models involve different set of rules which in turn will shape the UK regulatory framework and influence consumer protection legislation.
|What is this?||Retain Single Market access?||Retain EU consumer laws?||Retain influence over EU consumer laws?|
|Non-EU member of European Economic Area (EEA)||Free movement of people, goods, services and capital. Includes Norway and Iceland||Yes||Yes||Limited influence. Consulted with no formal vote|
|European Free Trade Association (EFTA)||Membership of the EFTA requires its members to comply with the majority of rules governing the single market. However, the application of relevant laws are based on bilateral agreements. Includes Switzerland||Partial, limited in services. E.g. no financial passporting||Partial, must apply EU laws covered by bilateral agreements||No|
|World Trade Organisation (WTO)||Relationship based WTO trade rules based on the principle of non-discrimination and no preferential treatment. Goods and services will become subject to EU and UK tariffs.||No preferential access||No, but some EU laws enshrined in the UK legislation may still remain to facilitate UK-EU trade||No|
|A tailored agreement between the EU and the UK||New bespoke model negotiated from scratch over the course of years. Example agreement models include Canada, Turkey and Ukraine||No, though possible exceptions subject to negotiations||No, but some laws may still apply subject to bilateral agreements||No|
Under certain models, the government will be able to repeal some of the EU driven consumer laws. However, given the recent major overhaul in domestic consumer laws which came into force through the Consumer Rights Act 2015 such temptation maybe difficult to achieve in practice. Also in order to maintain trade with EU countries the UK businesses will need to comply with the EU consumer protection laws anyway.
We suspect more uncertainty around cross-border elements of the EU existing rules which protect UK consumers when travelling abroad or making EU cross-border transactions. For example these include roaming charges, passenger rights, distance selling requirements, and cross-border payments.
Also questions will remain around cross-border enforcement, for example whether UK authorities will remain part of the CPC network or Rapex.
Whatever the outcome of the Brexit negotiations, Citizens Advice will work with the government and other stakeholders to ensure that consumer protections remain strong post Brexit. Positive signals from the Government have emerged in recent weeks about maintaining current levels of protection both in the immediate transition and in the longer-term. The Prime Minister, Theresa May, has also signalled a more interventionist approach to failing markets to ensure the economy works better for everyone, and especially struggling households. We welcome this commitment and look forward to working closely with the government to put enhanced consumer policies into practice.