Business, Innovation and SkillsWritten evidence submitted by British Independent Retailers Association

Introduction

1. The British Independent Retailers Association (bira) represents small, family-owned and run independent retailers, a market segment that includes two out of three of all shops in the country.

2. bira has supported the process that has led to the draft Consumer Bill of Rights from the early days of its formulation. It welcomes the clarity, consistency and certainty that the bill promises to bring to this area of law, which affects everybody (and retailers are also all consumers). It is keen to ensure that the manifest benefits of updating the legal regime are realised by avoiding unintended consequences arising from inconsistency or imprecision of language.

3. Clarity and consistency are vitally important in an economic realm where tens of billions of consumer transactions take place each year and where if just one hundredth of one percent of those transactions works out less well than it should then tens of millions of transactions will result in detriment on one side or other, or both, every year.

4. In this document we comment on specific elements of the Bill by exception, the whole being accepted as a reasonable draft.

The Short Term Right to Reject Faulty Goods and the Six Month Right to Reject Faulty Goods

5. The clarification of the existing right to reject faulty goods for a full refund within 30 days, rather than a “reasonable” period, is in the main, sensible. Many products are relatively simple and faults become apparent within a few weeks’ use.

6. It is slightly less consistent, though entirely understandable, that a “reasonable” period still applies to perishable goods, which may not have a natural lifetime measured in weeks.

7. In light of this it is also less logically consistent that all non-perishable goods should be subject to the same rules. The short term right to reject faulty goods and the six month right to reject faulty goods after one repair or one replacement are not proportionate to the full range of complexity and cost of durables. A saucepan, for example, is a relatively simple product and the potential liability to the retailer, who probably bears the entire risk in the sale, is relatively circumscribed. Motor vehicles or computers on the other hand are products of high complexity. The draft bill draws no distinction between the simple £20 saucepan, a complex £2,000 ride-on lawn mower and a sophisticated £20,000 motor car.

8. On the basis of the draft a vehicle of any value would be subject to a full refund after a single attempted repair in the first six months after purchase and in the first 30 days there need not even be a repair for there to be a refund.

9. The unstated assumption behind the Bill seems to be that all manufacturers provide warranties on their products and in the case of cars, provide no-quibble guarantees that will stand to correct any fault (although not to the extent of replacing a vehicle). This is to assume more than may be reasonable—dealers carry our warranty work but may not be reimbursed fully by manufacturers.

10. It may also be assumed that manufacturers will always support the risk of the retailer in selling a product and reimburse them fully for returns. In fact the lower the value of the good the less this is likely to be the case. For large retailers which have a dominant position in relation their supply chain partners this may well be the case, but not for small shops (the majority) where the retailer is often much smaller than the supplier.

11. This is potentially a significant issue: retailers may be dissuaded from selling products with a higher risk of rejection for fault, to the detriment of consumer choice.

12. The answer would simply be to allow some proportionality and allow more than one repair or replacement in the six month period. One repair or replacement otherwise could be considered arbitrary.

13. It is not clear from the draft whether a process of repair involving more than one visit would constitute more than one repair. Common sense would suggest that the visits would constitute a single repair, but this needs clarification.

14. The prescriptive formula of one repair or one replacement goes beyond EU law. Trade is increasingly cross border in Europe, indeed that is a clear intention of the market, and this is the case with goods, services and digital products, so a harmonised European consumer regime rather than one increasingly differentiated country by country would seem to be a key long term aim that the Bill does not address.

15. The regime allows for rejection for fault and partial refund up to six years (five in Scotland). The suggestion that values should be based on recognised second hand values is insufficiently strong even in the market for used vehicles where privately owned services provide “trade”, not consumer valuations.

Services

16. The Bill would bring the provision of services into the regime for the first time, which is a sensible move. In cases where a vendor provides both goods (tiles, say) and services (tile-fitting) there are obviously more opportunities for faults to arise than in a sale involving just one area. The association believes that it should be made clear that both would give rise to opportunities to repair or replace.

17. The association has concerns that the regime does not take into account the service supply chain which might include several different independent operators. In the case of tiling, for example, it’s likely other service providers would be involved (plastering and plumbing for example) which further complicates the issue of how to make good a problem when the customer invokes their right to reject faulty goods or services.

18. The above point also gives rise to concerns that in the case of tiling (for example) a relatively small fault with either the product or the service could potentially result in the supplier of the product or service having to restore the area to its former state, which in the case of a bathroom or kitchen, would most likely involve considerable time and cost, which feels disproportionate to the “offence” of the potentially small original fault.

Enforcement

19. The association welcomes proposals to require enforcing authorities to give two days’ notice of routine inspections. In view of the needs to plan a declining resource and for officers to check for Primary Authority arrangements with the BRDO prior to inspections (not yet available to the majority of small retailers and not yet certain to be so) notice seems like a sensible margin of time to ensure that the right people are on hand for a valuable conversation.

20. However, it ignores the fact that two out of three shops are family-owned, partnerships or sole traders, so on the basis of probability (a proprietor, like a staff member, having 28 days’ holiday per year, a visit at two days’ notice has a high chance of finding that the key person is on leave. Simple calculation suggests that two weeks is more appropriate.

21. This is particularly relevant given the powers of observation, test purchasing and entry that are readily available to enforcing officers.

Education

22. One of the drivers for the revision to the rules has been evidence that neither consumers nor all retailers are fully aware of their rights and obligations in the current regime made up of many pieces of legislation. For the full benefits of this new regime to be realised the language used to express key concepts must be absolutely clear and consistent.

23. In particular bira is concerned that the Short term right to reject faulty goods is almost always abbreviated to “The short term right to reject” or, more frequently “The right to reject”. This is wrong in detail and wrong in practice: consumers will naturally understand this as expressed, and the abbreviated versions both carry the message that consumers have an arbitrary right to reject goods for a full refund. This is a core issue and is at the heart of the concern about the unintended consequences of the Bill.

24. There will need to be a huge educational effort to ensure that consumers and retailers fully understand their rights and obligations. In fact there will have to be two: as the adoption of the Consumer Rights Directive now seems likely to take place up to a year after the Consumer Bill of Rights there will be two transitions and two educational exercises.

Conclusion

25. There is much to be gained in updating consumer law, bringing it into one place and including goods, services and digital products, so bira welcomes the aims of the Bill. The devil, however, is always in the detail and we have identified key areas where unintended consequences may, without careful drafting, lead to potential benefits being lost.

Alan Hawkins
CEO

Michael Weedon
Deputy CEO

14 August 2013