Business, Innovation and SkillsWritten evidence submitted by Citizens Advice Bureaux

About Citizens Advice

1.1 The Citizens Advice service provides free, independent, confidential and impartial advice to everyone on their rights and responsibilities. It values diversity, promotes equality and challenges discrimination.

1.2 The service aims:

to provide the advice people need for the problems they face; and

to improve the policies and practices that affect people’s lives.

1.3 The Citizens Advice service is a network of nearly 400 independent advice centres that provide free, impartial advice from more than 3,500 locations in England and Wales, including GPs’ surgeries, hospitals, community centres, county courts and magistrates courts, and mobile services both in rural areas and to serve particular dispersed groups. In 2012–13 the Citizens Advice service in England and Wales advised 2.3 million people on 6.6 million problems.

1.4 In 2012–13 Citizens Advice Bureaux received 245,000 enquiries about consumer issues. These included 14,000 enquiries about second hand cars, 14,700 enquiries about building repairs and improvements and 6,300 about frauds and scams.

1.5 Since April 2012 we have also operated the Citizens Advice Consumer Service, formerly run as Consumer Direct by the OFT. This telephone helpline covers Great Britain and provides free, confidential and impartial advice on all consumer issues. In 2012–13 the Consumer Service dealt with 700,000 enquiries. These included 269,000 calls relating to defective goods and 186,000 relating to substandard services.

General Comments

2.1 Citizens Advice welcomes the opportunity to provide a submission to the Business Innovations and Skills Committee on the Consumer Rights Bill.

2.2 We have worked closely with officials at the Department of Business Innovation and Skills during the development of this bill to ensure that the final legislation meets the needs of consumers. We believe that the draft legislation before the Committee represents a much needed simplification and clarification of consumer law for both consumers and business.

2.3 We therefore strongly support the Bill and would like to see it pass through the legislative process as quickly and smoothly as possible.

2.4 Citizens Advice has actively engaged throughout the consultation process leading up to this draft Bill. We do not propose to repeat the arguments we have put forward throughout the process here. We have instead focussed our submission on those areas of the Bill which we believe could be improved and have provided suggested amendments. We would, however, ask the Committee to consider our previous responses alongside this submission.

2.5 Our keys asks to the committee in this submission are:

Changes to the requirements around the provision of point of sale information

Thirty day maximum time limits within which repairs, replacements and refunds must be carried out

The extension of collective redress provisions beyond competition cases, to include all instances of unfair practices.

Point of Sale Information

3.1 One of the key objectives of the Bill is for consumer law to be easy to use. In order for this to become a reality consumer and traders need to be aware of, and understand, what the new law means for them. Our recent report, Redressing the Balance, demonstrated that there is widespread mis-understanding amongst consumers and traders regarding their rights and obligations is widespread.1

A CAB in the North West of England saw a 76 year old man who had bought a washing machine which stopped working less than 18 months later. He went to the shop which he had originally purchased the washing machine from but was told that there was nothing they could do as it was out of warranty. As a result the client paid an independent repairman to fix the washing machine at a cost of £150. The repairman said that the washing machine was of very poor quality and had a number of faults not consistent with 18 months wear and tear. Shortly before visiting the bureaux the client had seen a newspaper article which informed him that his consumer rights did not end when the warranty ends and that he should have been eligible for a repair, replacement or a partial refund. He was out significantly out of pocket as a result of paying for the repair and upset as he felt that the shop had deliberately misled him about his rights.

A CAB in the South of England reported the case of a man who bought a tablet computer as a Christmas present for his son. After one use his son was not able to charge the tablet. The client returned the tablet to the shop from which he had purchased it but was told that as it had been more then 30 days since he had purchased the item he would have to contact the manufacturer directly. The client knew that this was not the case as he had recently seen media coverage about the company which highlighted similar problems experienced by other consumers. In this coverage a company representative had admitted that there was an issue with staff training and understanding of the issue. The issue did not seem to have been resolved in this particular store and the client was left frustrated and unable to exercise his rights.

3.2 Citizens Advice asked consumers taking part in a survey what would make resolving their consumer problems easier in the future. Forty three% of those responding said that information about their rights on receipts, at the till and on websites would help them to resolve problems with a trader.2 We believe that traders should be required by law to display point of sale information outlining to consumers the rights afforded to them under the Bill. We have provided an examples of how such a notice could look in Appendix A.

3.3 Regular interaction with this information would promote familiarity and understanding of the new law amongst traders and consumers. Furthermore, more widespread understanding of these rights and responsibilities would reduce the number of disputes between traders and consumers, saving both parties time and money. In addition, enforcement penalties for failures by traders to comply with the law are included in the draft Bill. We believe that a model notice setting out the rights and responsibilities of consumers and traders at the point of sale will help traders to avoid this pitfall by getting it right first time.

3.4 We believe that such a measure is provided for in the Consumer Rights Directive at articles 5.1(e) and 6.1(i) which deal with pre-contract information requirements. The clauses require that consumers are provided with a “reminder of a legal guarantee of conformity for goods”. Whilst the Consumer Rights Directive fails to define this term, the provision comes from the Directive on Sale of Goods and Associated Guarantees. Article 2 of this Directive provides a definition of when consumer goods are presumed to be in conformity with the contract for sale which includes:

goods being as described;

fit for purpose; and

of satisfactory quality.

3.5 In our opinion the Consumer Rights Directive is logically conceding that this information is central to the pre-contract details consumers need.

3.6 The Department for Business Innovation and Skills have said that they believe that this requirement is merely for a statement such as “You have a statutory guarantee that the goods will be provided to you in accordance with the contract”. In our opinion this in not helpful. It does not really say anything except that a trader cannot break the contract and certainly does not inform the consumer as to their rights under that contract. This Bill provides a real opportunity to provide consumers with the information that they really need, rather than something which does not tell them anything.

We therefore suggest the following amendment to the draft Consumer Rights Bill

3.7 Part 1 chapter 2 clause 11(4): At the end of clause 11(4) add: A notice outlining these rights and a source of further information must be displayed in a durable form or delivered verbally before the contract is concluded and may be provided using the draft form at Annex X.

3.8 Consideration will also need to be given to the enforcement of this suggested amendment. Failure to provide point of sale information should, in our view, be an offence. The Consumer Rights Directive states that pre-contract information is part of the contract for consumers, but we would welcome clarity on what remedy will be available to consumers if no point of sale information is provided.

30 Day Time Limited for Repair/Redress and for Refunds

Repair/redress

4.1 The Bill rightly aims to make complex consumer law easier to understand and we believe that in many aspects this goal is achieved. Where the Bill applies rights for goods, services and digital content, it makes use of the two tiered system outlined in the Sale of Goods and Associated Guarantees Directive, which has been transposed into UK legislation as the Sale and Supply of Goods to Consumers Regulations 2000. The tiers are repair or replacement followed (where the repair/replacement fails to resolve things) by part or full refund.

4.2 These layers of redress include the requirement that repairs or replacements are done within a “reasonable time” and without “significant inconvenience”. Citizens Advice supports the inclusion in the Bill of a limit to the number of repairs and replacement that can be attempted to one. However, this fails to address the essential problem of how long a period of time is considered to be “reasonable” for the execution of a repair or replacement. Elsewhere in the Bill, a limit of 30 days is placed on consumers for the rejection of a product. We therefore suggest the same 30 day limit is imposed on the time within which a repair or replacement must be carried out by the trader.

4.3 Consumer research carried out by Citizens Advice supports this proposal. In a survey conducted by Ipsos MORI on our behalf a representative sample of consumers were asked how useful it would be to have a right to have problems resolved within a set time and a right to have some or all of their money back if it could not be done in this time. Ninety one% said that this would be very or fairly useful.3

4.4 We understand that in some cases repairs will take longer than 30 days to carry out, perhaps because parts need to be transported from a distant location. Our proposal would not prevent the trader and consumer agreeing a longer time scale for the repair where appropriate. We want to ensure that the new law does not avoid creating a loophole for unscrupulous traders can make consumers wait an unacceptably long time for a single repair or replacement to be carried out.

Refunds

4.5 The Bill offers consumers the right to reject goods and obtain a part or full refund where the repair or refund options have failed. We believe that the 30 day limit, as discussed above, should also be extended to include refunds. This would mean that consumers do not face unreasonable delays to obtain the refund that they are entitled to.

4.6 It is important to remember that the money owed to the consumer is recompense for the supply of a faulty or sub-standard product and so the consumer has already suffered a breach of contract and are unable to use the item they paid for. It is therefore in the interest of consumers, traders who abide by the law, and the wider economy that the consumer receives a refund within a timely manner so that they can then reinvest this money elsewhere. We can see no justifiable reason why a refund should not be paid to the consumer within 30 days.

We therefore Propose the Following Amendments to the Draft Consumer Rights Bill

Goods

Clause 19(1)(c): After “The right to receive a refund” add “within 30 days” before “from the trader”

Clause 23(2)(a): After the words “a reasonable time” add “which must not exceed 30 days”

Clause 23(5): Delete “and” at the end of 23(5)(a). After clause 23(5)(b) add a new sub clause (c) “and should not exceed 30 days”

Clause 24(1)(b): After “receive a refund from the trader” add “within 30 days”

Clause 24(5): After the words “if the consumer exercises the final right to reject, any refund to the consumer” add “must be provided within 30 days but” then continue

Digital content

Clause 45(5): Delete “and” at the end of 45(5)(a). After clause 45(5)(b) add a new sub clause (c) “and should not exceed 30 days”

Clause 46(2)(b): At clause 46(2)(b) after the words “within a reasonable time” add “within 30 days” before “and without significant inconvenience”

Clause 47(1): After “all money paid by the consumer for the digital content” add “within 30 days”

Services

Clause 57(4): After sub-clause (a) delete the word “and”. At the end of sub-clause (b) add the word “and” and add sub-clause (c) “a maximum period for performance of 30 days”

Clause 58(1): After “an appropriate amount” add “within 30 days”

Thought will once again need to be given to the enforcement of these provisions. The 30 day rules are designed to give consumers a recognisable cut off point for taking the matter further. We would therefore suggest that where a trader fails to comply it should be considered to be an unfair commercial practice and enforced accordingly.

Collective Redress

5.1 When traders fail to meet their legal obligations, consumers often give up rather than take the case to court. Ninety four% of consumers taking part in a survey conducted by Citizens Advice told us that they had complained, attempted to get a refund or tried to get a problem put right. Only ten% were able to say that they had been successful. Seventy four% said that they were not successful at all and sixteen% said that they were only partially successful.4

5.2 The Bill recognises the need for a facility for collective actions for competition cases. It allows for cases to proceed on an opt-out basis so that any affected consumer who does not opt out from proceedings will be compensated if the collective action is successful. Citizens Advice welcomes these provisions. We are, however, disappointed by the narrowness of the scope and would like to see the collective redress model widened to include all cases of unfair practice experienced by consumers, not just anticompetitive practices.

5.3 Research carried out by the European Commission in 2011 found that there was considerable appetite for collective redress in the UK—87% said that they would be more willing to defend their rights in court if they could join with other consumers who were complaining about the same thing (see redressing the balance for reference).5 We believe that widening collective redress to cover all unfair practice experienced by consumers, following the opt out model provided for the in the current Bill, would be good for consumers, good for traders who treat customers fairly and good for the economy.

5.4 Allowing collective redress on a wider scale would send a clear message to traders that they will be required to compensate all effected consumers when they are found to have fallen foul of consumer law and allow consumer to reinvest the refunded money into responsible traders and the wider economy, contributing to economic growth. We would like to see the scope of collective redress widened in this Bill. At the very least we are calling on the Government to commit to reviewing how successful the current reforms as proposed are upon implementation and consider extending the scope of collective redress at a later date.

23 August 2013

Annex A

SIMPLE VERSION—REFLECTING THE RIGHTS CONTAINED IN THE BILL AS CURRENTLY DRAFTED

Your Legal Rights

Bought something faulty or sub-standard?

If something you buy is faulty or sub-standard:

Within 30 days of purchase you can:

return it for a full refund

OR

ask for it to be repaired or replaced.

After 30 days you can get a repair or replacement for up to six years.

Repair or replacement:

If after one repair or replacement the problem has still not been fixed then you can have a refund.

The refund will be in full if:

it is less than six months since you bought it.

After six months, the amount of the refund can be reduced to take account of the time you have been able to use it.

You have no legal right to money back just because you changed your mind. The trader may offer returns for any reason as part of their own returns policy if they choose to.

If you want to check up on your rights, get advice before you agree a solution with the trader. Go to your local CAB or visit the Adviceguide website at www.adviceguide.org.uk or contact the Citizens Advice consumer helpline on 0845 04 05 06.

SIMPLE VERSION INCLUDING OUR SUGGESTED 30 DAY TIME LIMIT ON REPAIRS, REPLACEMENTS AND REFUNDS

Your Legal Rights

Bought something faulty or sub-standard?

If something you buy is faulty or sub-standard:

Within 30 days of purchase you can:

return it for a full refund

OR

ask for it to be repaired or replaced.

After 30 days you can get a repair or replacement for up to six years.

Repair or replacement:

The trader can attempt one repair or offer one replacement. This must be carried out within 30 days.

If the repair or replacement is not carried out within 30 days, or the problem has still not been fixed, you can have a refund

The refund will be in full if:

it is less than six months since you bought it.

After six months, the amount of the refund can be reduced to take account of the time you have been able to use the item.

Any refund must be provided within 30 days.

You have no legal right to money back just because you changed your mind. The shop may offer returns for any reason as part of their own returns policy if they choose to.

If you want to check up on your rights, get advice before you agree a solution with the trader. Contact your local CAB or visit the Adviceguide website at www.adviceguide.org.uk or contact the Citizens Advice consumer helpline on 0845 04 05 06.

SIMPLE VERSION INCLUDING OUR SUGGESTED 30 DAY TIME LIMIT ON REPAIRS, REPLACEMENTS AND REFUNDS PLUS THE PROPOSED SLIDING SCALE OF MINIMUM REFUNDS

Your Legal Rights

Bought something faulty or sub-standard?

If something you buy is faulty or sub-standard:

Within 30 days of purchase you can

return it for a full refund

OR

ask for it to be repaired or replaced.

After 30 days you can get a repair or replacement for up to six years.

Repair or replacement

The trader can attempt one repair or offer one replacement. This must be carried out within 30 days.

If after repair or replacement the problem has still not been fixed you can have a refund.

The refund will be in full if:

it is less six months since you bought it.

After six months the amount of the refund can be reduced to take account of the time you have been able to use the item.

Any refund must be provided within 30 days.

You have no legal right to money back just because you changed your mind. The shop may offer returns for any reason as part of their own returns policy if they choose to.

If you want to check up on your rights, get advice before you agree a solution with the trader. Go to your local CAB or visit the Adviceguide website at www.adviceguide.org.uk or contact the Citizens Advice consumer helpline on 0845 04 05 06.

SUGGESTED WORDING FOR DISTANCE SELLING

Extra rights buying on line, over the phone, by post (distance selling).

You can usually change your mind and cancel within14 days of receiving the item.

If you haven’t agreed to an earlier start you have 14 days from agreeing the service to change your mind and cancel.

You must cancel in writing.

Check your cancelation rights form.

Your refund must be provided within 14 days.

SUGGESTED WORDING FOR DOORSTEP SELLING

Box to be added above the general information

Extra rights for buying in person from a person at home/ in the street/ at a sales promotion (doorstep selling).

You can usually change your mind and cancel within14 days of receiving the item.

If you haven’t agreed to an earlier start you have 14 days from agreeing the service to change your mind and cancel.

You must cancel in writing.

Check your cancelation rights form.

Your refund must be provided within 14 days.