Memorandum by the Office of Fair Trading
The Office of Fair Trading (OFT) is a competition
and consumer protection authority, rather than a sectoral Regulator
(although it does have specific responsibilities to ensure that
only "fit" persons hold a consumer credit licence. In
order to assist the Committee's inquiry, this paper sets out a
brief description of the OFT's role and the ways in which it is
accountable to citizens and Parliament. Details of the OFT's position
in relation to the questions posed in the Committee's Call for
Evidence are set out in the annex to this note.
The OFT's goal is to make markets work well
for consumers. It does this through:
Enforcing competition and consumer
Further details of the OFT's work are available
From 1 April 2003 the OFT has a corporate structure.
The members of the OFT board are appointed by the Secretary of
State for Trade and Industry under the Enterprise Act 2002. The
first members are:
Penny Boys (Executive Director).
John Vickers (Chairman).
Further details on OFT members and the board
are available at: www.oft.gov.uk. The Board is responsible for
setting our strategic direction, establishing priorities and objectives,
and monitoring our performance. It brings a wide range of experience
and expertise to the OFT which has recently acquired increased
powers and responsibilities under the Enterprise Act 2002.
The OFT is vote-funded through Parliament. The
budget for 2003-04 is £55 million. The Comptroller and Auditor
General has the responsibility for auditing the OFT's accounts.
Transparencyproviding a clear explanation
of what we are doing, and how and whyis a vital part of
accountability. The OFT is open and receptive to the ideas and
concerns of everyone who has an interest in what we do. We must
observe statutory requirements to keep certain information confidential,
and ensure that we act fairly towards those who are facing regulatory
or enforcement action by us. Otherwise, we publish the results
of all of OFT market studies, decisions and reasons to make market
investigation references, our response to super-complaints, decisions
on mergers, decisions and some other actions under the Competition
Act and all orders and injunctions secured from the courts under
consumer law. In addition we consult on and issue guidance on
how we intend to use our enforcement powers.
Accountability to Citizens
Under s.3 of the Enterprise Act, the OFT publishes
its proposed work programme for the year ahead and consults fully
on those proposals before publishing its main objectives and priorities
(the Annual Plan). The first such plan, for the financial year
2003-04, was published at the end of June. Everyone interested
has the chance of commenting on our Plan and influencing what
we do. Our draft Annual Plan for 2004-05 will be issued for consultation
at the beginning of December. A meeting has been arranged following
each publication to discuss the Annual Plan directly with our
stakeholders. There will be additional stakeholder meetings in
2004 on specific policy areas. Our National Liaison Strategy is
for regular meetings and discussions with more than 50 national
consumer, trade, and regional government groups.
Under s.11 of the Enterprise Act, some consumer
organisations (those so designated by the Secretary of State for
Trade and Industry) have a right as "super-complainants"
to require the OFT to deal with their complaints about markets.
Market studies are undertaken at the OFT's discretion, but the
OFT is receptive to ideas and suggestions about what to look into.
Anyone who believes that we should investigate
a particular matter under the Competition Act 1998 is encouraged
to bring their concerns to the OFT. In 2002, we opened 1,038 cases
based on such complaints.
The OFT is the front line authority for assessing
mergers (around 300 per year) that may affect competition in the
UK. Those likely to be affected by a particular merger, are invited
to comment before the OFT decides on whether to clear a merger
or refer it for further investigation to the Competition Commission.
In a typical year, the OFT receives around 500 such representations
from interested parties, including members of the public.
The OFT does not have a role in seeking redress
for individual consumers and front line enforcement of consumer
law is for Trading Standards Departments of local authorities.
Our role in relation to consumer law is to take enforcement action
on behalf of consumers generally and to regulate the consumer
credit market. We received around 2,500 letters and nearly 10,000
emails in 2002 alerting us to matters of concern.
Appealing OFT Decisions
In general under the Competition Act, the OFT's
decisions, and the level of penalties, can be appealed (by the
parties or third parties with sufficient interest) to the Competition
Appeal Tribunal (CAT) which provides a full re-hearing. The CAT
also has the power to review (on judicial review principles) OFT
decisions to clear mergers or refer them to the Competition Commission
and decisions on whether or not to make a market investigation
reference to the Commission. There is a further right of appeal
on points of law to the Court of Appeal. The OFT's decisions to
refuse or revoke consumer credit licences following procedures
supervised by the Council on Tribunals may be appealed to the
Secretary of State for Trade and Industry. The DTI remits such
appeals to independent experts who sit as a tribunal, conduct
a re-hearing and advise the Secretary of State. There is a further
right of appeal on a point of law to the High Court. There are
similar arrangements in respect of powers to ban persons from
estate agency work.
The OFT enforces consumer law ultimately through
the courts (although many matters are resolved by agreement with
Letting citizens know what we have done
In addition to publishing our decisions and
a large amount of guidance, under s.4 of the Enterprise Act, the
OFT publishes an Annual Report which includes an assessment of
what has been achieved and how financial resources have been allocated.
Everyone interested can form their own assessment of our performance.
Empowering consumers by giving them advice and
helping business to comply with consumer and competition law
The more citizens and businesses understand
what the law is and what their rights are the more effective the
law will be in making markets work well for consumers. We have
an active programme of media campaigns, regional Roadshows, and
press briefings and have issued 150 press notices this year. We
have held more than 75 free seminars on the Enterprise Act. Our
website is regularly updated: it received nearly 1.2 million hits
We publish guidance on all the legislation which
we enforce. We have also published guidance for consumers on a
wide range of issues. A full list is available at www.oft.gov.uk
This is complemented by advice to businesses as to their rights
and obligations under consumer protection and competition law.
In addition to our website, we have an Enquiries
Unit which deals with calls from the public. In 2002 it dealt
with 72,600 calls, 9,900 e-mails and 2,500 letters.
Accountability to Parliament
The OFT's Annual Plan and Annual Report are
laid before Parliament. As noted above, the OFT's Accounts are
audited by the Comptroller and Auditor General and are thus subject
to scrutiny by the Public Accounts Committee.
The OFT's work in protecting consumers' interests
was reviewed by the PAC following a report by the National Audit
Office in November 2000. A follow-up report has been published
by the NAO and a PAC hearing on its findings took place on 17
Other Parliamentary Committees require evidence
from the OFT as part of their investigations. For example, the
OFT gave evidence to the Transport Sub-Committee's inquiry into
the bus industry in May 2002; to the House of Lords Economic and
Financial Affairs, Trade and External Relations Select Committee
on the review of the EC merger regulation in May 2002; to the
Health Select Committee on 3 April 2003 on our Pharmacies report;
and twice this autumn to the Treasury Select Committee (on credit
cards). The OFT also briefed the Trade and Industry Committee
about its work in April 2002.
Parliamentary Questions about the OFT and its
work are dealt with by Ministers from the Department of Trade
and Industry. The OFT is always ready to meet and correspond with
MPs and members of the House of Lords to discuss particular issues.
In 2002, the OFT replied to over 340 letters from MPs raising
issues on behalf of their constituents. We replied to a further
8 letters from members of the House of Lords. There was correspondence
too with members of the Welsh and North Ireland Assemblies, MSPs
1 December 2003