Harmonisation of the withdrawal
period
142. The majority of witnesses we heard from
were supportive of the provisions within the Directive to harmonise
the withdrawal period at 14 calendar days. We heard that the varying
lengths of withdrawal periods across the EU and between existing
Directives in the acquis caused confusion for traders in
cross-border transactions and increased transaction costs. EuroCommerce
believed that it was particularly onerous for small companies
wanting to trade cross-border to ascertain the situation across
the Member States in relation to the varying rights of withdrawal
(QQ 4, 31, 63, 77, 97, 123-24, 218, 265, 285, 339, 365, pp
23, 26, 28-9, 97-8, 106, 107, 155, 156-57, 176).
143. The support among our witnesses for harmonisation
of the right of withdrawal was underscored by Commissioner Kuneva,
who considered the right essential in distance and off-premises
contracts and was keen to emphasise that in the United Kingdom
the withdrawal period would be improved under the Directive, extending
from seven to 14 days (Q 218).
144. However, many witnesses felt these proposals
could be improved. Which? identified the right of withdrawal
as an area where the Commission could go further in increasing
clarity, pointing to the fact that the end point would differ
depending on whether a consumer was buying goods or a service
and depending upon the method of purchase (i.e. distance or off-premises).
It stressed that consumers would need to be confident that they
knew when the period of withdrawal would start and when it would
finish, a concern that was also raised by Consumer Focus (Q 63,
p 23). Dr Twigg-Flesner also thought there was room for greater
clarity on withdrawal rights, highlighting that a harmonised right
of withdrawal was already made available at the EU level in five
other Directives and that this Directive would not encompass those
Directives. Consequently, he suggested that the right of withdrawal
was an area "where it might make sense to have one coherent,
standardised European set of rules to help the creation of contracts",
the scope of which would extend beyond this Directive (QQ 24-5,
27).
145. The OFT was supportive of the harmonisation
of withdrawal rights across the EU but criticised what it saw
as the transfer of risk from the trader to the consumer for distance
and off-premises contracts. It cited the duty upon the consumer
to return goods within 14 days at their own expense and the provision
for the trader to reduce the money refunded in the case of diminished
value as a result of excessive handling and suggested that this
would open up a "new potential for dispute and mistrust"
(Q 285, p 97). Which? was also cautious about the
latter provision and did not think traders should be entitled
to pay a reduced refund as compensation for any reduction in the
retail value of cancelled goods (p 28). By contrast, the
CBI were pleased that the Directive would give business the right
to ensure that consumers did not use goods and then send them
back for a refund, something which it cited as "a current
problem" (Q 365).
146. Other complaints arose from the choice of
14 calendar days for the withdrawal period. We heard from the
Association of British Insurers (ABI) that, under current FSA
rules, many insurance contracts (including life insurance) are
subject to a 30-day cancellation notice period for the consumer,
which under the Directive would be reduced to 14 days. The ABI
explained that some of these contracts were quite complex and
therefore considered it appropriate to give the consumer 30 days
to withdraw from the contract (QQ 401-402). Several other
witnesses highlighted the lack of evidence presented by the Commission
to justify a 14 day right of withdrawal, and EuroCommerce suggested
that such a justification should be based on the consumer need
(pp 57, 181).
147. There were further concerns about which
contracts should be subject to a right of withdrawal. For example,
the FSA thought that this would prevent providers from setting
up a product before the withdrawal period had expired and could
therefore complicate the situation for consumers in relation to
distance pensions contracts (p 174).
148. Finally, Dr Twigg-Flesner told us that
there was some concern that the provisions might actually take
away the freedom of national law to regulate differently when
there was a real need. In relation to United Kingdom law, this
worry centred around the 45-day cooling-off period for extended
warranties and electrical goods, which the OFT stated "is
considered in all the circumstances to be necessary and highly
desirable in relation to those products". It thought there
should be the ability for Member States to be able to deal with
specific problems in specific areas, without maximum harmonisation
impinging upon that (QQ 25, 295).
Exercising the right of withdrawal
149. Some witnesses were critical of the provisions
for the consumer to exercise their right of withdrawal, questioning
whether returning the goods to the trader or providing the trader
with notice of withdrawal over the telephone would suffice as
withdrawal from the contract. Dr Twigg-Flesner was not convinced
that the provisions would be workable in practice and suggested
that consumers "might well not bother exercising their right
of withdrawal" (p 23, Q 31). Contrary to this, the BRC
was concerned that traders' obligations as set out in Article
16 could be "wrongly interpreted" as standing independently
of the consumer's obligations as set out in Article 17, thus creating
an absolute right to a refund whether or not the goods had been
returned to the trader (pp 156-57).
150. Our witnesses were split on the notice of
withdrawal form set out in the Directive. The OFT supported the
introduction of the optional form, whereas the BRC did not think
the purpose of the form and how it should be used had been made
totally apparent in the text of the Directive. For the BRC, a
preferable approach would be to require the trader to indicate
the basic information that the consumer needed to provide if they
wished to withdraw. It suggested that such a requirement should
be laid down in the Directive as this would ensure that if a consumer
provided this information, the trader would have to accept it
as a notice of withdrawal (pp 97, 162).
151. In relation to the practicalities of exercising
the right of withdrawal, there was some support for the duty on
the consumer to return goods at their own expense within 14 days,
but this was not universal (Q 285, p 156). The Bar Council
of England and Wales suggested that the requirement could be problematic
in relation to large items, and believed that the current requirement
that consumers make goods available for collection was preferable
(p 153).
Conclusions and recommendations
152. We welcome the introduction of a harmonised
withdrawal period for the majority of business-to-consumer contracts
and consider that this will help to address the problems associated
with the varying lengths of withdrawal period which currently
exist across the EU. Nevertheless, we note that many of our witnesses
were concerned about the detail of the provisions in the Directive
on the right of withdrawal and we are concerned that a uniform
approach will not work for all situations, such as complex insurance
contracts. We therefore consider that the Commission must revisit
this chapter, providing in particular greater justification of
the choice of a uniform 14 calendar day withdrawal period.
153. We are concerned about how the right
of withdrawal might affect existing provisions such as the 45-day
cooling-off period for warranties in the United Kingdom and call
for this to be preserved under the Directive.
154. We can see the benefit of a harmonised right
of withdrawal form such as that included in the Directive, but
the use of such a form should constitute only one of several options
for the consumer. The Directive should make it clear that the
simple act of returning the goods to the trader satisfies the
criteria for exercising withdrawal, in addition to the option
of notifying the trader in writing on a durable medium (see paragraph
140). We are not convinced that notifying the trader over the
telephone of an intention to withdraw from the contract should
be similarly accepted as satisfying the criteria for withdrawal,
as we do not consider that it would be possible to prove that
a telephone call had or had not been made.
35 COM(2008)614 Recital 28 Back
36
COM(2008)614 Article 17(2) Back
37
COM(2008)614 Article 2(10) Back
