Review of terms and revision
of the lists
188. The European Commission emphasised that
the general unfairness clause (see paragraph 179 above) would
allow Member States and their national regulators to retain their
existing rights to declare terms unfair unilaterally (Q 242).
Clarity on this matter was demanded by Which? in the light
of the bank charges litigation case currently making its way through
the United Kingdom's judicial system.[47]
It was pointed out that some of the terms under scrutiny in that
case were not included in either the proposed "black"
or "grey" lists (Q 73).
189. The Government appeared to be content that
the Directive would not affect the role of national regulators.
They pointed to the Office of Fair Trading's retention of the
ability to publish "non-binding guidance" on unfair
contract terms and they noted that their initial concerns about
potential restrictions on the activities of the Financial Services
Ombudsman had reduced (Q 347).
190. There was a general concern about the proposed
method of reviewing the content of the lists, which would delegate
this power to the Commission under the Regulatory Committee with
Scrutiny procedure (see Box 7 below). A number of witnesses were
concerned that stakeholders would be insufficiently consulted
(pp 24, 58, 157). The CBI wanted to ensure that the process
was "a very open and transparent process with stakeholder
involvement", allowing the time and opportunity to comment
and to be engaged (QQ 421, 423).
BOX 7
Regulatory Committee with Scrutiny
Delegation of power to the Commission allows for
greater flexibility in the decision making procedure. Rather than
requiring full consideration by both the European Parliament and
the Council of Ministers, the legislation can be adopted by a
group of Member State experts, chaired by the Commission. The
Council and the European Parliament must be allowed to carry out
a check prior to the adoption of these measures, which should
only amend technical ("non-essential") elements of an
Act adopted by codecision. In the event of clear opposition on
the part of one of these institutions (absolute majority of MEPs
or qualified majority at the Council), the Commission must either
amend the proposed measure or present a legislative proposal to
be submitted for the full codecision procedure. Delegated powers
of this sort are known as "comitology".
191. We received a varied response to the procedure
from representatives of the European Parliament and Member States.
Malcolm Harbour noted that the Regulatory Procedure with Scrutiny
allowed European Parliamentary committees "a right of call-back
if we see that the Commission's implementation moves outside the
scope of what we have agreed." He emphasised, though, that
this Procedure is relatively new and has not yet been fully tested
(QQ 201, 202). The Portuguese and French governments were
concerned that Member States would have insufficient involvement,
and the United Kingdom Government sought similar reassurance (QQ 112,
113, 352). Commissioner Kuneva urged stakeholders and institutions
not to be afraid of the procedure and to "give it a chance"
(Q 242).
192. On the other hand, Consumer Focus feared
that the process of reviewing the lists in this way would cause
delay, thus undermining the rationale for a principle-based piece
of legislation that enabled regulators to move quickly (Q 71).
The Trading Standards Institute was also worried that it would
not be possible to review the lists with sufficient speed (p 108).
Conclusions and recommendations
193. We note that the exclusion of negotiated
terms from the content of the provisions on contract terms has
the potential to place consumers at a disadvantage. We accept,
though, that Article 33 making it incumbent on traders to prove
that a term has been individually negotiated is weighted in favour
of the consumer. Consideration might usefully be given to strengthening
this Article further, but we do not consider that the case has
been made to bring negotiated terms within the scope of the Directive.
194. We welcome the introduction of "black"
and "grey" lists but the devil lies in the detail of
their content. We have heard various specific suggestions as to
how the lists might be amended, including opposing views. At
this stage, we draw no conclusions on the content of the lists
but we note that there is substantial concern on this matter.
If agreement is to be reached, it will be essential that every
term on each of the lists is fully justified, with due regard
to current practice in each Member State and to the views of stakeholders.
195. We were relieved to hear the assurances
from both the Commission and the Government that the role of national
regulators with regard to unfair terms would be largely preserved
under the Directive. We would hope that other Member States
might be similarly reassured by clarifications to the Directive.
The general principles on assessing the fairness of contract terms
might benefit from some clarification in order to provide this
reassurance.
196. Substantial concern was expressed about
the use of delegated legislative powers ("comitology")
to amend the lists. It was felt that the process could be opaque,
excluding stakeholders, and even Member States, from considering
the full implications of proposals. Like the Commission, we
consider that this process ought to be given a chance to prove
itself as it could be a more efficient method of taking these
decisions than a full legislative procedure. Its legitimacy will
be dependent on a commitment to full transparency by the Commission
and by national governments, which should include consultation
as appropriate.
45 Please note that these are included as hypothetical
examples to assist the reader and should not therefore be considered
as legally binding. Back
46
See Articles 5a (parts 1-4), 7 and 8 of Council Decision 1999/468/EC
as amended by Council Decision 2006/512/EC Back
47
Office of Fair Trading (OFT) v Abbey National plc and others.
This case relates to the question of whether the OFT has the power
to declare bank charges unfair. It was brought because a large
number of United Kingdom consumers have argued that charges imposed
on them by banks in cases of unauthorised overdrafts have been
unfair. Back
