CHAPTER 9: Summary of Conclusions and
Recommendations
Chapter 2: Overall objective
197. We agree that there is a need to update
the existing Directives, not least due to inconsistencies between
them over key definitions and the fragmentation of the business
to consumer internal market that has resulted from their minimum
harmonisation basis.
198. However, we consider that the Government
should withhold agreement from the proposal as drafted. We recommend
that further progress on the Directive should await a more complete
Impact Assessment. We believe that this could usefully include:
a full analysis of existing consumer protection in all 27 Member
States; the problems encountered; the differences between the
proposal, the existing minimum harmonisation Directives and national
provisions; better statistics on cross-border trade; and possible
interaction with the Common Frame of Reference for contract law.
199. We recognise the importance of the Directive
reflecting both the interests of business and consumers, which
are not alternatives but complementary, and we believe that consumers
and their interests must be kept at the heart of this proposal.
We therefore recommend that any revised or updated Impact Assessment
should include greater research into consumer behaviour and the
level of desire and demand for cross-border shopping, as well
as the extent to which legal harmonisation can foster active use
of the internal market by consumers.
200. We also note Article 95(3) TEC, which requires
that any internal market legislation concerning consumer protection
should have as its base a high level of protection. We therefore
recommend that the protection offered by the existing Directives
covered in this proposal should be taken as the base upon which
to build. We consider it of utmost importance that the overall
level of protection afforded to consumers should not be reduced.
201. Finally, we are not convinced that by itself
the action proposed by the Commission (that is, harmonisation
of consumer law across the EU) will necessarily boost cross-border
retail trade as the Commission desires. We recommend that the
Commission gives further consideration to other factors, such
as language, culture, distance of delivery and handling of cross-border
complaints, and the extent to which these may also be responsible
for current low levels of cross-border retail trade.
Chapter 3: Full harmonisation
202. We note that the principle of full harmonisation
has already been applied in European Union consumer protection
legislation—namely in the Unfair Commercial Practices Directive
and in the recent Timeshare Directive. One notable lesson to be
learned from the former is the need for clarity in the Directive
about the extent of full harmonisation.
203. On that basis, and like many of our witnesses,
we acknowledge that full harmonisation, where justified, could
increase legal certainty for both consumers and business. But
further work is required to clarify the benefits of full harmonisation,
taking into account concerns that consumer protection could be
reduced but also the view of the business community that
profitable businesses will in any case seek to deliver a high
level of consumer protection.
204. Full harmonisation as proposed by the Commission
is likely to be politically impossible for Member States and the
European Parliament to support, but we also detect little
enthusiasm to abandon the full harmonisation principle entirely.
In that case, we consider that a "differentiated harmonisation"
model may be workable, harmonising aspects such as definitions,
the right of withdrawal and the provision of information but allowing
Member States room for manoeuvre in other areas. Such flexibility
could facilitate swift responses to future challenges.
205. The relationship between the relevant provisions
contained in national law and those in the Directive is unclear
and if there is a conflict between them, which of them takes priority.
It is also unclear as to how national contract law might impact
on the way in which the proposed Directive will take effect, once
it has been transposed. We urge the Commission to clarify these
matters. Our preference would be to see the relationship between
the Directive and national contract law resolved in the text of
the Directive itself. We fear that, otherwise, confusion will
reign.
206. We note the "blue button" optional
instrument suggestion, allowing Member States to retain their
own models of consumer protection based on national contract law
but allowing consumers to opt into a harmonised system. We recognise
some theoretical benefits may be offered by this option but we
are concerned that such a system may be excessively complex for
the consumer and trader alike. Further work might usefully be
done to assess its practicality.
Chapter 4: Scope of the Directive
207. We note the view expressed by some of our
witnesses that the coverage of the Directive should be widened,
particularly to include the Package Travel Directive. We recommend
that consideration of including other Directives within the scope
of this proposal should be revisited following the extended Impact
Assessment we have recommended in paragraph 39.
208. We support the idea that there is room to
expand the scope of the Directive and recommend that it should
extend to digital products. We consider the application to digital
products particularly important given the proposal's aim to future-proof
consumer law and update the existing acquis, which has
been introduced over three decades and thus does not sufficiently
address issues specific to the digital era.
209. Related to this, we recommend that Chapter
IV of the Directive should apply to both the goods and the services
elements of mixed contracts. We further recommend that services
should be covered by the Directive in its entirety. We recognise
that such extensions to the scope will require significant work
but consider that there will be few opportunities to reform consumer
law and that it is therefore worth spending the time now to produce
a future-proofed Directive with clear application.
210. We note our witnesses' concerns about the
exclusion of hire purchase from the scope of the Directive and
urge the Commission to reconsider the rationale for this exclusion.
This should include consideration of the possibility to disapply
the draft Directive where a trader has voluntarily chosen to comply
with the Consumer Credit Directive.
211. While we consider that this Directive should
embrace services generally, we recognise financial services as
separate and distinct from this category given the specialist
nature of these products. We recognise the concerns of the financial
services industry about the application of this Directive to the
sector. In particular, we note the industry's concern that the
ban on inertia selling could prohibit the auto-enrolling of pensions.
We therefore recommend that it is made clear in the proposal that
the provisions on inertia selling do not apply to pension schemes
offered by an employer.
212. We note that the ban on inertia selling
would also prevent the tacit renewal of contracts, including insurance
policies, and variation of terms without the consent of the consumer.
These matters are contentious and we are not convinced that they
should be similarly excluded from the scope of the Directive.
At the very least, we consider that the possibility of such changes
should be mentioned in the contract, and clear notice must be
given in advance of the insurance premium being levied upon renewal.
Chapter 5: Clarity for consumers and provision
of information
213. We recognise the importance of consumers'
awareness of their rights and consider that a clear and comprehensible
Directive is an important part of informing the consumer. However,
there is an inherent tension in providing a legal text that is
clear to lawyers and is also accessible to all consumers. We recognise
that the transposition of the Directive into national laws will
provide an opportunity to improve accessibility of the Directive.
In the first instance, we consider it essential that the Directive
should be sufficiently legally robust and clear for those explaining
the provisions to consumers, so that they can do so accurately.
We believe it would also be helpful for national authorities to
produce comprehensive guidance documents for consumers on their
rights.
214. We note and support the permissive nature
of the provisions on general consumer information. We agree that,
where already apparent from the context, the trader should not
be obliged to furnish the consumer with such information. Nevertheless,
we are concerned about how that might be adjudicated should a
dispute arise between the trader and consumer as to whether or
not something is "apparent from the context". We recommend
that clear guidelines covering this area are drawn up.
215. We consider that attention should be paid
to the need for guidance on how information should be communicated
to provide certainty to businesses and to highlight key information
for consumers, possibly through the use of summary boxes.
216. We are not convinced by the argument that
these provisions will overload the consumer with information,
though this is conditional on information being deployed sensibly,
in line with the requirements set out in Article 5. We consider
it important that consumers are given this information, regardless
of whether they read it at the time of purchase or not, so that
they have access to it in the future, should the need arise.
217. We are concerned about the possibility created
in this Directive for a reduced level of mandatory information
to be provided to consumers of financial services products. We
note that this is a concern shared across the EU and warn about
the potential impact of this on consumers who are sold such products
off-premises. We are concerned that this could create an added
incentive for businesses to sell financial products off-premises,
thus multiplying the adverse effect on consumers. We recommend
that financial services are excluded from this part of the Directive.
Chapter 6: Right of withdrawal for distance and
off-premises contracts
218. 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.
219. 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.
220. 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.
Chapter 7: Sales contracts
221. Earlier in this Report we discussed the
principle of full harmonisation, which would have a significant
impact on sales contracts. We conclude that the Sales chapter
is not fit for purpose in its current form if intended as a full
harmonisation measure.
222. We observed little appetite among our United
Kingdom witnesses to see the United Kingdom's "right to reject"
removed and, furthermore, we note that this statutory right, or
similar, is not exclusive to the United Kingdom. For the sake
of clarity, we recommend that these concerns be addressed through
an amendment to Article 26 of the Directive. This amendment may
need to be flexible, perhaps giving a specific time-limited right
to reject, such as the 30 days proposed by the Law Commission,
in order to take into account the concerns of Member States which
do not currently support the right to reject.
223. The requirement that a consumer must inform
the trader of a defect within two months of detection appears
arbitrary and we are concerned that it may not always be practicable
to notify the trader within two months. As we do not consider
the case has been made for the restriction, and as we are concerned
at its impact, we recommend deletion of the two month limit as
a mandatory requirement.
224. The two year limit on a trader's liability
for faulty goods could be problematic in relation to the purchase
of a range of goods which could reasonably be expected to last
longer than two years. We therefore recommend reconsideration
of the two year limit, with a view to either extending the period
or allowing some flexibility in its application.
225. The proposal to exclude rescission of contracts
in cases of minor defects appears to be fraught with uncertainty
and a lack of clarity, which would not assist the trader or consumer.
We recommend that this exclusion either be removed or that clarification
of what is considered a "minor defect" be included in
the Directive.
226. We are concerned that the circumstances
under which the consumer might resort to the second tier of remedies
are unclear. The lack of clarity stems from the use of terms such
as "reasonable time" and "significant inconvenience",
which could favour the trader over the consumer. For the purposes
of the consumer, we recommend that the circumstances under which
he may resort to the second tier of remedies be made more explicit
in the text.
Chapter 8: Unfair contract terms
227. 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.
228. 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.
229. 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.
230. 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.
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