Brexit: will consumers be protected? Contents

Chapter 3: Significant areas of the acquis

General areas of the acquis

21.Mr Pete Moorey of Which? pointed to the importance of the EU’s acquis “across a whole range of issues”. These included: “unfair commercial practices, which come under the unfair commercial practices Directive; ensuring better information provision through a number of regimes under the consumer rights Directive; [and] distance shopping, which comes under the consumer rights Directive” (see Box 2).33

22.He also raised the issue of “how to maintain rights in relation to cross-border purchases and UK consumers’ rights when they are holidaying abroad”, and membership of the EU’s agencies.34

The ADR Directive

23.Mr Lewis Shand Smith of the Ombudsman Services referred to the importance of the ADR Directive and the accompanying Regulation creating the online dispute resolution platform (see Box 3). This legislation “requires that wherever there is a contract for the sale of goods and services anywhere in the EU, Member States must provide alternative dispute resolution for consumers if something goes wrong”. Turning to the online dispute resolution platform, he said that it “operates in every Member State”, and, “if customers buy goods online and something goes wrong, they go on the platform and from there they are directed to the relevant ombudsman”.35

Three important aspects of the acquis

24.Mr Leon Livermore, of the Chartered Trading Standards Institute, highlighted three important aspects of the EU’s acquis. First, he said that the EU provided the “legislative framework within which we work”. This framework “facilitates the free movement of goods, but it also facilitates the free movement of information … a lot of consumer protection is based on relationships with colleagues abroad”.36

25.Second, Mr Livermore highlighted the facilitation of information sharing. National trading standards teams gathered the relevant information about, for example, “telephone and postal scams”, and passed this on to local authorities who, in turn, collected that information and passed it “to colleague enforcement agencies in the rest of Europe”. This brought the “benefit” that cross-border problems were “tackled at both ends”.37

26.The third way the EU facilitates the enforcement of trading standards is through “investing in infrastructure”. Mr Livermore concluded, overall, that “if you want effective enforcement and you do not want the UK to become a soft target for rogue traders … we need to maintain the protections that we have now”.38 When asked for a specific example, he mentioned “RAPEX, which is really good example of European cooperation … It is a terrific system”.39 RAPEX is described in Box 5.

Box 5: The Rapid Alert System (RAPEX)

The EU’s RAPEX (or Rapid Alert System) illustrates the three important aspects of the EU’s consumer protection acquis highlighted by Mr Leon Livermore.

Under the RAPEX system, the Commission publishes a weekly summary of the consumer protection related alerts reported to it by the relevant national authorities, such as local authorities and national trading standards bodies. The Commission’s weekly overview includes information on: dangerous products found; any risks to consumers that have been identified; and any measures taken in the notifying country in order to prevent or restrict their marketing or use.

The weekly summary also includes information on those other countries where the same product has been found, and whether any further measures have been taken.40

27.Anticipating the Brexit negotiations, Mr Livermore argued that “whatever trade deal we put in place, consumer protection and market surveillance are key elements of that”. His “greatest fear” was if the Government’s focus fell on “legislation rather than infrastructure and you try to deal with infrastructure later, we will have missed the boat”.41

The Consumer Protection Cooperation Regulation

28.Mr Jason Freeman of the CMA pointed to the significance of the Consumer Protection Cooperation (CPC) Regulation. He explained that under the CPC Regulation, the CMA had “a statutory function … to ensure that the cross-border enforcement system works smoothly” (see Box 6).42 His colleague, Mr Roland Green, argued that while the CPC Regulation gave rise to “frustrations … at a very core level it is useful to have a mechanism where there is regular discussion and cooperation to be aware of the problems that occur in different states”.43

29.The CMA’s “primary” concern was being able to continue to take effective cross-border enforcement action after the UK leaves the EU. Mr Freeman warned that “sometimes outside the European Union … there are legal difficulties or practical difficulties around evidence sharing, and that can inhibit the effective execution of enforcement work”. To avoid this problem he suggested that a “number of measures in respect of cross-border enforcement [would] need to be negotiated between the UK and the EU as we seek to leave”.44 He concluded, however, that if the CPC Regulation continued in place in the UK after Brexit, “then cross-border consumer protection should not be too affected”.45

Box 6: The Consumer Protection Cooperation Regulation 2006/2004

In the UK, the Competition and Markets Authority (the CMA), formerly the Office of Fair Trading, is responsible for regulating UK markets and promoting competition in the interests of business, consumers and the economy. It has specific responsibility to enforce consumer protection legislation in the UK and cooperates, to that end, with similar national organisations within the EU.

The CMA’s role in enforcing the EU’s consumer protection rules stems from, and is facilitated by the EU’s Consumer Protection Cooperation Regulation.46 The CPC Regulation provides the mechanism for the exchange of information between national enforcement bodies such as the CMA and, where necessary, and empowers them to bring legal action to enforce consumer protection laws.

In May 2016, the Commission brought forward a new Regulation aimed at developing and modernising the CPC’s mechanisms for cooperation.47 The Commission proposed the introduction of two new mutual assistance mechanisms designed to facilitate cooperation between National Enforcement Bodies (NEBs) such as the CMA. In addition, the proposal empowers them, where necessary, to take enforcement action to stop cross-border infringements of the EU consumer acquis.

The first new mutual assistance mechanism deals with simple requests for information. NEBs are required to cooperate in an effort “to establish whether an intra-Union” consumer protection infringement has occurred. There are limited grounds for refusal.48 The second mutual assistance mechanism deals with requests for enforcement measures, under which NEBs are required to take “all necessary measures to bring about the cessation or prohibition” of an intra-Union breach of the EU’s consumer protection rules.49

The Member States are obliged to ensure that the NEBs receive adequate resources to ensure that they can meet these requests. The proposed Regulation also sets out the minimum powers that all NEBs must enjoy, which include:

  • the power to access all relevant documentation;
  • the power to compel public bodies, companies and individuals to supply information;
  • the power to enter and inspect premises;
  • the power to purchase goods in order to detect infringements and gather evidence;
  • the power to purchase goods “under a cover identity” in order to detect infringements and gather evidence;
  • the power to adopt interim measures to prevent risks to consumers;
  • the power to close down websites; and
  • the power to impose penalties and fines.

It is anticipated that the Member States will have agreed the new Regulation in December 2017. Importantly, the new text includes a provision that encourages cooperation with third countries (that is, non-EU Member States).50

30.When asked for an example of the CMA’s work facilitated by the CPC Regulation, Mr Freeman referred to its 2015 investigation to improve Europe’s car rental market (see Box 7). He said that this investigation achieved “concrete changes”, which led to “about £127 million of benefit to UK consumers”.51

31.Mr Freeman’s colleague Mr Roland Green agreed. He said that the “substantive value of the [CPC Regulation] is in providing mechanisms … for evidence sharing and obtaining evidence, reciprocally and mutually, across different states and for taking enforcement actions”. The maintenance, post-Brexit, of these elements of the CPC Regulation “would be desirable and we would expect that it should be possible to do so”.52

Box 7: Example of the CMA’s pan-European cooperation on consumer protection

In 2015 the Competition and Markets Authority (CMA) led a European-wide project, facilitated by the European Commission and involving Member State consumer protection authorities, which resulted in five leading EU car rental companies committing to improving the way they deal with their customers.

The companies—Avis Budget, Enterprise Rent-a-Car, Europcar, Sixt and Hertz, which in total represent around two thirds of the UK and EU markets—agreed to introduce the following improvements:

  • Improved transparency when making a website booking or reservation: consumers will now have more of the key information they need to shop around for the best deal for them.
  • Better information at the booking stage about optional waiver and insurance products.
  • More upfront information about pre- and post-rental vehicle inspection processes.
  • Improved notification of, and dispute processes for, any charges for damage.

Each company has committed to make these changes, while taking account of the standard of their existing practices, and each has made a commitment to improve its practices overall as a result.

Nisha Arora, Senior Director of the CMA, said:

“We welcome the improvements made by the leading EU car rental companies to ensure that consumers are given clearer information upfront about their rental. These changes go a long way to ensuring that consumers know exactly what they are getting when they rent a car.

“The CMA, together with the European Commission and our EU counterparts have worked constructively with the leading EU car rental companies to reach agreements on revised practices that will benefit motorists who rent vehicles in the UK and abroad. The improvements by these five businesses now set a benchmark for the rest of the industry to follow.”

In the UK, the CMA has worked closely with the trade association the British Vehicle Rental and Leasing Association (BVRLA). Following a review of its UK Code of Conduct, significant improvements similar to those adopted by the main car hire businesses have been adopted into the Code, to which companies representing the vast majority of the UK car rental fleet are signatories. The revised Code was launched at the beginning of 2016.

At a European level the CMA, European Commission and enforcement authorities in other EU Member States worked with Leaseurope, the umbrella body for the European car rental trade associations. Leaseurope has adopted the general principles underlying the agreed improvements into its Code of Conduct.

Source: Competition and Markets Authority, Press Release, Car rental customers set to drive off with better deals, 13 July 2015: https://www.gov.uk/government/news/car-rental-customers-set-to-drive-off-with-better-deals [accessed 20 November 2017]

CEN and CENELEC

32.Dr Scott Steedman CBE, Director of Standards at the British Standards Institute (BSI), cited the importance of two European-wide Standards Organisations, CEN and CENELEC (see Box 8). He pointed out that while CEN and CENELEC were not formally part of the EU, the Commission provided funding and “grants them the exclusive right to label a business standard an ‘EN’”. Once a product receives such a designation, national standards bodies such as the BSI are “committed to adopting and implementing that standard”. He added that “critically” national standards bodies are also committed “to withdrawing any conflicting standards in order to ensure that we are all operating to a single standard with no barriers to trade” across its 3453 member countries.54

Box 8: European product standardisation bodies

All products and services that citizens buy and use in their everyday lives have to meet certain standards of safety and quality. In Europe, these standards are developed and agreed by the three officially recognised European Standardisation Organizations: the European Committee for Standardisation (CEN), the European Committee for Electrotechnical Standardisation (CENELEC) and the European Telecommunications Standards Institute (ETSI).

The close collaboration between CEN and CENELEC was consolidated at the start of 2010 by the creation of a common CEN-CENELEC Management Centre (CCMC) in Brussels.

By setting common standards that are applied across the whole of the European single market, CEN and CENELEC ensure the protection of consumers, facilitate cross-border trade, ensure the interoperability of products, encourage innovation and technological development, include environmental protection and enable businesses to grow. Products and services that meet these European Standards (ENs) can be offered and sold in all of the participating countries.

CEN and CENELEC bring together the national standards agencies of 34 countries. The network involves business federations, commercial and consumer organizations, environmental groups and other societal stakeholders. More than 60,000 technical experts from industry, research, academia and other backgrounds are directly involved in their work.

Together, CEN and CENELEC provide a platform for the development of European Standards and other technical specifications across a wide range of sectors. They work closely with the European Commission to ensure that standards correspond with any relevant EU legislation.

CEN and CENELEC also cooperate with respectively the International Organization for Standardisation (ISO) and the International Electrotechnical Commission (IEC) to reach agreements on common standards that can be applied throughout the whole world, thereby facilitating international trade.

Source: CEN and CENELEC, ‘About us’, 2017: https://www.cencenelec.eu/aboutus/Pages/default.aspx [accessed 15 November 2017]

33.Dr Scott Steedman said that the European standardisation system was built on “reciprocity of market access”. Provided the UK remained a member of CEN and CENELEC “we will immediately carry on as today, working on the European standards and influencing them for the benefit of consumers and industry”. But, he warned, it “would be extremely damaging”55 if the UK was to leave these bodies: “There would be quite a serious risk that our industries would use European standards because they provide the easiest market access route to the EU” without having had any “influence over the shaping of those industry standards”.56

34.The danger, according to Dr Steedman, lay in the fact that CEN and CENELEC’s “statutes and the eligibility for membership is described … in the form of, ‘an EU member, an accession country or an EFTA country’”. Their rules “were not written imagining that there would be a country in the situation of the UK”.57 Nevertheless, Dr Steedman said that it was his “ambition [and] expectation”58 that the UK would remain a full member of these bodies, and he was “confident” that a form of words could be found to accommodate the UK.59

35.Leon Livermore also told us that “a commitment to retain membership of CEN and CENELEC would be extremely helpful”.60

Relationships with regulatory agencies

36.Mr Pete Moorey of Which? also raised the importance of the UK’s post-Brexit relationships with the EU’s executive and regulatory agencies.61 He argued that this issue “clearly” needs to be a priority. He mentioned specifically: “the European Food Safety Authority and the medicines and aviation agencies”.62

37.Mr Chris Woolard of the FCA emphasised the importance of maintaining relationships with national regulators post-Brexit: “We see it as essential, whatever the nature of the settlement that is reached, still to have very strong relationships in place between us and our fellow regulators in Europe.”63

Conclusions

38.Witnesses with diverse areas of operation and expertise have highlighted the range and significance of individual items of EU legislation. It is clear that beyond setting the baseline for the consumer protection standards that individuals enjoy, EU legislation also plays a crucial role in facilitating a range of cross-border cooperative mechanisms designed to police consumer protection within the Single Market.

39.While the range of legislation identified by our witnesses is broad, another theme is the importance of the agencies, networks and infrastructure, largely created by EU law, which, cooperate on a reciprocal basis, develop policy and facilitate information sharing and exchange between national and EU bodies as a means of protecting consumers across the EU.

40.Of particular importance in this regard is the Consumer Protection Cooperation Regulation which encourages cooperation between national bodies tasked with protecting consumers. We note that the latest iteration of this legislation which is due to be agreed by the Council shortly, includes a provision that encourages cooperation with non-EU Member States.

41.With regard to the international standards organisations CEN and CENELEC, we acknowledge that they are not formally EU bodies, and understand that the resolution of the UK’s individual membership of these bodies post-Brexit is not directly within the Government’s gift. Nevertheless, we call on the Government to support the BSI’s efforts to amend these bodies’ statutes to accommodate the UK’s new status outside the EU and invite the Government to provide an update on this important issue when it responds to this report.


40 European Commission ‘Rapid Alert System: Weekly Reports’: https://ec.europa.eu/consumers/consumers_safety/safety_products/rapex/alerts/?event=main.listNotifications [accessed 20 November 2017]

46 Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the Regulation on consumer protection cooperation) (OJ L 364, 9 December 2004, pp 1–11)

47 Proposal for a Regulation of the European Parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws, (COM(2016)283, 25 May 2016)

48 Article 14, Proposal for a Regulation of the European parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws (COM(2016)283, 25 May 2016)

49 Article 12, Proposal for a Regulation of the European parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws (COM(2016)283, 25 May 2016)

50 Article 40, Proposal for a Regulation of the European parliament and of the Council on cooperation between national authorities responsible for the enforcement of consumer protection laws (COM(2016)283, 25 May 2016)

53 The members are drawn from: the 28 EU Member States; the three European Free Trade Association (EFTA) States (Iceland, Norway and Switzerland); and, three EU candidate countries: Serbia, Turkey and the Former Yugoslav Republic of Macedonia.




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