Today, the Consumer Rights Act 2015 and the Alternative Dispute Resolution Directive come into effect.
The Act replaces three big pieces of consumer legislation – the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations and the Supply of Goods and Services Act.
From our point of view the key changes are:
- All UK businesses including lawyers and other professionals have to offer customers details of a certified alternative dispute resolution body. (See more discussion below)
- The Consumer Rights Act introduces:
30 days to get a refund-a specific timeframe has been created in which customers can reject a faulty item and get a full refund.
- A ‘tiered’ remedy system in place for faulty goods, digital content and services, this means the customer’s rights to a refund are now more clearly set out. Whether the customer is entitled to a refund depends on how long they have owned the product.
- After one failed attempt by the retailer to repair or replace a faulty item, the customer is entitled to ask for a refund or price reduction.
- A second repair or replacement – If a customer does not want a refund or price reduction, they have the right to request another repair or replacement at no cost to themselves.
- Deductions from refunds – No deduction can be made from a refund in the first six months after purchase. The only exception to this is motor vehicles, where a reasonable reduction may be made for the use the customer has had of the vehicle.
- Digital content rights – This new law gives consumers rights in relation to online digital content that is paid for, digital content supplied free with other paid for items and digital content supplied on a physical medium, such as a DVD.
- Unfair terms in consumer contracts – It will now be easier for consumers to challenge hidden fees and charges. Now the key terms of a contract, including price, may be assessed for fairness unless they’re both prominent and transparent.
- Pre-contract information – The Consumer Rights Act states that if a retailer provides pre-contract information in relation to a service and the consumer takes this information into account, the service must comply with that information.
- Service providers have to provide their services within a reasonable time and for a reasonable price.
These changes have been described by the consumer group Which? as the biggest reform to shoppers’ rights in a generation and it certainly seems that consumers will have more rights to complain and a new means of doing so in the form of alternative dispute resolution.
They may be better informed about alternative dispute resolution as a result but the question is whether UK businesses will embrace it, or will consumers end up feeling frustrated that businesses refer to an ADR provider but say that they are not willing to use that provider? What is the point of that? More to the point, businesses (and in particular lawyers) are likely to be criticised and penalised in costs if the complaint escalates to the Court and they have refused to take part in ADR.
There appears to be a reluctance and apathy on the part of business to engage in a process that would actually save them money in the long term and improve customer service.
Old habits die hard and many businesses appear to be ignoring the new law which is seen as more interference and red tape from Brussels. The situation is not helped by the mixed message of compulsory information and voluntary participation which is enshrined in the regulations.
This is likely to be a slow burner as businesses do not have to comply from day 1 but only from when a customer actually complains and that complaint goes through the complaints process. Also, the EU ODR Portal comes into operation from 9 January 2016 for businesses which operate online and there will be further changes that businesses will need to make.
Some businesses may then be in for a shock when there is enforcement of the regulations. For example, EE was fined £1m by OfCom for failing to inform customers about alternative dispute resolution and it is likely that high profile businesses may be singled out for enforcement in due course. There is then likely to be a rush to find out more about the certified ADR Providers like ProMediate.
We would urge businesses to get your house in order now and join us as members early on so that we can keep you informed of developments and customers can be reassured that your business complies, so avoiding any enforcement action.
The lights have gone green for consumers to complain and we are here ready to manage that and although we are unlikely to refuse to deal with non-members’ disputes, we will prioritise complaints about our member businesses and they can be dealt with quicker as we already know that they are willing to engage in the process.
Disclaimer: The information and any commentary on the law contained in this article is for information purposes only. No responsibility for the accuracy and correctness of the information and commentary or for any consequences of relying on it, is assumed by the author. The information and commentary does not, and is not intended to amount to legal advice to any person on a specific case or matter. The article was written on the date shown and may not represent the law as it stands subsequently. For the avoidance of doubt, the views in this article are personal to the author and not attributable to any other individual or organisation.