Earlier this month, the Business Secretary Greg Clark announced government plans to give the Competition and Markets Authority (“CMA”) new powers to find consumer law has been broken, without going through the courts (as is currently the case). The new powers enable the CMA to directly fine businesses who breach consumer legislation, including those who:
- impose unfair terms and conditions, such as excessive cancellation charges (see previous Hamlins article to understand more about unfair terms);
- employ practices which are, or appear to be significantly harming the interests of consumers, such as loyalty penalty charges (these are charges imposed on longstanding customers by businesses in the mobile, broadband, savings accounts, mortgages and household insurance sectors which are currently being investigated by the CMA following a super-complaint from Citizens Advice); and
- make misleading claims (for example, the CMA has investigated the behavior of online booking sites following concerns about search results, pressure selling tactics, hidden charges and discount claims misleading customers).
The government also announced its proposal to give regulators, such as Ofcom and the Financial Conduct Authority, new powers to stop loyal customers being taken advantage of if their existing powers are insufficient.
These new powers will be consulted on in the government’s upcoming Consumer White Paper.
Over the past few years, the CMA has taken enforcement action against unfair practices in a number of sectors, including:
- the entertainment sector (secondary ticketing sites and gambling firms); and
- the travel sector (hotel booking sites, car hire sites, and Airbnb).
The new powers are intended to enable the CMA to intervene earlier and more quickly to protect consumers from unfair or misleading business practices, and are especially intended to tackle loyalty penalty charges and practices such as subscription traps and unfair cancellation charges.
Hamlins regularly advises businesses on their terms and conditions and business practices to ensure compliance with consumer protection law. For further information, please contact Matthew Pryke.