CONSUMER LAW REVIEW: CALL FOR EVIDENCE

The Consumer Council’s Response to the Department for Business

Enterprise and Regulatory Reform.

August 2008

CONSUMER LAW REVIEW: CALL FOR EVIDENCE

CONTENTS Page 1 INTRODUCTION 3

2 THE CONSUMER COUNCIL’S RESPONSE 4

3 SUMMARY OF RECOMMENDATIONS 5

4 DETAILED RECOMMENDATIONS 11

APPENDIX A: SUPPORTING INFORMATION 31

Samples of some of our research reports and consumer

education materials are enclosed for information.

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1. INTRODUCTION The General Consumer Council for Northern Ireland (The Consumer Council)

welcomes the opportunity to respond to BERRs Consumer Law Review: Call

For Evidence.

Our legislative role is to make the consumer voice heard and to make it count.

Set up by statute in 1985 as a Non-Departmental Public Body, the Consumer

Council’s role is to promote and safeguard the interests of all consumers in

Northern Ireland.

The Consumer Council has specific legislative responsibilities for energy

(including natural gas, electricity and coal), passenger transport, food and we

became the consumer representative body for water and sewerage services

from April 2007.

The Consumer Council carries out research and investigations to identify key

consumer concerns, to provide evidence where change is needed, lobby

Government and key decision makers, and to campaign for a fair deal for

consumers, particularly the vulnerable.

Educating consumers forms a vital part of our work and we have developed

strong links with schools, colleges, youth organisations, the community and

voluntary sector, essential skills tutors and the business sector in order to

raise peoples’ awareness of their consumer rights and responsibilities, where

to go for expert consumer advice and also to boost skills that enable

consumers to deal confidently with issues such as complaints about faulty

goods or poor service.

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2. THE CONSUMER COUNCIL’S RESPONSE

As the main focus of BERR’s review is enforcement and compliance issues, it

is more appropriate for those bodies with enforcement or regulatory

responsibilities to comment in detail on the effectiveness or otherwise of

current arrangements.

However, the Consumer Council is well placed to make recommendations

about the need to:

• embed consumer principles in legislation;

• educate and empower consumers;

• provide accessible, relevant and reliable information;

• improve provision for vulnerable consumers; and

• strengthen systems of redress.

In addition we have made general comments about the scope of the review;

securing compliance with the law and targeted enforcement, particularly with

regard to online shopping.

Where relevant, we have supplemented our response with research

undertaken by the Consumer Council and have sent examples of some of our

education resources aimed at raising consumer proficiency.

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3. SUMMARY OF RECOMMENDATIONS Options for legislative reform

• The Consumer Council supports the proposed review of current consumer

protection arrangements aimed at making legislation more accessible for

consumers and businesses alike, and building in greater flexibility to deal

with the complexity of situations that occur now and help anticipate

emerging issues.

• The Consumer Council recommends the adoption of a principle based

approach to consumer legislation, whilst being careful not to dilute overall

protection or create uncertainty for businesses.

• The Consumer Council recommends embedding the established

consumer principles of Access, Choice, Information, Redress, Safety, Fairness, Representation, Quality and Value for Money into the

legislative framework in the same way that ‘implied terms’ are used in the

Sale of Goods Act 1979.

• The Consumer Council supports the move to consolidate core principles of

consumer law into one piece of legislation, produced in plain English to

improve accessibility.

• The Consumer Council considers the Consumer Protection from Unfair

Trading Regulations to be a good model in that they successfully

consolidate key pieces of consumer protection legislation, providing

flexibility, clarity and the ability to respond to emerging issues. At the same

time, consumers and businesses are given certainty as to which

commercial activities are automatically banned. We would be keen to

know where these new regulations; the biggest change to consumer

protection in the past 40 years, sit in relation to BERRs proposed review of

consumer law.

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• The Consumer Council urges caution in approaching ‘deregulation’ and

seeks assurance that in the process of consolidation, laws are only

dismantled where it can be clearly demonstrated that the original need no

longer exists or the necessary protection can be delivered more effectively

in other ways.

• The Consumer Council believes that over reliance on a more self

regulatory approach would not provide the necessary levels of consumer

protection since detriment needn’t be caused by deliberate unfair trading

but can equally arise due to, for instance, insufficient staff training.

Consumer Empowerment and Redress

• The Consumer Council firmly believes that empowering people with the

knowledge, skills and confidence they need to function effectively as

consumers is the most sustainable way to ensure ongoing consumer

protection.

• The Consumer Council strongly recommends that Government, consumer

protection organisations, regulators and education stakeholders work

together to deliver education initiatives aimed at empowering consumers.

These should be developed to suit a variety of audiences including:

- schools and colleges;

- youth sector;

- adult learners;

- community and voluntary groups; and

- business and retail.

Targeting this range requires a more co-ordinated approach, the sharing of

ideas and examples of best practice and also needs appropriate allocation

of resources.

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• The Consumer Council recommends that greater priority be given to

educating businesses to raise their awareness of consumer protection

legislation, improve standards in customer care and complaint handling

and to direct businesses to sources of expert, impartial advice to resolve

consumer disputes.

Provider Information

• The Consumer Council recognises the value of current (informal)

arrangements whereby consumer representative organisations and online

consumer forums offer feedback on retailers and service providers.

• The Consumer Council supports the extension of ‘approval schemes’ such

as the OFTs Consumer Codes Approval Scheme and calls for more

effective promotion to encourage greater participation from businesses

and consumers.

Complaints Procedures

• The Consumer Council recommends the development and promotion of a

‘model’ redress procedure as part of the extension of the OFT Consumer

Codes Approval Scheme.

• The Consumer Council agrees the need for third party dispute resolution

and would like to see this provision widened to cover key industry sectors

that tend to generate a high proportion of complaints and for these

schemes to be more effectively signposted.

• The Consumer Council recommends changing the name of the Small

Claims Court to encourage greater use by consumers who may find the

word ‘Court’ off-putting or fail to associate it as a route to redress for

disputes concerning goods or services.

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• The Consumer Council also recommends an awareness raising campaign

about the role of the Small Claims Court to encourage better take up of its

services.

• The Consumer Council recommends that BERR include a review of

business to business behaviour to strengthen consumer protection

arrangements as corporate malpractice has the potential to cause wide-

scale consumer detriment and often goes undetected.

Vulnerable Consumers

• The Consumer Council recommends that any review of product/provider

information and systems of redress incorporates the views of vulnerable

consumers; not only representative organisations but with consumers

themselves.

• The Consumer Council calls for an extension of the concept of ‘social

responsibility’ which already applies to most utility providers so that

businesses are required to screen their goods and services, customer care

policies and redress systems to ensure that the needs of vulnerable

consumers are anticipated and met wherever feasible.

Securing compliance with the law

• The Consumer Council agrees that regulatory effort and resources should

be targeted at areas where risk to consumers is potentially greatest, but

not at the expense of routine monitoring and enforcement of marketplace

activities generally.

• The Consumer Council strongly believes that, as a matter of principle,

where there is non-compliance, all businesses, irrespective of market

share, brand image and reputation should be treated equally and

consistently in the enforcement measures taken.

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• The Consumer Council is concerned at BERRs proposal to implement a

light touch approach or reduced levels of routine enforcement with respect

to businesses which are perceived to be ‘responsible’. Our experience

shows that while a company’s head office may be familiar with consumer

law it does not necessarily follow that staff working ‘on the shop floor’ are

aware of their legal obligations towards consumers.

Intelligence-led enforcement

• The Consumer Council supports an intelligence-led approach, which

gathers information from sources that go beyond the enforcement network

and involves ‘front line’ organisations such as Citizens Advice and

independent community advice centres.

Consistency and cross-boundary working

• The Consumer Council supports the development of measures aimed at

achieving greater uniformity of enforcement activities between and across

the various UK authorities.

• The Consumer Council agrees that new consumer protection

arrangements are needed to better reflect the global marketplace and

facilitate international co-operation.

Internet enforcement

• The Consumer Council recommends that a review of legislative and

enforcement provision for Internet buying and selling transactions forms a

central part of BERRs Consumer Law Review.

• The Consumer Council calls for legislation to make certain that all

businesses selling on the Internet provide their geographical address and

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a notice about cancellation rights. These should be provided in

accordance with set guidelines that denote where the information appears

and how it is formatted.

• In line with findings from OFTs market study on Internet Shopping, 2007,

the Consumer Council supports the development of “targeted, innovative

campaigns” to raise consumers’ awareness of their online shoppers’ rights

and the provision of clearer guidelines for online traders stating the key

legal requirements.

• The Consumer Council recommends that BERR sets up a dedicated

Internet Regulatory Unit, which although centralised, effectively gathers

intelligence and shares findings with local enforcement agencies.

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4. DETAILED RECOMMENDATIONS Options for legislative reform 4.1 The Consumer Council supports the main thrust of BERRs Consumer

Law Review in its aim to simplify consumer protection legislation, make it

more accessible for consumers and businesses and to allow enough

flexibility so that laws are able to address the complexity of scenarios

that arise now and to anticipate emerging issues.

4.2 The Consumer Council backs the adoption of a principle based approach

to consumer protection legislation (rather than prescriptive) as this allows

greater flexibility in targeting unfair trading.

However, any move to a less prescriptive approach must ensure there is

no dilution in the overall level of protection given to consumers by

introducing legislation which is so general as to be legally unenforceable

in practice. It must also provide a level of certainty for businesses and

we recognise that this is a difficult balance to strike; however, the

effective use of plain English and a de-mystification of ‘legal speak’ will

help.

4.3 The Consumer Council recommends embedding the established

consumer principles of Access, Choice, Information, Redress, Safety, Fairness, Representation, Quality and Value for Money into the

legislative framework in much the same way as ‘implied terms’ are used

in the Sale of Goods Act 1979.

The Consumer Principles: When buying goods or services, consumers have a right to expect: Access Can people actually access the goods and services they need?

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Choice Do people have choices about where and how they shop for goods

and services? Can their choices affect markets to make them work better?

Information Consumers need clear, reliable and accessible information about

goods and services to help them make buying decisions, to understand their

rights and to know what to do if something goes wrong.

Redress When things go wrong, is there a system in place to help consumers

get some redress? Is there an effective complaints procedure and good after

sales care?

Safety Consumers should not suffer loss or harm as a result of a product or

service they have received. Are systems in place to identify risk and ensure

that standards are as high as they should be?

Fairness All consumers deserve to be treated with equity and respect and to

receive the highest standards of service delivery and customer care.

Representation Consumers need to be consulted and to have their views

represented in shaping the development and delivery of services.

Quality Consumers are entitled to the highest standards of quality in terms of

the goods they buy or the level of service they receive.

Value for Money Consumers should not pay more for goods and services

than their quality, availability or conveyance justify.

4.4 The Consumer Council urges caution in approaching ‘deregulation’ as

similar initiatives in the past, aimed at cost savings, have resulted in

the over-hasty dismantling of regulations with unforeseen and

unfortunate consequences. For example, it is generally accepted that

the dilution of previously effective Animal By-product Rendering

Regulations was a major factor in the emergence of BSE. In the end,

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any cost savings became insignificant in relation to the financial

damage caused to the agricultural industry and the UK economy.

4.5 No laws should be dismantled except in cases where it can be clearly

demonstrated and there is consensus that:

• the original need no longer exists, or

• the necessary protection can be delivered more effectively in other

ways.

4.6 The Consumer Council readily accepts that the vast majority of

businesses behave responsibly. However, responsible businesses

were never the problem. The reality is that there are and always will be

a minority of rogue traders who will look for and exploit legal loopholes

for financial gain. Many of these are persistent and repeat offenders.

The Consumer Council believes the adoption of a more ‘self regulatory’

approach would not give consumers the necessary levels of protection.

Voluntary Codes of Practice and Business Guidelines provide useful

regulatory instruments in their own right, but they have limitations in

that they are honoured by responsible traders and ignored by rogues.

At worst, over reliance on a self-regulatory approach may actually

provide rogue traders with more opportunities to trade unfairly.

4.7 Rogue traders are not the only challenge to the adoption of a more

self-regulatory approach. Our work with business and retailers

demonstrates to us on a regular basis that whilst companies may

communicate a genuine commitment to consumer law and the

provision of first class customer care, very often systems and training

are not in place to ensure that staff working with consumers are

enabled to deliver on this commitment.

4.8 The Consumer Council recommends that consumer protection

arrangements be bedded upon a robust core of legislation backed up

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by an effective regime of enforcement, with severe penalties and

sanctions for those guilty of unfair trading.

4.9 The Consumer Council supports the move to consolidate the core

principles of consumer law into a single legislative instrument and to

make this more accessible using plain English which is better suited to

consumers and businesses.

Consumer Empowerment and Redress

What are the possible advantages in making consumers more aware of

their rights and routes to redress? (BERR)

The Consumer Council believes that empowering people with the knowledge,

skills and confidence they need to function effectively as consumers is the

most sustainable way to ensure ongoing consumer protection.

Consumer proficiency research conducted by the Consumer Council in 20071

showed that:

o Six in ten consumers now consider themselves to be very or quite well

informed about their rights. This represents a 54 per cent increase (63

per cent in 2007 compared to just 41 per cent in 2003).

o The number of consumers who feel confident in expressing their rights

has doubled from 2003, with three quarters now saying that they are

willing to stand up for their consumer rights. This shows a 97 per cent

increase (73 per in 2007 compared to just 37 per cent in 2003).

o The number of consumers willing to take action when they felt they had

reason to complain rose from 60 per cent in 2003 to 64 per cent in

1 Well, what do consumers know now? A Consumer Council Progress Report on Consumer

Proficiency 2003 – 2007, March 2008

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2007. It is likely that this can be attributed in some part to the increase

in consumer knowledge, confidence and awareness

The advantages of these significant improvements are four-fold:

Individual Having a sound knowledge of your consumer rights can save an

estimated £180 a year and make you less vulnerable to scams and ill-advised

purchasing decisions2.

Community As consumers grow more knowledgeable and confident, their

actions, and hopefully the outcomes, inspire others to gain a better awareness

of their rights and entitlements when buying goods and services. Empowered

consumers are more likely to be proactive citizens, demanding more from

public services and benefitting society in this way too.

Business As consumers become more aware of their entitlement to high

quality goods, services and customer care, their buying decisions will

influence the market place and challenge business to raise standards.

Businesses that make it easy for consumers to come to them with complaints

(or indeed positive feedback) and who respond to the market intelligence

provided will thrive by boosting customer loyalty.

Economy It has been calculated that the increase in levels of consumer

proficiency over the past four years represent total benefits to consumers and

to the Northern Ireland economy of £52 million.3

2 Consumer Detriment Report, Office of Fair Trading, 2000

3 This figure is calculated using an index of consumers who were not proficient in 2003 compared to 2007.

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Consumer Empowerment

How do you raise consumers’ awareness of their consumer rights?

(BERR)

A key priority of the Consumer Council’s corporate plan 2008-2011 is:

Delivering consumer knowledge, skills and information for all.

While similar consumer organisations have largely focussed their work on

information campaigns, lobbying, research and policy development, the

Consumer Council, in using these approaches too, has remained committed

to producing and delivering consumer education initiatives and resources. As

a result we have built a strong reputation for our consumer education work,

not only at a local level and across the UK but also with colleagues from the

National Consumer Agency in the Republic of Ireland, academics and

consumer organisations in Europe and internationally.

Our education resources are developed to boost the skills of all consumers,

particularly the vulnerable, including:

- young people;

- older consumers;

- consumers from an ethnic or minority group;

- consumers with a disability; and

- consumers with low levels of literacy or numeracy.

The following examples of education resources can be found on our website

at: http://www.consumercouncil.org.uk/education/

Samples of the following materials are enclosed for information.

Shop Around - an interactive, multimedia quiz and scenario pack

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designed for community and voluntary groups but also

used by schools. This resource has its own website at

www.shoparound.org.uk

Buy Rights - a 12 minute DVD and support materials designed for

use by youth workers. The film has subtitled and

signed versions to maximise accessibility. Every youth

worker in Northern Ireland received a pack and post-

primary teachers frequently request packs also.

Shoppers’

Rights Card

- a credit card sized resource for all consumers that tells

them their rights under the Sale of Goods Act and

their responsibilities. We have distributed 500,000 to

local consumers.

Making a Big

Purchase?

- this leaflet was produced to give customers tips on

how to protect their purchases and pre-payments to

avoid losing out when companies go bust.

A characteristic of the Consumer Council’s approach has been to develop and

promote partnerships with other bodies and organisations and, where

possible, to work collaboratively with these in the delivery of consumer

education programmes and initiatives. This enables the pooling of expertise

and sharing of resources.

A prime example of how we have made a significant impact in raising levels of

consumer skills and confidence is demonstrated in our work with the NI

Assembly and the Council for the Curriculum, Examinations and Assessment

(CCEA). We lobbied successfully to ensure that consumer education and

skills became a key focus of the revised NI curriculum, delivered through

Home Economics and this is now a compulsory subject for all post primary

pupils until they reach GCSE level.

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To support teaching of consumer education and skills, we have over 100

lesson plans available through our website covering a variety of topics across

all subject areas including Business Studies, Citizenship, English, Maths and

Life Skills.

We have also worked in partnership with the Department for Employment and

Learning (DEL) in developing policy that places consumer education and skills

within the lifelong learning agenda.

The Consumer Council also recognises the importance of raising consumers’

awareness of their responsibilities, as well as their rights and our education

work programme covers issues including:

• making informed choices,

• when consumers don’t have rights; and

• how to complain effectively.

4.10 The Consumer Council recommends that consumer empowerment be

given greater prominence within consumer protection. This requires a

more co-ordinated approach with appropriate allocation of resources.

To what extent would raised awareness of consumer rights improve the

willingness of businesses to improve consumer protection voluntarily

thus reducing the need for public intervention? (BERR)

Our latest consumer proficiency research4 shows that while consumers have

become more aware of their rights and are more confident about expressing

these, satisfaction among consumers with the way complaints are handled

has fallen from 66 per cent in 2003 to 59 per cent in 2007. This might be due

to unfounded or unrealistic expectations on the part of some consumers but

could equally indicate that businesses are unable or unwilling to meet

consumers’ raised expectations about what constitutes good customer care.

4 Well, what do consumers know now? 2008

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Our previous 2004 Business Report5 identified that, like consumers, many

businesses lacked a proper understanding of consumer rights and

entitlements and that a significant number of businesses did not provide

training for their staff in consumer law or customer care.

4.11 In order to equip businesses, especially frontline staff with the

knowledge and skills necessary to meet the needs of empowered

consumers, the Consumer Council recommends that greater priority be

given to educating businesses and raising their awareness of

consumer protection legislation, best practice in customer care,

complaint handling and sources of expert, impartial advice to help

resolve customer disputes.

To what extent is it more realistic to aim to ensure consumers know

where to go to find out about their rights when they need to, rather than

know their rights? (BERR)

It is unrealistic to expect consumers to have a detailed knowledge of their

rights but it is important that they know that they have rights; that they have a

basic understanding of what those rights are; that they have the confidence to

use these rights and that they know where to go for expert help and advice if

needed.

Consumer Council research in 20076 showed that whilst consumers’ levels of

awareness of organisations having a role in consumer complaints had

increased significantly, a sizeable proportion of the Northern Ireland

population remained largely unfamiliar with many of the key consumer

organisations that are there to help them.

4.12 The Consumer Council recommends that Government, consumer

organisations and businesses work together to raise consumers’ 5 Consumer Knowledge – Business Report, 2004 6 Well, what do consumers know now? 2008

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awareness of who to go to for the various difficulties they may

encounter.

Information about sectors and products 4.13 The Consumer Council supports the views expressed in BERRs

Consumer Law Review and in its interim report, Warning: Too Much

Information Can Harm, July 2007, that factors such as time pressures

or a lack of skills in using information can prevent some consumers

from making the best use of product and sector information.

We look forward to seeing the results from BERRs survey looking at

consumers’ confidence in different markets and consumer complaints

information, due for publication this summer.

Provider Information

4.14 The Consumer Council recognises the value of current (informal)

arrangements whereby consumer representative organisations and

online consumer forums offer feedback on retailers and service

providers. These sources of information tend to offer the right level of

independence, impartiality and informality that consumers trust and

appreciate.

4.15 The Consumer Council supports the extension of ‘approval schemes’

such as the OFTs Consumer Codes Approval Scheme, designed to let

consumers know that a business is offering a high quality and

trustworthy service.

However, the challenges facing an extension of this kind are:

a) How it would be effectively monitored and ‘enforced’ and what

sanctions will apply for failure to meet the required standard?

b) How the scheme(s) will be promoted so that consumers know

about the benefits implied by the scheme logo?

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Are current systems of redress working properly and how might they be

improved? (BERR)

Complaints procedures 4.16 The Consumer Council would like to respond to the point made in

BERRs review that many companies’ returns policies go beyond the

law and offer generous goodwill gestures in cases where, for example

the customer has simply changed their mind.

This is obviously good for consumers but it has the potential to set

unrealistic expectations when customers return non-faulty items to

smaller businesses who cannot afford such generous returns policies.

This in turn can lead to customer dissatisfaction and confuses the

message to consumers that if the goods are not faulty, they do not

have a legal right to a refund or replacement.

This is another example of where consumer education is key to

developing informed, skilled consumers and customer service staff who

understand the difference between legal obligation and goodwill

gestures.

4.17 The Consumer Council recommends the development and promotion

of a ‘model’ redress procedure as part of an extension of the OFTs

Consumer Codes Approval Scheme (CCAS).

Businesses would need encouragement to make greater use of this

scheme and to realise its potential in resolving disputes and lowering

incidences of customer dissatisfaction.

4.18 The Consumer Council would also like to see effective promotion of

CCAS with consumers to raise their awareness of the availability of an

independent redress scheme.

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Alternative dispute resolution

Consumer Council research in 20047 found that businesses in Northern

Ireland were generally unsure as to whether there was a specific body dealing

with complaints for their industry or were uncertain as to which body it might

be. Consequently, just over half (53 per cent) of all businesses were not

referring consumers to the appropriate body as a means of dealing with

unresolved complaints and disputes.

Consumers also lack awareness about the availability of ADR, as reflected in

a recent Ofcom press release8. The research showed that less than 50 per

cent of consumers surveyed were aware of communications providers’ Codes

of Practice for Complaints and only 15 per cent were aware of at least one of

the two ADR schemes available to settle disputes.

4.19 The Consumer Council agrees the need for industry specific third party

dispute resolution as part of the consumer protection regime and would

like to see:

• provision made for market areas that generate a high level of

consumer detriment;

• addressing market overlaps where evidence exists that more

than one scheme contributes to confusion for consumers and

inefficiencies;

• greater consistency and monitoring of ADR services; and

• improved signposting to raise consumers’ awareness of this

route to redress

• sharing of data and best practice regarding existing ADR

schemes and their success rates in resolving consumer disputes

concerning the supply of goods and services.

7 Consumer Knowledge – Business Report, 2004 8 www.ofcom.org.uk/media/.10 July 2008

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Small Claims Court

Consumer Council research in 20079 found that whilst 60 per cent of

consumers surveyed were aware of the Small Claims Court and had some

idea of what it does, a sizeable proportion of Northern Ireland consumers

were largely unfamiliar with this route to redress.

4.20 The Consumer Council recommends changing the name of the Small

Claims Court to encourage greater use by consumers who either find

the word ‘Court’ off-putting, or do not associate it with consumer

disputes regarding goods and services.

4.21 We also recommend an awareness raising campaign to promote the

Small Claims Court and the services it provides as at present it is more

commonly used by businesses taking action against consumers10.

What are the limitations of relying on consumer empowerment and

redress to achieve effective outcomes for consumers? (BERR)

Corporate malpractice

Consumer detriment can occur in ways which do not directly involve ‘business

to consumer’ transactions. This is where corporate policies and practices act

against the overall consumer interest. Recent examples uncovered by OFT

include collusion between major airlines on fuel surcharges and price fixing of

milk by supermarkets and dairies.

The potential detriment to consumers of ‘corporate malpractice’ is likely to be

greater as the impact is borne by all. In addition, this type of behaviour is often

‘invisible’ to the consumer and only comes to light as the result of regulatory

intervention and subsequent media interest.

9 Well, what do consumers know now? 2008 10 In 2006, 60 per cent of small claims in Northern Ireland were issued by banks, finance houses, companies and shops.

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4.22 The Consumer Council recommends that BERRs review also focuses

on the regulation of business to business behaviour to strengthen

consumer protection arrangements.

4.23 While not mentioned in BERRs review, the Consumer Council wishes

to take this opportunity to raise its concerns about the lack of protection

offered to consumers when they have pre-paid for goods and the

company goes bust. The collapse of Farepak caused detriment to

consumers on a huge scale and we are currently keeping a watching

brief on the difficulties of Wrap-it, the online wedding gifts service,

which may have financial (and stressful) repercussions.

Progressing complaints

Not all consumers have the knowledge, skills or confidence to seek redress.

Others simply choose not to complain. In the Consumer Council’s proficiency

research in 200311 and 200712, the most common reasons consumers gave

for not complaining were that they:

- ‘didn’t want the hassle’

- ‘thought it would be a waste of time’

- ‘didn’t consider the problem serious (or costly) enough’.

This is reflected in the OFTs recent Consumer Detriment Report13 where

many respondents mention time, frustration and cost factors as deterrents to

taking a complaint further. Other respondents decide not to pursue things

when repeated contacts with the product or service provider fail to bring the

consumer closer to a solution, causing them to switch to an another supplier,

(if one is available).

11 Consumer Knowledge – well, what do you know? 2004 12 Well, what do consumers know now? 2008 13 Consumer Detriment Report – Accessing the frequency and impact of consumer problems

with goods and services. OFT, April 2008

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It is very likely that a large number of complaints go unrecorded and

unresolved, leading to high levels of customer dissatisfaction. The question

has to be asked whether some less scrupulous companies rely on a ‘drop-off

effect’ from consumers who either lack the patience, time, or skills to pursue

their complaint. An added deterrent can be the cost factor involved in making

a complaint, such as endless phone calls to the company or other incidental

costs as identified in OFTs report.

4.24 The Consumer Council would like to see the implementation of model

redress schemes that place the onus on businesses to progress

complaints, keep the consumer informed at regular intervals and strive

to seek a satisfactory conclusion in as little time as possible.

4.25 The Consumer Council recommends that BERR consults with

consumers to identify what they feel to be good and bad practice in

terms of complaint handling, customer care and that this informs the

design of a model redress system.

The Consumer Council operates a number of consumer panels,

including an older persons’ panel, youth panel, rural consumers’ panel

and a disability panel. In doing this we understand and appreciate the

value of hearing directly from consumers, gaining their insight and

receiving clear steers in relation to policy development.

Respondents to the OFT Consumer Detriment survey rated companies

‘being easy to contact’ very highly, followed by the company

‘acknowledging the problem’, ‘providing information’ and showing ‘a

degree of sympathy’.

It is also interesting to note that in a British Standards Institute survey

conducted in May 2007:

• More than a third of consumers said they would stay loyal to a firm

if it apologised following a customer service failure;

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• Yet, in three-quarters of all cases of poor customer service, no

apology was offered; and

• Overall, 76% of consumers said they had taken their business to a

competitor as a result.

4.26 In November 2007, the Consumer Council consulted with Customer

Service Managers from many of the large high street retailers and

asked them how their store could be better at encouraging consumers

to come to them with their complaints and feedback. Participants

compiled a list of suggestions that they felt could be easily

implemented. These included:

• Customer comment cards at the till • Interactive kiosks placed in store for customers to provide feedback • Pictures of in-store staff so that customers view them as friendly

and approachable and know who to go to with a problem • Customer service desks to be better situated in store with improved

signposting • Customer suggestions box • Greeter at door who can deal with queries/issues • Information about what to do and who to contact if you have a

problem to be printed on the back of the receipt • Promotion of chat forum/feedback pages on company websites.

Vulnerable consumers

How can we do more to ensure effective empowerment and redress for

consumers who might be considered vulnerable? (BERR)

The needs of vulnerable consumers feature prominently in the Consumer

Council’s corporate objectives and we ensure that our work focuses on priority

groups including young people, older consumers, consumers with disabilities

and consumers from ethnic and minority groups. In 2007, 60 per cent of our

publications covering consumer advice and guidance on how to complain

went to areas of social deprivation and section 75 groups14.

14 See Appendix, page 30.

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4.27 The Consumer Council calls for an extension of the concept of ‘social

responsibility’ which already applies to most utility providers with regard

to vulnerable consumers. We recommend that these obligations are

applied to other providers of goods and services and that companies

screen their supply of goods and services, customer care and

complaints procedures so that the needs of vulnerable consumers are

anticipated and met wherever possible.

4.28 The Consumer Council can see no reason why the practice of cold-

calling should not be made illegal as this is an activity that appears to

lend itself to unfair trading, primarily targeted at vulnerable, older

consumers.

4.29 The Consumer Council supports any move to make information on

products, services, contracts, credit and billing information more

accessible for consumers. It is also important to ensure that the

information is perceived by consumers as being provided in their

interest, to help them make an informed choice. This will benefit all

consumers, not only those identified as vulnerable. We welcome the

research that has been undertaken and the recommendations that

have emerged. We now look forward to seeing changes implemented

as a result.

Securing compliance with the law 4.30 The Consumer Council agrees regulatory effort and resources should

be targeted at areas where the risk to consumers is potentially

greatest. However, this should not be at the expense of routine

monitoring and enforcement of marketplace activities generally, which

should remain an important part of consumer protection.

4.31 The Consumer Council believes that, as a matter of principle, where

there is non-compliance, all businesses, irrespective of market share,

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brand image and reputation should be treated equally and consistently

by enforcement and legal procedures.

4.32 The Consumer Council is alarmed at any prospect that may result in a

light touch approach or reduced levels of routine enforcement with

respect to businesses which are perceived to be ‘responsible’. We

know through our work with major high street retailers that whilst senior

management at head office may possess a sound knowledge of

consumer law, this is not necessarily filtered down to employees

working ‘on the shop floor’. Indeed, as we mentioned earlier, our

research shows that even in larger companies, staff often receive no

training in consumer rights and complaints handling. In other words,

consumer detriment needn’t be the result of deliberate malpractice, but

can occur through accidental oversight or ignorance.

Intelligence-led enforcement 4.33 The Consumer Council supports an intelligence led approach to target

business activities and market sectors posing the greatest risk to

consumers.

We recommend intelligence gathering go beyond the enforcement

network and involves ‘front line’ organisations such as Citizens Advice

and independent community advice centres. This should automatically

include all regions, including Northern Ireland.

Consistency and cross-boundary working

It is interesting to note in the European Commission’s Green Paper on the

Review of the Consumer Acquis15 that a Eurobarometer survey conducted on

behalf of the Commission found that 71% of consumers consider it harder to

resolve problems such as complaints, returns, price reductions and

15 http://ec.europa.eu/consumers/rights/cons_acquis_en.htm#green

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guarantees when shopping cross-border. Addressing these negative

perceptions will increase legal certainty and consumer confidence.

4.34 The Consumer Council supports the development of measures aimed

at achieving greater uniformity of enforcement activities between and

across the various UK authorities.

4.35 The Consumer Council agrees that new consumer protection

arrangements need to be developed that are better able to reflect the

global marketplace and facilitate international co-operation.

Internet Enforcement

In the last twelve months around 37 per cent of consumers in Northern Ireland

had shopped online for goods and services, this compares to 28 per cent in

200316. The Consumer Council is committed to helping Northern Ireland

consumers to protect their personal and financial information as many are put

off by concerns they have about Internet fraud. We are also focused on

raising awareness of cancellation rights when shopping online.

4.36 The Consumer Council recommends that legislative and enforcement

provision for Internet buying and selling transactions forms part of the

current Consumer Law Review, rather than separately.

4.37 The Consumer Council recommends setting up a dedicated Internet

Regulatory Unit, which although centralised, effectively gathers

intelligence and shares intelligence with local enforcement agencies.

4.38 The Consumer Council calls for legislation to make certain that all

businesses selling on the Internet provide their geographical address

and a notice about cancellation rights. The information should be

16 Well, what do consumers know now? 2008

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provided in accordance with guidelines that make clear where the

information appears and the way that it is formatted.

4.39 The Consumer Council is committed to raising consumers’ Internet

shopping skills and, in line with findings from OFTs market study on

Internet Shopping, 200717, supports the development of “targeted,

innovative campaigns” to raise consumers’ awareness of their rights.

The Consumer Council also supports the OFTs recommendation to

provide clearer guidelines for online traders stating the key legal

requirements.

17 http://www.oft.gov.uk/shared_oft/reports/consumer_protection/oft921.pdf

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APPENDIX: SUPPORTING INFORMATION Footnote 10, page 17 Section 75 of the Northern Ireland Act 1998 came into force 1 January 2000

and places a statutory obligation on public authorities in carrying out their

various functions relating to Northern Ireland, to have due regard to the need

to promote equality of opportunity –

• between persons of different religious belief, political opinion, racial group,

age, marital status or sexual orientation;

• between men and women generally;

• between persons with a disability and persons without; and

• between persons with dependents and persons without.

The statutory obligations are implemented through Equality Schemes,

approved by the Equality Commission and by screening and carrying out

Equality Impact Assessments (EQIAs) on policies.

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