The government has consistently sought to reassure various stakeholders (employees, consumers etc), that in a soft/hard post-brexit environment, rights will be preserved. However, the debate demonstrates a strong anti-regulation agenda softened by reassuring words introducing The Great Repeal Bill. Despite representations to the contrary, the Consumer voice is not generally heard or allowed access to key government discussions and even if views are extracted, it coalesces around a Consumer Establishment; this sharply compares to the relationship between business and government. This Paper seeks to outline options and defines a Consumer strategy that not only reaches beyond any Brexit ‘conclusion’ but looks toward the threats posed by the coming of the Fourth Industrial Revolution; this paper delivers Political Entrepreneurism into the heart of Consumer Equality.
This Paper has no intention to revisit the rights and wrongs of the 2016 EU Referendum; that is a discussion that is beyond the remit this Paper.
The consequences of the vote are now beginning to seep into the collective-conscious of Parliament, parts of the Media and the British Public. Those consequences are now strongly suggestive that a ‘trimming’, by default or design, of Consumer Regulation, will follow any form of Brexit.
As The Great Repeal Bill progresses through parliament, concern remains at how EU Law, formally imported onto UK Statute books will be addressed or amended following our exit. Some laws are currently sitting within the UK Statute books, such as the Package Travel Regulations, because each Member State has been obligated to import a particular EU Directive into their own National Laws. Some EU Laws however, exist as a Regulation and are simply followed by each Member State, with obligations to import enforcement, as can be seen in the Flight Delay, Cancellation and Denied Boarding Regulation. It is this latter group of laws that will present the biggest challenge but also from a commercial and political agenda perspective, an opportunity.
The challenge now presented by The Great Repeal Bill is how to deal with the many thousands of laws/regulations and to seamlessly transport their provisions into UK National Law. One such device appears to present itself through the importation of Henry VIII clauses; these clauses potentially provide Ministers with sweeping powers to red-line any regulation which they class as unworkable or harmful to the goal of a new business strategy or a de-regulated society. The problem with using that form of legislative construction, is that it either attracts a low-level parliamentary scrutiny (perhaps pressured by the enormity of the task it faces), or, no scrutiny at all.
Currently, the Bill is somewhat log-jammed in parliament, because the government is facing a real threat to it remaining in power through cross-bench angst at its provisions. The government is now considering over 400 amendments before the Bill becomes law and at the time of writing this Position Paper, the debate is passing through its Committee stage.
Whilst the current government considers its options under the Bill, we should be under no illusion that if they succeed in getting The Great Repeal Bill onto the Statute books, the agenda of de-regulation will remain a strong motivator for those on the government benches. Equally, it should be recognised that European Law relies on the complexity of cross-border cooperation and enforcement, so the relevant question to ask is: ‘how can rights be effective in law, when the very devices within that law, requires our country to be members of the EU or the EEA?’
Several examples illustrate the point:
- The Denied Boarding, Flight Cancellation and Flight Delay Regulation (EC Regulation 261/2004) is required to be adopted by each Member State without the need to formally import its provisions into domestic law. The Regulation provides a codified route for air passengers when dealing with problems on civil air transport. The first issue relates to the fact that the Regulation applies to EU Registered Airlines. In a post-brexit scenario, will the UK’s airlines be registered within the EU; will they enjoy the benefits of the EU Open Skies agreement and the regulation created by the European Aviation Safety Agency (EASA)? Further, where problems occur, will Consumers have the opportunity to seek enforcement against a British registered airline with the help of a National Enforcement Body (NEB) within a Member State or will it have to seek the help of the UK’s Civil Aviation Authority sitting outside the EU & EEA? The question arises also if a UK Citizen travels with an EU registered airline, could they rely on its provisions and in particular, assistance from an NEB? At first glance it could be suggested that they could not, however, the analogy can be drawn with a non-EU citizen purchasing a ticket from an EU airline; they would be able to rely on the provisions of the Regulation despite not being an EU Citizen. Uncertainty is demonstrated through these few examples and that uncertainty could have the effect of rendering the ‘imported’ law as being ineffective. The only way to resolve the potential for uncertainty is through the introduction of comprehensive balancing provisions and/or reciprocal agreements at the time the Regulation is imported into UK domestic law.
- The Package Travel Directive, is imported into Member States’ domestic law; in the UK it is known as The Package Travel Regulations. This provides extensive Consumer protections for those who buy traditional Package Holidays. That protection is to be considerably extended by the new Directive/Regulations in 2018, covering a wider range of holiday-type, including the majority of so-called DIY holidays. There are two principal issues about the operation of this protection in the post-brexit world. At face value, a Consumer buying a holiday from a UK-based tour company will still be able to pursue their claim or complaint in the UK under ‘UK domestic law’. However, in recent years, as the Single Market has developed, travel companies have begun to recognise the ‘opportunity’ of relocating to another Member State for tax or other operational reasons. It is quite likely that this trend will not abate and we are likely to see Consumers, as they currently do, make contracts across borders with travel companies. In those instances, future UK Consumers will be faced with a challenging set of terms and conditions and will likely be required to lodge a complaint or make a claim in one of the 27 Member State’s that the company is registered in. This will have an immediate impact on Consumers who will have become familiar with the ease at which they can make their complaints or lodge their claims in the UK. Another important factor concerns the Financial Protection that a travel company is obligated to provide to a Consumer. In recent years there has been growing concern about how the ‘obligation’ is being applied and there has been some discussion, but no action, on the creation of a pan-European Financial Protection scheme for Consumers. For example, Low Cost Holidays moved its operations to Majorca in Spain, primarily to take advantage of the flexibility of the Single Market, but in particular, the different financial threshold/rules set by the Mallorcan government, in the operation of their Financial Protection scheme. When Low Cost Holidays collapsed, it was clear that Consumers would not receive appropriate Financial Compensation from that scheme and it highlighted the impotence of the Civil Aviation Authority (CAA) who could only watch as the disaster unfolded. It raised important questions which I had pursued for several years about the need to have a pan-European Financial Protection Scheme, but as we discovered, Member States were keen to maintain a subsidiaric approach toward Financial Protection. What of the future? In the face of ‘brexit’, the remaining 27 Members are quite likely to sharpen up aspects like Financial Protection as they grow and solidify the rules of the Single Market. The newly ‘adopted’ UK domestic provision is likely to be ineffective in part because of Commercial decisions and Single Market developments; Consumers will run at a disadvantage unless a reciprocal deal can be struck to allow for the continuation of action within the UK against EU/EEA travel companies and that Consumers will enjoy the benefits flowing from any future pan-European Financial Protection scheme.
- The Small Claims Court Regulation is another example of EU Law being adopted by Member States without the need for formal inclusion into domestic law (note: this Regulation is not applied in EEA Member States, eg: Norway). The EU Smalls Claims Procedure empowers a Consumer in the European Union, to bring their complaint before their local Court or Tribunal, against a trader based in another part of the EU. This provision simply extends rights of redress in the Single Market and Consumers can bring claims that are less than €5,000. The adoption of these provisions are already mirrored within the Civil Procedure Rules of England & Wales; post-brexit it would appear that this Regulation will also be adopted by UK domestic law. However, it is difficult to see how this currently valuable Consumer legislation can continue to be effective. In the first instance, how can a UK Consumer sue a trader from another country when there will be no reciprocal agreement in reverse? How can a Consumer compel a Single Market trader to accept the jurisdiction of the UK courts when the UK will sit outside that trading block? How can a Consumer utilise and enforce any judgement received against a trader from the Single Market? This is a complex area and demonstrates how at the stroke of midnight on exit day, this provision alone could potentially be lost from the Consumer armoury on a whole range of Consumer Rights and the complaints that flow therefrom.
- The UK Consumer Rights Act, stemmed from the Directive on Consumer Rights. It brought together other EU provisions and recognised the operation of the Single Market in the fields of Goods, Digital Content & Services. It provides clarity on information requirements, the fairness of contracts and enforceability. It is to-date, the single most important piece of Consumer Protection Legislation produced. The Act seeks to incorporate and impose a Commercial responsibility on those countries not choosing an EEA jurisdiction for dispute resolution, but importantly on the sale of goods it excludes a Commercial entity’s responsibility for ensuring that information provided by them becomes a term of the contract, the requirement that changes to the contract information must be agreed between the trader and the consumer before entering the contract, along with further exclusions on information rights, exclusions on delivery and the passing of risk, irrespective of whether the contract ‘has a close connection’ to the UK. The Act provides that where no jurisdiction has been chosen or where an EEA jurisdiction has been chosen, to help decide which law is applicable to contractual relations, reference should be made to (Rome I) EC Regulation 593/2008! At preamble 6 of the Regulation, it states that one of its primary purposes is to ensure: ‘The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, certainty as to the law applicable and the free movement of judgments, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country of the court in which an action is brought’. Compare that to the statement offered by the UK government in May 2016 (one month before the EU Referendum), on their review of EU Regulation on Consumer Protection Cooperation. In that paper they stated: ‘Cross-border enforcement of consumer protection plays a key role in ensuring the digital economy and the single market works well. We are keen to work with the Commission to ensure that these opportunities are realised. The UK wants people to have the confidence to purchase goods and services from across the EU, safe in the knowledge that there are mechanisms in place to tackle rouge traders and unjustifiable business practices’. Insofar as the Consumer Rights Act is concerned, the biggest threat lies within the potential failure of enforceability, importing a Regulation to which there are no reciprocal agreements to cement-in those provisions and from a Consumer perspective, the potential inability to continue to use the Small Claims Process, as detailed above, will only serve to promote the uncertainty of the law at Brexit Day +1!
It is my opinion, that on closer examination of the current crop of EU Consumer Law, we are likely to find other contradictions and the potential for the laws to be ineffective. It is also important to remember, once we are out of the Single Market and the EU, we will not be able to influence the outcome of any developments in Consumer Laws or Protections.
It is therefore clear, that by design, without the use of any Henry VIII clauses, the work of deregulation will have begun. Soothing words about protections are no substitute for solid engagement and proposals.
In short, it is quite likely that from 29 March 2019 onwards, it will begin to dawn on Consumers that the protections that they have taken for granted will be lost in the excitement of sovereignty and agenda. It is crucial that Consumers now engage in the real possibility of change but that engagement must also extend not only to other Consumer Groups, but to the very Lawyers who purport to represent the Rights of Consumers; to date, their silence has been deafening!
The Four Brexit Options now crystallising for Consumers:
At the time of writing this Position Paper it is clear that the whole brexit process is in some disarray. However, Consumers should not assume that this will always be the case. At some stage in the future, it is entirely possible, that Westminster Politicians, will not want to take full responsibility for their decisions and that whatever the outcome of any negotiations, they will want to ‘re-understand’ the ‘will of the people’. There has been much debate about the content of the so-called ‘brexit-papers’ and whether these impact statements should be released for Public discussion! Within the EU, there is no such reticence and in fact Consumers can view EU assessments on a wide range of topics. One such paper on Consumer Rights advocates that the best possible solution for Consumers rests in the UK taking the EEA/Norway solution. In anticipation that UK Citizens may again be asked to vote and for the purposes of this Paper, it is perhaps prudent to set out the potential options and what they mean insofar and Consumer Rights are concerned:
- Continued Membership of the European Union. It is not inconceivable, even after the last 18 months, that the British People could be asked to agree on continued membership of the EU. If that were the case, whatever about any recriminations, it would provide the best possible outcome for UK Consumers. They would be able to retain their Rights and influence the development of those Rights and their position in the Single Market.
- A new Membership of the European Economic Area (EAA) (The Norway Model). This would be determined to be a ‘soft-brexit’. It would deliver exit from the European Union, but retain Membership of the Single Market and its laws. Consumers would be able to enjoy the full legal protections of the Single Market but they would not be able to influence the development of Consumer Laws or their position in the Single Market (there is a Consultative process but this does not equate to the same level of Consultation as being a full member of the EU).
- A new Trade Deal. I would describe this as a semi-hard-brexit. This could provide for some access to the Single Market, but it is not yet clear to what extent protections would be offered to Consumers. It is currently difficult to establish whether such protections would be generally available across all Consumer products and services or whether there would be any limitation. This option provides no opportunity for Consumer Consultation.
- A Hard Brexit. This delivers a complete exit from the EU, the Single Market and the Customs Union; this is often referred to as the WTO model. Consumers would be left with residual EU law that may prove to be ineffective. As we would not be members of the EU, there would be no opportunity to influence laws that would not be part of the UK landscape. Consumers only option would be to canvass the UK parliament for enhanced protections.
A Brexit Strategy:
In my work as a Consumer Commentator, it is a challenge to provide a ‘balance’ required by some media outlets.
The issue surrounds the fact that if a firm Consumer position is required to be stated, which supports the status quo (eg: continued membership of the EU), then some broadcasters are unable to accept that this is the best possible analytical outcome for Consumers and that you are engaged in ‘Project Fear’.
As a Consumer Campaigner and Commentator you are always examining the ‘cause and effect’ of a political decision upon the Consumer and this was no different to the various scenarios that potentially affected Consumers before the EU Referendum. In that period no such claims of ‘Project Fear’ were ever offered.
It is therefore irrational, in the absence of a clear and developed government policy, for media outlets to expect anything less than a best solution for Consumers to be presented.
It is reasonable therefore to state that Consumer representatives are confronted by polarised positions and some feel impeded to discuss strategy, offer solutions or simply offer the view that they simply do not know what will happen next. With respect to my fellow Consumer Campaigners, this is an untenable position to maintain 18 months after the Referendum.
Since the Referendum, there have been many lectures and meetings around the country, where Consumer Campaigners are simply trying to fathom out ‘what comes next’. Theories veer from the ultra-deregulationists (such as the proposals offered by the authors of ‘Britannia Unchained’), to the theory that the left of politics are seeking a similar outcome as the anti-regulationists, with the promise of Social Justice.
Speaking out with definition and clarity has become a risky business, with some media outlets steering away from controversial opinion. Even comedians have fallen victim to receiving criticism from their audience-base when offering a satirical take on the entire brexit process!
This polarisation fails to allow for a sensible debate, opinion to be heard, courage to be deployed and a lack of an honest recognition of the actualité of the Consumer position.
Currently, Consumers enjoy a high degree of Consumer Protection within Europe, which has moved its focus away from being an entirely business-centric Union to one that has created a Social Europe, whereby Consumers are seen as an essential linchpin in the construction of successful businesses and an effective cross-border Single Market.
In practical terms, if we are to assume that the UK will embark on a semi-hard/hard brexit, government will have to recognise that they are at risk of causing serious detriment to the ‘just about managing’ or ‘squeezed middle’ Consumers, when failing to assess adequately and maintain the substantial body of enforceable Consumer Rights; this is not to say that other categories of Consumers will also suffer similar detriment.
Whatever about the rosy-tint placed on UK life and the opportunities in a post semi-hard/hard brexit, the Consumer/Commercial world already operates on a cross-border basis. The semi-hard/hard brexit position speaks confidently about ‘Global Britain’, as if Britain and its Citizens do not already reach out and transact with the world around the UK. As we develop further our digital opportunities and indeed welcome the Fourth Industrial Revolution into our lives, how will these transported laws and the failure of these laws help us in the changes to come? The new-age of Industrial opportunity will visit new challenges upon Consumers, be that in health, work, play or what goods or services we buy; it will be Consumerism at the speed of thought! It therefore serves no purpose to revert to some nirvana and we must accept that whatever decision we make, it is logical that events will dictate how we transact in the world. The question must be: ‘Should we ensure that Consumers, the very oil of the Commercial machine, be empowered or benefit from a comprehensive set of rules and regulations that they have come to understand, or, should they be subject to the ‘wild-west’ of uncertainty?
It is now becoming clear that if we hope to trade with the rest of the EU, we will have to comply with Standards and Laws. If we have no influence in the creation of law, we must as a country understand how we can become the influencers of such regulation and this can only be achieved in the post-brexit world of the Standards-making bodies (BSI & CEN).
Whatever my previous comments, the government must consider how they transport Consumer Law into the domestic law-books and deal with uncertainties and the ineffectiveness of such laws.
If we are to restore a feel-good factor amongst Citizens/Consumers and prepare for the changes to-come from the Fourth Industrial Revolution, we must seek to create Confidence.
Confidence will not be created through an anti-regulationist agenda nor through an unrealistic view of the world around the UK.
In order to establish ‘Confidence’ the government should by its own initiative or Citizen encouragement, take radical steps to place Consumers at the heart of their overall strategy.
In the first instance they should recognise in Statute, that Consumers are key Stakeholders in the UK economy.
Consumers should be deployed within the offices of Regulators and Company Boards. New Consumer Objectives should be created which align with comprehensive Public Information Campaigns. UK law should initially mirror EU law so maintaining the high Standard already enjoyed by Consumers and where possible, cooperation through reciprocal agreements to guarantee enforcement and standards in cross-border activity. These steps should be taken to not only establish ‘Confidence’ but to recognise that at some time in the future our path may once again run parallel to that of European Union and the country may well want to once again take its seat at the table of Member States; with one eye to the future, we should ensure that we are regulation and systems ready which is in stark contrast to the UK’s current position.
It is therefore incumbent upon the UK government and the Consumer Establishment to create a wider cohort of Stakeholders and to develop a Social Contract for Consumers.
It is my strong recommendation that in the event of a semi-hard/hard brexit, the UK must create such a Social Contract for Consumers; such a contract should hold or demonstrate the following basic principles:
The Social Contract for Consumers
The creation of a Social Contract for Consumers, in a post-brexit Britain, creates an opportunity to energise the Consumer & Commercial Sector, through active engagement and partnership. That partnership is to be developed across multiple platforms thereby creating personal and commercial profit through an enhanced relationship model.
The Consumer Objective:
Preamble: Since 1973, Consumers have enjoyed a joint equality with Commerce, through a system of European Law. If a post-brexit Britain is created, that joint equality must take centre-stage in any new regulatory world. The following should be considered to be the principal goals but these should not be considered to be exhaustive:
- The Primary Objective must be to replicate the provision within the Charter of Fundamental Rights of The European Union, where the UK will introduce, either through Statute or within any Rights Framework, the Fundamental Right that ‘UK policies shall ensure a high level of Consumer Protection’;
- The Second Objective must ensure that within any new regulatory framework of the UK, that the Consumer is given special status and equal rights of access to government. Such a right is not just held exclusively for the Consumer Establishment, but extended to all Citizens/Consumers in an open, transparent and fully engaged methodology;
- The Third Objective shall provide that individual Consumers and not just the Consumer Establishment, will have equal right of access to law-making, standards-making, commercial development, not just within the UK but across Europe and any other National body where the rights of Consumers and Commerce are discussed and developed;
- The Fourth Objective will ensure that Consumer education will become paramount in any National legislative, standards, regulatory or commercial development framework, so empowering individual Consumers;
- The Fifth Objective will produce the Right of Equal Access to Law where disputes arise, such an access will not be impeded by any device that acts as a disincentive to access this Right. In accessing such a Right full regard will be given to assistance provided to all parties and that extra-routes to resolution are not defeated by device, a lack of independence or transparency or a lack of ease-of-use of an effective Appeal process. The creation of this Objective will ensure that Consumers as Stakeholders in the Commercial Market can act as a spur/encouragement to the development of that Market, where it fails them;
- The Sixth Objective shall create through reciprocal agreements or other legal devices, the ability of Consumers to transact with ease across any Commercial Market anywhere in the world. In developing this Objective, due regard must be had to the Right of Equal Access to Law within those Markets.
The Social Contract for Consumers:
The Structure of the Social Contract for Consumers will have its base within the Consumer Objectives. The structure of such a contract must first recognise the different Consumer Product or Service types. Its membership, paid for by Public Funds, must be open to all Consumers and not just the Consumer Establishment. The structure should positively attract engagement regardless of issue, politics, race, gender or sexuality. The structure will positively promote all aspects of inclusiveness and diversity and be open and transparent in all its dealings. The Contract should attract due diligence and good governance and should operate within those principles through the assistance of a Board, answerable to its Membership through regular annual meetings. The structure should establish named contacts within all National and Local government offices and departments along with developing a Special Relationship with the Speaker of the House of Commons. It should encourage best practice in the development of Consumer Policy and Law and seek to ensure that the UK adopts mirror benefits from other jurisdictions. The Contract will actively engage with other Consumer Groups & Individuals and not just from the Consumer Establishment; such engagement is to also be encouraged with any country outside the UK. The Contract will engage in creating surveys to extract information and of Consumer trends & opinions. The Contract will actively engage in Consumer messages and work with Commercial entities and Legislatures to ensure an Effective Rights Process and an Equality of Arms within Consumer Products & Services.
The Social Contract for Consumers shall ensure, through government enacted legislation, that Consumer Representatives (not just from the Consumer Establishment) sit as active members on the boards of UK Companies (more than 100 employees). Consumers will also be empowered to sit on Regulatory Boards and Standards-making Bodies and their Committees as Equal Representatives, advocating the Consumer position. Advocacy of the Consumer position will not serve as a block to development of Products out Services, but add a unique perspective of use and experience of those Products or Services.
The operational goals of the Social Contract for Consumers will be to:
- Highlight deficits within the development, nature, sales or delivery of Products or Services;
- Act as an equal Stakeholder to help define and develop solutions;
- To actively promote and develop law, standards and policy, thereby ensuring a high standard of Products & Services & Equal Treatment for all;
- To be central to the development and creation of Public Information Campaigns;
- To actively understand, define, promote and develop solutions within any Cross-Border digital and commercial activity;
- To advocate for effective National or Cross-Border enforcement methodologies.
By following the Consumer Objective and the Structure of the Social Contract for Consumers, it will ensure that Rights that have endured since 1973, will maintain their central position in Civil Society. The benefits of those Rights will endure within a radical structure, thereby maintaining the Social Element for Consumers and thus maintaining a fairness for the Commercial Market. Apart from the traditional forms of engagement, the new Social Contract should deploy new methodologies to encourage inclusiveness and diversity of opinion and contribution by adopting technology such as:
- Global Governance Participation;
- Social Media;
- Behavioural Transformations within Media and Social Mediums;
- Trans-National Actors Participation;
- Trans-National Connectivity;
- Trans-National Linking;
- The Internet of Things;
- Virtual & Augmented Realities.
It is imperative that mere soundbites do not take the place of positive action for Consumers.
It is clear that the brexit scenario has some way to go and in the absence of any written policy from government, the purpose of this paper is to offer a vision of Consumers and their Rights, within any soft/hard brexit outcome.
It is important to re-state the conclusions within an impact policy paper prepared for the European Parliament & DG Internal Policies. On Consumer Protection they have concluded:
“However, from the time of withdrawal the consumer protection legislation of the EU and the UK are likely to drift apart. Even if the UK autonomously adopts all EU legislation in the field of consumer protection, interpretation of such legislation will differ, as the UK courts will not be subordinated to the European Court of Justice. As it is unclear, how the consumer protection level in the UK will develop, the protection of EU27 consumers by means of EU consumer law will depend on the applicability of EU consumer protection law and its enforceability. The applicable regime for questions of jurisdiction, conflict-of-laws and enforceability is uncertain after Brexit".
Government and its Ministers no longer have the luxury of simply sitting on the sidelines. They should remember that the very Consumers subject of this report are indeed their own constituents; they are not some abstract concept.
Consumers suffer real detriment and if this government is not clear in its Consumer Strategy, intended or unintended consequences will not be received lightly, irrespective of whether those same Citizens voted to Leave or Remain. One such ‘unintended’ consequence will be the development of a new case-type of law, where lawyers will take advantage of the uncertainty created in adopted law. This ‘unintended’ consequence will deliver a Consumer dissatisfied; a disempowered Consumer!
It is therefore my view, that government should urgently review its Consumer Strategy and define clearly the role that Consumers can play in the hoped-for dynamic economy.
A failure to look at that economy simply ignores the greatest resource the Commercial world relies upon, the Consumer!
In addition, government must move beyond their mid-20th Century thinking and enhance the protections for Consumers as this continent and the world beyond moves into a new Industrial Revolution period; Consumer Protection must be fit for purpose and not reliant on an ideology of a past commercial or industrial methodology.
I therefore strongly recommend that government reads and considers the issues within this paper and dare to deliver an even stronger status for Consumers!
Independent Consumer Campaigner & Commentator
29 November 2017
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