- The government will protect consumers’ hard earned money and stop exploitation of online consumers
- New powers for the competition authority will improve enforcement and combat subscription traps and fake reviews so people can spend with confidence
- Economy Minister Kwasi Kwarteng: The UK’s economic recovery depends on the strength of our markets and consumer confidence in them
An arsenal of planned reforms to boost competition and protect the public from rip-offs while Britain builds fairer from the pandemic was unveiled by Economy Secretary Kwasi Kwarteng.
The government will change the law so that prepayment systems like Christmas savings clubs will have to protect customers ‘and consumers’ money as they save for the holidays. The change will prevent scandals like Farepak from recurring, where tens of thousands of people, many on low incomes, lost everything they had saved for Christmas when the company went bankrupt.
For the used car and home improvement sector, where consumers often make large, important one-time purchases, the government will require companies to arbitrate or mediate if a dispute arises over a transaction. This means that both sides will not be dragged through the courts and the playing field will be leveled out for decent companies doing the right thing.
The government is also cracking down on subscription traps by requiring businesses to state exactly what consumers are signing up for and simply letting them cancel to ensure people can spend their hard-earned money with confidence.
The consumer catfish behind fake reviews online are also targeted by rules that automatically make it illegal to pay someone to write or host a fake review.
The government will help regulators clean up other shady tactics used to deceive online shoppers. These include “dark patterns” that make consumers spend more than they want and “mud”, negative nudges, such as when companies pay to have their product features appear high on a retailer’s website while hiding the fact that they paid for it.
Economy Minister Kwasi Kwarteng said:
The UK’s economic recovery relies on the strength of our open markets and consumer confidence in them.
In fulfilling our commitment to strengthen our competitive regime, we give businesses confidence that they will compete on fair terms and the public’s confidence that they will get good business.
The proposals come in the new competition and consumer policy reform consultation that fulfills the government’s manifesto to “give the competition and market surveillance authority enhanced powers to combat consumer rip-offs and bad business practices”.
Harsh penalties are imposed for non-compliance, with new powers for the person CMA and similar law enforcement agencies to punish unscrupulous traders who violate consumer laws with fines of up to 10% of their global sales, and civil fines for companies that deny or give misleading information to law enforcement agencies.
The government is also considering several options – including introducing fines – if companies violate obligations to enforcement agencies to change their course of action.
To speed up processes, CMA Also, being able to enforce consumer law directly instead of going through legal proceedings that can take many months or even years – which protects the consumer faster.
Consumer and Small Business Secretary Paul Scully said:
Business is built on trust. When consumers part with their hard-earned cash, they can rightly expect to get their money’s worth. Cowboy builders are not welcome in 21st century Britain.
As we build more justly, we will protect the UK public from being duped and help small businesses thrive.
As the vaccination program helps end lockdown restrictions, creating a competitive, open and fair market is seen by the government as essential to achieving its goal of enabling businesses to rebuild better and, in turn, encourage investment and job creation.
Competition in the markets gives new and smaller businesses fair opportunities without monopolists losing their weight unfairly, while strong consumer rights ensure that the companies that offer the best service are rewarded with more market share.
The consultation also establishes new and expanded powers for competition oversight to promote innovation, productivity and growth. According to the plans CMA Complete investigations faster and impose harsher penalties on companies that break the law or do not cooperate with the work of the regulator.
Competition helps businesses by encouraging creativity and productivity as they compete for business. And because the customer is at the center of a competitive marketplace, it gives ordinary consumers access to better products, more choice, and lower prices.
Anti-competitive behavior – such as when companies accept price increases – excludes smaller companies and can cost consumers billions.
Between 2014 and 2020 the CMA has brought over £ 7 billion worth of benefits to consumers in the past 3 years, but recent studies, including the Furman Review and Penrose Report, have shown that more could be done to improve competition.
The government is therefore proposing a package of reforms to ensure that the UK has a best-in-class competitive regime that matches the ambitions set out in the growth plan. The plans would allow it CMA to:
- Impose stricter penalties for companies that fail to comply with their investigations or orders, with new powers for fixed penalties of up to 5% of annual sales and additional daily penalties of up to 5% of daily sales as long as the non-compliance continues
- Disqualification of company managers who provide false information to the supervisory authority
- accept voluntary binding commitments from companies at every stage of their investigations rather than waiting until the end – resulting in faster results and lower costs for companies and the regulator
- Blocking a wider range of harmful mergers, including so-called “killer acquisitions,” where large corporations snatch potential competitors before they can bring new services or products to market
The government is committed to an efficient and predictable competitive regime. Damage to consumers should be repaired quickly, costs and uncertainty for companies reduced.
Andrea Cocelli, managing director of CMAsaid:
Competitive, well-functioning markets are the cornerstone of a thriving economy and require constant vigilance.
These suggestions lead many of the CMAs Proposals for a faster, stronger and more flexible system of competition and consumer protection that protects consumers and enables businesses to grow and thrive.
We will answer the advice in due course.
Rocio Concha, which one? Policy and Advocacy Director said:
It is positive that the government is giving the competition and consumer regulator greater powers to take vigorous enforcement action that will address issues with the current system and help combat business practices that harm consumers.
The pandemic has exposed weaknesses in UK consumer protection that have allowed unscrupulous businesses to exploit customers while our competitive regime needs an update to address the challenges of digital markets.
The government must now ensure that these proposals are swiftly implemented and underpinned with the right resources at local and national levels to strengthen consumer protection.
To minimize the burden on smaller businesses in mergers, the government is proposing to avoid small business mergers – where each party’s turnover is less than $ 10 million CMAOverall merger control.
In the future, the government will be the CMA with more regular control over which areas of the economy they should focus on in their investigations. The CMA There is also a need to produce regular competitive status reports examining the dynamics of competition in the UK markets.
The government believes that competition policy can do more to support the ten-point plan for a green industrial revolution, so it has CMA Advice on how competition law can better support the UK’s transition to a net zero economy.
Matthew Upton, Director of Policy at Citizens Advice said:
Consumers are faced with a constant flurry of tricks designed to get them to spend more money than they wanted – and often more than they can afford.
In particular, we’ve long been calling for a revision to prevent people from getting trapped in subscriptions that no longer need, want, or may even know they had them.
We embrace protective measures that help consumers navigate the ever-changing landscape of buying goods and services. The proposals to give the competition and market surveillance authority more powers to take action against companies that do not behave fairly are essential to this end.
The government also launched a consultation today to seek views on the goals and powers of the Digital Markets Department. Proposals include introducing a mandatory code of conduct for tech giants with ingrained market power to stimulate competition and new powers to fines of up to 10% of sales for serious violations. The proposed new measures are designed to help UK startups and scale ups compete more fairly against these big tech companies with strong market positions.