Today I gave a speech at techUK’s tech policy conference where I touched on the CMA’s new consumer enforcement regime ahead of our new powers coming into force on 6 April.
The CMA’s new direct enforcement powers mean that the CMA will be able to decide whether key consumer protection laws have been breached without having to take businesses to court, and we will be able to take direct action to tackle these breaches including through fines and redress.
At the beginning of April, alongside finalised guidance for the new regime, we will publish an approach document which will include more detail on our enforcement priorities for the first 12 months.
It will also explain more fully how we plan to apply the ‘4Ps’ framework (our focus on pace, predictability, proportionality and process) to the new consumer protection regime.
In the meantime, we are today providing an update ahead of those publications in particular to help guide businesses as they prepare to comply with the new regime.
Update on our consultation and next steps
In recent months, we have consulted extensively on guidance for the new regime, receiving helpful and constructive feedback from a range of stakeholders.
We have heard loud and clear that businesses – large and small – want to do the right thing for their customers and many are working hard to ensure they comply. But for smaller businesses especially, the compliance burden must be proportionate.
Taking that feedback on board, we will:
- streamline the drafting of our guidance on unfair commercial practices considerably to make it as clear and accessible as possible, whilst retaining the case studies and examples which we know businesses and advisors find helpful
- from April, kick off an extensive business outreach programme. This will build on the explainer event we held last summer with over 200 businesses and other organisations to help them understand the changes and start preparing for the new regime
- publish a series of accessible and interactive business explainers for the key practices covered by the guidance
Before 6 April, we'll publish:
- an approach document: setting out how we will implement the Strategic Steer in our approach to consumer work, how we will implement the ‘4Ps’ in this area, and our enforcement priorities for the first 12 months of the new regime with a focus on the most egregious harms
- unfair commercial practices guidance: a streamlined and simplified version of the draft on which we consulted which sets out detail on what practices are and aren’t compliant with the law – here we will carve out some aspects of drip pricing where we will re-consult
- procedural guidance for the direct enforcement model (CMA200): setting out how a direct enforcement action will be run from start to finish and how we will interact with parties
- consumer protection regime guidance (CMA58): setting out how the regime sits in the broader landscape and when we will exercise our direct enforcement powers
Ahead of these publications, we want to provide further detail on 2 specific areas.
Drip pricing
We are taking a phased approach to our guidance on this – which was the issue we received the most substantive feedback on.
- in April, we will provide a clear framework for compliance with aspects of the law which are already well understood and largely unchanged. By this I mean the prohibition of genuinely unexpected and untrailed mandatory charges added on at the end of a purchasing journey. These ‘dripped fees’ harm consumers and fair dealing businesses by hindering effective price competition which we know primarily happens on headline prices
- for those aspects of the drip pricing guidance that have created more uncertainty (including fixed-term periodic contracts) we will run a further consultation on revised draft guidance in the summer, with a view to producing finalised guidance in this area in the autumn
- in the meantime, we will only take enforcement action against drip pricing which clearly breaches the rules in line with the April guidance
Fake reviews
Fake reviews are a banned practice under the DMCCA. Although we can tackle fake reviews under our existing powers, we recognise that new provisions may require changes to systems and compliance programmes.
We hear that businesses need time to bed these in, and so for the first 3 months of the new regime we will focus on supporting businesses with their compliance efforts rather than enforcement.
Enforcement priorities
The remaining law where our new direct enforcement powers can be used hasn’t changed materially. However, we recognise that the risks of getting it wrong are changing substantially.
Businesses have told us they are preparing to comply and will be relying on the clarity and certainty provided by our final Guidance, as well as further detail on our early enforcement priorities to be published at commencement in April.
Our early enforcement action following commencement is likely to focus on more egregious breaches.
For example:
- aggressive sales practices that prey on vulnerability
- providing information to consumers that is objectively false
- contract terms that are very obviously imbalanced and unfair
- behaviour where the CMA has already put down a clear marker through its previous enforcement work
- where the law tells us that a practice is always unfair
At the same time, we will support the vast majority of well-intentioned businesses who want to do the right thing but may be unclear on exactly what is needed to ensure compliance, especially in areas where the law has been updated or there is less clear-cut precedent. We will also take into account where businesses have taken proactive steps to correct infringing conduct, in deciding the appropriate level of a penalty.
Delivering a robust, effective regime
Taken together, I am confident this approach will deliver robust protections for consumers, focusing on clearly illegal conduct that results in tangible harms.
At the same time, it gives the business community the clarity to comply with new laws as quickly as possible - and the confidence that early enforcement action will be proportionate.
This is, after all, in the interests of both businesses and consumers; when businesses get it right, consumers benefit.
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