Ministers seek to root out scams with new consumer protections

  • Government to protect consumers’ hard-earned money and eliminate online consumer exploitation
  • new powers for the competition regulator will improve the app and tackle subscription traps and fake reviews so people can spend with confidence
  • Business Secretary Kwasi Kwarteng: The UK’s economic recovery hinges on the strength of our markets and consumer confidence in them

An arsenal of reforms planned to boost competition and protect the public from scams as the UK rebuilds itself more just after the pandemic has been unveiled by Business Secretary Kwasi Kwarteng.

The government will change the law so that prepayment programs like Christmas Savings Clubs must protect customers ‘money, protecting consumers’ money when saving for the holidays. The change will prevent scandals like Farepak from happening again, where tens of thousands of people, many on low incomes, lost everything they saved for Christmas when the company went bankrupt.

For the used car and home improvement industries, where consumers often make large and large one-time purchases, the government will require companies to participate in arbitration or mediation in the event of a dispute over an issue. transaction. This means that the two sides will not be taken to court and level the playing field for decent companies doing the right thing.

The government is also cracking down on subscription traps by requiring companies to make it clear what consumers are signing up for and letting them easily cancel, to ensure people can spend their hard-earned money with confidence.

Consumer catfish behind fake online reviews will also be targeted by rules that automatically make it illegal to pay someone to write, or host, a fake review.

The government will help regulators remove other questionable tactics used to fool online shoppers. These include “dark models” that manipulate consumers into spending more than they want, and “sludges,” negative nudges such as when companies pay for their product to be great. present on a merchant’s website while hiding the fact that they paid for it.

Business Secretary Kwasi Kwarteng said:

The UK’s economic recovery is built on the strength of our open markets and consumer confidence in them.

By delivering on our commitment to strengthen our competition regime, we give businesses the assurance that they are competing on a level playing field and the public confidence that they are getting a good deal.

The proposals are part of the new consultation on the reform of competition and consumer policy, which respects the government’s clear commitment to “give the Competition and Markets Authority increased powers to fight against scams consumers and bad business practices ”.

Severe penalties for non-compliance are proposed, with new powers for the CMA and similar authorities to strike unscrupulous traders who violate consumer law with fines of up to 10% of their worldwide turnover, and civil fines for companies who refuse or give misleading information to consumers. authorities.

The government is also considering several options – including the introduction of financial penalties – when companies fail to honor commitments made to the authorities to change their habits.

To speed up processes, the CMA will also be able to directly enforce consumer law rather than having to go through legal proceedings which can take months or even years, meaning consumers are protected faster.

Consumer and Small Business Minister Paul Scully said:

Business is built on trust. When consumers part with their hard-earned money, they are entitled to expect value for their money. Cowboy builders are not welcome in 21st century Britain.

As we rebuild in a fairer way, we will protect the UK public from deception and help small businesses thrive.

With the immunization program helping end foreclosure restrictions, creating a competitive, open and fair market is seen by the government as fundamental to achieving its goal of enabling businesses to rebuild better, and in turn boosting businesses. investments and create jobs.

Competition in the markets helps new and smaller businesses achieve a fair image, without monopolies weighing unfairly, while a strong set of consumer rights means that companies providing the best service are rewarded with a greater share of the money. market.

The consultation also sets out new and improved powers for the competition watchdog to help drive innovation, productivity and growth. Under the plans, the CMA will be able to conclude investigations more quickly and impose tougher penalties on companies that break the law or do not cooperate with the work of the regulator.

Competition supports businesses by boosting creativity and productivity as they compete for business. And, because the customer is at the center of a competitive market, it gives ordinary consumers access to better products, more choice, and lower prices.

Anti-competitive behavior – such as when companies collude to raise prices – excludes small businesses and can cost consumers billions.

Between 2014 and 2020, the CMA has delivered consumer benefits worth over £ 7bn in the past 3 years, but recent studies including the Furman Review and Penrose Report have found 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’ competition regime, in line with the ambition set out in the Growth Plan. The plans would allow the CMA at:

  • impose tougher penalties on companies that do not comply with its investigations or orders, with new powers for fixed penalties of up to 5% of annual turnover and additional daily penalties of up to 5% of daily turnover as long as the non-compliance persists
  • disqualify business leaders who make false statements to the regulator
  • accept voluntary binding commitments from companies at any stage of their investigations, rather than having to wait until the end – resulting in faster results and lower costs for companies and the regulator
  • block a wider range of harmful mergers, including so-called “murderous acquisitions” where large companies capture potential competitors before they can launch new services or products

The government is committed to putting in place an effective and predictable competition regime. Damage to consumers should be remedied quickly, and costs and uncertainty for businesses should be reduced.

Andrea Coscelli, Director General of the CMA, mentionned:

Competitive and well-functioning markets are the cornerstone of a thriving economy and their maintenance requires constant vigilance.

These proposals advance many of the CMAsuggestions for a faster, stronger and more flexible competition and consumer protection regime that will protect consumers and allow businesses to grow and prosper.

We will respond to the consultation in due course.

Rocio Concha, which one? The Director of Policy and Advocacy said:

It is positive that the government is preparing to give the competition and consumer regulator more powers to take strong enforcement action that will solve the problems of the current system and help tackle business practices that harm consumers.

The pandemic has exposed weaknesses in UK consumer protections that have allowed unscrupulous businesses to exploit customers, while our competition regime needed an update to cope with the challenges of digital markets .

The government must now ensure that these proposals are implemented quickly and are supported by adequate resources at local and national levels, so that consumer protection is strengthened.

On mergers, in order to minimize the burden on small businesses, the government is proposing that mergers between small businesses – where each party’s turnover is less than £ 10million – be abolished of CMAmerger control as a whole.

In the future, the government will provide the CMA with more regular guidance on the areas of the economy on which to focus its investigations. the CMA will also have to produce regular ‘state of competition’ reports examining the dynamism of competition in UK markets.

The government believes that competition policy can do more to support the Ten Point Plan for a Green Industrial Revolution and has therefore called on the CMA prepare advice on how competition law can best 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 barrage of tricks designed to make them spend more money than they want – and often more than they can afford.

In particular, we’ve long been calling for an overhaul to prevent people from being trapped in subscriptions they no longer need, want, or perhaps didn’t even know they had.

We welcome protections that will help consumers navigate the ever-changing landscape of how they purchase goods and services. The proposals to give the Autorité de la concurrence et des marchés more powers to crack down on companies that do not play fair are essential in this regard.

The government also today launched a consultation to gather views on the goals and powers of the Digital Markets Unit. The proposals include imposing a mandatory code of conduct on tech giants with entrenched market power to stimulate competition and new powers to impose fines of up to 10% of turnover. cases for serious offenses. The proposed new measures are expected to help UK start-ups and scale-ups compete more fairly with large tech companies with powerful market positions.

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