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"Making the EU Work for Consumers"

The Rt. Hon. John Hutton MP,  Secretary of State for Business, Enterprise & Regulatory Reform
New Connaught Rooms, Holborn, London,  08 May 2008

Good morning everyone. Thank you all for being here today.

The issues we’re to here discuss – how best to empower and protect consumers in an increasingly digital globalised world are profoundly important to all of us because effective competitive markets rely on informed and empowered consumers.

Well-informed consumers are central to achieving our ambitions of social welfare through strong growth and economic prosperity in the decades ahead. And the views and experiences you share with us today will help establish the modern consumer protection regimes essential to ensure dynamic economies and prosperous lives for our citizens.

We need to be bold and ambitious.

And develop national and European consumer laws that reflect and are flexible enough to meet the demands of relentless change and evolving technology. Built around simple legal frameworks and clear, effectively targeted regulation that’s easier to understand and enforce; tackles properly and fairly market failures consumers cannot address themselves and delivers high levels of protection across markets and member states.

That, I believe, is the best way to give consumers the freedom and confidence to choose the right deals for them and enable more businesses to innovate and compete across the EU.

And making all of these lofty ambitions a reality must be the focus of our discussions today.

The consumer context

We’re all aware of the forces that have transformed the consumer experience in recent years. Technology has provided the means and globalisation - the people, providers and markets to revolutionise trade across the world.

Together, these forces have unleashed an avalanche of information and change. This has enabled consumers not only to compare prices, value and quality more easily than ever before, but also to play a more active, innovative role in the development and delivery of the goods and services they buy. Empowered consumers make for strong markets.

Armed with these freedoms and rising aspirations, consumers want increased choice, lower prices and higher-quality products and services.

Potential of the Single Market

Over the last fifty years, the EU - supported by a Single Market that’s established more open, competitive and diverse markets - has delivered these and other benefits to consumers across the EU.

For example, thanks to EU consumer policy, almost 500 million people can be confident that the products they buy, from toys to cosmetics, are clearly and properly labelled and meet basic safety standards.

Recently introduced mobile roaming regulations have ensured for example fair prices for consumers using their mobile phone in the EU.

And measures such as the first Timeshare Directive have secured essential information and effective protections for people buying goods, services and timeshare properties abroad and enabled in the process – and this is very important - vibrant markets to develop across the EU.

All these measures help generate consumer activity worth 58% of EU GDP. And we know that with increased cross-border trade, we could achieve even more.

The Challenge

The EU single market has the potential to become the world’s largest retail market. But despite increasing numbers of purchases made across EU borders, 45% of EU consumers feel less confident buying goods or services from other member states. And two-thirds of EU retailers still sell exclusively to domestic markets.

The UK and EU consumer law reviews now taking place give us a unique opportunity to tackle the unnecessary costs, risks and uncertainties holding our consumers and businesses back.

We already have some of the world’s strongest consumer protection regimes. And any future reforms must retain these high standards of protection. But we should also not shy away from bold measures to simplify and modernise outdated and complex consumer laws, wherever they exist.

Review of EU Consumer Strategy

I believe achieving this in the EU will depend on four things.

Firstly, that the Commission continues to take a proactive approach to its competition and consumer policies.

Neither can address all of the issues that arise from new technologies or market failures alone. But together, they can help remove remaining barriers to the Single Market. Generate investment and increase imports from outside the EU. And deliver more competitive prices and better value for consumers.

Secondly, that we ensure a stronger consumer voice in the development of EU policies. Areas such as trade defence, CAP reform, or the further liberalisation of EU markets impact directly on consumers’ lives. And it’s essential their interests are represented in all of these negotiations. It’s not just producer interests we need to take account.

Thirdly, that we educate and empower consumers, so they better understand their rights and responsibilities and can operate across the EU with confidence. With powerful initiatives at a national level such as the UK’s Consumer Direct helpline which I think is doing an excellent job and EU action including the establishment of the European Consumer Centre network in member states.

And fourthly that through an effective review of the Consumer Acquis we develop a modern and flexible legal framework for consumer rights in the EU.

To do that, our policies must primarily be focused on delivering greater competition, lower prices, higher standards and increased opportunities for consumers and business.

We must be sure of our priorities. Taking action that is based on robust research and sound analysis of EU consumers’ issues, attitudes and behaviours.

And I welcome the introduction of the Consumer Market Scoreboard to help us critically assess EU markets from a consumer perspective and hopefully help policy makers target solutions for maximum impact.

We also need to ensure clarity, consistency and flexibility.

The Unfair Commercial Practices Directive has successfully produced a clearer legal basis for fair trading laws. And I believe that together with a similar Consumer Rights Directive - based on clear principles, it could form a firm foundation for EU consumer law in the future.

This legal framework should then operate in line with the Better Regulation Agenda.

That means wherever possible, overlapping directives should be simplified. All regulatory responses considered in terms of the cost and benefits they deliver to consumers and business and the protections already provided by existing laws.

And consistent definitions and interpretations of key terms implemented across the whole of the consumer acquis, that are flexible enough to meet the challenges of future innovations, technologies and markets.

It’s also important to recognise that regulatory action at an EU level is not always the most appropriate response. For example, self regulation has proved very successful at delivering protection in the advertising industry. And the UK’s Office of Fair Trading approved codes of practice are improving consumer protection across many sectors too.

Consumers want robust protection, rather than more complicated laws. And, I believe, EU legislation is best directed where it can eliminate barriers to trade in the Single Market; tackle cross-border market failures, remove protectionist constraints or increase consumer confidence in shopping in another country.

The UK Consumer Law Review

The UK’s own major consumer law review also aims to help us ensure that, in a rapidly changing and evolving market place, we have the right policies to stimulate innovation and competition and increase consumer choice and confidence.

Developed over decades and comprising more than 100 different pieces of legislation, the UK’s current system offers high standards of protection. I think that is generally accepted. But it is often too complex for consumers to understand and we now know costs business an estimated £1.25 billion every year.

This Review seeks to maintain the level of these protections, whilst simplifying and updating existing legislation measures, reducing unnecessary red tape for business, improving consumer empowerment and targeting enforcement more effectively to weed out rogue traders that we know are still out there.

To help support this, I’ve commissioned a unique UK-wide survey to look in depth at the perceptions of consumers across a range of different markets - focusing on confidence, transparency, complaints and vulnerable consumers.

And today I’m asking you and others to come forward with evidence to help inform the actual Review. We want the benefit of your experience, feedback and opinions to help identify what changes are needed; how we can help more consumers and businesses understand their rights and responsibilities; and what can be done to better address consumer issues and risks.

This is just one, albeit critical, part of our ambitious programme to give the UK the best consumer regime in the world.

Preliminary findings of research from the University of East Anglia’s Centre for Competition policy, to internationally benchmark the UK’s consumer framework, already shows our system ranks well against other countries.

And a range of further measures introduced this year aim to protect consumers from high pressure salesmen and rogue estate agents, lenders and debt collectors.

We’re also implementing the UCPD through Consumer Protection Regulations to protect people from unfair, misleading and aggressive sales practices.

Now hopefully these new regulations will enable Trading Standards to take action against the small minority of rogue traders, who pressurise, bully or lie to consumers to make a sale. And it has been backed by £7.5million of funding for new specialist Trading Standards “Scambuster” teams.

With reference to an issue I know you have raised Larry – while we accept that a private right of redress in relation to the Regulations could clarify existing consumer protections, we must look at whether this would benefit consumers enough to justify the extra costs it may present.

Therefore, we have asked the Law Commission as you know to consider how far a private right of redress for unfair commercial practices would help our ambitions to simplify and extend consumer law.

Unprecedented access to markets is increasing choice and competition throughout the world economy. These are all powerful, good things. Consumers and businesses look to us to help them navigate the safest and most cost-effective route through this complex global marketplace.

We now have, I think, an unprecedented chance to develop a long-term vision for both our own and the EU’s consumer protection regimes. And I hope that through our discussions today, we can make the most of that opportunity.

Developing simple, fair and proportionate measures, at home and in Europe, that encourage businesses to take advantage of new markets. And boost the knowledge and confidence of consumers, so they can get the best, fairest deals possible whatever, wherever and however they pay. These have got to be the principles and objectives that we set ourselves.

Thank you.

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