Enforcement Of Regulations

on the role of Trading Standards in the UK.

Local Authority Trading Standards services protect consumers and honest traders by ensuring that trade is carried out lawfully, fairly and safely.

Trading Standards Departments are a function of local government and are funded by local tax money. Each Local Authority is responsible for its service and decides its priorities and resources. In recent years the Government has put in money to improve Trading Standards enforcement via a Modernisation Fund.

on Part 8 of the Enterprise Act and Stop Now Orders.

Part 8 of the Enterprise Act replaced Part III of the Fair Trading Act 1973 and the Stop Now Orders (EC Directive) Regulations 2001. It also extended the scope of the Stop Now Order enforcement regime to include a wider range of domestic consumer protection legislation.

Under Part 8 of the Act, the Office of Fair Trading, Trading Standards Authorities, sectoral regulators and other designated enforcement bodies, can apply to the courts to stop traders infringing a wide range of consumer protection legislation where those infringements harm the collective interests of consumers.

These orders are known as Stop Now Orders (also known as Enforcement Orders). Breach of a Stop Now Order is a contempt of court and could incur a fine or imprisonment.

Enforcers can also use Stop Now Orders to clamp down on traders who fail to carry out a service with reasonable care and skill.

The Office of Fair Trading is responsible for co-ordinating enforcement action under the Regulations. Further information on the role and responsibilities of the OFT is available on www.oft.gov.uk

Who can use Part 8 powers?

Under Part 8 of the Act three types of enforcers are identified:

(i) General Enforcers. In addition to the OFT, the Trading Standards Service in Great Britain and Department of Enterprise, Trade and Investment (DETI) in Northern Ireland are specified in Part 8 as having the power to act as general enforcers.

(ii) Designated Enforcers. A designated enforcer is any public or private body in the UK which the Secretary of State designates in a Statutory Instrument, having identified the person or body has the protection of the collective interests of consumers as one of its purposes.

The Secretary of State has designated the following bodies as Part 8 enforcers by a Statutory Instrument:

  • The Civil Aviation Authority
  • The Director General of Electricity Supply for NI
  • The Director General of Gas for Northern Ireland
  • Ofcom
  • The Director General of Water Services
  • The Gas and Electricity Markets Authority
  • The Information Commissioner
  • The Office of Rail Regulation
  • The Financial Services Authority
  • Consumers' Association (Which?)

A public body will only be granted designated enforcement powers if it is independent. By granting a public body designated enforcement powers, it is deemed that the body is conclusively identified as a public body for the purposes of Part 8.

A private organisation may be designated as an enforcer only if it fulfils the criteria specified by the Secretary of State in a Statutory Instrument.

(iii) Community Enforcers. Community enforcers are entities from other EEA states that are listed in the Official Journal of the European Communities. These enforcers may apply for injunctions in other member states.

Guidance for private bodies wishing to become designated enforcers under Part 8 of the Act.
Applications from bodies seeking designated status.

When are Part 8 powers used?

Under Part 8, there are two types of breaches of the law:

• Domestic: which relates to breaches of a wide range of UK laws listed in a Statutory Instrument made under Part 8.

• Community: which are acts or omissions that breach the UK’s and other European Economic Area (EEA) states’ legislation and other provisions implementing the European Directives listed in Schedule 13 to the Act.

International action

Part 8 gives enforcement authorities the power to take action against businesses in certain other European countries that are infringing certain European based consumer protection legislation. 

Part 8 of the Enterprise Act (link to HMSO site).
OFT’s guide to Part 8 of Enterprise Act.
Consumer and competition provisions of the Enterprise Act which came into force on 20 June 2003 and additional Statutory Instruments made under Parts 8 & 9.Enterprise Act Schedules 14 and 15.

The Enterprise Act 2002 (EA02) received Royal Assent on 7 November 2002.  The EA02 includes a range of measures to strengthen the UK's competition and consumer law framework.  Part 9 came into force on 20 June 2003 and reflects the Government’s strategy to widen and harmonise the regimes for protecting confidential information and for defining the gateways through which such information can be disclosed in the UK.  It also introduces appropriate safeguards.

Part 9 creates a gateway for the disclosure of information relating to specific consumer and competition matters. In addition, it also creates a gateway to allow certain information to be disclosed for certain civil investigations and proceedings overseas.

Part 9 also lays down the requirements that have to be met, before public authorities may disclose information.  The provisions apply to information which has been gathered for competition or consumer functions under parts of the EA02 and under other specified competition and consumer protection legislation (this legislation is listed in Schedule 14 of the EA02) and in statutory instruments made under section 241(3). They apply whether the information obtained relates to the affairs of individuals or a business.

Part 9 provides a general restriction on the disclosure of information unless that disclosure is within permitted gateways or the information has previously been made public.

A public authority which holds information captured by the Part 9 provisions may disclose it only in the following circumstances:

• If the information is already lawfully in the public domain;

• There is an existing power/duty to disclose the information under another piece of legislation;

• The authority has gained consent from all relevant parties;

• There is a European Union obligation to release the information;

• If disclosing the information enables an authority to carry out its own statutory function; 

• If disclosing the information enables another authority to carry out its statutory function; 

• If the information will be used in a criminal investigation and/or

• To another public authority overseas (this also has other restrictions placed upon it, as set out in Part 9).

There are safeguards within Part 9 ensuring that recipients of information do not disclose it to anyone else unless they have permission from the public authority who gave them the information in the first instance. These safeguards also ensure that a recipient of information will only use it for the purposes for which it was disclosed.

When a public authority decides to disclose information, they must apply a proportionality test. They must consider if it is necessary to release all or only part of the information they hold to achieve the desired outcome.  If it is not necessary to release all the information they hold then they must not do so. This proportionality test further protects the interests of the individual or business about whom the information is held.

Current position

The current Part 9 gateways do not in general allow information to be released to business and individuals for the purpose of civil proceedings; they do permit the disclosure to such persons for criminal proceedings or in certain limited circumstances such as by consent.

Concerns

The enforcement community have highlighted concerns that they are unable to release information to individual consumers who wish to pursue a civil proceeding against a trader for example, where the consumer has been the victim of a scam or injured due to an unsafe product.

Intellectual property rights holders have commented that public authorities such as enforcers are unable to release information to rights holders so they can take action against counterfeiters in the civil courts.

The wider business community have concerns about making it easier to release information for civil cases. This is because it could, depending on the nature of the gateway and restrictions on disclosure of information under Community law, allow information which was previously confidential (for example, commercially sensitive information from mergers or market investigations) to be released to their competitors.

Consultation

We are therefore consulting on the question of amending Part 9 to allow information to be released more easily for civil court proceedings and are seeking your views on the options set out in the consultation document.

The deadline for responses is 18 November 2005

Please email your responses to: part9.consultation@dti.gsi.gov.uk

Amendment to Part 9

We are seizing the opportunity to amend Part 9 via the Company Law Reform Bill as to not amend now would mean having to wait for a significant period before an amendment could be made.

The amendment is an enabling clause. The types of information for which disclosure might be made, will be defined in secondary legislation. 

The amendment will improve consumer redress and make it easier for intellectual property rights holders to obtain information to pursue civil action against counterfeiters. It will also ensure that competition information will not be disclosed.

The clause (number 867 in Part 34) can be accessed via the following website:

http://www.publications.parliament.uk/pa/pabills.htm#c

Explanatory notes will be made available as soon as possible and will also be accessible via the above.

What is a Consumer Group Claim?

Section 19 of the Enterprise Act inserts a new section 47A into the Competition Act 1998 to empower certain ‘specified bodies’ to bring proceedings for claims for damages before the Competition Appeals Tribunal (CAT), on behalf of a group of two or more named individual consumers.
 
Such claims may be brought before the CAT in respect of specific infringements (set out in the Act) which concern agreements, decisions and concerted practices which have the object or effect of preventing, restricting or distorting competition, and conduct which amounts to the abuse of a dominant position.

Claims may only be brought before the CAT after the OFT or European Commission (or the CAT on appeal from the OFT) has ruled that an infringement has actually taken place.
 
How can a specified body take a claim to the CAT?

For a specified body to take a claim to the CAT on behalf of a group of consumers, each consumer must give his or her consent to the claim being brought by the specified body, and the claims must relate to the same infringement of competition law.

In particular, the infringement that is relied upon must relate to goods and services that were received (or sought to be received) by the claimant otherwise than in the course of a business. Provided these conditions are met, it is also possible for existing claims being taken by individual consumers to be taken over by a specified body and dealt with together.
 
Any damages awarded by the CAT will be ordered to be paid directly to the represented consumers individually. Where the CAT is satisfied that all the individuals and the specified body are in agreement, it may order the damages to be paid to the specified body who will then enforce the award on behalf of the represented consumers.
 
How can a body apply to be specified?

In order to be designated as a specified body to bring claims on behalf of consumers, an organisation must meet criteria published by the Secretary of State. Designations are made by means of a Statutory Instrument.

Guidance for prospective specified bodies. 
Applications received from bodies seeking specified status.

If you require further information on applying for specified status please contact:

John Madill
Consumer and Competition Policy Directorate
Tel: 020 7215 2132
e-mail: john.madill@dti.gsi.gov.uk

What is a super-complaint?

Section 11 of the Enterprise Act enables consumer bodies designated by the Secretary of State to submit “super-complaints” to the OFT where they consider that there is any market feature, or combination of features, such as the structure of a market or the conduct of those operating within it, that is or appears to be significantly harming the interests of consumers.

Who can bring a super-complaint

Only those bodies that have been designated by the Secretary of State can bring a super-complaint.

The super complaints process has been set up with the aim of strengthening the voice of consumers, as they are unlikely to have access individually to the kind of information necessary to judge whether markets are failing for them. Consumer groups can access individuals’ complaints to form a judgment on whether there is a problem and then take the necessary action.

However, it is important to remember that any body can still bring complaints to the OFT and the OFT will deal with them.  Super-complaints are simply a new route into the system – an initial “fast-tracking” to ensure that complaints about market failure which harms consumers are given consideration within a fixed time.

How can a consumer body apply to be designated?

Guidance and criteria for prospective super-complaints bodies.
Applications from bodies seeking designated status.

For further information on applying for designation please contact:

Marie Cawley
Consumer and Competition Policy Directorate
Tel: 020 7215 6771
e-mail: marie.cawley@dti.gsi.gov.uk

DTI along with the Small Business Service (SBS) and the Cabinet Office is involved in the government's work to ensure effective enforcement of all regulations.

The Enforcement Concordat was signed in 1998 by local and national enforcers. To date over 96% of all central and local government organisations with an enforcement function have adopted the Enforcement Concordat

The Concordat articulates the Principles of Good Enforcement that help businesses to comply with regulations, and help enforcers to achieve higher levels of voluntary compliance. 

The Principles are:

• Standards: setting clear standards
• Openness: clear and open provision of information
• Helpfulness: helping business by advising on and assisting with compliance
• Complaints: having a clear complaints procedure
• Proportionality: ensuring that enforcement action is proportionate to the risks involved
• Consistency: ensuring consistent enforcement practice.

The net result is good enforcement that benefits consumers, employees and businesses.

For more information on the  (and to download copies of it) visit the Cabinet Office site.

Enforcement Concordat Good Practice Guide

The Good Practice Guide uses case studies to give enforcers a range of options for putting the Enforcement Concordat into practice. These are real life examples of how enforcers have made the Concordat's principles work. For example: innovative ideas on how business can get information about regulatory requirements; how to use technology for smart compliance, and;
using partnerships to improve business - enforcer relationships. 

Enforcement Concordat: Good Practice Guide for England and Wales.

Please click the button to order a printed copy.

To find out more about the Enforcement Concordat and the Good Practice Guide please contact: Rachel Mallaband at the DTI's Small Business Service. Tel: 0114 279 4451.

 

Retail Enforcement Pilot

Introduction

The Retail Enforcement Pilot, launched in June 2005, is looking at ways of reducing the cost of compliance for retailers arising from regulation and inspection.

The Pilot builds on a range of cross-government work on reducing regulatory burdens and responds to concerns expressed by business about the inconsistency of enforcement within and across agencies, including conflicting enforcement advice.

At present the Pilot is being be run in two local authority areas: Warwickshire, working with their district councils; and the London Borough of Bexley. These pilot areas will allow new ways of working to be tested in a two-tier and a unitary authority.

Who is involved?

To give the Pilot senior business leadership, Gerry Murphy, CEO, Kingfisher PLC, was appointed as “Retail Champion” by the Secretary of State.

The Pilot Steering Group draws on a wide range of expertise from across central and local government and includes representatives from Trading Standards, Environmental Health, Food Standards Agency (FSA), Health and Safety Executive (HSE), and DTI's Small Business Service (SBS).

Aim

Throughout the year the Pilot will be developing new mechanisms to enable a change in the philosophy of enforcement to compliance. This will be achieved through:

• Improving the provision of information and advice on regulatory requirements for business.

• Co-ordinating local enforcement officers activities and business assessments, ensuring multiple visits are avoided.

• Providing a conciliation service to overcome conflicting interpretations of regulations by different agencies.

• Agreeing common standards across enforcement agencies and promoting best practice.

Other Resources

A new CD-ROM for business has been developed. Called “Cutting Red Tape”, the CD-ROM provides information, advice and a checklist of regulatory requirements. Free copies can be requested from: cuttingredtape@bexley.gov.uk

A national baseline survey of retailers will be run during July and August 2005 to collect evidence of the nature and scale of the problems retailers face from regulation compliance and inspection.

Contact

 

DTI Enquiry Unit dti.enquiries@dti.gsi.gov.uk

020 7215 5000