The Stop Now Orders (EC Directive) Regulations 2001

Stop Now Orders - in short: 

• the new Stop Now Orders will enable named consumer bodies to tackle unscrupulous traders for whom existing sanctions are not a sufficient deterrent;
• trading standards departments will for the first time have the power to ensure that traders comply with their civil obligations to consumers: at present they can only enforce those provisions of consumer protection legislation which carry criminal sanctions;
• legitimate businesses will benefit by knowing they will not be undermined by competitors who disregard the law;
• effective and consistent enforcement of consumer protection European-wide will give consumers confidence to shop across borders to take full advantage of the single market.

Introduction

The Stop Now Orders (EC Directive) Regulations, in force from 1 June 2001, give effect in the United Kingdom to Directive 98/27/EC on injunctions for the protection of consumers’ interests.

The Regulations give new, focused and effective powers to consumer protection bodies to clamp down firmly on traders who do not comply with a wide range of legislation intended to safeguard the interests of consumers. The Director General of Fair Trading and other named consumer protection bodies will be able to apply to the courts for Stop Now Orders to stop traders in their tracks from infringing specified legislation where those infringements harm the collective interests of consumers. The courts are also given the power to order traders to publish corrective statements with a view to eliminating the continuing effects of past infringements.

The Stop Now Orders are intended as an additional enforcement mechanism which will work alongside existing sanctions such as criminal prosecutions where these are already provided for in legislation. Failure to comply with a Stop Now Order would be treated as contempt of court punishable by fines or even imprisonment.

Legislation covered

The Regulations will apply to infringements of the following UK legislation:

• regulation of misleading and comparative advertising, except regulation specifically in relation to food, tobacco and tobacco products;
  
  
• the Consumer Protection (Cancellation of Contracts Concluded Away from Business Premises) Regulations 1987;
  
  
• the Consumer Credit Act 1974;
  
  
• regulation of the content, amount and distribution of television advertising and of programme sponsorship;
  
  
• the Package Travel, Package Holidays and Package Tours Regulations 1992;
  
  
• the Medicines (Advertising) Regulations 1994;
  
  
• the Unfair Terms in Consumer Contracts Regulations 1999;
  
• the Timeshare Act 1992;
  
  
• the Consumer Protection (Distance Selling) Regulations 2000;
  
  
• regulation of the sale and supply to consumers of goods and the following services, and of guarantees in relation to such services-

(i) services provided under a contract for the supply of goods to be manufactured or produced; and

(ii) installation of goods, where installation forms part of a contract for the sale or supply of goods, and where the goods are installed by the seller or supplier or under his responsibility.

Enforcement bodies

The Government wanted to broaden the enforcement base and give a potentially wide range of public and private consumer protection bodies the authority to apply for Stop Now Orders where they have proven expertise, independence and commitment to do so. The Regulations provide for the following bodies to have enforcement powers:

• the Director General of Fair Trading (DGFT) who is the lead body with responsibility for each directive area and who will have to put in place strong co-ordination arrangements with other named consumer bodies;
• trading standards departments to allow local problems to be dealt with quickly and efficiently at local level;
• statutory regulators who will be able to tackle infringements in their particular areas of expertise;
• private consumer organisations which meet objective criteria; and
• consumer bodies from other Member States named for this purpose in the Official Journal of the European Communities.

There will be reciprocal rights under the provisions corresponding to these Regulations in other Member States for UK enforcement bodies to apply to the courts elsewhere in the Community for orders to stop infringements which originate there but which harm UK consumers.

Private Consumer Organizations

The Regulations contain a power for the Secretary of State to name private consumer bodies as having the power to apply to the courts for Stop Now Orders. The Regulations set out the objective criteria against which applications for named body status will be assessed. These include that the body is so constituted, managed and controlled as to be expected to act independently, impartially and with complete integrity in the use of its powers, and that it is ready and willing to cooperate with the DGFT, other qualified bodies and with relevant regulatory and self-regulatory bodies. The Secretary of State may designate a private body for all purposes under the Regulations or only in relation to infringements of specified legislation.

The Department consultated with interested parties in 2002 on the minimum evidence that would be required by the Secretary of State from private consumer organisations wishing to be designated as a UK qualified entity under the Stop Now Orders Regulations.

Consultation Paper.
Summary of Responses.
Government Response.

Following consideration of the responses to the consultation, guidance setting out the minimum evidence required by the Secretary of State has now been published.

Guidance.

Applications from organisations should be sent to: Sharon Coe, Department of Trade and Industry, Consumer and Competition Policy, Room 665, 1 Victoria Street, London SW1H 0ET (e-mail: sharon.coe@dti.gsi.gov.uk).

Co-ordination

The Government is keen to ensure that the Regulations do not impose unnecessary burdens on businesses or undermine the existing regulatory and self-regulatory regimes in the areas of broadcasting, medicines advertising and misleading and comparative advertising. The Director General of Fair Trading (DGFT) will be required to put in place effective arrangements for co-ordination and consultation between named enforcement bodies to ensure that businesses do not face a multiplicity of actions on the same or related issues, and that enforcement bodies’ efforts are not duplicated.

In addition, the Regulations contain a number of controls to support this administrative co-operation. Both domestic and foreign consumer bodies are required to give the DGFT and the defendant trader two weeks notice of their intention to apply to the court for a Stop Now Order. The Director General has the power to waive this requirement where he considers circumstances justify proceedings being brought immediately without delay to safeguard the interests of consumers.

If more than one of the DGFT and any public or private UK qualified entity are contemplating bringing proceedings the DGFT may, in any particular case, direct which of these entities is to bring such proceedings, or that only he may do so. Where the DGFT directs that only he may bring such proceedings he may take into account whether the infringement could be stopped by other means in deciding whether or not to bring court proceedings. This provision will be used by the DGFT to stop public and private UK bodies from bypassing existing regulatory and self-regulatory regimes and to ensure that court proceedings can only be brought by one body.

Enforcement bodies are empowered to accept undertakings to avoid the need for court action, and these undertakings will have the legal equivalence of an Order.

International Dimension

In today’s modern economy consumers are increasingly willing to shop across borders, especially with the opportunities presented by the rapid development of e-commerce. Effective enforcement of EC consumer protection rules is essential if this trend is to continue and consumers are not to be discouraged from taking full advantage of the single market.

The EC Injunctions Directive establishes reciprocal arrangements within the EU for tackling rogue traders based in one Member State who harm the collective interests of consumers in other States. These arrangements are based on mutual recognition of Member States’ enforcement bodies. UK qualified bodies will for the first time be able to apply directly to the courts of other Member States to stop practices which originate there but which harm UK consumers. These provisions could be used, for example, to stop bogus prize draws which falsely promise large prizes in return for an ‘administration fee’.

Codes of Practice - Business to Consumer

The Government believes that self-regulation by means of an effective code of practice can, in some areas, be a viable alternative to regulation. This is because legislation can be inflexible and difficult to change. Codes can be changed more quickly in response to the development of new unfair business practices that lead to consumer detriment. Regulation can also impose unnecessary bureaucracy and additional costs upon business. This can have a knock on effect for consumers through increased prices.

A well-administered code can often be more effective in solving consumers’ problems than recourse to the law. It can offer a quicker and cheaper response in dealing with redress. Good codes ensure that consumers are properly protected in the event that something goes wrong. The Government is taking action to make it easier for consumers to recognise these good codes. The Enterprise Bill will strengthen and expand the Office of Fair Trading’s (OFT) powers to enable them to give formal approval to good codes of practice. They will also be able to oversee the monitoring of the operation of approved codes and withdraw approval from codes that are not operating satisfactorily.

OFT’s new approach to codes of practice is a two-stage process. The first stage can be delivered within OFT’s existing powers whereas the second requires legislation. The first level will be a confirmation that codes meet OFT’s criteria and will represent a promise by the sponsors that their code does so. There will be no independent checking of how well the code works at this stage and so OFT will not be approving the codes. At the second level, OFT will publicly endorse those codes where sponsors can prove that their codes have delivered on the initial promise. This level of endorsement is comparable to the proposals in the Consumer White Paper published in 1999. It will probably include a mark or logo signifying OFT’s approval.

OFT are targeting priority sectors where actual or potential consumer detriment is high and consumers need to be able to identify better traders. They will not be tackling sectors where there is an alternative self-regulatory regime such as the DTI’s Quality Mark scheme for the construction industry. The priority sectors are:

•    Used cars
•    Car repair and servicing
•    Credit, including debt management and credit repair
•    Funerals
•    Travel
•    Estate Agents
•    Direct Marketing 

The OFT is currently assessing applications received from code sponsors in these sectors.  Although OFT will be concentrating on codes in the priority sectors initially, other codes will be assessed in due course.

All of the documents relating to OFT’s new regime can be viewed on the OFT website http://www.oft.gov.uk/Business/Codes+of+practice/default.htm

If you have a question please send an e-mail to: codes.practice@dti.gsi.gov.uk.

Sales Promotions

The European Commission proposed a Regulation on Sales Promotions in October 2001.

The aim of the proposed Regulation is to create a harmonised regime for sales promotions involving offers of discounts, free gifts, premiums, and promotional competitions and games. 

The Regulation is part of the Internal Market for Services Strategy and would be directly and uniformly applicable in Member States with the aim of replacing existing restrictions with a clear and legally certain environment.  The goal is to encourage cross-border activity for the benefit of both business and the consumer.  

Business will be able to conduct pan-EU sales promotions without incurring the cost and disincentive of different regulatory regimes.  

Consumers will benefit from increased choice and competition as more EU markets make use of sales promotions and UK consumers are able to access those markets more effectively.  New information and transparency requirements will add to existing consumer protection instruments. 

In response to the Commission’s proposal, the DTI issued a consultation document to canvass views from stakeholders. 52 written responses were received by the deadline of 25 October 2002. Copies of the consultation document and a summary of these responses can be accessed below.

Following First Reading in the European Parliament, the European Commission issued an amended proposal in October 2002. Copies of its proposals can be found below, or by following this link to the European Commission’s website.

To follow the progress of the Regulation, or to find out more about the rules of procedure under which the Regulation will be voted, please click here for a link to the European Commission’s website, typing in the COM number of the latest proposal (e.g. COM (2001) 546).

The full text of the Regulation (Oct 2001) 
Amended proposal (Oct 2002)
DTI Consultation document.
Responses to DTI's consultation.

The Commercial Agents (Council Directive) Regulations 1993

The Regulations implement EC Directive (86/653/EEC) relating to self-employed commercial agents, the aim of which was to harmonise the laws of Member States and to strengthen the position of commercial agents in relation to their principals.

The Regulations lay down the minimum requirements of a contract between an agent and principal, for example, minimum periods of notice, when commission is due and the right to claim compensation on the termination of the contract.

The DTI has published a Guidance Note on the Commercial Agents (Council Directive) Regulations 1993. Unfortunately we cannot give legal advice or an interpretation of the Regulations.  If you require legal advice on the interpretation of the Regulations then you should seek advice form a solicitor who is an expert in the field of Commercial Agent law.

Please click the button to read the guide on-line. For a printed copy, please e-mail our Commercial Agents contact point.

Estate Agents Act  

Please click the button to access out Fact Sheet and FAQ on the Estate Agents Act.

The Act regulates the conduct of estate agents in the course of estate agency work. It does not cover the letting of properties.

The Act lays down the duties of the agents which are owed to the client - such as the passing on of offers, handling money, and giving details of charges - and to third parties - such as disclosure of personal interest.

The Act also gives the Director General of Fair Trading the power to issue warning or prohibition notices against those persons whom he considers to be unfit to carry on estate agency work.

Appeals under The Estate Agents Act

The Act is enforced by local trading standards departments and the Office of Fair Trading. The Office of Fair Trading also produces a booklet about the Act and its regulations.

For further information contact local trading standards departments or the Office of Fair Trading.

Review of Home Buying and Selling

DTI Ministers and officials also participate in the Government’s review of home buying and selling, along with Ministers and officials from the Lord Chancellors Department and the Office of the Deputy Prime Minister (ODPM). Details of this initiative can be found on the ODPM website

Homeworking Scams

Whilst the Government recognises there are some genuine homeworking opportunities, many are bogus and seek to exploit vulnerable groups in society. The Government is committed to action to expose scams that falsely promise work at home in return for an advance payment from the worker, and to expose directories that contain these types of scams.

Advice to homeworkers

If you are looking for work to do at home you should consider writing to or approaching local companies who may be able to offer this type of work. Genuine employers will not ask for money in advance before providing you with work. Beware of adverts about working from home which require you to send off money in advance. Our advice is never send money in advance to people or companies who claim they can offer you work at home.

The Department of Trade and Industry produces warning leaflets, posters and cards about homeworking scams which can be obtained by calling 0870 1502 500 (for leaflets and posters) and 020 7215 5930 (for cards) which are suitable for display in public offices or shop windows.

Homeworking leaflet.

Please click this button to order a free poster.

Further information about employment rights can be obtained from DTI's Employment Relations Directorate.

For more information regarding homeworking contact the National Homeworking Group. 

What to do if you are victim of a homeworking scam. 

If you are victim of a homeworking scam you should contact your local Trading Standards department; details of your local Trading Standards Department can be found in your local phone book under council services. Trading Standards may be able to pursue scams using a number of different legislative avenues such as the Trade Descriptions Act 1968 or the new Stop Now Orders, which have been introduced by the DTI. Also, if you became aware of the scheme through an advert in a newspaper or magazine you should contact the Advertising Standards Agency, who are responsible for investigating complaints about the promotion of scams in newspaper.

DTI Contact

 

DTI Enquiry Unit

Enquiry Unit

020 7215 5000