OFT and LBRO outline civil sanctions proposals
21 December 2010
The Office of Fair Trading (OFT) and LBRO have outlined their proposed approach to the use of new powers which will allow enforcement bodies to directly impose fines and other sanctions on traders for breaches of consumer law.
Subject to parliamentary clearance in the new year, a new pilot project, sponsored by the Department for Business, Innovation and Skills, will enable the OFT and a number of participating local authority Trading Standards Services (TSS) to trial a range of new civil sanctions as an alternative to criminal prosecution.
The powers are likely to include fixed penalties of up to £3,000 for minor breaches, variable penalties of up to £500,000 or one per cent of turnover for more serious offences, enforcement undertakings, stop notices and other discretionary requirements. These include the power to require traders to put right problems suffered by consumers as a result of the law being breached.Traders subject to such enforcement decisions will be able to appeal to an independent tribunal.
The pilot project is expected to cover breaches of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) (OFT and TSS), the General Product Safety Regulations 2005 (GPSRs) (TSS) and the Weights and Measures Act 1985, as well as certain weights and measures regulations.
The objective of the trial is to test the effectiveness of the powers to secure compliance with consumer law and to encourage traders to voluntarily offer redress to consumers who suffer detriment as a result of unsafe products, or unfair and misleading business practices.
John Fingleton, OFT chief executive, said: "For many breaches of consumer protection law, the main formal sanction is a criminal prosecution of the trader by an enforcer. The new civil sanctions would provide the OFT and Trading Standards with additional enforcement options, and allow consumer redress to be part of the enforcement outcome.
"We will continue to work closely with our partners in Trading Standards to ensure that relevant enforcement activities are carried out in a way that is transparent, accountable and consistent and drive high levels of business compliance."
LBRO Chairman Clive Grace said: "It is important that sanctioning is proportionate to the risk and harm caused. This pilot gives an opportunity to test a more proportionate approach to sanctioning in real enforcement situations.
"We are glad to be working with the OFT and Trading Standards Services on this pilot. We have already been working with business in designing the pilot and we will work hard to engage with business perceptions on the approach and impact of proportionate sanctioning."
Edward Davey, Consumer Minister, said: "Consumers must be protected from illegal practices and rogue traders. The Civil Sanctions Pilot - due to start in April next year - will trial the use of new powers, including requirements to restore the position of consumers who have lost out.
"I welcome the consultation on draft guidance on the use of these powers, announced today by the Office of Fair Trading (OFT) and the Local Better Regulation Office. I would encourage enforcers, businesses and consumer groups to take part in the consultation on the draft guidance, which opens today."
Enforcers, business and consumer groups are invited to comment on the approach by 14 February 2011.
NOTES
1. Civil sanction powers were proposed in a 2006 report prepared for the Government by Professor Macrory www.bis.gov.uk/files/file44593.pdf
2. In 2008, the Regulatory Enforcement and Sanctions Act 2008 introduced a framework for powers to impose civil sanctions as an alternative to criminal prosecutions. In order to test the use of these powers in relation to fair trading, the Department for Business, Innovation and Skills proposed a pilot of the sanctions in their July 2009 Consumer White Paper
3. For further information on the Consumer Protection from Unfair Trading Regulations 2008, see http://www.oft.gov.uk/business-advice/treating-customers-fairly/protection, the General Product Safety Regulations 2005 (GPSRs) see www.bis.gov.uk/policies/consumer-issues/product-safety and the Weights and Measures Act 1985 www.nmo.bis.gov.uk/content.aspx?SC_ID=257.
4. Traders can challenge an enforcement decision by appealing to the First Tier Tribunal. More information is available at www.tribunals.gov.uk/tribunals/firsttier/firsttier.htm
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