Pauline Munro considers the legislation enacted last year to protect consumer interests
As a number of well-known retailers have discovered to their cost recently, the government is stepping up enforcement of regulations to protect the interests of consumers. "Stop Now Orders", which were introduced a year ago, allow British consumer protection bodies to pursue rogue traders operating both in the UK and from abroad by taking out court injunctions to prevent traders from breaking the law. Breach of a Stop Now Order could lead to fines and/or imprisonment for contempt of court.
The Stop Now Orders Regulations introduce a sharper, swifter and more efficient mechanism for the OFT and other consumer protection bodies to enforce existing law. Amongst others, the Regulations cover laws made under EC directives on unfair contract terms, consumer credit, misleading and comparative advertising, sale of goods and guarantees, television broadcasting activities and the advertising of medicinal products for human use. Orders can be used against any trader in the UK or, under corresponding provisions, any trader in any Member State of the European Union.
The OFT has been swift to put the new powers into practice. In November 2001, branches of four major furniture retailers agreed to change adverts for interest free credit after the OFT wrote to them under the Stop Now Powers. All four were advertising interest free options or 0% finance deals for their products. However, if a lump sum was not paid off in full at the end of the one year interest free period, interest was charged for the whole of the loan. The OFT took the view that the adverts broke the law by using the words "interest free" when the agreement was not genuinely interest free.
More recently the OFT has issued proceedings for Stop Now Order in the Manchester County Court against two companies and a number of individuals seeking Stop Now Orders after successive complaints about these companies supplying shoddy goods.
In addition to speeding up the process of taking action against businesses which breach consumer protection legislation, the Stop Now Powers extend enforcement powers to a much wider range of bodies than before. The enforcement bodies, in addition to the OFT, that are now empowered to act (known as "UK Public Qualified Entities") include the Information Commissioner, the Civil Aviation Authority, the Gas and Electric Markets Authority, the Director General of Telecommunications, the Director General of Water Services, the Rail Regulator, the Consumers' Association and every weights and measures authority in Great Britain.
Except in situations requiring urgent action, all bodies qualified to take action under the Regulations must notify the OFT and the business concerned of their intention to take action at least 14 days before bringing proceedings. This ensures that businesses will be given an opportunity in which to agree voluntarily in writing to stop their behaviour and comply with the law (an "informal assurance"). If a business breaches its informal assurance, the OFT or consumer body can either ask for a formal written undertaking to comply or apply to the court for a Stop Now Order. If a business repeatedly breaches consumer protection law covered by the Stop Now Powers, and it has signed a formal undertaking or been the subject of a Stop Now Order, it can be taken to court for contempt, which is punishable by a fine or imprisonment.
It is clear that the OFT and the associated enforcement bodies regard the new provisions as an important weapon against those who harm the collective interest of consumers. For further information please contact Pauline Munro.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.
