The UK Government is due to implement the Consumer Rights Directive (2011/83/EU) with effect from 13 June 2014 when the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 will commence.
What does this mean for the Retail Motor Industry?
The changes will potentially have the least impact on Dealers who have been used to consumers being able to cancel contracts completed at a distance for several years.
However Dealers would be advised to review policies to ensure they are compliant with the new Regulations.
Probably the biggest changes will be felt by Mechanical Service and Repair outlets and Body Repairers where customers regularly telephone and enter into contracts for services at a distance.
These contracts are cancellable and certain information must be provided to the customer in order to comply with the Regulations.
Failure to comply with the Regulations is a criminal offence with the potential of a £5000 fine for each offence committed.
Set out below are some of the main points.
- Ban on ‘premium rate’ help-line charges
Few businesses operating in the Retail Motor Industry offer consumer customer’s ‘help-lines’ with premium charges rates, however those that do will no longer be entitled to operate help-lines that charge more than the basic rate.
Changes affecting “on-premises” contracts
- Information requirements for “on-premises” contracts
Where businesses enter into contracts with consumers “on-premises” (i.e. in the showroom, service/bodyshop reception), there are new requirements for specific information to be provided to the consumer.
These requirements are similar to the information required under the Consumer Protection (Distance Selling) Regulations 2000 (“DSR 2000”) in relation to distance contracts. The information requirements include:
- the main characteristics of the goods or services;
- the identity of the business; and
- the total prices of the goods and/or services (including taxes).
NOTE: This is not a complete List RML members should contact the Helpline for a complete list of the information members should provide to Consumers following ‘on site contracts’.
Changes affecting “distance” contracts
- Increase to the statutory minimum "cooling off period" from 7 working days to 14 calendar days for distance contracts
The increase in the statutory minimum “cooling off period” is likely to affect businesses where contracts are routinely made on-line or on the phone.
All businesses offering goods and/or services to consumers in the motor industry must ensure that all their publications, order processes and returns procedures are amended to reflect the changes in the legislation.
RML members should contact the helpline if assistance is needed with regard to these changes to ensure compliance prior to the 13 June 2014 when the changes become operational.
- Information requirements for “distance” contracts
Retailers will be required to provide certain prescribed information to a consumer before the contract with the consumer is binding. The information will include in particular:
- the main characteristics of the goods;
- the identity of the trader;
- the total price of the goods/services (inclusive of taxes); and
- all additional delivery charges and any other costs.
NOTE: This is not a complete List RML members should contact the Helpline for a complete list of the information members should provide to Consumers following ‘on site contracts’.
- Harmonised rules on refunds
If a consumer withdraws or cancels a contract, the retailer must reimburse all payments (with the exception of non-standard delivery costs) received from the consumer within 14 calendar days.
For the purposes of services, the period is calculated from the day on which the retailer is informed of the consumer’s decision to withdraw from the contract. For goods contracts, the period begins on the day on which the trader receives the goods back or, if earlier, the day on which the consumer supplies evidence of having sent the goods back.
- Confirmation of distance contracts
There is a new requirement, a retailer will be required, no later than the time of the delivery of any goods or before performance of any service supplied under the contract, to provide the consumer with confirmation of the contract on a “durable medium” (e.g. by paper or by email).
The information to be included in the confirmation will include in particular:
- the main characteristics of the goods/services;
- the total price of the goods/services (inclusive of taxes); and
- all additional delivery charges and any other costs.
It is important that retailers are familiar with the extent of information which must be provided to the consumer.
Whilst “off-premises” contracts may no longer be as common place as they once were in dealerships, they are still quite common in the repair side of the industry. With free collection and delivery services being offered consumers may never actually visit the repairer’s premises. Such contracts will be ‘off-premises contracts’.
Criminal prosecutions can be brought for failure to comply with the provisions of the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013. With any criminal prosecution and conviction there is a real potential to damage a business' reputation and goodwill, it can also affect a business' ability to hold a Consumer Credit License.
It is therefore vital that Retail Motor Industry reviews its processes to ensure that they are compliant with the changes being introduced into UK consumer law.
All changes are due to be introduced no later than 13 June 2014, time is running out for retailers to implement changes.
