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May 2009

Be afraid, be very afraid — as the CPR give new life to consumer protection

COMMENT by DAVID PERKINS

HERE’S a rather jolly new wheeze from HM Government — and I am not talking about Property Information Questionnaires.

That said, a couple of guys I have spoken to in the last few days think that PIQs are a ‘good’ idea which could be working. One even suggested that PIQs might well become the saviour of Home Information Packs generally.

But PIQs are not the good news I have in mind. Hands up those of you already familiar with the Consumer Protection from Unfair Trading Regulations 2008? These are known to the trade as the CPR – the trade in question being the consumer protection industry run by Trading Standards Officers.

In a nutshell, think of the CPR as a new version of the ubiquitous Trade Descriptions Act 1968 which it largely replaces.

These are very important new Regulations but as they do not require estate agents to do anything they are not doing already (or should be doing), few estate agents are aware of the increased significance of these powers to TSOs.

I call the CPR new, but in fact they came into force a year ago on May 26, 2008 and differ from the TDA in many respects – not least the Regulations are both shorter and more versatile.

Basically, anything which might mislead a member of the public falls within the ambit of the CPR. It is more wide-ranging than the Property Misdescriptions Act and, from the TSO’s point of view, far more flexible.

If an Officer does not like something an estate agent is doing he can require the agent to stop forthwith. This could cover leaving a ‘sold’ board on display for too long, or in the wrong place – such as on a verge to a public highway.

Many agents seem to forget that their agency boards are only lawful if placed within the curtilage of the property for sale; and only one at a time.

Many of the incidents which are potentially PMA offences could now be dealt with under the CPR and more quickly.

A TSO could serve a notice on the estate agent requiring him to stop whatever practice it is to which the Officer has taken an exception.

If this ‘advice’ were ignored, the TSO can formally require the agent to stop. Breaching that specific instruction could lead to contempt of court and from that, and pretty soon, unlimited fines or imprisonment.

The CPR stems from the EU Unfair Commercial Practices Directive which the Council of Ministers formally adopted in May 2005 with the broad intention of harmonising unfair trading laws across the Union by introducing a general prohibition on any traders treating any consumers ‘unfairly’.

That may sound commendable but has led to another example of where a trader can be found guilty and then have to prove he was acting reasonably and not unfairly. Again the TSOs become the investigator, prosecutor, judge and jury – so be warned.

The CPR say that businesses must not mislead consumers through acts or omissions, nor subject them to aggressive commercial practices such as high pressure selling techniques. The Regulations also provide additional protection for vulnerable consumers who are often the target of unscrupulous traders.

They apply to all business sectors with the flexible provisions intended to plug gaps in existing consumer protection legislation and set standards against which any new questionable practices can quickly be assessed.

Under the TDA, if an activity was not listed, it was not covered by the legislation: the CPR is less prescriptive and therefore faster and more flexible.

This European Union Directive was a ‘maximum harmonisation Directive’ meaning it sets a maximum level of restriction which is permissible in respect of allegedly unfair commercial practices.

However, as UK Parliamentary Draughtsmen try to avoid duplication, the CPR have many repeal provisions.

Initially, 12 pieces of existing legislation were repealed outright while 11 laws were repealed in part. These included the whole of Part 3 of the Consumer Protection Act 1987 and most of the TDA.

The CPR provide similar or greater consumer protection than the laws replaced and, accordingly, these Regulations are now regarded as the main workhorse in the field of consumer protection.

Interestingly, the thorough review leading to introduction of the CPR offered the civil servants an opportunity to deal with the PMA but that has not been amended in any way.

The CPR talk about misleading practices, aggressive practices, and banned practices of which there are currently 31, listed in one of four Schedules, and unlawful in any circumstances.

Here is the critical point – all businesses are expected to look at their present practices, and any future marketing plans, assessing them against the criteria set out in the CPR.

If an estate agent were found in breach of these Regulations and had not undertaken such an internal review, the firm would have great difficulty in sustaining a due diligence defence.

Again you need to look at the definitions carefully as all are wide-ranging. The CPR use the term ‘product’ to refer to goods and services in a very wide sense, including residential and commercial property, rights and obligations.

For instance, although the TDA applied to both goods and services it had different rules for different circumstances.

The CPR treat the supply of goods and services in exactly the same way and this approach is extended to intangible rights such as rights to cancel contracts discussed last month.

The CPR cover all forms of promotion and advertising including anything that gets onto the internet. That’s however it gets onto the internet, even if the material was lifted unbeknown from your website and ‘modified’.

These Regulations are far from being a one-off. As with HIPs, they are part of a complex series of changes which have been quietly introduced during the last decade of Labour administration. Many people still regard this Government as being superficially very similar to the Tories in basic philosophy.

In my book, this is far from the truth as, in practice, a plethora of totally new legislation and intrusive regulation is being brought forward.

These are creating a vastly complex, and vastly expensive, regulatory structure giving the State new, unprecedented, powers of intervention and control in virtually every field of commercial and professional activity.

To an extent, this trend reflects UK membership of the European Union but the interpretation and implementation of many European Directives is the responsibility of the UK Government.

It is, frankly, misleading to lay all the blame on the European civil servants in Brussels for the complexity of regulation which now face business generally and not just estate agency – all trades, professions and businesses have similar problems.

It is not just the ‘consumer’ who is becoming all-powerful – arguably consumers are also more confused and not well served.

Take HIPs as an example where I am yet to hear anyone claim they are a stunning success. One dare not ask how much that saga has taken to force through! But this approach is typical throughout all Government thinking.

Yet, far more worryingly, these changes are giving greater power to the new and fast-growing, unaccountable, ‘grey’ administrative judiciary.

For example, one used to be regarded as innocent until proven guilty, a right enshrined in Magna Carta which has held good for hundreds of years.

Now, one of the implications of the Enterprise Act 2002 is to create a number of situations where you do not have to be found guilty of an offence.

You can be deemed guilty by civil servants from this grey judiciary and then left to prove your innocence before the courts, at your expense.

This cost saving was part of the motivation for the change. However, it has totally reversed a critical principle of British justice and slipped into law with little debate or serious consideration.

I accept that TSOs have an important function to perform but the CPR give them a powerful new approach including the right to intervene in anything and everything you do.

When we were drafting the Estate Agents Act in 1979 (EAA) this introduced the minimum controls then thought necessary with the power of TSOs tightly proscribed. Too tightly I am now prepared to concede after 30 years’ experience.

Now all the EAA safeguards have gone as Officers have the right to intervene in anything you do citing the CPR. Over the next few years the Consumer Estate Agent and Redress Act 2007 will introduce far more Regulations which the Department of Business Enterprise & Regulatory Reform and the OFT already have in advanced preparation. Do not think it all ends now HIPs rule supreme. This is merely a short period to draw breath.

David Perkins can be contacted
at PO Box 333, Carterton,
Oxon, OX18 3WZ,
on 0870 350 1865 or at:
david@david perkins.co.uk.