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Brexit Notes: No-Deal & Consumer Rights

As 2019 dawned, there was hope in some quarters that a renewed commitment to common sense might have dawned with it and that our intrepid politicians might return to work determined to agree upon a way forward for Brexit. It is quite clear, not least in light of the House of Commons’ rejection of the Government’s Brexit deal on 15 January, that this is not to be.

Talk of ‘no-deal’ is far from new; however, for a long time, it has been reasonably easy to dismiss a no-deal scenario as unrealistic. Now, however, with less than three months before the UK leaves the EU, a no-deal Brexit is starting to look like a realistic possibility after all.

Opinions on a no-deal Brexit are wide-ranging and, of course, it is still entirely possible that the scenario will play out in some other way. Nevertheless, the Government has been making preparations for a no-deal Brexit, including the publication of a range of Technical Notices and an even broader range of draft secondary legislation.

In this post, we look at the impact of a no-deal Brexit on consumer rights in the UK and offer some comments on what this will mean for consumers and businesses in real terms.

No-Deal Brexit: The Basics

Before we get into the detail, it is as well to briefly outline exactly what ‘no-deal’ means. The UK is scheduled to leave the EU at 11 pm local time on 29 March 2019. If there is no deal in place at this point, EU law ceases to apply in the UK unless the UK has expressly adopted it. Unlike the alternative ‘deal’ scenario, there is no transition period within which EU law and the ‘four freedoms’ would continue to apply.

No-Deal Preparations for Consumer Rights

The Government has published a Technical Notice entitled ‘Consumer rights if there’s no Brexit deal’ and two draft statutory instruments: the Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2018, and the Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018.

In addition to the general changes outlined in this post, the Technical Notice also sets out some specific changes relating to package travel, timeshares, textile labelling, and footwear labelling.

The first set of regulations deal with cross-border enforcement while the second would implement the following changes:

  • • Limit the applicability of responsibilities set out in the Consumer Rights Act 2015 (currently applying to importers into the EEA) to importers into the UK;
  • • Put choice of law clauses referring to the laws of an EEA state on the same footing as those referring to non-EEA countries;
  • • Limit consumers’ rights to redress from importers engaging in practices prohibited by the Consumer Protection from Unfair Trading Regulations 2008 to importers into the UK (as opposed to importers into the EEA);
  • • Put users of EEA-based payment service providers on the same (less-protected) footing as users of payment service providers based in non-EEA countries; and
  • • Remove the current obligations on UK ADR providers to deal with disputes involving consumers resident in EU Member States. This would also end the operation in the UK of the European Commission’s Online Dispute Resolution Regulation for consumer Alternative Dispute Resolution.

Current UK consumer law is derived from EU law and, in the form of the Consumer Rights Act 2015, in fact provides better standards of protection than the ‘basic’ EU provisions. At least initially, therefore, UK consumer law and EU consumer law will be essentially the same. Cross-border enforcement would become more difficult in the event of a no-deal Brexit, however.

Put more simply, life for UK consumers would continue largely as normal, at least where their consumer rights within the UK are concerned. What would change is the ease of enforcing those rights if a trader is not based in the UK.

Cross-Border Enforcement and Dispute Resolution

At present, as an EU Member State, the UK’s consumer protection regime is supported by a reciprocal cross-border enforcement framework. A no-deal Brexit would mean the UK’s immediate departure from that framework.

Moreover, UK consumers would no longer be able to use the UK courts to take action against traders based in the EU effectively. Even if a UK court were to rule in a consumer’s favour in such a case, enforcing that ruling would be more difficult. By the same token, consumers based in the EU buying from UK-based traders could find enforcing their rights similarly difficult if we leave without a deal.

Access to alternative dispute resolution (‘ADR’) stands to be reduced. The European Commission provides an Online Dispute Resolution Platform for use in disputes between traders and consumers; however, a no-deal Brexit would mean UK-based traders and consumers no longer having access to it. Nevertheless, within the UK, the Government has said that it is taking steps to ensure that consumers and traders will still be able to use ADR for UK disputes. ADR obligations for businesses will not change; however, if your website makes any reference to the EU Online Dispute Resolution Platform, such references should be removed in the event of no-deal.

Final Thoughts

It goes without saying that regardless of how our departure from the EU proceeds, consumer rights will be affected in some way, but the impact of a no-deal Brexit could be more significant and would, of course, happen much sooner.

That being said, UK-based consumers and UK-based traders doing business within the UK should not need to be overly concerned and should expect the same rules that apply now to apply even if there is a no-deal Brexit. Those engaged in cross-border trading, however, should expect things to become less straightforward and prepare accordingly.

For consumers with questions about cross-border transactions in the event of no-deal, the UK’s European Consumer Centre will be available to help, and the Government has committed to funding the Centre for at least one year from April 2019.

From a business perspective, those selling only within the UK should not expect a great deal (no pun intended) to change. Those selling to consumers in EU Member States, however, must remember that, once the UK has left the EU (especially in a no-deal scenario), changes to EU consumer law will no longer necessarily be reflected in UK consumer law in the same way that they are now. In such cases, it will be important to keep up-to-date with EU law and the laws of any Member States sold into.

Do you trade with consumers in other EU Member States? If so, how are you preparing for Brexit, no-deal or otherwise? Are you expecting business to become more difficult or have you got it covered? As always, your comments are welcome!

 

[This post was edited on 16 January to reflect the outcome of the Meaningful Vote in the House of Commons on 15 January]

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