Government won't lobby EC over unfair terms in contracts

The Government will not ask the European Commission (EC) to extend the remit of the UK’s consumer protection laws covering unfair contract terms.

During negotiations with the Commission over a new European Union Consumer Rights Directive, the Department of Business, Innovation and Skills (Bis) said the UK should be “free” to legislate at a national level to protect consumers.

The proposed Directive has sparked controversy because full harmonisation of these laws would have had a detrimental effect by reducing protection offered by countries such as the UK.

The original Directive was finally shelved earlier this year but this latest incarnation has already caused concern. A Committee of the Parliament said last week that the Directive still did not offer consumers enough protection.

The Department of Bis launched a public consultation in August. It has now discussed with consumer rights organisations, business groups and individuals if charges, such as extra fees for luggage and package holiday surcharges, should be covered by the same consumer protection laws as a contract's main provisions.

Businesses claimed that extending the protection was unnecessary. They argued that if these costs were more tightly regulated, 'headline prices' would have to rise.

Consumer organisations, such as Consumer Focus, disagreed. They said that consumers are most influenced by 'headline' prices, and pay less attention to charges that are not immediately apparent. They also said that many consumers do not fully understand the terms of their contract.

However following a ruling by the Supreme Court that charges levied by banks on consumers were not unfair, the Government opted not to lobby in Brussels for the extension.

“Recent discussions have indicated that the relevant provisions on unfair contract terms will be adopted on a minimum harmonisation basis which would enable Member States to apply their own rules.

“This means that the UK would still be free to regulate this matter internally in domestic law, even if the present text of the Directive remains unchanged,” it said in its consultation.