In its continuing consultations on the Unfair Commercial Practices Directive, the DTI has pondered copying Germany and allowing competitors to sue each other for breaches of consumer protection laws. What an excellent idea says Stephen Groom
Topic: Consumer protection
Who: The Department for Trade and Industry ("DTI"), UK
When: December 2006
As the December 2007 deadline approaches for Europe to implement the Unfair Commercial Practices Directive ("UCPD"), the UK Government's DTI has published its response ("Response") to the various comments received from stakeholders on the UCPD consultation paper it published in December 2005.
Also in December 2006 the DTI published yet another UCPD consultation. This time focusing on framing and enforcing criminal sanctions for breaching the new rules by indulging in "misleading", "aggressive" or just plain "unfair" consumer-facing commercial practices. Will practices that currently earn a slap on the wrist from the Advertising Standards Authority, for example, now land the board of the advertiser in clink?
Well kept secret
More on this soon on marketinglaw, but here we will focus on the brief reference in the Response to a method of enforcement of consumer protection and marketing laws which is a well kept secret in the UK.
We will call this "mutual regulation" for now and the underlying concept is simple and has been operating in other EU states like Germany for many years.
Some benefits of mutual regulation
Mutual regulation could at a stroke relieve the considerable burden on Advertising Standards Authority and many other hard-pressed and over stretched regulators of advertising and marketing such as trading standards, the Financial Services Authority, the Information Commissioner's Office, the Medicines and Healthcare Regulatory Authority, the Direct Marketing Authority, Ofcom, the Office of fair Trading and premium rate line regulator ICSTIS, to name but a few.
Mutual regulation could quickly restore healthy respect amongst UK businesses and consumers alike for hitherto barely enforced consumer protection measures such as those dealing with data privacy, digital marketing, distance selling, price indications, trade descriptions, telephone marketing and prize promotions.
Mutual regulation could provide consumer bodies, brand owners and consumers with a means of obtaining swift and effective justice which quickly put a stop to even digital non compliant practices that otherwise might attract a slap on the wrist weeks down the line and long after the offending email or text has done its work.
Mutual regulation could hit non compliant advertisers where it hurts, in the pocket, whereas an ASA "complaint upheld" might be regarded as an acceptable overhead.
Mutual recognition could rapidly remove the current inequalities of treatment which today make the UK marketplace systemically anti competitive. Responsible and compliant advertisers and marketers could at last reach a point where they are not consistently disadvantaged against competitors who ignore consumer protection laws, reap the benefits and get off scot free.
What is mutual regulation
So what is mutual regulation?
It is giving businesses the right to enforce consumer protection laws themselves by taking their non compliant competitors to court.
This is a right that German businesses have had for many years but something that UK brand owners have simply not been able to do until now, unless for instance rights such as trade marks or copyright are infringed or a passing off has been committed or a libel or "malicious falsehood" has occurred .
How would this system be financed? By a small levy on advertising spend in addition to that already charged to finance the ASA/CAP self regulatory system and channelling into the new system the fines currently meted out against advertisers by bodies such as ICSTIS and the FSA as well as the fines paid by businesses under the new system.
To avoid clogging up the existing courts consideration might also be given to setting up a separate specialised "Market Court" along the lines of similar bodies in Sweden for example. Their experience would speed the processing of cases and also provide consumers with cheap and quick, user friendly redress.
Interested in "mutual regulation"? Well if you are, unfortunately the DTI does not seem to share your view to date. In its Response it dismisses the idea stating merely in justification that existing enforcement arrangements are adequate. A breathtaking assertion that leads one to wonder just who the DTI has been listening to before arriving at this point of view.
Why this matters:
Many in the UK marketing community take a view quite contrary to that of the DTI and believe that existing enforcement mechanisms for advertising and marketing related consumer protection laws are hopelessly inadequate. Perhaps the DTI should think again.