The Provision of Services Regulations 2009 will implement the EU Services Directive. A number of the new obligations created by the Regulations will apply directly to businesses supplying services, including advertising and marketing agencies. Nav Sunner reports.
Topic: Regulatory
Who: UK Government
Where: UK
When: 28 December 2009
Law stated as at: 2 December 2009
What happened:
The Services Directive (the "Directive") was adopted on 12 December 2006. The basis for the Directive is to create a free market for the services sector in the EU and the EEA countries of Iceland, Norway and Liechtenstein to match the existing ones for goods, people and capital. The Directive requires Member States’ Governments to simplify procedures and remove barriers to cross-border service provision.
The main objectives of the Directive are as follows:
- remove unjustifiable or discriminatory requirements affecting the setting up or carrying on of a relevant service activity;
- set up a point of single contact enabling service providers to apply and pay for authorisations (to offer or provide services) online;
- provide for competent authorities in different states to co-operate, including by sending requests for information through an internal market information system, reducing the burden on service providers;
- require service providers to make certain information available for recipients of their services; and
- set up a portal to enable consumers to find out what their rights are in each country of the EEA, thus increasing confidence in using services.
Member States must implement the Directive by 28 December 2009. In the UK this will be done through the Provision of Services Regulations 2009 (the "Regulations").
Although there are some important exceptions (such as financial services, audio visual services and healthcare) the Regulations apply to all businesses operating in the services sector including marketing and advertising agencies.
In order to ensure compliance with the Regulations, service providers will need to observe certain requirements about the provision of information to service recipients, the handling of complaints and the need to be non-discriminatory within general conditions. These duties will apply to all providers operating in the UK regardless of where they originate.
Thus, businesses that fall under the Regulations (including marketing and advertising agencies) should review their practices to ensure that they have taken appropriate steps to comply with the Regulations.
PROVISION OF INFORMATION
Mandatory Information
Under the new regime service providers are obliged to make certain information available to customers. The Regulations provide a fairly comprehensive list including the following:
- the name of the business;
- the legal status and form of the business;
- the geographic address at which the business is established and details by which someone in the business can be contacted rapidly and communicated with directly;
- if the provider exercises an activity which is subject to VAT, the identification number;
- if the provider is carrying on a regulated profession, any professional body or similar institution with which its is registered, it needs to make available the professional title and the EEA state in which that title has been granted;
- if the provider has general terms and conditions it must make these available;
- the existence of contractual terms, if any, that it uses concerning the competent courts or the law applicable to the contract;
- the price of the service, where a price is pre-determined by the business for a given type of service;
- the main features of the service, if not already apparent from the context;
- if the provider is subject to a requirement to hold professional liability insurance or a guarantee, information about the cover and, in particular, the contact details of the insurer or guarantor and the territorial coverage.
How is this information to be made "available"?
The Regulations specifically deal with this and provide that a service provider can make the information available in any of the following ways:
- supplied to the recipient on the provider's own initiative;
- made easily accessible to the recipient at the place where the service is provided or the contract concluded;
- made easily accessible by the recipient electronically by means of an address supplied by the provider;
- included in any information documents that the provider supplies to the recipient, which set out a detailed description of the service provided.
Requests for Information and Complaints
The Regulations state that the provider must also make available contact details where recipients can request information or make a complaint – this must include a telephone number and one or more of a postal address, fax number or e-mail address. The Regulations do not specify how this information should be made "available" but it can be presumed that the suggestions given above for other information will apply in this case.
Information to be supplied on request
Provision has also been made in the Regulations for service providers to make certain information available to recipients if the recipients ask for it. This includes the following:
- where the price is not pre-determined for a given type of service, the price of the service or, if an exact price cannot be given, the method for calculating the price or a sufficiently detailed estimate; and
- information on any other activities carried out by the provider, which are directly linked to the service in question and on the measures taken to avoid conflicts of interest.
General points in relation to information disclosure
All the information required to be supplied must be given in a clear and unambiguous manner so that it can be easily understood, taking into account the choice of words and style, as well as factors such as the format and structure. The information must also be given in good time before the contract is concluded or before the service is provided when there is no written contract.
HANDLING OF COMPLAINTS
The Regulations state that the provider of a service is required to respond to complaints as quickly as possible. The provider must also make best efforts to find a satisfactory solution to complaints but are not expected to do so in the case of vexatious complaints which may include a complaint which is clearly unsubstantiated or malicious.
NON-DISCRIMINATION
The Regulations state that a service provider cannot discriminate on the grounds of nationality or place of residence in the general conditions it makes available to the public at large unless these are justified by 'objective criteria'. The general conditions include conditions found in any non-contractual material such as information in an advertisement, a website, as well as in contractual documentation. Thus, a service provider cannot provide a different standard of service on the sole basis of the customer's residence. The duty applies where the customer is an individual but not where it is a legal person (such as a company).
CONSEQUENCES OF BREACH
What happens if a service provider fails to comply with the Regulations? There is already existing legislation that allows various consumer bodies and the OFT to take action against breaches of certain consumer laws where this harms the collective interests of consumers. These bodies will now have the same powers to take action when there has been a breach of the obligations in these Regulations to provide particular information, respond to complaints, and discriminate on grounds of place of residence. The key issue here is that such bodies will not intervene in business to business transactions nor in individual consumer disputes with providers in which case businesses and individual consumers are left to seek redress for any non-compliance on their own initiative through the courts redress for any non-compliance on their own initiative through the courts
Why this matters:
The Regulations should make it easier for service providers, particularly small and medium sized businesses to offer their services to customers in other EU countries, whether establishing elsewhere in the EU or providing services remotely from the UK. It should also give customers greater transparency about the services they are looking to buy and the service provider they are engaging.
However UK service providers will need to audit all their marketing communications and websites to ensure that the prescribed information is being made available
