Passed by Parliament in March, the provisions of the new Consumer Rights Act 2015 will soon come into effect. The new Act will present challenges for finance businesses and require them to develop closer relationships with their suppliers to ensure there is a joined up approach to dealing with customer complaints.
On the surface, the Act appears to be simply a consolidation of a number of different provisions relating to different types of transactions brought together. However, dig deeper and there are in fact some key changes that businesses need to be aware of and must be prepared for before the Act comes into force on 1 October.
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Key change one: Remedies for non-conforming goods
The most notable feature of the Act relates to the range of remedies that consumers will be entitled to when goods or digital content are supplied to them under any form of contract (sale, hire purchase, or hiring, or where there is a combination of goods and services). The existing implied terms that the goods should be of satisfactory quality, fit for purpose, or correspond with sample remain, but enhanced remedies will become available to consumers where goods don’t conform to the requirements.
Consumers will have a new 30-day short-term right to reject goods alongside ‘first’ and ‘second’ tier alternative remedies, at the customer’s option, for repair or replacement, which will apply both during and after the first 30 days have expired, and a final right to reject or price reduction, once the 30 days have expired. However, the consumer only has to accept one repair or replacement before moving on to the final remedies, so traders cannot repeatedly offer to repair or replace the goods, unless the consumer consents to this.
After 30 days, the final right to reject doesn’t apply if the trader has not been given the opportunity to repair or replace (at consumer’s option). It only applies if the repair or replacement has not been successful or if different non-conformities arise. Repair is only available if that is possible but there is no obligation to do either one if the cost of doing so is disproportionate to doing the other.
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By GlobalDataThe Act also covers contracts for the sale and the supply of digital content. In essence contracts for digital content contain some of the same consumer rights in respect of satisfactory quality, fitness for purpose and description/correspondence with sample, but it is important for businesses to understand what constitutes digital content and whether these changes affect them.
Key change two: Extended coverage for remedies
Another key change is the contracts that these provisions apply to. Previously, some of the consumer remedies for repair or replacement did not cover certain contracts, for example hire or hire purchase (although in most cases these remedies were offered as part of a complaints resolution process). These other contracts will now be expressly covered. Relevant businesses need to be aware of this change to ensure they respond appropriately to customers wishing to exercise their statutory remedies.
Key change three: Unfair contract terms
Finally, the Act has consolidated consumer rights in relation to unfair contract terms contained in the Unfair Contract Terms Act (UCTA) and the Unfair Terms in Consumer Contracts Regulations and moved away from the ‘reasonableness’ test under UCTA to create a universal requirement of fairness. These new rights will operate in conjunction with the Consumer Protection from Unfair Trading Regulations. Considerations for fairness are the prominence and transparency of a term.
David Wood is a partner in the financial litigation team at business law firm DWF
