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Brexit’s detrimental effects on consumer rights and business

22 August 2019

In the wake of a possible no-deal Brexit, the law surrounding consumerism could be subject to various vital changes.

Legislation currently governing the protection of consumers is essential in the development of the internal market. It ensures that consumers within the EU are provided with the same minimum standards whilst they shop within the EU.

Each member state is subject to these minimum standards but may on their own accord raise the minimum standards of protection. This essentially allows consumers in the UK to buy goods and services from other member states knowing that there are similar protections to that of the UK. This is enforced by the cross border consumer framework and the civil judicial cooperation framework.

Jeremy Glen
Jeremy Glen, Partner

The position may change if a no-deal Brexit occurs. The UK government has set out various advisory notes and draft statutory instruments in anticipation of the detrimental effect on the laws to protect the consumer post Brexit.

The principal issue surrounds the enforcement of consumer rights by UK consumers. The government intends to ensure that before the UK’s departure from the EU, most previous EU laws are enshrined in UK domestic law. The government initially intends to amend the Consumer Rights Act 2015 to shift responsibilities from legislation regarding those who are importing to the EU/EEA to those who are importing to the UK. Additionally, any contracts, particularly in relation to timeshares, that are made within an EU member state are likely to be governed by the law of that member state.

The UK government published guidance on a potential no-deal Brexit on 14 August 2019 and identified areas that this may affect in relation to the rights of a consumer and businesses.

Purchasing within the EU

Consumers will have reduced protection if they are users of an EU/EEA based payment service as ultimately these users will be put in the same position as if they were resident in a non-EU member country. Therefore, where a no-deal Brexit occurs, when making payments to somewhere within the EU, Iceland, Liechtenstein or Norway, there could potentially be higher charges than normal.

When purchasing a package holiday The Package Travel and Linked Travel Arrangements 2018 Regulations enforces alongside the EU Directive that the UK must abide by insolvency protections that are applied in the trader’s member state. This currently benefits UK traders as other member states recognise the UK’s insolvency protections. Where a no-deal occurs, this will ultimately affect the mutual recognition of the EU’s Package Travel Directive where the business entity does not normally direct their business at the UK as they may will not recognise the UK’s insolvency protections.  It is advised that when purchasing a package holiday from EU businesses that frequently sell to the UK, the consumer will be covered if the company goes bust. However, if an entity does not actively sell to the UK, the consumer is advised to read the terms and conditions on the effects if the business entity does become insolvent.

Buying a timeshare within the EU

When purchasing a timeshare where the contract would be made in an EU member state, the government advises that the consumer checks the laws of that particular member state as the timeshare contract may be governed by this law. In accordance with the EU Directive on timeshares, the level of protection may differ from state to state depending on the particular protections to non EU citizens that the country has. For example, it is uncertain whether timeshare contracts will be written in English as EU law provides that contracts should be written in the language of the consumer’s member state – if the UK is not an EU member, this would not apply.

Consumer Rights and Business

The government advises that consumers may have issues in relation to solving their cross-border disputes through the use of the European Commission’s Online Alternative Dispute Resolution platform. Therefore, if used by UK businesses, the government advises that, post Brexit, businesses remove their links to this ODR platform as it will no longer be available. However, the current UK Alternative Dispute Resolution System will remain in place, but will not apply when attempting to resolve cross-border disputes.

With the entire state of consumer law currently undetermined, businesses and consumers are advised to keep up to date as the position evolves, with an eye out for complications in the potential redress for UK consumers and businesses.

 Contact: Jeremy Glen Partner T: 0141 221 8012

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