Tag: customer protection

New laws to be introduced to ‘force businesses to be upfront with customers’

  • Fake reviews will be added to banned practices
  • Unavoidable hidden fees cost consumers £2.2 billion every year

Fake reviews, shop labelling and hidden fees that make shopping more difficult and expensive for consumers will all be targeted head on to clamp down on unfair trading practices.

Following a consultation into consumer transparency and as part of the Digital Markets, Competition and Consumer Bill (DMCC), the Department for Business and Trade will officially add fake reviews to a list of banned business practices, outlaw dripped fees that are unavoidable for consumers and ensure that businesses provide clearer labelling for prices on supermarket shelves.

These measures will be legislated for as part of the DMCC Bill as it progresses through Parliament.

Sneaky hidden fees, or dripped prices that are unavoidable will be banned. Drip pricing occurs when consumers are shown an initial price for a good or service while additional fees are revealed (or “dripped”) later in the checkout process.

Research suggests it is widespread and occurs in more than half of providers in the entertainment (54 percent) and hospitality (56 percent) industry, and almost three quarters across transport and communication (72 percent) sectors.

Every year, unavoidable fees cost consumers £2.2 billion, which is why these laws are being designed to ensure online shoppers have a clear idea of what they are spending upfront, to inform them as much as possible and as soon as possible before making purchases.

To make it easier for consumers to compare products and services, fees that are mandatory must be included in the headline price or at the start of the shopping process – these include booking fees for cinemas and train tickets.

Optional fees such as airline seat and luggage upgrades for flights will not be included in these measures.

Minister for Enterprise, Markets and Small Business Kevin Hollinrake said: “From supermarket shelves to digital baskets – modern day shopping provides customers with more choice than ever before. But with that, comes the increased risk of confusion, scams and traps that can easily cost the public more than they had planned.

“Today’s announcement demonstrates the clear steps we’re taking as a government to ensure customers can compare purchases with ease, aren’t duped by fake reviews, and have the sting of hidden fees taken away.”

Reviews were found to be used by 90% of consumers and contributed to the £224 billion spent in online retail markets in 2022, which is why this government is committed to ensuring that the information available online is accurate and fair.

Working with the Competition and Market’s Authority, new guidance will be created in the coming months to tackle fake reviews which will be added to the list of banned practices, with website hosts held accountable for reviews on their pages.

The Price Marking Order (PMO), a piece of Retained EU Law, will also be reformed now ]we have taken back control of our laws’.

The PMO requires traders to display the final selling price and, where appropriate the final unit price (e.g., price per litre/kilogram) of products in a clear way. The EU’s PMO laws were last updated 20 years ago and no longer reflect modern shopping habits.

We will be working with stakeholders and businesses to create new, simpler and clearer guidance for pricing labels that works best for British businesses and improves the shopping experiences for UK customers. This is expected to be issued in the spring.

Our proposed changes will ensure unit pricing is consistently applied, including to promotions and special offers, helping consumers compare products easily and identify what items represent the best value to them.

Small shops that are currently exempt from the PMO will continue to be exempt from those specific measures.

Graham Wynn, Assistant Director, British Retail Consortium said: “The BRC looks forward to continuing to work with officials as practical detailed implementation plans are developed. We are committed to ensuring information given to consumers is clear and they are not misled in any way.“

The UK Government will also be making provision for the PMO in relation to the Deposit Return Scheme so the cost of the deposit is displayed separately on price labels.

In addition to fake reviews and hidden fees, the DMCC Bill will also look at other consumer issues including subscription traps, and will provide the CMA with stronger tools to investigate competition problems and take faster, more effective action, including where companies collude to bump-up prices at the expense of UK consumers.

Prepayment meter outrage: Shapps acts to address forced installations

  • Business Secretary gives energy suppliers deadline to urgently report back on remedial action for customers who faced wrongful installations
  • This follows damning reports earlier this week highlighting what appear to be breaches of rules and regulations to protect vulnerable households
  • Energy regulator Ofgem also asked to toughen up their investigations after they failed to find serious failings by British Gas

Business and Energy Secretary Grant Shapps has today given energy bosses a deadline of Tuesday to report back to him on what remedial action – such as providing compensation – they plan to take should they have wrongfully installed prepayment meters in the homes of vulnerable customers.

It comes in the wake of British Gas admitting fault as a result of the Times investigation which showed even those with small children or medical conditions have not been shown forbearance, with reports of debt collectors breaking into homes to install the equipment.

But these findings by The Times newspaper follow several reviews by Ofgem of the services provided by energy suppliers, which have not identified this unacceptable behaviour – or other significant shortcomings – and have in some cases even given companies a clean bill of health.

Therefore the Business Secretary has today told Ofgem to toughen up on energy suppliers and investigate the customers’ experience of how their supplier is performing.

He called on the regulator to set up a new customer reporting system for households to pass on their own stories of how they are being treated – especially those who are vulnerable – and not just rely on energy firm bosses to share information with their regulator.

Business and Energy Secretary Grant Shapps said: “ I am appalled that vulnerable customers struggling with their energy bills have had their homes invaded and prepayment meters installed when there is a clear duty on suppliers to provide them with support. They need to refocus their efforts on their consumers, the British public, who are at the receiving end of this abhorrent behaviour.

“ I’m also concerned the regulator is too easily having the wool pulled over their eyes by taking at face value what energy companies are telling them. They need to also listen to customers to make sure this treatment of vulnerable consumers doesn’t happen again.”

News reports across the country have highlighted examples of the forced installation of prepayment meters in the homes of those who are struggling to pay their bills.

The regulator has also been asked to toughen up their reviews, going beyond the company headquarters to find out what is really happening in people’s homes by hearing from them directly and engaging more with charities and other groups that represent consumers.

Currently, energy suppliers are required to provide Ofgem with information to demonstrate how they comply with the rules on supporting vulnerable consumers, on customers struggling to pay and on the fitting of prepayment meters.

The Business Secretary wants to see the voices of consumers and those who champion their needs heard when deciding which energy companies are meeting expectations  – with a customer reporting hotline being just one example we would want the regulator to consider.

On Thursday night a number of suppliers announced they would suspend forced installations after being pushed by Ofgem to pause the practice while they reassure the regulator they’re complying with the rules.

However, just over a week ago the Business Secretary launched a crackdown on the mistreatment of energy users by suppliers, already asking them to voluntarily commit to stopping this practice. He also demanded they share the number of warrants they’ve applied for in recent months and plans to publish the findings.

Earlier this week the Energy and Climate Minister also met British Gas CEO Chris O’Shea and expressed his horror at recent reports. He made it clear this kind of behaviour is unacceptable, especially from such a key and longstanding British company.

He urged Mr O’Shea to take urgent steps to repair the damage done to British Gas’ reputation and urgently come back to him outlining the role he will personally take to fix these cultural issues.

The British Gas boss was also told by the Minister that vulnerable, mistreated customers need to be identified and redress provided. He will be monitoring matters extremely closely to make sure this happens.

Last month the Business Secretary and Energy and Climate Minister called energy suppliers to voluntarily stop force fitting prepayment meters: 

https://twitter.com/grantshapps/status/1617055839788929024

Greater control for taxpayers using repayment agents

HM Revenue and Customs (HMRC) is changing the way taxpayers who use a repayment agent can receive overpaid tax to protect them and raise standards among repayment agents.

HMRC will introduce legislation to change the way repayment agents are paid for their services and better protect customers from the unscrupulous tactics used by some operators. This means stopping the use of legally binding ‘assignments’ as part of claiming an Income Tax repayment, which could only be cancelled if the agent and taxpayer both agreed to do so. This can be challenging for customers who become dissatisfied with their agent, or who simply wish to take over managing their own claim.

Under new arrangements, if a taxpayer chooses to use a repayment agent to reclaim overpaid tax and wants it sent to the agent, they will need to make a nomination, which they can cancel at any time. The new process will make it easier for taxpayers to stay in control of their repayments.

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said: “Taxpayers deserve better – we want to make sure they are better protected before choosing to enter into an agreement with a repayment agent. HMRC’s updated standards for agents will level the playing field and provide the benchmark we expect all repayment agents to meet.”

The changes follow HMRC’s consultation last summer on ‘Raising standards in tax advice: Protecting customers claiming tax repayments’. Responses to the consultation highlighted the need to improve agent transparency and standards with the overall aim of better protection for taxpayers.

As a result, HMRC is today also setting out the following measures:

  • updated standards for agents – applicable to all tax agents and include greater transparency requirements
  • a new HMRC registration process for repayment agents – to make the agent sector more transparent so customers better understand what they are signing up to

Victoria Atkins, Financial Secretary to the Treasury, said: “For too long taxpayers have been left in the dark as a result of misleading and opaque agreements with repayment agents.

“These new measures will ensure those who are entitled to claim a tax repayment or relief can do so freely and easily – whether they choose to do this themselves or by using an agent.

“This Government is making it easier to navigate the system for all taxpayers using an agent to claim money that’s owed to them.”

Victoria Todd, Head of the Low Incomes Tax Reform Group, said: “We welcome these additional steps, which show HMRC recognises the important role they play in consumer protection.

“Refund companies have a legitimate role in the tax system, but the practices of some of these companies in recent years have been unacceptable. The proposed changes will hopefully address problems around the use of assignments, increase transparency for taxpayers and set clearer standards for these companies’ behaviour. 

“Alongside this, it is important that more effort goes into raising awareness of refunds and ensuring it is as simple as possible for taxpayers to access them. We look forward to working with HMRC on the detail of the proposals.”

These changes form part of the government’s commitment to tackle problems in the repayment agent market, which is currently an unregulated sector.

Responses to HMRC’s recent consultation overwhelmingly supported the need for improving standards in the repayment agent sector.

The updated HMRC standard for agents includes:

  • greater evidence of customer consent. This aims to ensure that taxpayers better understand the agreement they’re entering into
  • stricter transparency rules, including introducing a 14-day ‘cooling off’ period for customers after entering into an arrangement with an agent, and an obligation on agents to ensure all communications and advertising material are fair, clear, accurate and do not mislead or conceal material facts

Further details on the approach to registration for repayment agents will be set out in due course.

If taxpayers think they are owed a tax rebate, they can claim directly from HMRC via the free and secure service on GOV.UK and will receive 100% of the money owed.