The FSA states in the guidance that it is concerned at the number of unfair clauses it comes across in consumer contracts, such as rights to unilaterally alter or terminate a contract, rights to transfer obligations under a contract and contractual terms that are not in plain English. Whilst the FSA’s guidance is intended only for firms regulated by the FSA, it is a useful reminder to everyone involved in commerce as to what unfair terms are and how businesses can avoid imposing an unfair term on a consumer. The FSA can take action against businesses registered with it for unfair contractual terms, for example by obtaining a court injunction to prevent an unfair term being used any further by the business. The Office of Fair Trading (OFT) can also take action in the wider market place against offending practices.

The FSA sets out that, if a business can specify a valid reason within the contract itself as to why terms might be unilaterally altered, the right to unilaterally alter the contract is less likely to be considered unfair. A right of alteration is unlikely to be valid if it is, for example, in the business’s absolute discretion or to cover “unexpected” costs. In addition, stating that the contract can be altered “for any valid reason” will not be enough. If a business does alter a term that has a significant impact on the consumer’s obligations under a contract, such as varying charges payable by the consumer, the consumer should be informed of the change as soon as possible and given the chance to terminate the contract with immediate effect, without charge or other “practical” barriers put in place by the business to prevent the contract coming to an end.

Similarly, in relation to the transfer of obligations to third parties, the business should make sure that the guarantees provided to the consumer by the third party are the same as or better than those offered by the business itself – they key is stability and certainty for the consumer. The guidance states that consumers should be adequately informed of any transfer in good time for the consumer to fully understand the impact on the contractual relationship.

Simon Weinberg, a solicitor in the Commercial/IP/IT team at Matthew Arnold & Baldwin and assistant editor of Upload-Commercial/IP/IT, commented, “This guidance, whilst useful, does not necessarily tell us anything new. It is an important reminder for businesses of the requirement to have contractual terms that do not unfairly prejudice the consumer. It is not just the risk of an injunction to prevent the future use of those terms that should be taken into consideration – in addition, businesses should remember the bad press that can come with an injunction and the knock-on effect on consumer goodwill to an offending business. At a time when margins are tight and goodwill is essential to survival in the marketplace, getting contractual terms in order is an easy way to avoid the risk of an FSA or an OFT investigation, and all the reputation damage that can come with it.”

The Guidance, which should be referred to by all businesses engaged in the recovery of consumer credit debts (e.g. debt collectors, banks and law firms), sets out the standards that the OFT expects all parties engaging in the recovery of such debts to adhere to.

The Guidance is divided into the following chapters:

1. Introduction. This sets out how the ‘fitness test’ under section 25 of the Consumer Credit Act 1974 applies to debt recovery activities;

2. Overarching principles of fair business practice. This sets out the FSA’s overarching principles of consumer protection and fair business practice that apply to all debt recovery activities. This chapter explains that businesses should treat debtors fairly, be transparent, exercise forbearance and consideration, and act proportionately. They should also establish and implement clear, effective and appropriate policies and procedures (especially for dealing with vulnerable debtors);

3. Unfair or improper business practices. This sets out the behaviours that the OFT considers to be unfair or improper business practices for the purposes of section 25(2A)(2) of the Consumer Credit Act 1974 (e.g. using Facebook or Twitter to contact debtors.) If these are engaged in, they may call into question a person’s fitness to retain, or be granted, a consumer credit licence;

4. Regulatory compliance and enforcement. This outlines the OFT’s approach to securing compliance and provides information on the regulatory options available to the OFT.

The OFT has said that it will shortly update its Irresponsible Lending Guidance to reflect this revised version of Debt Collection Guidance.

The complaint was that the website had been misleading as it had not set out that the surcharges were not optional in order to make a purchase from the website. It was also argued that the website was misleading in the way it set out VAT on purchases, as the price quoted was with the figure excluding of VAT, whereas in all cases VAT would apply.

The ASA upheld both parts of the complaint, ruling that there had been a breach of the CAP Code in terms of misleading advertising and pricing. The CAP Code is the code of practice aimed at ensuring adverts, including material written on businesses’ own websites and social networking websites, are fair and not misleading. The ASA is a regulator in charge of enforcing the CAP Code.

This issue is increasingly in the public eye. The Office of Fair Trading recently told travel companies to make credit and debit card surcharges clearer on their websites. In addition, the Consumer Rights Directive recently adopted by the European Union requires pricing to be more clearly set out.

Many people may be under the misapprehension that they have until the Consumer Rights Directive is brought into force under English law (likely to be about two years from now) before they have to make all charges clear up front in an online order process. In fact, as this ruling shows, failure to be up front and clear on pricing is already a breach of the CAP Code and the ASA enforces the CAP Code even for something said on an organisation’s own website. Although a breach of the Code does not have legal effect, it can result in bad publicity and an inability to obtain advertising space in the future.

The OFT’s response to the consultation can be found here: http://www.oft.gov.uk/shared_oft/consultations/consumer-landscape/Consumer_Landscape.pdf.

The guidance applies to high street and online estate agents, property auctioneers, buyers’ agents, and solicitors and online property sites which offer services that count as estate agency work.

The new guidance focuses on two important pieces of legislation: (1) the Consumer Protection from Unfair Trading Regulations 2008, which prohibit traders/estate agents from engaging in commercial practices that are unfair to sellers, buyers, potential sellers and potential buyers of residential property, and (2) the Business Protection from Misleading Marketing Regulations 2008, which prohibit traders/estate agents from using misleading marketing when they advertise services to potential business clients or market commercial property for sale.

The draft guidance seeks to clarify how these two Regulations apply to estate agency work. It contains examples of trading practices that could breach the Regulations, and offers practical steps that businesses can take to comply with the law when they do any of the following:

1. advertise for new business, including through flyers, websites, newspaper advertisements and verbal discussions;

2. provide advice to new clients and take new instructions;

3. market properties, including when property details are put on the Internet;

4. negotiate and make sales; and

5. deal with complaints.

Currently, if you are convicted of committing a criminal offence under the CPRs or BPRs, you could face a fine not exceeding the statutory maximum , which is £5,000 (if convicted in the Magistrates Court), or an unlimited fine and/or imprisonment for up to two years (if convicted on indictment in the Crown Court.)

Also, under the Estate Agents Act 1979, if the OFT deems a business to be unfit to engage in estate agency work, it can issue a prohibition order banning the business from doing so.

The deadline for responding to the consultation is 9 December 2011. After this date, the OFT will publish its final guidance and a summary of the responses received.

The Office of Fair Trading (OFT) claimed that Purely Creative, which promoted various prize-draw scratch-cards breached the Regulations because consumers ended up paying a significant contribution towards the value of the prize in premium-rate telephone charges and costs of delivery and insurance. The OFT failed to obtain Purely Creative’s agreement to various undertakings relating to the promotions and applied for an injunction under the Enterprise Act 2002 which would prevent Purely Creative from continuing with the promotions. The High Court initially ruled that the promotions breached the Regulations and injunctions should be granted in principle. However, the High Court accepted undertakings from Purely Creative in lieu of injunctions, by which Purely Creative undertook, amongst other things, not to have any future promotions which created the false impression that a consumer had won or might win a prize where any effort made by the consumer in claiming that prize is subject to the consumer incurring a cost which would then cover either the cost of the prize or Purely Creative’s delivery and insurance costs.

Purely Creative appealed the ruling of the High Court. The OFT cross appealed with amended suggested undertakings and argued that, if those suggested undertakings could not be approved by the Court of Appeal, the interpretation of paragraph 31 of schedule 1 of the Regulations should be referred to the European Court of Justice (ECJ) for clarity.

The Court of Appeal stayed both the appeal and cross-appeal and referred a number of questions to the ECJ:

-          do the Regulations prohibit consumers from incurring any cost when claiming a prize?

-          if Purely Creative offers a number of methods of claiming a prize but only one of them incurs any cost (even a small cost), is that a breach of the Regulations?

-          if Purely Creative was allowed to run promotions where consumers incurred only a small cost in claiming a prize, how should a court decide whether that cost is sufficiently small, and should the court also consider whether such costs, even though small, are necessary?

-          does the use of the words “false impression” in paragraph 31 of the Regulations impose an additional consideration on courts on top of the consideration of whether a consumer can pay to receive a prize, and, if so, what is a “false impression” and how is it created?

The reference will hopefully provide some clarity in the interpretation of the Regulations. In the meantime, the Court of Appeal ruled that the undertakings given to the High Court remain in full force and effect until the ECJ decision is passed down.

The OFT has also signalled its intention to change the law to abolish charges altogether for consumers paying by debit card. Some travel companies have signalled their intention to incorporate surcharges into the headline price that appears online – at present the OFT noted that some companies do not inform a consumer of the surcharge until the fifth or sixth webpage of a booking process.

The High Court has agreed with the OFT that such a minimum term was unfair and designed to take advantage of the naivety and inexperience of the average consumer and were weighted in favour of the gym or health club causing a significant imbalance in the parties’ rights and obligations. Gym members would not anticipate all the events which might render the use of the gym impractical and the agreements did not address the tendency of users to overestimate the amount that they would want to use the gym when signing up. Accordingly, those provisions were unfair contrary to the Unfair Terms in Consumer Contracts Regulations 1999 and were unenforceable.

In addition, the practice of describing members who wanted to terminate their agreements as defaulters and registering or threatening to register that with credit reference agencies was an unfair commercial practice and harmed the collective interests of consumers, contrary to the Consumer Protection from Unfair Trading Regulations 2008.

Now, the OFT has published a report evaluating the impact of its 2001 decision. It has concluded that, as a result of its intervention, the prices in the hospital sector have risen so that other people can compete, Napp’s market share has dropped significantly, and prices in the community sector have come down (and by far more than the OFT had required in its decision). This has therefore been a significant success for boosting fair competition.

SGC owns two other UK-based gaming and amusement machine operators – The Global Draw and Games Media. Global Draw is estimated to have a 43% share of the gaming and amusement machine market.

An invitation to purchase is a commercial communication and must contain details of the product and price in a way that enables the consumer to make a purchase. The ECJ ruled that an invitation to purchase can exist even where the means to actually purchase the product or service, such as an order form, have not been provided. The implication for businesses is that the ruling seems to suggest that even an advertisement referring to a product or service and its price may be considered an invitation to purchase.

English law and guidance offered by the Office of Fair Trading previously presumed that an invitation to purchase existed only where the means of purchase was provided. The ECJ’s ruling means that the definition is much wider than this, and an invitation to purchase arises wherever the information and price on a product are sufficient for a consumer to make a transactional decision. The ECJ’s ruling is wide enough for a verbal or visual reference to a product or service merely identifying it to be considered an invitation to purchase. However, the ECJ stated that it would be up to a Member State’s national court to decide, in the particular circumstances, whether an invitation to purchase had been made or not based on the information given.

This ruling is a potential massive headache for any businesses supplying consumers as they would need to provide lots of information at a very early stage or they would fall foul of the law. However, the ECJ did limit the effects of its ruling by interpreting Article 7(4) of the Directive as allowing a trader to refer a consumer to its website for the ‘mandatory material information’ rather than actually having to set out that information in the invitation to purchase, although certain information still must be provided in the invitation to purchase and the website must actually contain the mandatory material information required by the Directive.

The Law Commission is looking to enable consumers to cancel and claim a refund if they return or reject goods or services within three months. The Law Commission is looking for responses to the consultation by 12 July 2011, and it can be found here: http://www.justice.gov.uk/lawcommission/docs/cp199_consumer_redress.pdf.

The OFT said that the website had breached CPUTR by publishing misleading information about the product availability and falsely representing itself as a consumer. Groupola has promised not to repeat the infringements.

The OFT investigation centred on concerns that consumers were being unfairly pressured into selling their gold. Payments for gold were sent to consumers with the requirement that consumers had to reject and return the payment within a restrictively short time period if they wanted their gold returned, failing which their gold would be melted down.

There was also concern in relation to the clarity of the pricing methods for any gold sent in and insurance arrangements for the time when the gold was in transit. It was also noted that consumers were being denied their legitimate cancellation rights and legal redress rights for loss or damage to goods when in transit, and that the terms and conditions of the companies were not in plain and intelligible English.

Whilst the companies denied any wrongdoing, the OFT was of the opinion that the trading practices of those companies under investigation were a breach of the Consumer Protection from Unfair Trading Regulations 2008 and the Unfair Terms in Consumer Contracts Regulation 1999.

In lieu of court action, the OFT obtained written promises from the three remaining trading companies to change their trading practices to ensure compliance with the law. The promises included:

• The provision of an option for consumers to receive either a quote requiring acceptance or payment for their gold.
• The provision of clearer pricing information.
• Explaining the risks.
• Making clear that the ‘top’ price for gold they were receiving was based on the scrap value of the gold rather than the marketable commercial value.
• Not claim to be the number one buyer when this was not the case.
• Have clearer information about consumers’ legitimate rights.

The CPR prohibits unfair commercial practices that may adversely affect a consumer’s decision-making. Businesses cannot trade unfairly or mislead consumers, and the CPR lists 31 specific trading practices that are considered unfair.

The defendant in this case, Purely Creative Limited (PCL), had breached the CPR in a number of ways, as the scratch card that PCL promoted gave a consumer the impression that they won a prize when, in reality, they had not or they would have to pay to get that prize.

The High Court ruled that PCL had breached the CPR under the specific items 5 and 6 (which prohibit misleading consumers by action or omission) and 31 (which prohibits the creation of a false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either (a) there is no prize or other equivalent benefit or (b) taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost).

The High Court did not agree with the OFT that item 31 would be infringed if the process involved the consumer having to spend any money at all. If there was a minimal cost such as a postage stamp or money that did not reach the promoter’s pocket, that would not be a misleading commercial practice. However, it would be a problem where the promoter receives a payment to offset the cost of the prize may create a misleading impression that the prize is won rather than paid for by the consumer. The OFT would only need prove that the recommended route to claim the prize involved a cost, and providing an alternative claims route with a de minimis cost would not be a valid defence for the promoter.

The High Court also clarified the standard that needed to be met. The Regulations prohibit misleading standards against average consumers. An average consumer is reasonably well informed, observant and circumspect. In other words, consumers who take good care of themselves should be protected, rather than ignorant, careless or hasty consumers. In dismissing PCL’s argument, the court ruled that the average consumer would not have read all the terms and conditions of the promotion.

As this is the first examination of the CPR in the High Court, the outcome is an interesting one, showing just the sort of unfair practice that the OFT is seeking to restrict, as well as showing how the CPR will be interpreted by the courts in future.

In a statement, the OFT said that similar action would be taken against other websites, blogs and microblogs such as Twitter users. Consumers must ultimately be protected from misleading practices, and it must be clear when online content and advertising has been paid for. Online promotional activity would not be treated differently to other marketing.

It should also be noted that the OFT considers non-monetary payment in kind (such as free products) to be treated in the same way as payments. Further, traders who pretend to be consumers when writing website reviews would also be considered to be acting unfairly.

The OFT’s press release can be found here: http://www.oft.gov.uk/news-and-updates/press/2010/134-10.

It will not be a surprise if there is soon going to be a succession of high-profile actions under the misleading selling regulations. CPUTR came into force two years ago, and so far the OFT seems to have tried to encourage businesses to comply rather than simply prosecute. However, there will come a point when the OFT will no longer tolerate continued misleading selling practices and will look to make examples of offenders. If that happens, traders could face criminal sanctions.

Problems uncovered by the OFT’s investigation were specific to each business, as set out in the individual requirements.  However, across the sector the problems include:

• A failure to consider the customer’s circumstances or proportionality before asking the court to put a charging order in place;
• Not building adequate checks into the lender’s decision-making process; and
• Applying substantial charges for referring cases to a debt collection agency.

In a minority of cases, lenders sent oppressive and/or misleading correspondence.

The requirements imposed on some of the lenders included:

• providing a case file note seting out in reasonable detail why it was appropriate and reasonable to seek a charging order taking into account:
  • the extent to which a customer had responded to reasonable requests made by the lender;
  • such information about the personal and financial circumstances of the customer as the lender was able to obtain through its reasonable endeavours;
  • the amount of the sum owed;
  • the length of time that the sum has been owed;
  • whether it is reasonable for the lender to take steps other than those proposed.
• a requirement that the lender should consider whether the steps it proposed to take were proportionate having regard to the amount of the sum owed;
• a requirement that the lender should not state that it will seek a court order or judgment where the lender has no intention of seeking a court order or judgment;
• a requirement for new terms to be put in place where the lender wished to impose charges for default or impose charges to recover the costs of third parties and that any proposed new terms should be given to the OFT.

As part of the review of consumer credit and personal insolvency call for evidence, the Coalition is consulting on the impact of a £25,000 threshold before being able to enforce by means of a charging order and an order for sale.

Unfair trading is prohibited by the Consumer Protection from Unfair Contract Trading Regulations. However, consumers are generally not able to take action in the event of unfair trading. Instead, action under those Regulations is taken by the Office of Fair Trading or the local Trading Standards office.

A new report by the Law Commission is aimed at reviewing the current law in due course, and states that whilst consumers have no direct course of action in many instances, in those instances where direct action is available, for example under the law of undue influence and duress, the law is largely redundant as consumers cannot understand it sufficiently to make use of it.

It is expected that a consultation paper will be issued by the Law Commission in early 2011, highlighting how the law should be reformed. The Law Commission’s initial report can be found here: http://www.lawcom.gov.uk/docs/misrep_summary_evidence_web.pdf.

The first is aimed specifically at SMEs (small and medium sized enterprises) setting out step-by-step guides to stay in line with competition law. The second is aimed at directors of all companies, outlining the level of knowledge and understanding directors need to have of competition law.

With businesses liable to be fined up to 10% of their turnover and with directors at risk of disqualification should their companies breach competition law, the guidance is likely to be welcomed.

A link to the two sets of guidance can be found here:  http://www.oft.gov.uk/OFTwork/consultations/current/achieving-compliance/  and   http://www.oft.gov.uk/OFTwork/consultations/current/company-directors/.

At present, the two bodies assess whether companies merging would breach competition laws, in addition to investigating anti-competitive agreements. The Office of Fair Trading is responsible for initial enquiries and investigations into suspected infringements. The Competition Commission takes on the most serious cases for in-depth investigation and final decisions. Some enforcement decisions may be filtered down to local branches of trading standards offices, although this is yet to be confirmed.

Amid mixed feelings within industry, the move begs the question – will anyone be calling for an investigation of this merger…?

The OFT has the power to fine organisations up to 10% of their turnover for having an anti-competitive agreement contrary to the Chapter I Prohibition of the Competition Act. Third parties who suffer loss arising out of anti-competitive conduct can also sue for damages. In addition, individuals involved with cartel activity can be personally fined and jailed under the Enterprise Act.

Trading Standards Officers conducted onsite visits, a website sweep and a mystery shopping exercise.  They found that:

• Misleading advertising is the most significant area of non-compliance, in particular failing to disclose fees and misrepresenting debt management services as being free when they are not;
• Frontline advisers working for debt management companies are lacking in competence and are providing poor advice on inadequate information;
• There is low industry awareness of the Financial Ombudsman Service (FOS) for resolving consumer complaints.

 The OFT plan to update their Debt Management Guidance and will carry out robust enforcement action against licensees that fail, or refuse, to change advertising and/or behaviour.

 Attached is a link to the detailed report http://www.oft.gov.uk/shared_oft/business_leaflets/credit_licences/OFT1274.pdf and the Debt Management Guidance  http://www.oft.gov.uk/shared_oft/business_leaflets/credit_licences/oft366.pdf.

The OFT took action against the sites under the Consumer Protection from Unfair Trading Regulations 2008 for being misleading in their presentation as they had copied the EHIC brand, used an official sounding domain name and omitted important information by failing to show that they were not an official provider of EHICs. There was also a failure under the Electronic Commerce (EC Directive) Regulations 2002 to provide certain information in a form and manner which is easily, directly and permanently accessible.

Three of the companies have given formal written undertakings to the OFT to not engage again in deceptive practices, one company has folded and the other has had its domain name suspended by its domain name registrar.

In the report, the OFT said that landlords, as unsecured creditors, are unfairly disadvantaged in insolvencies compared to secured creditors (such as banks) and should be given greater powers to influence the fees charged by insolvency practitioners.

The OFT has offered to assist the Department for Business, Innovation and Skills (BIS), and the Insolvency Service in taking forward its recommendations. The British Property Federation (BPF) has expressed its support for the recommendations and has urged BIS to act on them.

The report can be found here: http://www.oft.gov.uk/shared_oft/market-studies/onlinemarketsdiscussionpaper.

This latest criminal trial against the four individuals has collapsed after the discovery of a lot of emails. The OFT, which brought the prosecution, has so far not explained why it dropped the case. However, the defence team claims that the emails showed that the executives had not colluded with Virgin and made the case untenable.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘We await details of the reasons for the collapse of the case. In the lead up to the trial, the executives have suffered unexpected turbulence to their careers and they will now hope to draw a line under the episode. The OFT is keen to make examples of people who engage in anti-competitive practices. They did not succeed this time, but businesspeople should be careful not to do anything that could put themselves in the firing line. Entering into discussions with any competitors or acting in a co-ordinated way with competitors is a dangerous game and could have serious unwanted effects for the future of the business and individuals concerned.’

Virgin’s is having the tables turned on it. In 2006, the OFT started action against Virgin and British Airways over co-ordination in price changes involving fuel surcharges. In that case, BA was fined £120m by OFT and £200m by the US Department of Justice but Virgin received total immunity from fines for having been the whistleblower then. Meanwhile, a trial of four BA executives for alleged cartel activity relating to that case has recently started at Southwark Crown Court.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘People generally know that agreements between competitors may be anti-competitive. What they don’t realise is that if they agree certain things with different levels of the supply chain then that can also be unlawful. Specifically, setting agreed or minimum resale prices with a customer is absolutely prohibited. I have had to warn many clients of the dangers of those sorts of provisions in supply contracts, as they could be fined big amounts, sued by third parties and find that their contracts are unenforceable for having a provision that is considered to be anti-competitive. It’s not always popular advice, but someone has to say it as it is!’

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case impacts on anyone who deals with consumers for long-term contracts. The impact is serious. The OFT has clearly taken the view here that three year terms without the right to cancel are too long. The business in question presumably thought it had a debt owing and sent the matter to debt collectors. However, since the OFT considered the clause to be unfair, its tactics in pressurising the consumers to pay up was deemed to be aggressive. Breach of the 1999 Regulations only mean that a term is unenforceable, whereas breaching the 2008 Regulations would amount to a criminal offence. For now, we don’t know what a court will decide – only that the OFT doesn’t like what AMS has done – so it will be worth watching the outcome from the courts.’

• Consumers’ awareness of their rights when shopping online had risen from 49% to 62%.
• There was a fall in the numbers of consumers not knowing where to seek advice for their rights (16% from 28%).
• 26% of web sites had restrictions on cancellations, down from 38% in 2006.
• More sites complied with all aspects for which they were assessed – 21% compared to 17%.  

However, Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This last figure is not encouraging. With consumers having more knowledge about their online rights and knowing where to turn to find out more, it’s important that more online businesses keep up and comply with their legal obligations.’

The draft guidance consists of a document setting out the technical legal issues for businesses and consumer advisers, and a simpler version for consumers.

The consultation is open until 21 April 2010.  The technical legal advice makes the following points:

•  Consumers have been given an exaggerated expectation of what the creditor or owner must do in order to comply with an information request as a result of misleading claims by claims management companies and inaccurate information on the internet.
• A number of creditors, appear not to understand their obligations under these sections.
• The purpose of these sections is to provide information to the consumer, not to provide a method for consumers to avoid paying their debts.
• The OFT considers that the creditor in sections 77 and 78 and the owner in section 79 includes a person who has merely bought the debts under the agreement. 
• As well as assignees ensuring that they are able to obtain from the assignor copies of the agreements and documents and historical information on the account, the original creditor should ensure that if necessary and appropriate, it is able to readily obtain from assignees any necessary information on the most recent state of the account.
• The creditor should satisfy itself that the writer of the request has the proper authority to obtain the information.  If there is no authority with the request the creditor is entitled to reply by asking to see the authority.
• If the request comes from only one debtor where there are two or more debtors, it must be complied with and the response given to both or all debtors.
• The creditor is not entitled to charge more than £1.
• The creditor can send the documents by ordinary second class post to the address given in the request.
• It is wise to retain some record of posting.
• If a claims management company does not hold a license then the OFT would expect the creditor to inform the debtor/hirer  why the information is being sent direct to him and to notify the OFT and Ministry of Justice.
• The request should be complied within 12 working days after the receipt is received.  The day the request is received is not included, but it will include the day the information is sent.
• A true copy as confirmed in the recent case of Carey v HSBC Bank plc does not mean an exact copy.
• There is no obligation to provide a signed copy.  The creditor may be able to provide evidence that its practice was always to require a signature to its agreements.
• The creditor can reconstitute a copy of the agreement.  The name and address at the time of execution must be included, but this can be taken from any source available.
• If the reason why no copy of the agreement is given to a request under these sections is that there never was an executed agreement, the creditor should acknowledge this in its response.
• Where there has been a variation, the duty is to provide the original agreement, but a copy of the latest variation or a clear statement of the terms of the agreement as varied.
• Any copy must be easily legible.
• The consultation provides details of the documents to be provided.
• The consultation also provides details of the statements of account that should be provided.
• The duty does not apply if the agreement has been paid off or terminated.
• It does not apply where judgment has been obtained unless there is an interest-after judgment clause in the agreement which the creditor or owner has not expressly waived.
• If the creditor fails to comply with the duty, it is not entitled, while the failure to comply continues, to enforce the agreement.
• If sections cannot be complied with, the debt does not disappear and it is perfectly acceptable for a creditor to seek to pursue the debt and to register any arrears or default with a credit reference agency.
• If a creditor were to threaten court action, knowing that such action is not possible, this would be misleading and oppressive.
• Where an agreement is unenforceable because of non-compliance with the sections:
• The OFT would expect the creditor to take steps to check that there was an agreement and that there are monies outstanding.
• No communications or requests should threaten court action or other enforcement of the debt where the creditor is aware that it cannot or will not be entitled to enforce the agreement.
• The creditor should make it clear in communications that the debt is unenforceable.  Failure to do so would unfairly mislead the debtor.
• Where a creditor has satisfied itself that a debt does exist and is correctly described, it is acting fairly in registering a default with credit reference agencies and informing the debtor or hirer that it intends to do so. 

The ex-directors and employees applied to have the case thrown out on the basis that it was not possible for an employer to bring a competition law case against their directors or employees, and also that it would offend a legal principle by which someone who does something unlawful (ie Safeway) could not sue another person (ie the staff) for the consequences of that unlawful action. The High Court has thrown out the ex-directors’ and employees’ application, and ruled that Safeway had a ‘real prospect of success’ at trial.  

Paul Gershlick, a Partner a Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case does not mean that Safeway has won. However, it means that Safeway has a real chance of succeeding at the main trial. Safeway’s claim is more than just frivolous.’

Paul Gershlick, editor of www.Upload-IT.com and a Principal at Matthew Arnold & Baldwin LLP, questions the effectiveness of this new body. ‘This country has enough quangos already. We need to cut the cost on spending on bureaucrats if we are to get public debt under control. This country has enough people championing consumer causes – from Which? through to the OFT and Trading Standards. There are also options in the commercial sector – there are plenty of law firms who are willing to collect consumers together to fight class actions. So why do we need yet another body paid for out of the public purse?’

• did not exclude liability for faulty or mis-described goods;
• were consistent with consumer rights under the Distance Selling Regulations;
• were drafted in plain and intelligible language;
• did not allow changes to be made after agreements had been made.

The Office of Fair Trading wanted to bring a test case to see if banks’ current account charges were fair. In particular, it was concerned on behalf of consumer bodies that overdraft charges were excessive. Several banks co-operated and they fought a test case that eventually went to the Supreme Court (previously known as the House of Lords). Rather than fight the entire battle as to the issue of fairness of the actual terms, the initial skirmish looked to resolve whether the overdraft charges were excluded from an assessment of fairness. The issue was whether the charges were part of the price or remuneration and so should not be considered.

The High Court and Court of Appeal ruled that the terms were in plain, intelligible English, but  sided with the OFT on the fairness point. Now, in one of its first judgments since being formed, the Supreme Court has given its landmark judgment that affects millions of people. It has gone the other way and sided totally with the banks on this issue.

The Supreme Court said that the banks were correct in saying that the charges were part of the payment in exchange for a global package of services. The Court of Appeal had no basis for having said that some bits of the goods or services or price were ‘essential’ items and more important than others. Any monetary price or remuneration or goods or services provided would fall within the exemption. Banking services were part of a package of services and the price paid by consumers included the charges for going overdrawn. It is irrelevant that the charges are contingent or not incurred by the majority of customers. Even if some goods or services are ancillary to the overall banking service, if the charges for them are under the same contract then they are all part of the price for the purposes of the exemption.

The Supreme Court added that the OFT was wrong to argue that the admin charges were default charges – consumers were not in breach of contract by going overdrawn, but it was expected that they may go into overdraft from time to time and they would have to pay a charge for using that part of the service. Those charges were an important part of the banks’ revenue streams and were not intended to be seen as consumers defaulting on the contract.

As Lady Hale from the Supreme Court said, consumer law aims to give consumers informed choices rather than to protect them from making choices that may be unwise for them. Paul Gershlick, editor of www.Upload-IT.com and a Partner at Matthew Arnold & Baldwin LLP, says: ‘This is a great result for the banking sector and most banking customers – banks would otherwise have had to charge for their other services in other ways and a different result could have spelt the end of free retail banking. The judgment is also good, because there has been a lot of uncertainty in the business world about charging extra ‘admin’ costs. This ruling shows that as long as the charges are presented in a clear way with the contract terms, if they form part of the same overall contract for the goods or services, their amount cannot be challenged. The aim of the 1999 Regulations is to protect consumers from terms which they may not be aware of in the small print, but consumers should be taken to have given enough attention to what they have bought and what they are paying for that.’

The guidance sets out the minimum standards of behaviour for providers of debt management services. However, the last compliance review took place six years ago, in November 2003, and the debt management market has changed significantly during that time. By conducting the review, the OFT will be able to assess industry compliance with the guidance, identify reasons for non-compliance, and obtain feedback on it.

Online questionnaires are available for debt management businesses, creditors, trade bodies, consumer advice bodies and trading standards services, with the closing date for submissions being 25 January 2010. The OFT expects to report on the findings of the review in spring 2010.