The Consumer Rights Act 2015 (“the 2015 Act”) was given royal assent on 26 March 2015. Much of the Act will not come into force until 1 October, although key provisions relating to letting agents are already in force. One of the key objectives of the 2015 Act was the consolidation of consumer legislation into a single act. However, the 2015 Act has introduced some new provisions, and, with respect to contracts for services, these are summarised below.
Letting agents
Chapter 3 of Part 3, and Schedule 9 to the 2015 Act came into force on 27 May.
Section 83 obliges agents to display a list of their fees for letting or property management work prominently in each of their premises, and on their website. Rent, tenancy deposits, statutory charges, and fees, charges or penalties received from the landlord on behalf of another need not be listed. The list must explain what the fee covers or why it is imposed, state the amount of the fee or how it is calculated, and, if it is payable by a tenant, indicate whether the fee applies to each tenant or the entire property.
Along with the list of fees, agents who hold client money are obliged to publish a statement as to whether they are a member of a client money scheme, and agents who are required to be a member of a redress scheme must publish a statement indicating such membership and giving the name of the scheme. There is no duty imposed on local authorities, or agents who only publish advertisements or provide a means of communication between landlords and prospective tenants.
The duty to publicise fees only applies to agents in England and Wales, and fees charged for letting and managing privately rented property in England and Wales. The other obligations under section 83 currently only apply in England.
The consequence of breaching any duty under section 83 may be a financial penalty of up to £5,000 for each breach. The relevant local weights and measures authority must serve a notice of intent on an agent before imposing a fine. The agent may respond to that notice in writing within 28 days of the notice being sent. If a final notice is issued, the agent may appeal to the First-tier Tribunal.
Services
Section 50 of the 2015 Act is a new provision which imports as a contractual term anything said or written to the consumer about the trader or the service if it is taken into account by the consumer in deciding to enter into the contract, or in making any decision about the service post-contracting. Such terms are subject to any contemporaneous qualification, or any later mutual express agreement. Information provided by the trader in accordance with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 is also included as a contractual term. The dual purpose of section 50 is to reduce the risk of consumer detriment, and to enable the enforcement of the 2013 Regulations.
Sections 54-6 of the 2015 Act set out the remedies for consumers where traders are in breach of contract. Section 54(7) explicitly lists the common law remedies available to consumers. Sections 55-6 provide a statutory framework for requesting repeat performance by the trader, and price reductions.
Unfair contract terms
Section 64 of the 2015 Act replaces regulation 6(2) of the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”). The two exemptions from a fairness assessment remain, save for two changes of wording. The second exemption now refers to the “appropriateness of the price payable” rather than its “adequacy”. The requirement that exempt terms be expressed in plain intelligible language has been expanded to require that the term is transparent (expressed in plain intelligible language) and prominent (brought to the consumer’s attention in a way that an average consumer would be aware of it).
Three terms have been added to the “grey list”, now found in Schedule 2 of the 2015 Act: paragraphs 5, 12 and 14 refer to, respectively, terms that require a consumer to pay a disproportionately high sum where he decides not to conclude or perform the contract (eg, a “termination fee”), terms that allow the trader to determine the characteristics of the subject matter of the contract post-contracting, and terms that give the trader the discretion to decide the price payable post-contracting where no price has been agreed. The guidance to the 2015 Act states that all of the terms on the “grey list” are assessable for fairness even if they would otherwise fall within the section 64 exemption, and are transparent and prominent.
To reflect European Court of Justice case law, section 71 will require the court to consider the fairness of a term of its own motion, unless the court considers that it does not have sufficient material to enable it to do so. The court will only have to look at the term(s) in question, not the whole contract.
Enforcement
Paragraph 19 of Schedule 5 to the 2015 Act clarifies that enforcers have the power to require production of documents, observe the carrying on of businesses, and enter premises in order to investigate undesirable practices by estate agents, in addition to breaches of the Estate Agents Act 1979.
Schedule 7 to the 2015 Act amends Part 8 of the Enterprise Act 2002 to, among other things, permit courts to order a party against whom an enforcement order is made to take “enhanced consumer measures”, where it is just and reasonable to do so. Those measures relate to redress to the consumer, future compliance by the trader, or enabling consumers to make choices more effectively.
Consequential legislative repeal
The Supply of Goods and Services Act 1982 and Unfair Contract Terms Act 1977 will be amended to solely apply to business-to-business, and consumer-to-consumer contracts. The UTCCR will be repealed.
Jessica Powers is a commercial barrister at Five Paper
