UPDATE – UK Consumer Rights Act 2015 and the transport sector: the Government’s response has now landed

In our May update on the Consumer Rights Act 2015 (CRA), we reported the Government’s announcement that maritime, air and rail services will not be exempt from the CRA scope. Instead, the implementation date has been delayed until 1 October 2016.

At the time of that update, we were still awaiting publication of the Government’s response to the consultation that influenced their decision. This has now been published and the decision not to exempt transport services has been qualified.

The relevant CRA Sections

The implementation delay in respect of the transport sector relates only to sections 57(3) and 57(4)(a) of the CRA.

Section 57(3) restricts traders who supply consumer services from limiting their liability to less than the price paid for such services, if they are in breach of relevant statutory obligations. Those obligations include providing services within a reasonable time, at a reasonable price and with reasonable care and skill.

Section 57(4)(a) deals more generally with constraints on the ability of service providers to restrict consumer remedies.

Purpose of the Government’s consultation

The consultation focussed on a number of points and concerns, summarised below. Responses were received from a variety of transport industry and consumer bodies.

If sections 57(3) and 57(4)(a) CRA are applied to the transport sector:

• The relevant CRA provisions could affect current compensation schemes. These schemes contain terms that have the effect of limiting transport operators’ liability to pay compensation; often regardless of the reason for any delay or cancellation. Such compensation tends to be based on fixed rates or percentages and, as such, the amount recoverable by a consumer will often be less than the full ticket price.
• There is a risk of over-complicating and potentially duplicating existing schemes, which already provide an established package of remedies for consumers in the transport sector.
• Concerns were raised that the factors above might result in additional cost to transport operators, which could be passed on to tax payers/consumers. This argument was particularly prevalent in Consultation responses from transport industry bodies.

If the CRA sections are not applied to the transport sector:

• There was concern that existing compensation scheme limits would apply even in the event of service disruptions caused by an operator’s failure to comply with the statutory rights. This would put consumers in the transport sector at a disadvantage to other sector consumers, and out of pocket where there have been service failings by transport operators.
• Limited and partial CRA exemptions for the transport sector may be overly confusing for consumers. This and the above point were raised primarily by consumer groups in their Consultation responses.

The Consultation outcome:

In reaching its decision, the Government considered that consumer interests are best served if transport sectors are not exempted from the CRA provisions. The financial and logistical risks posited by the transport industry bodies were considered to be outweighed by the potential benefits to consumers.

In particular, the Government stressed that, provided transport operators perform their services with reasonable care and skill, there is no reason why they should incur any additional costs under the CRA regime.

As such, the CRA will apply to the aviation and maritime sectors from 1 October 2016.

Implementation delay for rail transport operators:

For the rail industry, the Government considers that an additional 12 month exemption period for Section 57(3) CRA is necessary for some (but not all) rail operators:

• A further 12 months is being afforded to EU Licenced rail passenger operators, to allow the industry further time to review their compensation schemes. Section 57(3) CRA will not apply to these operators until 1 October 2017. All other CRA provisions will still apply from 1 October 2016.

EU licenced rail operators are those operating mainland services in the UK pursuant to an EU Rail Licence. This includes London Overground rail services.

• Operators providing services on only local and regional standalone infrastructures were not included in the original exemption and CRA has applied since it came into force on 1 October 2015. This includes London underground, metro services and heritage/tourist rail passenger services.

What next?

All businesses providing consumer-facing services should now be aware of the enhanced rights afforded under CRA, albeit some transport sectors have had a period of grace before being bound by those rights.

With implementation deadlines now determined, the transport industry and service providers individually should be actively addressing the requirements under CRA.

Businesses should be checking their terms and conditions and, in particular, the compensation mechanisms where services are delayed or cancelled and, in the case of air travel, if boarding is denied or a passenger is downgraded.

Compensation schemes may still be applied. However, they will need to comply with the CRA where such compensation is being paid as a result of a breach of a consumer’s statutory rights.

Of particular relevance are the following requirements:

• Refunds for any breach of statutory rights cannot be limited to less than the price a consumer has paid for their ticket.
• Refunds must be paid:
  • using the same means of payment as the consumer used to pay for the service;
  • without undue delay and within 14 days of the date a refund is agreed; and
  • without any fee being imposed on the consumer.

Any breach of the CRA may entitle a consumer to pursue the operator through the courts to enforce their rights.

Please click here for a link to the full Response to Consultation.