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by Melanie Ellis, Senior Associate
There are seven weeks left to respond to the Commission’s consultation on changes to the LCCP’s fair and open provisions. The proposed changes would give the Commission greater powers to enforce compliance with a range of consumer protection provisions in three areas: advertising, unfair terms and customer complaints.
Some of the key effects of the proposed changes are as follows.
Marketing
– Elevating compliance with the CAP and BCAP advertising codes to the status of a licence condition, meaning that any breach of the codes is an automatic breach of the operating licence.
This is particularly noteworthy for operators who use affiliates to carry out advertising on their behalf. In practice, the Commission indicates that regulatory action would follow where licensees are “in serious or repeated breach of the rules”, rather than it automatically following any complaint being upheld by the ASA.
– Changing the wording so that licensees must “ensure” adverts are not misleading, rather than merely “satisfying themselves” of this.
See comments below on unfair terms for a discussion of the difference.
– Making it a social responsibility code provision that significant conditions of promotions are presented at the point of sale and in advertising material.
– Making email marketing to customers an “opt-in” activity, so promotional emails cannot be sent without the customer’s informed and specific consent.
Unfair terms
– Changing the licence condition so that licensees must “ensure” rather than merely “satisfy themselves” that their terms and conditions are fair.
Whilst this is clearly intended to increase the standard which licensees’ terms must meet, the difficultly with this language is the question of who will be the judge of the terms’ fairness under the revised wording. Currently, provided licensees have taken steps to satisfy themselves that their terms are fair (for example by taking legal advice), they are compliant with the condition. Under the revised wording, the licensee may have taken very reasonable steps and genuinely believe their terms are fair, but if the Commission takes a different view it can find the licensee to be in breach of the condition.
In practice, there is no real difference between the steps a licensee would take to assure themselves that they are compliant or to ensure they are compliant! But there is a difference for the Commission when it comes to enforcement. Under the current wording, if the Commission disagrees with a licensee’s own assessment that its terms are fair, its only option is to question the operator’s suitability to hold a licence. This would have to be on the basis that a suitable operator would not have been satisfied that those terms were fair. The revised wording enables the Commission to “apply a broad range of sanctions through a less onerous process” – the Commission can simply find a licensee in breach if, in its own opinion, the terms are unfair.
– Extending the provisions to cover “consumer notices”, which include announcements and other communications with customers, for example pop-ups on a website or posters in a land-based casino.
Including these means they will be treated in a similar way to contract terms and must not be unfair or misleading.
Customer complaints
– Setting a deadline of eight weeks to resolve customer complaints, otherwise they must be referred to the ADR provider.
Whilst it is sensible to set a time frame for resolving complaints, eight weeks seems a fairly short window, particularly as the operator will be relying on the customer to respond to its communications, for example by accepting or rejecting a proposed resolution. This timeframe may lead to unnecessary escalation of complaints in some cases, but this may be mitigated by operators ensuring they communicate the consequences of a delayed response to customers.
– Ensuring information on how to complain and what the process is, is communicated clearly.
Conclusion
Overall the purpose of these changes, from the Commission’s perspective, is to give itself more power to deal with issues of unfairness to customers directly, rather than relying on the actions and sanctions available to third party agencies such as the ASA and CMA. The Commission downplays the extent to which it will be intruding into those agencies’ territory, for example it states in the consultation document that “the ASA remains the responsible lead regulator and the body toward which people should direct complaints about advertising standards”.
However, the Commission clearly thinks that those agencies’ powers do not allow for sufficiently timely and/or effective sanctions and it wants to take matters into its own hands. The proposed changes are in line with the Commission’s strategic priorities (set out in its corporate strategy for 2018-21) of protecting the interests of consumers and providing more efficient and effective regulation but, in the current climate of escalating regulatory action, will inevitably lead to more licence reviews and more seven figure penalties.
If you would like to respond to the consultation, the deadline is 22 April 2018.
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