MPs find gaps in consumer protection

9 Nov 11
Trading standards officials in local authorities do not have enough funding to effectively enforce consumer protection law, MPs warned today.
By Richard Johnstone | 9 November 2011

Trading standards officials in local authorities do not have enough funding to effectively enforce consumer protection law, MPs warned today.

The Public Accounts Committee has found that arrangements protecting people who have been sold defective goods or hit by online fraudsters are fragmented. Local authority trading standards officers deal with cases in their own areas and the Office of Fair Trading enforces some national laws.

But PAC chair Margaret Hodge said it was not clear which enforcement body was ultimately responsible for tackling regional, and some national, cases although the majority of losses were from mass-market frauds – £4.8bn of the estimated £6.6bn cost to consumers every year.

Protection services have also not kept pace with the rise of online frauds, with victims often falling through the cracks between enforcement bodies, MPs said.

The Department for Business, Innovation and Skills has overall responsibility for policy on consumer protection, but councils carry out the majority of enforcement work.

An estimated £247m was spent on enforcement in 2009/10, including £213m by local authorities on trading standards services. However, most councils were too poorly resourced to take on regional problems, the report, Protecting consumers - the systemfor enforcing consumer law, says.

Hodge added that the £8m of government funding to tackle malpractice at this level had been cut. The DBIS denies this, saying the money has increased to £9.25m for 2011/12.

The MPs said responsibility for tackling nationwide frauds must be clearly designated in the government’s plans to reform the protection regime, which include the abolition of watchdog Consumer Focus. Hodge urged ministers to make sure the changes ‘do not allow new sophisticated scams to emerge and persist without challenge’.

Calling for ‘a system fit for the modern era’, she added: ‘The department must ensure that there is funding and proper systems in place to escalate cases to the right enforcement body.’

The committee also found that there is a wide variation in the provision of trading standard services between local authorities.

Some have as few as two trading standards officers while others employ more than a hundred. This creates ‘enforcement deserts’ where councils do not spend enough money to provide an acceptable level of protection.

The PAC warned that a weakness in one area undermined the effectiveness of the whole system by allowing rogue traders to base themselves there while causing problems more widely. More transparent monitoring of local services is needed so gaps are exposed and tackled.

Responding to the report, a DBIS spokeswoman said that the department recognised the issues raised by the committee and would take the recommendations on board.

She said: ‘Since June we have been consulting on proposals to improve the system of enforcement of consumer law. The new arrangements will establish more clarity over responsibilities and better co-ordination between enforcers. The results of the consultation will be announced in the coming months.’

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