; Executive summary
Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

Executive summary

VIEWS: 15 PAGES: 38

  • pg 1
									              THE UNFAIR COMMERCIAL PRACTICES
              (UCP) DIRECTIVE

              Consultation on framing and enforcing criminal
              sanctions in the Regulations implementing the
              Unfair Commercial Practices Directive

              December 2006




URN 06/2123




                                              1
             Explanation of the wider context for the consultation
This consultation follows on from an earlier (December 2005) consultation on
implementation of the Unfair Commercial Practices Directive (UCPD, 2005/29/EC).

The UCPD will harmonise Member States unfair trading laws, and will introduce a
general duty on all businesses in the UK not to trade unfairly with consumers.

The Government’s Response to the December 2005 consultation said that the UCPD will
be enforceable by civil and criminal sanctions. The Government expects most breaches
of the Directive to be dealt with by civil or self-regulatory means. Yet we recognise that
there will continue to be a need for criminal sanctions and investigatory powers to deal
with the most serious breaches of the law.

This provoked considerable comment from stakeholders. This paper seeks views of
consumer bodies, academics, businesses and enforcement authorities on two issues not
addressed in the original consultation. These are:

   •    whether offences in the regulations implementing the UCPD and the amended
        Misleading and Comparative Advertising Directive (MCAD) should include a
        mental element (mens rea), should rely on the current general approach of strict
        liability offences/due diligence defences, or should contain a combination of the
        two; and

   •    on the Office of Fair Trading having the power to bring criminal prosecutions.

This consultation does not seek views on the Government’s decision to make most
breaches of the UCPD and the misleading advertising provisions in the MCAD a
criminal offence.

The Code of Practice on consultation states that it is appropriate to have a shortened
period for re-consultation on proposals revised or developed in the light of previous
consultation. Consequently the response time for this consultation will be eight weeks
from the date of issue.

Issue           11 December 2006

Respond by      5 February 2007

Enquiries to
      Peter Deft
      Department of Trade and Industry
      CCP, 1 Victoria Street
      London SW1H 0ET
      Tel: 020 7215 0341; Fax: 020 7215 2837; E-mail: peter.deft@dti.gsi.gov.uk




                                                                                     2
Table of Contents                                              Page




Executive Summary                                                     4

How to Respond                                                        7

List of Questions                                                     9

Chapter 1: Background – Strict Liability and Mens Rea             10

Chapter 2: Controls on Criminal Prosecutions                      13

Chapter 3: Advantages and Disadvantages of Mens Rea Offences      16

Chapter 4: Criminal Sanctions in the UCP Regulations              19

Chapter 5: Types of Mens Rea                                      23

Chapter 6: The OFT’s Power to bring Criminal Prosecutions         25

Annex A: Partial Regulatory Impact Assessment                     28

Annex B: Code of Practice on Consultations                        33

Annex C: Organisations to be Consulted                            34




                                                                      3
Executive Summary
____________________________________________________________


Fair trading practices are essential if consumers are to maintain trust and
confidence in markets and are to make free and informed purchasing
decisions. Sharp marketing practices not only harm consumers but also
provide unfair competition to legitimate businesses.

The Unfair Commercial Practices Directive (UCPD) introduces for the first
time a general prohibition on traders in all sectors engaging in unfair
commercial practices against consumers. It will put in place a much more
comprehensive framework for dealing with unfair marketing and selling
practices than exists at present. Following the Government’s decision
(announced in the Response to the December 2005 consultation 1 ) to repeal
much existing domestic legislation which overlaps with, and is replicated by,
the UCPD we expect the regulations implementing the Directive to become
the main law regulating fair trading in the UK.

But rules and regulations are of no value if they are widely disregarded.
Effective but proportionate sanctions are needed against those who use unfair
commercial practices. Enforcement bodies also need a flexible toolkit of
sanctions and investigative powers with which to tackle unfair conduct.

Different types of enforcement

In line with the findings of the Macrory Review of regulatory sanctions 2 , the
legislation implementing the UCPD and the misleading advertising provisions
in its counterpart the Misleading and Comparative Advertising Directive
(MCAD), will be enforceable by civil and criminal means. We expect most
breaches of the UCPD and the MCAD to be dealt with by civil or self-
regulatory means. Yet criminal sanctions and investigatory powers are
needed to deal with the most serious breaches of the law. This reflects current
practice in much UK consumer law.

The Government will consider whether further enforcement mechanisms
should be adopted for consumer law in response to the Macrory Review.

This consultation seeks views on two issues not addressed in our original
consultation paper:

Mens rea or strict liability offences

Some stakeholders argued that there is an over reliance on criminal
prosecutions in enforcing consumer law. They believed that the bulk of
infringements could be more appropriately dealt with by other means, notably
civil enforcement action. In order to ensure that criminal offences were used

1
    Can be found at: http://www.dti.gov.uk/files/file30152.pdf
2
    Regulatory Justice: Making Sanctions Effective: Final Report, November 2006


                                                                                  4
to prosecute the most serious offences only, they suggested that the
evidential threshold in criminal offences be raised from that of “strict liability”
to requiring proof of “mens rea” (guilty mind) by the trader. (Strict liability and
mens rea offences are discussed in Chapter 1.) The Government agrees that
prosecution of criminal offences should be reserved for the most serious
offences only, but seeks views on whether requiring proof of mens rea would
be an effective, or appropriate, means of securing this.

Government proposal

This consultation paper demonstrates that there are advantages and
disadvantages to adopting mens rea offences. We are therefore minded to
adopt a mixed approach. Mens rea could be adopted for certain very broad
and new provisions (general prohibition (Art. 5) and misleading omissions
(Art. 7(1) and (2)). Strict liability could be adopted for others (broadly,
misleading actions (Art. 6), aggressive practices (Art. 8) and the Annex
practices). We are also seeking views on the appropriate offence in relation to
breaches of the information obligations where there is an invitation to
purchase (Art. 7(4)) and offences for breaches of the misleading advertising
provisions in the amended MCAD.

We propose that the type of mens rea adopted should be based on the
knowledge/recklessness mens rea used in section 14 of the Trade
Descriptions Act 1968 (TDA).

The Office of Fair Trading’s (OFT) power to bring criminal prosecutions

The Office of Fair Trading’s (OFT) enforcement role in consumer law has
increased considerably in recent years. It is the lead enforcer under Part 8 of
the Enterprise Act 2002. It also has a coordinating responsibility for ensuring
that actions are taken by the most appropriate enforcer. However, unlike
Local Authority Trading Standards Services (TSS) the OFT cannot bring
criminal in most areas of consumer law. It appears anomalous that the OFT,
as a national consumer protection enforcement body which is also tasked with
championing and giving regulatory leadership and assistance to TSS, does
not have the same powers in this area as TSS. A lack of parity in powers
presents artificial barriers to the overall aim of true flexibility, consistency and
proportionality in enforcement actions taken since it can lead to reduction
and/or distortion of choice in determining the most appropriate enforcement
body, and enforcement route to be taken, in individual cases.

The Government Response set out our intention to place a duty to enforce the
UCPD on the OFT (and TSS). The duty would mean that the OFT (along with
TSS) would be able to bring criminal prosecutions where appropriate.

RIA

The Government is also seeking views on the RIA accompanying this
consultation. This is at Annex A.



                                                                                  5
Next Steps

The Government will draft offences in the regulations implementing the UCPD
and amending the MCAD taking account of the responses to this consultation.
We aim to consult on draft implementing regulations and guidance during the
early part of 2007.

Devolution

Consumer protection is a reserved matter in relation to Scotland and Wales.
However, responsibility for certain overlapping legislation to be repealed by
the UCPD is devolved. Consumer protection (other than safety in relation to
goods) is a transferred matter in relation to Northern Ireland and would
normally be the responsibility of Northern Ireland Executive Ministers. Whilst
the Northern Ireland Assembly and Executive are suspended, these functions
are discharged by Northern Ireland Departments subject to the direction and
control of the Secretary of State for Northern Ireland. The relevant Northern
Ireland Departments have agreed that the legislation to implement the UCPD
should be taken forward within UK-wide implementing measures.




                                                                             6
How to Respond



The Department of Trade and Industry welcomes comments, including
supporting evidence, by 5 February 2007.

When responding please state whether you are responding as an individual or
representing the views of an organisation. If responding on behalf of an
organisation, please make it clear who the organisation represents and,
where applicable, how the views of members were assembled.

Where possible please send responses by email only to the following
address: UCPD@dti.gsi.gov.uk

If you are not able to reply by email, a response can be submitted by letter or
fax to:

       Peter Deft
       Consumer and Competition Policy Directorate
       Department of Trade & Industry
       V 408, 1 Victoria Street
       London, SW1H OET
       Tel: 020 7215 0341; Fax: 020 7215 2837

A list of those organisations and individuals consulted is at Annex C. We
would welcome suggestions of others who you think may wish to be involved
in this consultation process.

Confidentiality of Responses

Your response may be made public by the DTI. If you do not want all or part
of your response or name made public, please state this clearly in your
response. Any confidentiality disclaimer that may be generated by your
organisation’s IT system or included as a general statement in your fax cover
sheet will be taken to apply only to information in your response for which
confidentiality has been requested.

Information provided in response to this consultation, including personal
information, may be subject to publication or disclosure in accordance with the
access to information regimes (these are primarily the Freedom of Information
Act 2000 (FOIA), the Data Protection Act 1998 (DPA) and the Environmental
Information Regulations 2004). If you want other information that you provide
to be treated as confidential, please be aware that, under the FOIA, there is a
statutory Code of Practice with which public authorities must comply and
which deals, amongst other things, with obligations of confidence.

In view of this it would be helpful if you could explain to us why you regard the
information you have provided as confidential. If we receive a request for
disclosure of the information we will take full account of your explanation, but


                                                                                  7
we cannot give an assurance that confidentiality can be maintained in all
circumstances. An automatic confidentiality disclaimer generated by your IT
system will not, of itself, be regarded as binding on the Department.

The Department will process your personal data in accordance with the DPA
and in the majority of circumstances this will mean that your personal data will
not be disclosed to third parties.

Help with Queries

Questions about the policy issues raised in the document should be
addressed in the first instance to Peter Deft at the contact details given above.

Complaints

The Code of Practice on Consultation can be found as Annex B to this
document. If you wish to make a complaint about, or comment on, the way in
which this consultation has been conducted, please contact:

       Nick Cooper
       Departmental Consultation Co-ordinator
       Department of Trade & Industry
       1 Victoria Street
       London SW1H OET
       E-mail: nick.cooper@dti.gsi.gov.uk
       Tel: 020 7215 0346; Fax: 020 7215 2826

As well as any answers to the specific questions asked, we would welcome
any further views on the content of this consultation.




                                                                               8
List of Questions


This consultation does not seek views on the Directive itself or on the
Government’s decision to make most breaches of the UCPD and the
misleading advertising provisions in the MCAD a criminal offence.

Chapter 2: Controls on criminal prosecutions

1. Do you think these safeguards are sufficient? If not why not?

Chapter 3: Advantages and Disadvantages of Mens Rea Offences

2. Do you have any comments on the Government’s analysis of the
advantages and disadvantages of mens rea offences?

Chapter 4: Criminal Sanctions in the UCP Regulations

3. Do you agree with the proposal to add a mens rea requirement to the
provisions creating offences for breaches of Articles 5 and 7(1) and (2)?

4. Do you agree that offences for breach of most of the prohibitions contained
in UCPD Articles 6 and 8, and in UCPD Annex I should not require proof of
any particular state of mind of the trader?

5. Do you consider that the new offence for breaching the information
obligations in Article 7(4) should be one of strict liability or should it require
proof of a state of mind of the trader on the same basis as the proposal for
article 7(1) and 7(2)?

6. Do you consider that a new offence in relation to the publication of
misleading advertisements in provisions implementing the MCAD should be
one of strict liability or should it require proof of a state of mind of the trader?

Chapter 5: Types of Mens Rea

7. Do you agree that the mens rea offences for breaches of the UCPD should
be “knowledge or recklessness”?

Chapter 6: The Office of Fair Trading’s (OFT) power to bring criminal
prosecutions

8: Do you agree that the OFT should have the power to bring criminal
prosecutions for breaches of the UCPD and the MCAD?




                                                                                       9
Chapter 1: Background – Strict Liability and Mens Rea
______________________________________________________________

Strict Liability Offences

1.1      A person is guilty of a strict liability offence if he carries out a
prohibited act or omission. The prosecution does not have to show that the
responsible person had any specific state of mind.

1.2      A typical example of a strict liability offence is the prohibition on the
use of false and misleading trade descriptions in section 1(1) of the Trade
Descriptions Act 1968 (TDA).


Section 1(1) TDA provides that:

Any person who, in the course of a trade or business,-

(a) applies a false trade description to any goods; or
(b) supplies or offers to supply any goods to which a false description is
applied;

shall ….. be guilty of an offence.


1.3        The interim report of the Macrory Review, Regulatory Justice:
Sanctioning in a post-Hampton World notes that the UK relies heavily on strict
liability offences to tackle non-compliance in regulatory law 3 . Strict liability
offences are also included in almost all the consumer protection laws that the
Government will repeal when it implements the UCPD.

Due diligence defence

1.4      Some strict liability offences contain due diligence defences. These
can reduce the severity of strict liability offences by allowing a trader to avoid
conviction if he can show that he has taken all reasonable precautions and
exercised all due diligence to avoid committing the offence. The onus of proof
is on the trader who must justify the defence on the balance of probabilities.

1.5      The defence is likely to involve a trader showing a court that he has
taken reasonable steps to avoid the commission of the offence. This is likely
to include:

    •   setting up a system which aims to prevent breaches of relevant
        legislation;
    •   ensuring that the system is used and works and is monitored; and
    •   identifying and rectifying any failures in the system.

3
 Regulatory Justice: Sanctioning in a post-Hampton World, Better Regulation Executive, May 2006,
p12 following


                                                                                               10
1.6      An example of a due diligence system might be a retail outlet putting
in place rigorous procedures for regularly checking the accuracy of shelf
prices.

1.7      If the Government adopts strict liability offences these would have
“due diligence” defences. Defences would apply only to criminal offences and
would not apply in relation to civil law injunctive remedies.

Innocent publication defence

1.8      Legislation affecting advertising and marketing practices also usually
contain an “innocent publication” defence. This enables a publisher to escape
liability if he can prove that the offence arose through the publication of an
advertisement received from a third party in the ordinary course of business
and that he did not know and had no reason to suspect that its publication
would constitute an offence.

1.9    If strict liability offences are adopted these would have “innocent
publication” defences. Again, these defences would be limited to criminal
offences only and would not cover civil law injunctive remedies.

Mens Rea Offences

1.10     Unlike strict liability offences, mens rea offences require proof both of
the prohibited act or omission and prescribed state of mind of the trader. This
state of mind is called “mens rea” (guilty mind). The burden of proof is on the
prosecution to prove mens rea, and not on the trader to prove its absence.

1.11     Most general criminal offences require the prosecutor to prove such a
specified state of mind. For example, in section 1(1) of the Theft Act 1968 part
of the constituent elements of the offence of theft includes dishonesty and
intention on the part of the defendant.

1.12       However, mens rea offences are rare in regulatory law 4 . The same is
true in consumer law, where the vast majority of criminal offences are strict
liability offences. The most important example of a (partial) mens rea offence
to be repealed by the UCPD is section 14 of the TDA 5 .


Section 14(1) of the TDA provides that:


It shall be an offence for any person in the course of any trade or business-
(a)    to make a statement which he knows to be false; or

4
  Idem, Annex D and Annex E
5
  This is a partial mens rea offence because an offence can still be committed by a person under section
14(1) without him knowing it. The required mental state (knowledge) only applies as far as concerns
the falsity of the statement – not the making of a statement (see Wings Ltd v Ellis [1985] AC 272).


                                                                                                     11
(b)       recklessly to make a statement which is false;

as to any of the following matters, ……


1.13    The elements required to demonstrate a guilty mind vary according to
how the offence is designed. They can include:

      •    intent;
      •    knowledge;
      •    recklessness;
      •    negligence.

1.14         These are discussed further in Chapter 5.

Mens rea and due diligence defences

1.15    Where all the elements of an offence require proof of a state of mind
then a due diligence defence is not needed. This is because the mens rea
element sets the level of mental state required in order for the offence to be
proved and accordingly there is no place for a defence which allows the trader
to escape liability if he can show that in broad terms he was not negligent.
(The due diligence defence fits into the context of section 14(1)(a) of the TDA
because the offence in that section has an element of strict liability.) For this
reason, should the Government choose to adopt mens rea offences these will
not be accompanied by a due diligence defence.




                                                                              12
Chapter 2: Controls on criminal prosecutions
______________________________________________________________

2.1    There are a number of existing safeguards intended to ensure that
breaches of consumer law are prosecuted only when the offence is serious
enough to warrant this, or that it is in the public interest to do so.

Local Authority Enforcement Policies

2.2      Almost all TSS have published enforcement policies. These set out in
broad terms the standards and principles underpinning local authorities’
enforcement procedures, including that regulatory activities should be
targeted only at cases in which action is needed. In addition, section 21 of the
Legislative and Regulatory Reform Act 2006 sets out overriding principles for
targeted inspection and enforcement which embeds “Hampton principles”.
Section 21 will be brought into force alongside the Compliance Code –
expected to be in April 2008 (See paragraph 2.7)

2.3      A recent case has underlined the link between enforcement policies
and actual prosecutions. In R v Adaway 6 , the Court of Appeal found that a
local authority had not acted in line with its published criteria for prosecution. It
consequently ruled that the earlier prosecution should not have been allowed
to proceed. This case underlines the need for local authorities to take care in
determining that a particular case meets their prosecution policy.

Concordat on Good Enforcement and Regulators’ Compliance Code

2.4    Almost all TSS and the OFT have also adopted the Cabinet Office’s
Concordat on Good Enforcement 7 .

2.5      This is a non-statutory code that sets out best practice enforcement
policies and procedures, including

      •   setting clear standards;
      •   ensuring that enforcement action is proportionate to risk;
      •   ensuring consistency in exercising their duties.

2.6     The Concordat also commits enforcers to discussing cases with
businesses before formal action is taken to resolve points of difference, if
possible, unless immediate action is required.

2.7      In addition, section 22 of the Legislative and Regulatory Reform Act
2006 provides for a statutory Regulator’s Compliance Code to supplement the
Concordat. This will embed “Hampton principles” of proportionate, targeted
and risk-based enforcement and inspection in the internal regulatory policies,
codes and guidance of regulators who are within its scope. Current drafts
include the requirement that regulators must work constructively with

6
     [2004] EWCA Civ 2831
7
    http://www.cabinetoffice.gov.uk/REGULATION/documents/pst/pdf/concord.pdf


                                                                                  13
businesses that are honestly trying to comply with the law and help them
towards compliance; as well as providing businesses with opportunities to try
and remedy breaches before taking enforcement action, unless immediate
action is required. 8 The Code is expected to be in place in April 2008.

The Code for Crown Prosecutors

2.8     In addition, TSS generally adhere to the Code on Crown
Prosecutors 9 . The Code imposes two stages that must be passed in deciding
whether a person should be charged with a criminal offence. These are:

      -   the evidential stage. Prosecutors must be satisfied there is enough
          evidence to provide a realistic prospect of conviction.
      -   the public interest stage. This establishes that suspected criminal
          offences are not automatically subject to prosecution. Instead,
          prosecutors have to balance factors for and against prosecution
          carefully and fairly. The Code includes a list of common public interest
          factors to help prosecutors decide whether to proceed.

2.9    We would also expect the OFT to adhere to the Code for Crown
Prosecutors in deciding whether to bring a criminal prosecution for breach of
the UCPD.

Establishing Consistency Between Civil And Criminal Enforcement
Action

2.10     The OFT has, at Section 229 of the Enterprise Act 2002, a duty to
publish advice and information to explain how Part 8 relates to those likely to
be affected by it and to indicate how it expects these provisions to operate.
As the UCPD will be enforceable under the civil injunction regime of Part 8,
the OFT must, at the least, revise the current Guidance to incorporate the
expansion of the legislation to which Part 8 applies. However, while the
statutory duty is limited to that Act, it would be of questionable value simply to
revise the current Guidance without also incorporating comparable material
on criminal enforcement of the UCPD. Business needs to be aware of the
consequences they face in the event of breaches of the new law.

2.11      Further, in the December 2005 Pre-Budget Report, the Government
announced that it would establish the Local Better Regulation Office (LBRO)
to address lack of consistency and coordination in local authority regulatory
services and at the same time strengthen the role of the OFT. The OFT's new
remit is to champion and to give regulatory leadership and assistance to Local
Authority Trading Standards Services across the UK.

2.12     The OFT will consider the best way to revise its Enterprise Act
Guidance internally and then with partner enforcement agencies in the light of
its regulatory leadership function. The issues will also be taken forward as one

8
    http://www.cabinetoffice.gov.uk/REGULATION/documents/enforcement/compliance_code.pdf
9
    http://www.cps.gov.uk/publications/docs/code2004english.pdf


                                                                                           14
element of a training programme that OFT will commence from April 2007
with the TSS and other enforcers on the provisions of the UCPD and best
practice on enforcement.

Current focus on areas of detriment

2.13     Whilst not being conclusive, enforcement data appears to indicate
that existing safeguards work reasonably well. Over three-quarters of current
prosecutions that fall within the scope of the UCPD are taken under the TDA.
Of these, over 50 % of prosecutions relate to just two sectors: transport
(primarily second hand cars) and home fittings. Both of these are areas of
notorious consumer detriment. 10

Question 1: Do you think these safeguards are sufficient? If not why
not?




10
  In December 2005 the DTI consulted on 28 laws that appeared to overlap to some degree with the
UCP. In 2004, over 75% of all prosecutions taken under these 28 were taken under the TDA (as
reported to the OFT). 27% were in relation to transport (primarily second hand cars); 26% in relation to
house fittings (OFT Annual Report and Resource Account 2004-5).


                                                                                                    15
Chapter 3: Advantages and Disadvantages of Mens Rea Offences
______________________________________________________________

3.1      The adoption of mens rea offences would raise the evidential
threshold before a criminal offence could be proved. This is because it would
require enforcers to demonstrate a guilty mind on the part of the trader in
addition to the occurrence of the prohibited act or omission. The potential
advantages and disadvantages of this are discussed below.

Bringing consumer law into line with general criminal law

3.2      An advantage of mens rea offences is that criminal liability would be
restricted to traders who can be shown to have flouted the law with whatever
degree of intent was specified. This would bring fair trading law into line with
much of the general criminal law.

3.3      However, it is also worth recalling that the rationale for regulation in
the area of unfair commercial practices is to suppress the practices
themselves and to correct the operation of markets by avoiding deception and
improving consumer information. Arguably, therefore what needs to be
tackled is the unfair practice irrespective of the state of mind of the trader.

Other enforcement mechanisms

3.4       Chapter 2 identified existing safeguards that seek to ensure that
criminal prosecutions are only taken where it is in the public interest. The fact
that the majority of criminal prosecutions take place in areas of significant
consumer detriment appears to indicate that these work well. In turn, this
raises question marks about whether mens rea offences are necessary to
ensure that criminal prosecutions are only brought where this is in the public
interest.

3.5      However, there is concern that enforcers currently turn too readily to
criminal enforcement for cases which might be better handled using civil
procedures. The increased difficulty of securing criminal convictions where
proof of mens rea is required might encourage enforcers to use other
enforcement tools. This would help meet the Government’s intention that
there should be increased use of civil (as opposed to criminal) means to
address breaches of unfair trading law wherever appropriate.

Improving sentencing outcomes

3.6        The interim report of the Macrory Review notes that: “because of the
distinctive nature of strict liability offences …. the courts have characterised
such offences as not truly “criminal”. …“[T]here is empirical research evidence
that strict liability offences can undermine the seriousness with which the
offence is handled by the courts”. The Review concludes that this is likely to
be a significant factor explaining, what many perceive as, the undesirably low




                                                                               16
sentences handed out to traders 11 . The final report adds that there is
evidence that for some offences the average fines are considerably below the
maximum available fine. For example, the average fine for non-compliance
with the TDA was £1,524 against a maximum fine available in the legislation
of £5,000 12 . A move to mens rea may ensure that sentences for criminal
prosecutions better fit the offence and therefore act as an effective deterrent
to non-compliance.

Decreased likelihood of securing criminal convictions

3.7       A consequence of the increased evidential hurdle may be to make it
more likely that serious offences go unpunished. It is not clear that alternative
(civil) enforcement routes will always have the same ability to deter unfair
practices in areas of true rogue activities. The result of mens rea could be a
net reduction in consumer protection in these areas.

Itinerant rogue traders

3.8      A simple way of proving mens rea might be to show that the trader has
previously been warned of his conduct, or that civil action has been taken
against him, and he has subsequently disregarded that advice/civil action.
This option is less readily available to enforcers in the case of itinerant traders
that repeatedly move from jurisdiction to the next before such secondary
action can be taken against them. Mens rea offences would make it very
difficult to secure convictions against unfair practices committed by a minority
of rogue itinerant traders.

Corporate entities

3.9       As the Macrory Review notes, adopting mens rea offences also
raises particular problems in relation to securing convictions against corporate
entities 13 . In cases of strict liability offences, companies can commit offences
by, for example, supplying goods under certain unlawful circumstances.
Liability arises even if the unfair practice is committed by one of its
employees. Imposing strict liability on businesses encourages them to
maintain standards of ‘good practice’ by employees.

3.10       Where a crime involving a state of mind (mens rea) is concerned,
liability will only arise if the prosecution can prove that the required state of
mind existed with the company. The usual way for this to be done is for the
prosecution to prove that an individual who is sufficiently senior within the
corporate structure as to represent a “controlling mind of the company” has
the requisite state of mind. Such a person might be a director or an executive
who has been granted very wide remit. This requirement can make securing a
conviction against a company very difficult, especially for large companies
with a diffuse corporate structure.


11
   Idem, Annex D, para D9
12
   Regulatory Justice: Making Sanctions Effective, Final report, November 2006, para 1.24
13
   Idem Annex D, para. D6


                                                                                            17
3.11     Of course, it may be argued that in most cases, civil enforcement
routes against corporate entities will be more appropriate and possibly more
effective, but there are doubts that such routes will always be available to
challenge serious breaches of the Directive in practice.

Minimising uncertainty associated with new offences

3.12     One clear advantage of mens rea offences is that they may be
particularly useful where offences are very broad and their impact may be
uncertain. For instance, in 1968 Parliament chose to make section 14 of the
TDA a (partial) mens rea offence because there was concern about how it
might be applied in practice.

Increased enforcement costs

3.13       Whilst it is hard to provide estimates, enforcers have suggested that
mens rea cases often take twice as long to investigate and prosecute as strict
liability cases. This is in part because it can be far more time consuming to
establish the evidence to support the mental element of the offence than to
prove the breach of the substantive law. But it is also possible that some of
this increase may be associated with the different type of offences prosecuted
under mens rea. For example, it is reported to be harder to prove a breach
relating to the provision of services (s14 TDA), because these can be
intangible, than goods (s1 TDA). Whilst this estimate may be overly high, it is
nonetheless likely that adopting mens rea offences would put a greater strain
on enforcers’ resources than strict liability offences if they continue to pursue
criminal prosecutions. Of course, this argument is not valid if the result of
mens rea is that enforcers choose cheaper civil enforcement routes instead.

Question 2: Do you have any comments on the Government’s analysis
of the advantages and disadvantages of mens rea offences?




                                                                              18
Chapter 4: Criminal Sanctions in the UCP Regulations
______________________________________________________________

4.1      The Response to the December 2005 consultation set out the
Government’s intention to provide criminal (as well as civil) sanctions for
breaches of almost all the prohibitions in the UCPD. (The exceptions are:
Article 6(2)(b) (commitments contained in codes of conduct); Annex 11
(advertorials) and Annex 28 (pester-power).)

4.2     This Chapter discusses which of the UCPD criminal offences should
be subject to a mens rea requirement, if the mixed approach that we propose
is adopted.

Article 5: general prohibition of (all) unfair practices.

4.3      The general prohibition has an extremely broad scope. It sets two
tests that need be met for a practice to be unfair. They are broadly that: (i) the
practice is contrary to professional diligence; and (ii) it distorts or is likely to
distort materially the economic behaviour of the average consumer. This
prohibition is new to UK law.

4.4      Because of the newness and considerable breadth of Article 5, we
believe that a simple breach of its prohibition should not in itself amount to a
criminal offence. It should only be a criminal offence where the trader has
engaged in such behaviour with the prescribed state of mind.

Article 6: misleading actions

4.5       The prohibition on misleading actions outlaws traders giving false or
deceptive information which would impair the average consumer’s economic
behaviour. It covers much the same ground as existing consumer law
intended to protect the economic interests of consumers, including s1 and s14
of the Trade Descriptions Act 1968 (in relation to business-to-consumer
practices) and Part III of the Consumer Protection Act 1987. Its counterpart in
relation to business-to-business practices is the prohibition on false or
misleading advertisements (representations) in the MCAD.

4.6        With many existing prosecutions for such offences apparently
focussing on sharp and dishonest practices in areas of serious consumer
detriment, we are concerned that adopting a mens rea offence might make it
more difficult to prosecute true rogue behaviour. In addition, there is the
possibility that greater difficulties in prosecuting corporate entities may reduce
incentives for compliance. We would welcome stakeholders views on whether
civil enforcement routes can adequately compensate for the increased
difficulty of criminal prosecution in this area if a mens rea element is
introduced.

4.7      If we adopted a strict liability offence this would effectively mean that
the current limited mens rea requirement in relation to misleading statements
as to services (s14 TDA) would no longer apply in the context of the


                                                                                 19
prohibition of misleading actions in the UCPD. The Government has often
proposed abolishing this requirement, most recently in the 1999 White Paper
Modern Markets: Confident Consumers, but would welcome stakeholders
views on the desirability of this.

Article 7(1) and 7(2): misleading omissions

4.8      A misleading omission is a failure to provide material information
which the average consumer needs, according to the context, to take an
informed decision. It is also a misleading omission to hide or provide material
information in an unclear, unintelligible, ambiguous or untimely manner. The
prohibition is capable of covering much of the same ground as that in article 6
(misleading actions). The prohibition also covers pure omissions (namely
ones which do not make what is said misleading). This is new to the UK as
well as being a very broad prohibition.

4.9      Because of the newness and breadth of this provision, we believe
that a simple breach of its prohibition should not in itself amount to a criminal
offence. It should only be a criminal offence where the trader has engaged in
such behaviour with a prescribed state of mind.

Article 7(4): misleading omissions where there is an invitation to purchase

4.10     Article 7(4) obliges traders to provide certain information where there
is an “invitation to purchase”, unless certain exceptions apply. The omission of
some of this information is often an offence under some domestic laws,
notably in relation to omitting certain pricing information. Yet the obligation to
provide all of the information required in this provision (unless certain
conditions are met) whenever there is an invitation to purchase is new to the
UK.

4.11      The information obligations in Article 7(4) are more specific than
those in Article 7(1). Unlike prescriptive information obligations in existing
laws, Article 7(4) provides traders with considerable flexibility as to how this
information should be given. Raising the evidential threshold could therefore
make it much harder for enforcers to bring successful prosecutions if traders
fail to provide information required under existing law where these would
amount to an invitation to purchase. On the other hand the circumstances
when this information must be given is new to UK law and open to different
interpretations. This suggests that there should be no offence unless the
trader has omitted this information with a prescribed state of mind.

4.12       We welcome views on whether this provision should be a strict
liability or mens rea offence.

Articles 8: aggressive commercial practices

4.13     An aggressive practice is one that uses harassment, coercion,
including the use of physical force, or undue influence to appreciably impair
the average consumer’s freedom of choice. The worst types of aggressive


                                                                                20
practices may well breach general criminal law. However, Article 8 also
increase protections against less clear-cut cases of harassment, coercion and
undue influence. This will be particularly important in relation to tackling high
pressure-selling.

4.14     Given the very real detriment and distress caused by aggressive
practices and the need to be able to take effective action to stop this type of
behaviour, we are inclined to favour a strict liability offence for such conduct.

Annex I: practices that are always prohibited

4.15     Annex I lists 31 practices that are always prohibited without the need
to apply the transactional decision test. Although some are in broad terms,
they are reasonably specific, particularly when compared to the broad
principles-based prohibitions in Articles 5-8.

4.16    Because the Annex was designed to prohibit the worst unfair
practices, we are minded to make the Annex prohibitions strict liability
offences.

MCAD prohibition on business-to-business misleading advertising

4.17     The Government will repeal business-to-business protections in most
existing laws where they exist, such as the TDA. The equivalent to Article 6
UCPD for business-to-business practices is the prohibition on misleading
advertising contained in the amended MCAD. This prohibits all misleading
advertisements, meaning any representations promoting the supply of goods,
services immovable property, rights and obligations. We will consequently
create an offence in relation to traders engaging in misleading advertising in
the legislation implementing the MCAD in order to ensure that there is no
reduction in the protection available to businesses.

4.18       Given that we are minded to create a strict liability offence for
breaching Article 6 UCPD, it would be consistent to make the corresponding
business-to-business offence relating to misleading advertising also one of
strict liability. On the other hand businesses can generally be expected to take
greater precautions and make more enquiries than consumers and to use the
civil courts to enforce their rights. Arguably, criminal offences should therefore
be reserved for those cases where traders engage in misleading
representations to promote the supply of goods, services, immovable property
rights and obligations with a prescribed state of mind. A duty to enforce
CMAD will be placed on the OFT, TSS and the Department of
Enterprise,Trade and Investment in Northern Ireland (DETINI).


Question 3: Do you agree with the proposal to add a mens rea
requirement to the provisions creating offences for breaches of Articles
5 and 7(1) and (2)?




                                                                                21
Question 4: Do you agree that offences for breach of most of the
prohibitions contained in UCPD Articles 6 and 8, and in UCPD Annex I
should not require proof of any particular state of mind of the trader?

Question 5: Do you consider that the new offence for breaching the
information obligations in Article 7(4) should be one of strict liability or
should it require proof of a state of mind of the trader on the same basis
as the proposal for article 7(1) and 7(2)?

Question 6: Do you consider that a new offence in relation to the
publication of misleading advertisements in provisions implementing
the MCAD should be one of strict liability or should it require proof of a
state of mind of the trader?




                                                                          22
Chapter 5: Types of Mens Rea
______________________________________________________________

5.1       As noted in paragraph 1.13 the common types of mens rea are:

          (i)     intent
          (ii)    knowledge
          (iii)   recklessness
          (iv)    negligence

5.2      These are considered below in very general terms.


Intent

A defendant intends the constituent facts of the offence if he acts in order to
bring those facts about or if he realises that the facts in question are virtually
the certain consequences of his actions. Mere foresight of the likely
consequences is not enough. Under section 8 of Criminal Justice Act
1967intention can be proven by reference and inferences from all the
evidence.

Knowledge

This requires an accurate belief on the part of the defendant that relevant
circumstances exist. Knowledge of a possibility is not enough. Knowledge can
be imputed where the defendant deliberately closes his mind to what he
suspects and does not make enquiries because he does not want his fears
confirmed.

Recklessness

This occurs where the defendant foresees the risk of the occurrence of the
constituent element of the offence as the result of his actions but does not
intend it. Instead he runs an unreasonable risk of that element occurring. In
determining what is reasonable, things such as the gravity of the harm, the
amount of the risk and the social utility of the activity are relevant. Sometimes
inadvertence to an obvious risk can also amount to recklessness.
Recklessness has a specific statutory meaning in the context of section 14
Trade Description Act (section 14(2)(b)). It applies where a person did not
have regard to the truth or falsity of his statement.

Negligence

Some criminal offences concern actions which are done negligently - where a
reasonable person in the same position as the defendant would have been
aware of the risks of the defendant's course of conduct and would not have
done it (eg driving without due care and attention). Sometimes what is
punished is gross negligence - where the standard of conduct of the



                                                                                 23
defendant not only falls short of what a reasonable person would have done
but falls short to a great degree (eg dangerous driving).


5.3        Negligence denotes the least level of fault with regard to a
defendant’s state of mind, knowledge and intention the most fault. This means
that it is harder to prove that a trader has acted with intent or with knowledge
than to show he acted negligently. Intention/ knowledge and recklessness are
the most usual types of state of mind in offences.

5.4      The Government proposes that the requirement for a particular state
of mind in relation to breaches of the prohibitions under articles 5 and 7(1)
should follow the more usual requirement of recklessness or knowledge.

5.5     Accordingly the Government considers that there should be no
offence unless the prosecution can prove

      (a) In relation to the prohibition in Article 5 that;

        (i) the trader was engaged in a commercial practice which fell below
        the standard of professional diligence;

        (ii) the trader knew that he was engaged in a commercial practice
        which fell below this standard or did not have regard to whether or not
        he was so engaged; and

        (iii) as a result of that commercial practice the economic behaviour of
        the average consumer is likely to be materially distorted.

      (b) in relation to the prohibition in Article 7(1) that

        (i) the trader was engaged in a commercial practice which having
        regard to the circumstances omitted material information that the
        average consumer needed in the context to take an informed
        transactional decision;

        (ii) the trader knew that he was engaged in such a commercial
        practice or did not have regard to whether or not he was so engaged;
        and

        (iii) as result of that commercial practice the average consumer is
        likely to take a transactional decision that he would not have taken
        otherwise.


Question 7: Do you agree that the mens rea offences for breaches of the
UCPD should be “knowledge or recklessness”?




                                                                               24
Chapter 6: The Office of Fair Trading’s (OFT) power to bring criminal
prosecutions
______________________________________________________________

6.1    Historically, consumer protection law has been enforced through
criminal sanctions by local authority Trading Standards Services. They
generally have a duty to enforce the legislation within their area and to
prosecute offenders (in England and Wales) where necessary.

6.2    By contrast, the OFT has very limited powers to bring criminal
prosecutions for breaches of consumer law. Such powers do exist in relation
to the Consumer Credit Acts 1974 and 2006 and the Estate Agents Act 1979,
where the OFT also has important licensing functions.

6.3    The OFT’s enforcement role has expanded considerably in the last ten
years through the increased use of civil law (injunctive) sanctions to enforce
consumer law. They are the lead enforcer under Part 8 of the Enterprise Act
and have a coordinating role to ensure that actions are taken by the most
appropriate enforcer. It is the Single Liaison Office under the EC Regulation
(No 2006/2004) on Consumer Protection Cooperation.

6.4    In the Chancellor’s Pre-Budget Report 2005: Britain meeting the global
challenge: Enterprise, fairness and responsibility, the OFT’s responsibilities
were widened yet further, with additional responsibilities to promote
consistency and proportionality in consumer protection as well as an
increased role in working with TSS.

6.5   Closer working includes providing regulatory leadership and
‘championing’ the TSS. The OFT believes that fully to fulfil this role, and to
ensure consistent enforcement it needs access to the same sanctions and
powers as the TSS.

6.6    Given its national and international work 14 , the OFT believes it is
disproportionate for traders with whom it deals to face lesser or arbitrarily
different sanctions from those at local or regional level for whom enforcement
issues are primarily dealt with by the TSS.

6.7    For example, a criminal prosecution for an offence affecting 15
consumers locally currently potentially attracts an immediate penalty, whereas
a nation- wide scam affecting hundreds of consumers, pursued by the OFT
through the civil route, will not attract any penalty (unless there is a later,
further breach). Clearly, the nature and effect of the breach should be
determining factors in choosing the most appropriate enforcement action, not
the identity of the body taking the enforcement action.

6.8     Furthermore, for maximum flexibility and to reflect Macrory principles,
all enforcers should have the ability to move between criminal and civil

14
     Including its role in the International Consumer Protection Enforcement Network


                                                                                       25
actions. Part way through an investigation it may become apparent that a
change is necessary to reflect the greater or lesser seriousness of a breach,
as the impact and cause of a trader’s conduct is not always clear at the
beginning of an investigation.

6.9    It would create unnecessary duplication of effort by enforcers if partial
investigations by one enforcer had to be referred to another enforcer to
complete them, simply because the enforcer initiating the investigation lacked
suitable powers to conclude the case appropriately itself.

6.10 Thus the OFT has argued that it needs to be able to take criminal as
well as civil prosecutions to facilitate:

   •   consistent enforcement, ensuring enforcement action is taken by the
       most appropriate body;
   •   actions that are tailored so that they are proportionate to the level of
       detriment created;
   •   access to the same powers of investigation as the TSS.

6.11 This would allow for a better distribution of cases between enforcers,
thereby ensuring that enforcement action would be taken by the most
appropriate body. In particular, given its remit and resources as a national
enforcement body the OFT may be well placed to take responsibility for those
serious national cases that require criminal enforcement. These might
potentially include:

   •   Continued breaches of the law by sole traders which are deliberate,
       aggressive, persistent, or demonstrate total disregard for the law and
       rights of consumers;

   •   Scams which cause widespread detriment to consumers;

   •   Prize draws with premium rate lines which are deliberate, fraudulent or
       avoid regulation;

   •   Mock Auctions which are fraudulent, deliberate or persistent;

   •   Aggressive Doorstep Selling which is aggressive, deliberate,
       persistent, fraudulent or avoids regulation;


6.12 As referred to in paragraph 2.10 above, the OFT will revise its
Guidance to take full account of the UCPD, and the existence of both civil and
criminal enforcement mechanisms.

6.13 The Government accepted that the OFT’s current powers appear
anomalous in comparison with those of the TSS. The Government also
accepted that the OFT’s enhanced enforcement responsibilities make it
appropriate for it to be given additional enforcement powers. It is for these
reasons that the Government said in its response to the December 2005

                                                                                  26
consultation that it intended to place a duty on the OFT (as well as the TSS
and DETINI) to enforce the UCPD. This duty will enable the OFT to bring
criminal prosecutions where appropriate and where TSS are currently unable
to do so.

6.14   We welcome views on the OFT having the power to prosecute.


Question 8: Do you agree that the OFT should have the power to bring
criminal prosecutions for breaches of the UCPD and the MCAD?




                                                                          27
Partial Regulatory Impact Assessment: Mens Rea

Purpose and intended effect of the measures

Objective

1. This consultation paper considers whether criminal sanctions for breaches
of the measures implementing the Unfair Commercial Practices Directive
(UCPD) and the misleading advertising provisions in the amended Misleading
and Comparative Advertising Directive (CMAD) should be based on strict
liability or should require a mental element (mens rea). We welcome your
views on this RIA, particularly further evidence about the costs and
benefits of the options.

Background and Consultation

2. In the consultation paper published in December 2005 the DTI proposed to
retain the existing balance of criminal and civil sanctions when transposing
the UCPD into domestic law. We also consulted on introducing new criminal
offences for breaches of certain new prohibitions introduced by the UCPD.

3. Consumer organisations and enforcers strongly supported this, arguing
this was essential if existing levels of consumer protection were not to be
significantly weakened. Business organisations opposed the introduction of
criminal sanctions in the legislation implementing the UCPD. They said that
UCPD should be enforced by civil means, with serious offences left to existing
theft and fraud criminal legislation. They suggested that if criminal sanctions
were used they should include a mental element (mens rea or guilty mind) in
order not to criminalise honest mistakes or unwittingly failing to comply with a
regulatory requirement. By contrast, most criminal offences in consumer law
are currently “strict liability” offences. The Government has decided to provide
criminal sanctions for breaches of broadly all of the prohibitions in the UCPD,
but is consulting on whether these should include a mental element (mens
rea), should rely on the current approach of strict liability offences/due
diligence defences, or should contain a combination of the two.

4. The Government will repeal some business-to-business protections that
overlap with the Directive, such as those in the Trade Descriptions Act 1968
which protects both businesses and consumers (the consumer protections in
the TDA are broadly replicated by Article 6 of the UCPD). The equivalent to
Article 6 UCPD for business-to-business practices is the prohibition on
misleading advertising contained in the amended MCAD. We will create an
offence in relation to traders engaging in misleading advertising in the
legislation implementing the MCAD in order to ensure that there is no
reduction in the protection available to businesses.

Rationale for Government Intervention

5. Introducing criminal sanctions was considered in the previous consultation
and accompanying partial RIA. Given we are providing criminal offences, it is

                                                                             28
sensible to consider the best way to frame them. This consultation considers
this, and looks at whether some or all UCPD criminal offences should include
a mens rea requirement.

Policy options

6. The options considered are:

Option 1: Strict Liability. Base all the criminal offences on strict liability. As
strict liability offences are the norm in regulatory law, including in almost all of
the legislation to be repealed by the legislation implementing the UCPD, this
is broadly the ‘no change’ option.

Option 2: Mens Rea. Provide a mental element of “knowledge or
recklessness” in criminal offences in relation to unfair commercial practices
in the legislation implementing the UCPD and in criminal offences for
engaging in misleading advertising in the legislation amending the Control of
Misleading Advertisements Regulations 1988 (“CMARs”), which implement
the MCAD in the UK.

Option 3: Mixed approach - some Mens Rea and some Strict Liability.
Provide a mental element in criminal offences for breaches of the new broadly
based prohibitions implementing Article 5 and 7(1) and (2) of “knowledge or
recklessness”; provide strict liability offences for breaches of provisions
implementing the prohibitions in Articles 6, 8 and most of the Annex practices;
consult openly on whether criminal offences for breaches of provisions
implementing the requirements in Article 7(4) and for engaging in misleading
advertising in the legislation amending the CMARs, should involve a mental
element or be based on strict liability.

Sectors affected

7. The Directive applies to all commercial practices directly connected with
the promotion, sale or supply of a product to consumers. It will therefore apply
to all businesses that sell products or services directly to consumers. For
example, there are approximately 320,000 firms in the retail sector, the great
majority of which are small firms employing four people or fewer 15 . There are
also approximately 140,000 hotel and restaurant enterprises, the majority of
which will be affected by the Directive. Firms in a wide range of other sectors
will be affected too, for example the real estate and services sectors. The
practical consequences for most law-abiding firms will be very limited.
However, the Directive will affect some sectors more than others. In particular,
sectors where there is currently a problem with aggressive and high-pressure
selling techniques, such as doorstep selling and timeshare.


15
  Source; Small Business Service statistics
http://www.sbs.gov.uk/sbsgov/action/layer?r.l2=7000000243&r.l1=7000000229&r.s=tl&topicId=7000
011759 . Data from the Inter-departmental Business Register gives a figure of 184,000 firms in the
retail sector, but unlike the SBS statistics, this excludes a large number of sole traders that will not be
registered for VAT.


                                                                                                        29
8. Direct costs will fall primarily on the public sector (courts and enforcers). In
the medium to long-term, these may well be outweighed by savings resulting
from a decreased number of criminal prosecutions. In the private sector
traders will only incur costs if they are prosecuted for engaging in unfair
commercial practices with consumers.

Cost and benefit analysis of the options
9. This RIA considers whether costs will increase or decrease, without
estimating costs.

Option 1: Strict Liability
Public sector benefits

10. Many of the existing offences that UCPD will be replacing are strict liability
offences. If the new offences are also strict liability offences we would not
expect the costs to enforcers and the courts to alter significantly from those
they currently face. There could be some reduction in costs to enforcers in
relation to misleading statements about services because, unlike section 14 of
the TDA, this would no longer be a (partial) mens rea offence.

11. An important benefit of strict liability offences is the lower evidential hurdle
they have compared to mens rea offences. This means that the cost of
prosecuting strict liability offences is likely to be lower for enforcers and the
court system. The additional costs from proving a mens rea offence are
considered under option 2.

12. Another benefit of strict liability offences in consumer legislation is that
they are intended to protect consumers by suppressing the activity in question
without regard to the state of mind of the trader. A method of avoidance of
liability is for the trader to show that he has taken all reasonable precautions
and exercised all due diligence to avoid committing the offence. An incentive
is thus given to traders not only to avoid advertent harmful acts but to take
care to avoid inadvertent ones as well. The lower evidential threshold of only
having to prove the commission of the prohibited act or omission means that
enforcers are more likely to take actions, and that these are more likely to be
successful. This powerful deterrent to the rogues reduces overall consumer
detriment.

Private sector costs

13. Unlike mens rea offences, strict liability offences usually give traders a
‘due diligence’ defence. Due diligence allows traders to avoid liability for the
offence if they can prove that they have taken all reasonable precautions and
exercised all due diligence. Arguably, this might impose slightly higher costs
on businesses in court.



                                                                                  30
Option 2: Mens Rea
14. For mens rea offences, prosecutors need to prove not only the
commission of the prohibited act or omission, but also that there was a certain
state of mind associated with it. This additional hurdle might encourage
enforcers to use civil, rather than criminal means of prosecution.

Public sector costs

15. Enforcers have estimated that mens rea offences often take twice the time
to investigate compared to a strict liability offence. This is in part because it
can be far more time consuming to establish the evidence to prove the mental
element of the offence than simply that there had been a commission of a
prohibited act. Traders will be far less willing to cooperate with enforcers if
they do not need to demonstrate due diligence to avoid conviction. This
additional time will increase costs for enforcers, who will therefore be able to
take fewer actions to enforce the UCPD. Also, if the prima facia evidence of a
possible offence is not strong, then TSS may not even have the resources to
start an investigation.

16. There would also be increased costs for the court system. One Local
Authority Trading Standards Service’s very rough estimate of these additional
costs is 30% for cases dealt with in the Magistrates Court, and 50% for cases
dealt with in the Crown Court.

17. Because it is harder for prosecutors to prove that traders have committed
mens rea offences, than strict liability offences, adopting mens rea offences
might increase the failure rate of criminal prosecutions. This would have a
knock-on detriment to other businesses, which would be subject to unfair
competition, and also to consumers, who might continue to be subject to
unfair practices.

18. It can be particularly difficult to prosecute large corporate entities under
mens rea offences. This is because it can be difficult to demonstrate that a
sufficiently senior officer had the required mens rea.


19. The higher evidential bar under mens rea would reduce the number of
successful prosecutions and thereby reduce the effectiveness of UCPD in
reducing detriment to consumers and as a deterrent to other traders from
engaging in unfair conduct.

Public sector benefits

20. The higher evidential threshold set by mens rea offences could encourage
enforcers to consider alternative enforcement mechanisms to criminal
prosecutions, such as civil injunctions or informal action. This may be more
appropriate for some cases (although we do not have evidence of trivial cases
being taken criminally currently, so there may be no change here).



                                                                                   31
Private sector costs and benefits

21. Businesses that are prosecuted under mens rea offences might face
higher court costs from extended court time. However, we expect that any
increase in costs would primarily fall on businesses carrying out unfair and
illegal commercial practices. Businesses may have reduced costs if enforcers
chose to pursue the civil route which provides for formal undertakings without
the need for court action Also, criminal prosecutions arguably carry a more
severe stigma for businesses, than civil action.

22. Mens rea might encourage traders to reduce the effectiveness of their
compliance procedures if they do not have to demonstrate due diligence to
avoid conviction. This would not be to the benefit of consumers.

Option 3: Mens Rea and some Strict Liability
23. The approach set out in the consultation paper is to introduce a mental
element for offences for breaches of provisions implementing the prohibitions
in Articles 5 and 7(1) and (2) of “knowledge or recklessness”; be inclined to
introduce strict liability offences for breaches of provisions implements the
prohibitions in Articles 6, 8 and in most of the Annex practices; and consult
openly on whether offences for breaches of the provisions implementing the
requirements in Article 7(4) and for engaging in misleading advertising in the
legislation amending CMARs, should involve a mental element or be based
on strict liability. This combines the advantages and disadvantages of the
options above.

24. If this proposal is adopted, strict liability would generally be retained for
those offences which replicate existing offences and for using aggressive
practices, but very broad new offences would also require proof of a mental
element. Having mens rea for these new broad offences would ensure that
traders could not be convicted of an offence without proof of the specified
mental element.




                                                                                    32
Annex B – Code of Practice on consultations


1. Consult widely throughout the process, allowing a minimum of 12 weeks for
written consultation at least once during the development of the policy.


2. Be clear about what your proposals are, who may be affected, what
questions are being asked and the timescale for responses.


3. Ensure that your consultation is clear, concise and widely accessible.


4. Give feedback regarding the responses received and how the consultation
process influenced the policy.


5. Monitor your department’s effectiveness at consultation, including through
the use of a designated consultation co-ordinator.


6. Ensure your consultation follows better regulation best practice, including
carrying out a Regulatory Impact Assessment if appropriate.


The complete code is available on the Cabinet Office’s web site, address
http://www.cabinetoffice.gov.uk/regulation/consultation/index.asp


Comments or complaints


If you wish to comment on the conduct of this consultation or make a
complaint about the way this consultation has been conducted, please write to
Nick Cooper, DTI Consultation Co-ordinator, 1 Victoria Street, London SW1H
0ET or telephone him on 020 7215 0346 or email to:
nick.cooper@dti.gsi.gov.uk




                                                                                 33
Annex C – Organisations to b consulted

Advertising Association                 Austin Reed Group PLC
The Advertising Standards               Baby Products Association
Authority Limited                       Bakers Federation
Age Concern                             Barclays PLC
Agricultural Engineers Association      The Bar Council
Airtours PLC                            BBC
Alliance of Independent Retailers &     Beachcroft Wansbroughs
Businesses                              BHS Limited
Amazon                                  The Booksellers Association
Amway                                   The Boots Company
Antiquarian Booksellers'                Bradstock Group PLC
Association                             British Advertising Gift Distributors
APCO UK                                 Association
Argos Limited                           British American Business
Aromatherapy Trade Council              British Association of Leisure Parks
Associated News                         & Attractions
Association for Payment & Clearing      British Association of Removers
Services                                British Association of Toy Retailers
Association of Beekeeping               British Audio Dealers Association
Appliance Manufacturers                 British Bankers Association
Association of British Insurers         The British Beer & Pub Association
Association of British Introduction     British Brands Group
Agencies                                British Casino Association
Association of British Oil Industries   British Ceramic Confederation
Association of British Travel Agents    The British Chambers of
Association of Building Hardware        Commerce
Manufacturers                           The British Chemical Distributors
Association of Convenience Stores       and Traders Association
Association of Cycle Traders            British Consultants Bureau
Association of District Judges          British Copyright Council
Association of Electricity Producers    British Cutlery & Silverware
Association of Independent              Association
Business                                British Equestrian Trade
The Association of Licensed             Association
Multiple Retailers                      British Essential Oils Association
Association of Manufacturers of         British Footwear Association
Domestic Appliances                     British Gas Services
Association of Master Upholsterers      British Gas Trading Limited
& Soft Furnishers Limited               British Hardware & Housewares
Association of Recognised English       Manufacturers Association
Language Services                       British Hat Guild
The Association of Residential          British Horological Federation
Letting Agents                          British Hospitality Association
Association of Translation              The British Institute of Inn Keeping
Companies                               British Insurance Brokers
Association of Unit Trusts &            Association
Investment Funds                        British Interior Textiles Association
AT UK PLC


                                                                          34
British Jewellery & Giftware         Citizens Advice - National
Federation                           Association of Citizens Advice
British Leather Confederation        Bureaux
British Luggage & Leather Goods      Clifford Chance
Association                          Cleaning & Hygiene Suppliers
British Marine Equipment Council     Association Limited
British Market Research              Cleaning & Support Services
Association                          Association
British Menswear Guild               Commercial Horticultural
British Music Rights Limited         Association
The British Phonographic Industry    Competition Commission
Limited                              Computer Cab PLC
British Promotional Merchandise      Computer Software & Services
Association                          Association
British Property Federation          Computing Suppliers Federation
British Retail Consortium            Confederation of Paper Industries
British Shops & Stores Association   Confederation of Passenger
British Telecommunications PLC       Transport UK
BT Cellnet                           Consumer Credit Association
The British Toy & Hobby              Consumer Credit Trade
Association                          Association
British Vehicle Rental & Leasing     Consumers Association
Association                          Consumers International
British Wood Preserving & Damp       Co-operative Retail
Proofing Association                 Corporation of Finance Brokers
Broadcast Advertising Clearance      Limited
Centre                               Corporation of London
Building Societies Association       The Cosmetic Toiletry & Perfumery
Business & Accounting Software       Association Limited
Developers Association Limited       Council of Circuit Judges
Business Europe                      Council of Mortgage Lenders
Business Services Association        The Council for Registered Gas
Cable & Wireless Global              Installers
Operations                           Courts (UK) Limited
Camelot                              Creative Industries Association
Carlton                              Credit Card Research Group
Carpet Right                         Credit Services Association
CBI                                  Crown Prosecution Service
Centre for the Visually Impaired     Cutlery & Allied Traders Research
CGU Insurance                        Association
Charity Commission                   Dairy Industry Federation
Chartered Institute of Marketing     Debenhams PLC
The Chartered Institute of Patent    Dell Products
Agents                               Denton Wilde Sapte
Chartered Society of Designers       The Digital Content Forum
Chinese Information & Advice         Direct Line
Centre                               Direct Mail Services Standards
The Cinema Exhibitors' Association   Board
                                     Direct Marketing Association (UK)
                                     Direct Selling Association


                                                                    35
Dixons Group Limited                   Force Internet Limited
Domestic Appliance Service             The Forum of Private Businesses
Association                            FTO
Domestic General                       Gardenex: The Federation of
e-centre UK                            Garden & Leisure Manufacturers
Electricity Association                General Consumer Council for
EMI Music                              Northern Ireland
English Tourist Board                  The General Council of the Bar
The Environmental Industries           Glass and Glazing Federation
Commission Limited                     Granada
Equifax Limited                        Greeting Card Association
Ericsson Limited                       Guernsey Trading Standards
EURIM - the European Information       Guild of Architectural Ironmongers
Society Group                          The Guild of British Coach
Europe Analytica                       Operators
Eversheds                              Gun Trade Association
Experian Limited                       Halfords Limited
Faculty of Advocates                   Halifax PLC
Federation of British Hand Tool        Health Food Manufacturers
Manufacturers                          Association
Federation of Crafts & Commerce        Help the Aged
Federation of Environmental Trade      Hire Association Europe
Associations                           HM Council of Circuit Judges
The Federation of European Direct      Home Office
Marketing                              Honda (UK)
Federation of Master Builders          Horticultural Traders Association
Federation of Multiple DIY Retailers   Hotel, Catering International
Federation of Petroleum Suppliers      Management Association
Limited                                House Builders Federation
FSB - Birmingham                       HSBC Bank PLC
FSB - Blackpool                        IBM UK Limited
FSB - Cardiff                          Imperial Tobacco Pension Fund
FSB - Glasgow                          Incorporated Society of British
FSB - Inverness                        Advertisers Limited
FSB - Lincoln                          Independent Committee for the
FSB - London                           Supervision of Standards of
FSB - Newcastle Upon Tyne              Telephone Information Services
FSB - Newtownabbey                     Independent Television
FSB - Preston                          Commission
FSB - Sutton Coldfield                 The Independent Food Retailers
Field Fisher Waterhouse                Confederation
Finance & Leasing Association          Independent Footware Retailers
Finance Industry Standards             Association
Association                            Institute of Consumer Affairs
Financial Ombudsman Service            Institute of Credit Management
Limited                                Institute of Direct Marketing
Fine Art Trade Guild                   Institute of Directors
First National Bank PLC                Institute of Fundraising
First National Motors Finance          Institute of Management
Food and Drink Association


                                                                       36
Institute of Practioners in          National Association for Pre-Paid
Advertising                          Funeral Plans
The Institute of Public Relations    National Association of Balloon
Institute of Sales Promotions        Artists & Suppliers
Institute of Waste Management        National Association of Bank &
Intellect                            Insurance Customers
InterForum                           The National Association of Estate
International Consumer Policy        Agents
Bureau                               National Association of Funeral
International Swaps & Derivatives    Directors
Association                          National Association of Tool
Intext Media                         Dealers
IPC Media                            National Car Parks
ITN                                  National Caravan Council Limited
ITV                                  National Carpet Cleaners
John English Gifts Limited           Association
John Lewis Partnership               National Consumer Council
Justices' Clerks' Society            The National Consumer Credit
Lakes Hospitality Association        Federation
LAPADA: The Association of Art &     National Consumers Federation
Antique Dealers                      National Council for Voluntary
Law Centres Federation               Organisations National Federation
Law Commission                       of Consumer Groups
The Law Society                      National Federation of Retail
The Law Society of Northern          Newsagents
Ireland                              National Fireplace Association
The Law Society of Scotland          National Lottery Commission
Laytons                              The National Newspapers Mail
Lighting Association                 Order Protection Scheme Limited
Lincolnshire Seed Growers            National Packaging Council
Association                          National Pharmaceutical
Local Authorities Co-ordinators of   Association
Regulatory Services                  National Wool Textile Export
London Internet Exchange             Corporation
Made in Scotland Limited             The Newspaper Society
Magistrates' Association             Next Retail Limited
The Mail Order Traders Association   Northern Ireland Tourist Board
Market & Opinion Research            North Yorkshire County Council
International                        Nottingham & Derbyshire Clothing
The Market Research Society          & Textile Association
Marks & Spencer PLC                  Office for the Regulation of
McCann Erickson                      Electricity & Gas
Merit (NW) Limited                   Office of Fair Trading
MGM Assurance                        Office of Gas & Electricity Markets -
Microsoft PLC                        Leeds
Motor Cycle Industry Association     Office of Gas & Electricity Markets -
Limited                              London
Museums Association                  Office of the Scottish Charity
Music Industries Association         Regulator
                                     Office of Telecommunications


                                                                       37
Office of the Information               Scottish Consumer Council
Commissioner                            Scottish Grocers Federation
The Ombudsman for Estate Agents         Scottish Law Commission
Oppenheimer Wolff & Donnelly LLP        Scottish Motor Trade Association
Orange PLC                              Scottish Software Federation
Organisation for Time Share in          Scottish Textiles Network
Europe                                  Scottish Tourist Board
Osborne Clarke                          Scuba Industries Trade Association
Outdoor Advertising Association         SITA
Outdoor Industries Association          Small Business Europe
Oxfam Publishing                        Small Electrical Appliance
Pearl Assurance PLC (MP35)              Marketing Association
Periodical Publishers Association       Society of London Theatre
Pet Care Trust                          Society of Motor Manufacturers &
Petrol Retailers Foundation             Traders Limited
Philatelic Traders Society Limited      Software Industry Federation
Philips Electronics UK Limited          Somerfield
Photo Marketing Association             Sports Industries Federation
International                           Strategic Rail Authority
Pine Manufacturers Association          Tesco Home Shopping
The Post Office                         Textile Services Association
Poundland PLC                           Thermal Insulation Manufacturers
PowerGen                                & Suppliers Association
Prince's Trust                          Time Group Limited
PRM                                     Tobacco Manufacturers
Provident Financial                     Association
Provident Personal Credit               Toshiba UK Limited
Provision Trade Federation              Tower Records
QVC                                     Trade Marks Patents & Designs
The Radio Advertising Bureau            Federation
The Radio Advertising Clearance         Trading Standards Institute
Centre                                  UK Fashion Export
Radio Authority                         Unilever PLC
Radio, Electrical & Television          Union of Independent Companies
Retailers Association Limited           United Kingdom Offshore
Readers Digest                          Operators Association
The Restaurant Association              Virgin.biz.net
Retail Motor Industry Federation        VISA International Service
Reuters                                 Association
The Reward Group                        Vodafone Airtouch Group Services
Royal & Sun Alliance Insurance          Limited
Royal Faculty of Procurators            Waitrose
Royal Institute of British Architects   Welsh Consumer Council
Royal National Institute for the        Welsh Tourist Board
Blind                                   West Sussex Trading Standards
Rural Shops Alliance                    Which? Legal Services
Sainsburys                              Willans
Scotch Whisky Association               Wine & Spirit Association of Great
SCBG                                    Britain & Northern Ireland
Scottish & Southern Energy PLC          Zurich UK


                                                                       38

								
To top
;