Monthly commercial law update: Top 5 developments in June

Welcome to the latest edition of top five commercial developments—this month we're looking at June.

Advertising and marketing: ASA publishes annual report

The Advertising Standards Authority (ASA) has published its annual report for 2013. It says that 69% of the complaints made in 2013 related to misleading advertising and that it took action on 4,161 advertisements, which were either changed or withdrawn. The key points of the report were that action was taken on:
  • payday loan ads: alongside ASA bans of socially irresponsible advertisements that trivialised taking out a high interest loan, CAP published new guidance for advertisers in the payday loan sector clearly setting out the criteria for preparing their ads in a responsible way
  • copycat websites: the ASA banned several advertisements and claims on websites by companies charging a premium for services such as passport and driving licence renewals which are provided much cheaper or free by government sites. The ASA also commissioned research to help understand how these sites cause confusion and help tackle poor practice
  • theatre ticket pricing: theatre ticket providers were brought into line for failing to include compulsory administrative fees in prices on their websites until late in the purchasing process
  • letting agent fees: action was taken to require all letting agents to be upfront in their ads about non-optional fees, such as reference costs or admin fees, which they charge. Detailed guidance was issued to trade bodies and the lettings sector on how to avoid misleading prospective tenants

Looking forward, the ASA intends to focus on the advertising of e-cigarettes, alcohol scheduling and food advertising to children. It has published a two-part report on children and food advertising.

Advertising and marketing: BCAP launches review on payday lending advertising

The Broadcast Committee on Advertising Practice (BCAP) has launched a review of how The UK Code of Broadcast Advertising (BCAP Code) is being applied to payday loan television advertising to ensure that young people, in particular, continue to be protected. Payday loan advertising has attracted concern across society, including government, media, consumer protection bodies and the public as the use of short-term, high-cost credit has increased during the economic downturn, including, in December 2013, a Business, Innovation and Skills Select Committee report which recommended that payday loan advertisements be banned from appearing during programmes aimed at children. In October 2013 the Committee of Advertising Practice (CAP) published updated guidance for payday loan advertisers on what they need to do to ensure that their advertisements are socially responsible. Furthermore from 1 July 2014, financial promotions for payday loans will be required to include an FCA risk warning. The review will be completed and the outcome communicated publicly by the autumn of 2014.

Consumer credit: payday lending reports by FCA and CMA

The FCA took responsibility for regulating logbook loans on 1 April 2014. Every firm offering consumer credit has interim permission while they are waiting to be fully authorised by the regulator. The FCA will be inviting firms to become fully authorised after it has completed checks of their practices. Logbook lenders will need to apply for full authorisation from 1 January 2015 and before 1 April 2015.

The FCA has published a research report which highlights evidence of poor firm behaviour where no affordability checks were undertaken before applicants took out their credit agreements. The FCA has said logbook lenders will need to dramatically raise their standards if they want to obtain authorisation from the regulator.

The report concluded consumers often have multiple debts they cannot manage, and they only seek debt management providers in urgent need.

The findings also conclude that:

  • most of the participants in the research had debts of between £15,000 to £30,000
  • some people had debts of up to £100,000
  • consumers have limited knowledge of the market and place their trust in debt management providers without shopping around
  • there was evidence of poor firm behaviour—advertisers lacked necessary training, provided poor quality or incorrect advice
  • a lack of distinction between advice and sales, and
  • there was a lack of clarity about the charges involved in debt management plans as well as consumer confusion on the actions of debt management providers once a plan had been set up.

Consumer law: European Commission publishes guidance on Consumer Rights Directive

The European Commission has published detailed guidance on the Consumer Rights Directive, which has been implemented in the UK by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 SI 2013/3134.

The regulations came into force on 13 June 2014.

Outsourcing: advice for data controllers and advice from Acas

The ICO has issued guidance on disclosure of employee information under the Transfer of Undertakings (Protection of Employment) Regulations 2006 SI 2006/246 (as amended by the Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014 SI 2014/16) (TUPE).

TUPE requires that the new employer is provided with specific details about their new workforce in advance of any transfer or change in service provision.

Some employers are unsure how they can comply with the Data Protection Act 1998 (DPA 1998) and TUPE when disclosing personal information about their employees. The DPA 1998 permits these disclosures because they are required by law. However, parties must comply with the data protection principles when handling personal information.

The guidance also provides a list of good practice tips. These include agreeing what information is to be transferred well before the transfer takes place, telling employees their information is being passed to the new employer and considering whether any personal information can be anonymised before providing it if not required under TUPE.

In addition, Advisory, Conciliation and Arbitration Service (Acas) has issued guidance on handling TUPE transfers. The Acas guidance provides a clear overview of the legal requirements and includes advice on when TUPE applies, getting the process right, and information and consultation requirements.

It aims to help employers better understand what the changes mean and how they may affect their business.

One of the key messages is that employers should involve their employees early in the process to minimise concerns and potential problems later. Acas' top tips for managing business transfers include:

  • consulting as extensively as possible
  • engaging with trade unions, as they can make all the difference in how smoothly a transfer happens
  • making sure contract information is up to date and reflects reality
  • setting up an employee forum, and
  • dedicating a management team to running the transfer.

 

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