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New guidance on retail pricing practices

The Chartered Trading Standards Institute (CTSI) has published new guidance, entitled 'The Guidance for Traders on Pricing Practices' (CTSI Guidance).

This new guidance, published in December 2016, replaces the BIS Pricing Practices Guide that had previously been in place from 2010. The new guidance signals a significant shift from the previous guidance and has been much anticipated by the business community.

Background

The decision to publish new Guidance replacing the 2010 BIS Guidance came about as a result of complaints from both consumer bodies and individual consumers. It was felt that businesses, and specifically retailers, had been engaging in pricing practices that had the effect of misleading and confusing consumers.

Who does the CTSI Guidance apply to and what does it mean for retailers?

The Guidance will cover all businesses that sell goods or services to UK consumers. It is important to note that this is irrespective of the sales channel, so any sales made online or via other distance means, such as over the telephone or in response to a printed advertisement, will be covered.

The most obvious change from the 2010 BIS guidance is the relaxing of its established rules, which were much more prescriptive. The current Guidance has moved towards a principles based approach, where the onus is on the trader to take the final decision on whether the action they have taken is compliant or not.

This is most apparent in relation to established rules such as the 28 Day Rule and the 10% Rule. Retailers will be familiar with these requirements, which state that a higher price must have been charged for at least 28 days before it is discounted and that at least 10% of the product range on offer was discounted in 'up to and from claims'. These rules and others still apply, but instead of pointing towards figures the rules now rely on 'significant proportions' of time and a 'significant amount' of goods being discounted. This new approach has the potential to be useful for traders, as more power is given to the retailer to be more flexible, but this double edged sword also has the potential to lead to confusion and questions amongst businesses.

Does my business have to comply with the CTSI Guidance?

As the name suggests, the Guidance is guidance and is not itself legally binding. Instead, the document is intended to give guidance to traders and compliment the underlying consumer protection legislation with regards to pricing and associated practices in the UK. The main bulk of the guidance is intended to compliment and support the Consumer Protection from Unfair Trading Regulations 2008 and this legislation has not been changed by the introduction of the new CTSI Guidance.

As a result of this, the implications of compliance or non-compliance with the Guidance are not entirely clear. It would not be a total defence for a retailer to say that they have followed the Guidance to the letter, and similarly not following the Guidance won't automatically mean that a breach of the consumer legislation has occurred. What is clear however is that in any legal proceedings the guidance would be strongly persuasive. In addition, the Guidance will continue to be used by regulatory bodies, as the 2010 BIS Guidance has been, and therefore the risk run as a result of non-compliance would almost certainly be too high for traders to ignore.

What next for traders?

The publication of the new Guidance from the CTSI cannot be said to be 'business as usual'. Although the new guidance keeps the principles of the old, the format is different and it places more control into the hands of the trader. The long term effects of this are not yet known, and whilst there is the potential for the new Guidance to give traders more freedom, there is also the risk that we will see a 'race to the bottom' as traders take advantage of the new flexibility to push the previously established boundaries.

Although the Guidance is in force, it is understood that enforcers will give retailers until April 2017 to adjust to the new Guidance. The CTSI is recommending that businesses use this window of time to review their pricing practices and reassess their fairness and effectiveness, as well as giving training to their teams on pricing practices and consumer legislation.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions.



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