My Lords, this is a short but not insignificant order that will enable the effective enforcement of the Consumer Protection (Payment Surcharges) Regulations 2012. The regulations implement into UK law Article 19 of the European Union consumer rights directive. They prohibit traders from charging consumers above-cost payment surcharges. The Government have had concerns about the level of card surcharges that
exceed the real costs in several sectors of the economy. Such surcharges are typically employed as a form of drip pricing, whereby the consumer does not see the final transaction cost until after completing several forms. That can make it more difficult for consumers to shop around. Under the regulations, surcharges for using a particular form of payment will become cost-reflective.
The provisions of the directive need to be implemented in UK legislation by December 2013 and brought fully into force by June 2014. Given the concerns that have been raised about these practices—notably by Which? and in a report made by the Office of Fair Trading—the Government have decided to implement this part of the directive early. The payment surcharges regulations were made and laid before Parliament on 19 December last year under the negative resolution procedure. As with this order, they come into force on 6 April 2013. They are not of course the subject of the Motion today but they are directly related.
Article 2 of the order provides for the enforcement framework in Part 8 of the Enterprise Act 2002 to apply in relation to the regulations. This enables the relevant enforcement bodies to apply to the courts for enforcement orders against traders that have engaged, are engaging or are likely to engage in conduct that breaches the regulations, if that conduct harms the collective interests of consumers in the United Kingdom. Taken together, the regulations and this order will provide an effective enforcement regime in fulfilment of the directive’s requirements that adequate and effective means exist in national law to ensure compliance with the provisions of the directive and that penalties laid down for breaches of the directive are effective, proportionate and dissuasive.
Although the payment surcharges regulations implement an EU directive, Article 2 of the order specifies them as a domestic infringement rather than a community infringement for the purposes of the 2002 Act. This is because the obligations in the regulations take effect from April 2013, whereas the EU directive requires them to take effect only from June 2014. The order does not therefore strictly relate to infringements of EU law in the period up to June 2014. For this reason, and unlike the regulations, the order is subject to approval by both Houses of Parliament. I beg to move.