Is It a Bird? Is It a Plane? No, It’s a Super-Complaint!

I was recently asked by my boss to prepare a short paper on the functioning of “Super Complaints” as a form of consumer protection enforcement in the UK. This was of particular interest as many regulatory systems, as well as many academics (particularly in Germany), primarily see private law as the main vehicle for consumer protection. Private law, simply put, regulates the relationships between private legal persons, and does not (generally) include the State as a party to the relationship. Consumer protection is most often achieved through standard contract law, as well as some special laws adding extra protection for consumers in contracts which are deemed “consumer contracts”. These protections tend to consist of extended rights to rescind, extra obligations to provide information, extended periods for returns and warranties, stricter regulations against unfair contract terms, and many more weird and wonderful additions to standard contract law. At the end of the day, under this system, if an unfair deal has been struck between a manufacturer or seller and a consumer, the consumer will be able to remedy it through private contract law on an individual basis, and even en masse in certain cases such as class action suits, etc.

The other way, of course, to regulate any area of human endeavor is through public law – which broadly comprises of constitutional law, administrative law, tax law and criminal law, as well as all procedural law, but for our purposes covers public/semi-public/governmental/quasi-governmental bodies and governmental steps taken to regulate particular markets. But of course, broad mandates like consumer protection and market regulation are too unwieldy for any one body to supervise in any great detail and thus there are a number of smaller authorities, interest groups and various public and private bodies who fulfill these functions more specifically for the various relevant markets, be it consumer sales, public utilities, finance markets, competitiveness in the ostrich meat market, etc. Sadly, these more focused bodies often lack the authority to really make a difference when someone, some group or some trend throw a spanner in the works, and it is here that our hero the Super Complaint comes in. Designation as a super complainant allows a body to send their worries further up the chain of command, in the hopes of a more concrete solution.

The Hero of Public Law Enforcement of Consumer Protection

A Super Complaint, as defined in section 11(1) of the UK’s Enterprise Act 2002, is a complaint submitted by a designated consumer body that “any feature, or combination of features, of a market in the UK for goods or services is or appears to be significantly harming the interests of consumers”.[1] The text of the whole sections reads thus:

11 Super-complaints to OFT

(1)This section applies where a designated consumer body makes a complaint to the OFT that any feature, or combination of features, of a market in the United Kingdom for goods or services is or appears to be significantly harming the interests of consumers.

(2)The OFT must, within 90 days after the day on which it receives the complaint, publish a response stating how it proposes to deal with the complaint, and in particular—

(a)whether it has decided to take any action, or to take no action, in response to the complaint, and

(b)if it has decided to take action, what action it proposes to take.

(3)The response must state the OFT’s reasons for its proposals.

(4)The Secretary of State may by order amend subsection (2) by substituting any period for the period for the time being specified there.

(5)“Designated consumer body” means a body designated by the Secretary of State by order.

(6)The Secretary of State—

(a)may designate a body only if it appears to him to represent the interests of consumers of any description, and

(b)must publish (and may from time to time vary) other criteria to be applied by him in determining whether to make or revoke a designation.

(7)The OFT—

(a)must issue guidance as to the presentation by the complainant of a reasoned case for the complaint, and

(b)may issue such other guidance as appears to it to be appropriate for the purposes of this section.

(8)An order under this section—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(9)In this section—

(a)references to a feature of a market in the United Kingdom for goods or services have the same meaning as if contained in Part 4, and

(b)“consumer” means an individual who is a consumer within the meaning of that Part.

The Super Complaint process is intended to be a fast-track system for designated consumer bodies to bring market features that appear to be significantly harming the interests of consumers to the attention of the OFT and the various other named “Regulators”. However, the Super Complaint is very much an instrument of consumer protection rather than just a general tool of market regulation and given the definition of consumer outlined in the Section and the guidelines issued on Super Complaints, Super Complainants assessing the impact of a market feature should focus on the effect on end consumers and not business intermediaries.[2]

The idea of a super complaint is that they are “clear indicators of mass consumer detriment”, and, such as in the area of financial markets, that “[a] super-complaint is about market structures, a section of a market or firms’ conduct in that market brought by an appointed consumer body on behalf of consumers”. As mentioned above, the complaint should not be about any one firm in particular, but rather about a generally detrimental, or potentially detrimental trend. Consumers collectively “[…]do not often have access to the kind of information necessary to make a judgement about market failure”.[3] The super complaint system has also been adopted in other jurisdictions; in fact, the government of New South Wales specifically based their system on the UK experiences with super complaints;

On 7 June 2011 the Minister for Fair Trading announced that NSW Fair Trading and consumer group CHOICE would pilot an 18 month ‘Super complaints’ project.

The project will allow CHOICE to present evidence to NSW Fair Trading that a feature of a market for consumer goods or services is, or appears to be, significantly harming the interests of consumers. Fair Trading will then research and assess the issue and report on actions that may be taken to address the issue.

This project is based on a super complaints system operating successfully in the United Kingdom.[4]

Some have even campaigned for the introduction of some procedure for super complaints regarding public services and not just for private markets.[5]

The Origin Story of Super Complaints in the UK

Super Complaints even under the Enterprise Act 2002 were not simply restricted to the Office of Fair Trading (OFT), but rather “[…]to the Office of Fair Trading (the OFT), the Director General of Telecommunications , the Gas and Electricity Markets Authority, the Northern Ireland Authority for Energy Regulation, the Director General of Water Services, the Rail Regulator and the Civil Aviation Authority (the Regulators)”, many of which have however had their functions moved to other bodies in the meantime.[6] Though it should be noted that “The Regulators” did not always have the same levels of duties as the OFT. For example;

The OFT is required by section 11(7) of the EA02 to issue guidance as to the  presentation by the complainant of a reasoned case for the complaint. The  Regulators do not have this duty but to facilitate a consistent approach this  guidance has been published by the OFT after consultation with (and  endorsement by) the Regulators through the CWP as Guidance for designated  consumer bodies making super-complaints. [7]

Super Complaints have also specifically been introduced for the financial markets in the UK under the Financial Conduct Authority FCA.[8]  The Financial Services and Markets Act 2000 (FSMA) provides that certain consumer  bodies may complain to the Financial Conduct Authority (FCA) about features of a  market for financial services in the UK that may be significantly damaging the  interests of consumers. The Government first issued guidance for bodies seeking designation as super complainants and then received and ultimately approved the newly appointed bodies which can make super complaints to the FCA:[9] Consumer Council Northern Ireland, Citizens Advice, The Federation of Small Businesses and Which? It was seen as important that the Super Complaints system be expanded to areas in which the OFT has either little to no authority, or even where it has concurrent but perhaps less relevant authority; “In the past, super-complaints about financial services could only be made to the Office of Fair Trading, which does not have as wide a remit as the FCA when it comes to financial services.”[10] These work very similarly to the OFT Super Complaints, but have been dealt with separately by the FCA and will continue  to do so in light of the newly established Competition and Markets Authority (CMA).

The Enterprise Act 2002 for the most part regulated how the old OFT Super Complaints procedure worked. The OFT issued guidance on how super complaints were to be presented and handled; “Section 11(7) of the Enterprise Act 2002 (the Act) also places upon the OFT a duty to issue guidance as to the presentation by the complainant of a reasoned case for the complaint.”[11] The O.F.T. was the S.H.I.E.L.D. (okay, to those of you who know your super heroes, I’m mixing metaphors here somewhat) to our particular super hero. The “Office of Fair Trading” (OFT), mentioned repeatedly above, was the body primarily in charge of consumer protection in the UK until the beginning of April this year (more on this later), and although it has recently been replaced, the process for filing and dealing with super complaints remains central to any analysis of the functioning of super complaints in the UK, as well as to their continued functioning under the new body.

The Secretary of State for Business, Innovation and Skills can designate certain bodies which represent consumers to make super-complaints. Super-complaints can be made to the OFT by a designated consumer body when it thinks that a feature, or combination of features, of a market is, or appears to be, significantly harming the interests of consumers.

The OFT considers the evidence submitted and undertakes whatever work is necessary to establish the extent, if any, of the alleged problems. The OFT must then publish a response within 90 days from the day after which the super-complaint was received stating what action, if any, it proposes to take in response to the complaint and giving the reasons behind its decision.

In some cases, it may be possible to resolve the concerns and propose remedies within the 90-day period but, in more complex cases, further work may be called for. This can be undertaken as part of a market study by the OFT, by referring the market to the Competition Commission for further investigation, or by any other action available to the OFT.[12]

Some of the bodies which could raise super complaints to the OFT were; The Consumers’ Association, National Consumer Council and Citizens Advice, which were designated in July 2004; Energywatch and the Consumer Council for Water were designated in January 2005; Postwatch, CAMRA and the General Consumer Council of Northern Ireland were designated in October 2005.[13]The OFT also compiled yearly reports, including lists of the super complaints they received that year and how they dealt with them.

Super-Model: The Oft Super Complaint Procedure

The following is a more concise description of the exact model used by the OFT for processing super complaints:

  • Be a designated body or apply for status as a designated body

The designated bodies could either be those set out from the start, or any such bodies as fulfilled the criteria and were later appointed Super Complainants by the relevant Secretary of State.

  • Make a complaint about a relevant market feature

The complaint must fulfill the various criteria to be accepted as a Super Complaint, such as evidence of detriment or potential therefor to the market in a way which could disadvantage consumers.

  • Provide evidence that it merits further investigation

“Super complainants are not expected to provide the level of evidence necessary for the OFT or a Regulator to decide that immediate action is appropriate. However, they should present a reasoned case for further investigation. Complaints that are, or that appear to be, frivolous or vexatious will be rejected.”[14]

  • The OFT will examine the complaint and get in contact with the complainant

The super-complainant will be contacted within five working days to acknowledge receipt and let them know if the complaint will be investigated further and, if so, who within the OFT will be the main contact during the 90 day period. The OFT will investigate the contents of the complaint in more detail to see if it meets the criteria set out in section 11. “All the criteria contained in section 11(1) must be satisfied for the complaint to receive super-complaint status.”[15]

  • The OFT will request clarification or further information, or obtain it themselves

“Where a request for clarification or further information is made, the super-complainant will be given a set time in which to respond to such a request. If it fails to do so, the team may consider making a formal response that no action will be taken with regard to the complaint. It is not possible to extend the 90 day response time if the complainant is not able to respond within the set time.”[16]

  • The OFT will carry out wider enquiries and investigations

Their methods will be determined on a case by case basis but may involve: internal research, public requests for information, approaching any relevant businesses or trade associations for information, approaching consumer organisations, trading standards departments, government departments and/or other public bodies for information, or any other necessary action.[17]

  • The OFT must publish a public response within 90 days

“Super-complaints will be given fast-track consideration. Those with the duty to respond to super-complaints are required to publish a reasoned response within 90 calendar days from the day after a complaint is received”, by virtue of section 11(2) of the Act.[18]

  • Enforcement Action may be taken by the OFT

“The possible outcomes of a super-complaint include:

o   enforcement action by the OFT’s competition or consumer regulation divisions

o   finding that another authority with concurrent duties is better placed to deal with the complaint

o   launching a market study into the issue

o   making a market investigation reference to the Competition Commission (CC) if there is a competition problem

o   action by a sectoral regulator with concurrent duties

o   referring the complaint to a sectoral regulator without concurrent duties

o   referring the complaint to the OFT for action (if the complaint was sent to a regulator with concurrent duties)

o   referring the complaint to another consumer enforcement body

o   finding the complaint requires no action

o   finding the complaint to be unfounded

o   dismissing the complaint as frivolous or vexatious:”[19]

The Rise of the Competition and Markets Authority

As of April 1 2014, the OFT and Competition Commission have merged to form the all-powerful “Competition and Markets Authority”, or the “CMA”. (It is at this point that I feel ashamed for letting my, albeit inconsistent and fair weak, attempts to make super hero comparisons fall by the wayside and am accordingly tempted to equate the CMA with Hydra.[20] Bear with me now, this comparison doesn’t make sense for a number of reasons, the most notable of which being that S.H.I.E.L.D. was set up as a response to Hydra and therefore temporally came after and not before that organisation, making it an inappropriate comparison for the OFT and CMA. Secondly, as it obvious from the first point, S.H.I.E.L.D. and Hydra were at direct odds with each other, rather than working towards the same goal, which once again makes this an inappropriate analog for the OFT and CMA. HOWEVER, in the interest of shoe-horning unnecessary metaphors into this discussion, I will draw from more recent work which some may consider non-canon, which is the TV show Agents of S.H.I.E.L.D., in which recently, as a tie in with the events of Captain America: The Winter Soldier, just featured a storyline in which Hydra had infiltrated all echelons of the S.H.I.E.L.D. heirarchy and attempted to “take over” S.H.I.E.L.D. in effect. Therefore, I argue that in this small way we can draw a comparison between Hydra taking over  S.H.I.E.L.D.’s assets and organisation, however briefly and incompletely, with the CMA’s assuming of many of the functions and powers of the now defunct OFT. Why would I bother writing a whole paragraph attempting to justify this admittedly weak and strained comparison? Because I felt I had written far too much seriousness in the above paragraphs, and needed a break. But lest it become too silly,[21] we shall now proceed…

The CMA was established under the Enterprise and Regulatory Reform Act 2013 and officially came into being as a sort of shadowy body in the background (See? the Hydra comparison occasionally works) in October 2013. It first took on its full powers and responsibilities, such as competition law enforcement, market studies and investigations, and merger control, however in April of this year. As part of a wider move to centralize all UK government web resources the CMA’s website can now be found under its GOV.UK heading at www.gov.uk/cma . One of the downsides of this centralization is that the information to be found on the website is no longer all that specific to the CMA, which is exacerbated by the newness of the body. As such, much of the information provided it old OFT information, with notes to amend certain words and phrases to reflect the new regime, such as their guidance on “How consumer bodies can make super complaints”.[22] The CMA did however in April publish a list of its current cases and investigations, though not specifically for super complaints.[23]

On 1 April 2013, local authority Trading Standards Services took on the lead role in enforcing consumer protection law, including at the national level. The OFT, and from 1 April 2014 the CMA, retains powers to enforce consumer law, with lead responsibility on unfair contract terms, using them to tackle widespread practices and market conditions that make it difficult for consumers to exercise choice or to seek out the best deal – for example, where consumers are prevented from switching suppliers by unfair contracts or where misleading pricing practices are widely used. On 1 April 2014 these powers transferred to the CMA.[24]

A number of sectoral regulators  shared concurrent competition and consumer powers with the OFT, and continue to share these powers with the CMA. These include Ofcom, Ofgem, the Office of the Rail Regulator, OFWAT, the Civil Aviation Authority, the Financial Conduct Authority, the Utility Regulator of Northern Ireland (URegNI) and Monitor (competition powers only).[25] Some of the foundational principles of the CMA are set out in their “Vision, values and strategy for the CMA” and  “Prioritisation principles for the CMA” documents, which are available online. Some examples of the continued role of Super Complaints within the CMA are:

Strategic choices

2.21 Some of the CMA’s work does not allow it discretion; for example it has a duty to investigate qualifying mergers that meet the relevant statutory tests, to undertake market investigations referred by sector regulators and regulatory appeals, and to consider and respond to supercomplaints within 90 days.”[26]

Prioritisation principles for the CMA

“2.4 In some cases we have a legal duty to act once certain relevant circumstances have materialised. For instance:

• once we have received a ‘super-complaint’ from a designated consumer body we must respond to this within 90 days “[27]

The CMA has also added more direct ways to report anti-competitive or market issues regarding competition law, consumer law or mergers directly to the CMA, with a form which can be downloaded on their website.[28] At the moment there is little information on the CMA website dealing directly with super complaints or how the procedure might change under new management, but presumably it will continue as before for the foreseeable future, with the addition of some powers and functions to the CMA and further similar systems such as the direct reporting form found of their website.

Conclusion

All in all the Super Complaint procedure has proven both effective as well as certainly popular as an instrument for the protection of consumer welfare in the UK.[29] As evidenced by its numerous and detailed reports on complaints received and measures taken, the duty imposed on oversight bodies such as the OFT, FCA and CMA to reply to such complaints have made the system both effective and respected by the relevant designated consumer bodies as well as by the public itself. The adoption of such systems within the FCA, its continued use by the CMA and the adoption of similar procedures around the world speak to the success of the super complaint as an effective tool of consumer protection.

And finally, to continue with the completely inconsistent references to nerdy humour;

May the Fourth Be With You,

~ Shane

PS: Some of you might have noticed the odd choice of a caped Imperial Storm Trooper as the featured image for this post, and yes, you deduced correctly, it is both a reference to Superman and superheroes in general, as well as the fact that today is May 4th, aka Star Wars Day.

Photo Credit: JD Hancock via photopin cc


 

[1] Full text of the UK’s Enterprise Act 2002 can be found here; http://www.legislation.gov.uk/ukpga/2002/40/contents

[2] The Office of Fair Trading, “Super Complaints: Guidelines for Designated Bodies”, July 2003, Para 2.4,  https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284441/oft514.pdf

[3] Huntswood Blog, “Shifting power? FCA s.234C super-complaints”, February 2014, http://blog.huntswood.com/2014/02/25/shifting-power-fca-s-234c-super-complaints/

[4] See Fair Trading NSW, “Super Complaints”, http://www.fairtrading.nsw.gov.au/ftw/About_us/Our_compliance_role/Our_compliance_priorities/Super_complaints.pageand in more detail and for an example for electricity switching sites, http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Problems_with_electricity_switching_sites.pdf

[5] Which?, “Complaints must count in public services”, March 2014,

http://press.which.co.uk/whichpressreleases/complaints-must-count-in-public-services/

[6] Supra note 2, Para 1.1,

[7] The Office of Fair Trading, “Super Complaint concurrent duties”, November 2003, http://www.oft.gov.uk/shared_oft/business_leaflets/enterprise_act/oft548.pdf

[8] Supra note 3,

[9] HM Treasury, “Guidance for bodies seeking designation as super-complainants to the Financial Conduct Authority “, last updated July 2013, https://www.gov.uk/government/publications/guidance-for-bodies-seeking-designation-as-super-complainants-to-the-financial-conduct-authority

[10] Rupert Jones, “Which? given extra powers to expose financial sector wrongdoing”, The Guardian, December 2013, http://www.theguardian.com/money/2013/dec/19/which-consumer-groups-super-complaint-financial-conduct-authority

[11] Supra note 2,

[12] The Office of Fair Trading, “Super Complaints”, available at http://www.oft.gov.uk/OFTwork/markets-work/super-complaints/#.U1_cYFWSwud

[13] Department for Business, Innovation & Skills, “Super Complaints”, July 2008 (archived page), http://webarchive.nationalarchives.gov.uk/+/http://www.berr.gov.uk/consumers/enforcement/super-complaints/page17902.html

[14] Supra note 2, Para 2.12,

[15] Ibid, Para 2.16-17,

[16] Ibid, Para 2.20,

[17] Ibid, Para 2.22,

[18] Ibid, Para 2.15 and 2.24,

[19] Ibid, Para 2.25,

[20] “Hail, Hydra! Immortal Hydra! We shall never be destroyed! Cut off a limb, and two more shall take its place! We serve none but the Master—as the world shall soon serve us! Hail Hydra!”

—The Hydra Oath from Strange Tales #135 (Aug. 1965)

[21] “Monty Python Precision Drilling” http://youtu.be/25Qhbdijv5Y

[22] The Competition and Markets Authority, “How Consumer Bodies Can Make Super Complaints”, March 2014, https://www.gov.uk/government/publications/how-consumer-bodies-can-make-super-complaints

[23] See; https://www.gov.uk/cma-all-cases

[24] The Office of Fair Trading, “OFT’s work and responsibilities after 31 March 2014”, available at; http://www.oft.gov.uk/about-the-oft/work-and-responsibilities#.U2EBGoGSwuc

[25] Ibid,

[26] The Competition and Makets Authority, “Vision, values and strategy for the CMA”, January 2014, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/274059/CMA13_Vision_and_Values_Strategy_document.pdf

[27] The Competition and Makets Authority, “Prioritisation principles for the CMA”, April 2014, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/299784/CMA16.pdf

[28] The Competition and Markets Authority, “Report anti-competitive or market issues to the CMA”, April 2014, https://www.gov.uk/government/publications/report-anti-competitive-or-market-issues-to-the-cma

[29] Supra note 5,

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s