CMA to get new powers of enforcement

Business Secretary Kwasi Kwarteng has announced a major shake-up of the Competition and Markets Authority’s powers. 

The CMA has been instrumental in the drive toward greater pricing transparency for consumers and more recently has intervened in the leasehold ground rents scandal that has resulted in Aviva and Persimmon Homes announcing they would remove certain terms from its leasehold contracts which cause ground rents to double, and offer leasehold house owners the opportunity to buy the freehold of their home at a discounted price respectively.

The proposed changes will allow the CMA to fine companies directly for breaches of consumer law without going to court, including breaches of consumer law, misleading claims, unfair terms and conditions, and restrictive contacts

The fines could be as much as 10% of the company’s global turnover.

The reforms follow calls by the former CMA chair Lord Andrew Tyrie for enhanced powers to protect consumers and allow for more efficient enforcement against companies.

Lord Andrew Tyrie said that “radical reform of consumer protection in the UK is long overdue” welcoming the proposals as marking what “could be a big step in the right direction” but added that the devil was in the detail.

He said:

“These proposals were first developed over three years ago … and have been good to go in a detailed form for over two years.
“Only with the detailed proposals to hand can we assess how much the consumer will benefit, how soon and, above all, the depth of the commitment to cultural change at the top of the CMA and Whitehall required to make them effective.”

Companies will be offered the opportunity to make binding, voluntary commitments at any stage of the CMA’s investigations to speed up the process and lower costs.

Any company that fails to comply with CMA investigations may face fines of up to 5 per cent of annual turnover and additional daily penalties of up to 5 per cent of daily turnover while non-compliance continues.

A government official said:

“We want a modernised competition watchdog that sets a gold standard worldwide.

“That means new sanctioning powers and faster processes to protect consumers and help small businesses thrive.”

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