The Government first announced plans for a shared ownership right to buy in October 2019. At the time the sector raised concerns about the impact the plans would have on housing associations ability to borrow. An election and a pandemic later the Government announced, during the CIH Housing Festival last week, the return of the right to shared ownership as part of its Affordable Homes Programme (AHP).
Organisations working in the public and not-for-profit sectors are still required to comply with consumer protection legislation when they carry out for-profit tasks, even if their goods or services are provided for public benefit or at a discounted rate.
The European Court of Justice (ECJ) has confirmed the Advocate General’s recent opinion that a state-funded school, providing free education, is subject to the European Union’s rules on unfair contract terms where it supplied services for-profit.
A student was offered an interest-free loan (repayable over seven months) to pay her registration fees for the academic year plus the cost of student trips. The terms of the loan allowed the school to charge interest if the student defaulted on her monthly payments, at a rate of 10% from the date of default. The student missed a payment, and a summons was issued. The student claimed the term was unfair and challenged the enforceability of the interest payments.
One of the disputed issues was whether a free, educational establishment was caught by the consumer protections contained within Directive 93/13/EEC (the Directive).
The protections within the Directive apply where there is a contract between a “Seller or Supplier” and a “Consumer” for goods or services, which are offered for “purposes relating to trade, business or profession” and for remuneration. The school argued that as a state-funded school it was not acting in the course of a trade, business or profession. The school had also subsidised the total tuition fees payable by the student and so believed it was not caught by the Directive. The ECJ confirmed that the definition of “Seller or Supplier” is very broad and applies to the contractual arrangement between the parties, not the legal status of the person supplying the goods or services or how much they charge for the supply.
The ECJ confirmed that providing the student with the interest-free loan and the ability to pay in instalments was “complementary and ancillary to its educational activity”. The term was subject to the Directive and held to be unfair (and therefore unenforceable), owing to the distorted bargaining power between the school and the student.
Key points for charities, schools, public authorities and other organisations providing goods and services for a public benefit
The Consumer Rights Act 2015 (the Act) replaced the previous Unfair Terms in Consumer Contracts Regulations 1999 and translated the Directive in English law. It empowers consumers to expect, amongst other things:
- goods and digital content to be of satisfactory quality, fit for their particular purpose, and as described;
- services to be delivered with reasonable care and skill, for a reasonable price and within a reasonable time; and
- contract terms and notices to be fair.
Remedies are available to consumers if these requirements are not met and generally, a breach of the consumer protections within the Act will entitle consumers to:
- reject goods or services;
- a repair or replacement; or
- a price reduction or refund.
It is important to understand that charities, schools and other public-sector bodies are subject to the Act where they enter into a contract for activities provided in the course of their trade, business or profession. Consumer protections still apply, regardless of whether the goods or services are supplied by a not-for-profit organisation, in the public interest, as a ‘freebie’ as part of a purchased package or at a discounted rate.
For more information
If you have any questions on the issues raised in this article or would like to review your consumer contracts, contact Emma Watt.
 Karel de Grote Hogeschool – Katholieke Hogeschool Antwerpen VZW v Kuijpers (Case C-147/16) EU:C:2018:320 (17 May 2018)
 Please note that in certain circumstances providing credit or allowing individuals to pay in instalments may require authorisation from the Financial Conduct Authority.
 Generally, public education is provided as part of the State fulfilling a legal duty, rather than a supply of services.
 Please note that the Competition and Markets Authority takes the view that education providers (including those operating on a non-profit basis) must treat their students as consumers for the purpose of the Act - Page 12
 “Business” includes the activities of any government department or local or public authority (section 2(y) Consumer Rights Act 2015).
 Certain rights also exist where digital content is provided free of charge.
Two final pieces of the possession jigsaw have been published on 15 September 2020. Mr Justice Knowles’ working group on possession proceedings has issued its guidance on the “overall arrangements” for possession proceedings.
One change proposed by the Building Safety Bill is the introduction of a duty holder regime, which will see statutory responsibility for the safety of higher risk buildings placed on key individuals
Throughout this pandemic, the Competition and Markets Authority (CMA) has been publishing various “Statements on Coronavirus” (Statements) which provide guidance on consumer rights during this time.
A recent increase in COVID-19 cases in the UK means new measures are being put in place in an effort to reduce the risk of a second wave. Whilst the impact of COVID-19 continues to be felt, it is important to remain focused on the sector’s road to recovery.
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Following our recent e-briefing on Possession Notices, Helen Tucker and Emilie Pownall from our housing litigation team discuss the impact of the changes on social landlords.
Not only has the possession stay been extended until 20 September, the notice periods to be given to tenants has been extended in certain circumstances with some important exceptions.
The Court has confirmed that a party cannot withhold its consent in order to re-write the original bargain.
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