UK: Regulatory Outlook 2018: Focus on Consumer Products and Retail

Last Updated: 6 March 2018
Article by Ros Baston and Thuong Nguyen

In our recent blog – General Regulatory Outlook 2018, we pointed out that the "good corporate citizen" agenda is progressing and will be trending in 2018. This agenda will be even more relevant and topical for the consumer products and retail sectors who, partly due to their close and constant interaction with the public, are facing increasing investor and consumer pressure to act ethically.

At the same time, the digital era with the Internet of Things and other advances in products and services has brought a stream of new and revised regulations as governments try to protect consumers without hampering innovation.

We've pulled together the headlines on EU and UK developments, as a brief overview of what's coming up across certain key themes:

  • The good corporate citizen
  • Consumer protection
  • Product safety
  • Marketing & advertising
  • Other matters

If you're interested in an item, you can click through here for a little more information and a timeline.

The good corporate citizen – under the public gaze

Gender Pay Gap Reporting: Large private and voluntary sector employers (with >250 employees) are due to publish the first annual report on gender pay gap by 4th April 2018. The report may require employers to carry out a substantial audit of their workforce. Some companies have already published the report and they are attracting significant publicity.

Waste Management: Both the EU and the UK government have put considerable effort recently to commit to reducing waste and encouraging recycling. Key measures, such as the EU plastic strategy which will likely be adopted by the UK, may transform the way producers and retailers package their goods.

Modern Slavery Statement: As the supply chain of the consumer products and retail sectors can be complex and often opaque, companies should consider whether they have conducted adequate due diligence on their suppliers to meet their desired ethical standards as the second Modern Slavery Statements become due.

Consumer protection – a focal point in the digital era

Consumer Protection Directives: These won't have to be transposed into UK law as they won't come into effect before Brexit and the UK Consumer Rights Act 2015 is broadly aligned with the proposals, but any differences between the UK and EU law may result in increased compliance costs.

Payment Services Directive 2: This directive which came into effect on 13th January 2018, has an impact on a wide range of industries and sectors. Retailers, now banned from charging customers fees for the use of payment methods such as credit cards, may also need to notify the Financial Conduct Authority if they intend to use the exclusion for limited cards such as gift or fuel cards. Marketplaces / online platforms who connect buyers and sellers may no longer be able to use the commercial agent exclusion and need to either obtain a licence from the FCA or partner with an authorised payment service provider.

Geo-blocking Regulation: This is likely to apply only after Brexit, and will prevent online sellers from discriminating against customers from other EU countries.

Cross-border Parcel Delivery Regulation: Once this regulation comes into effect, parcel delivery providers (including retailers who operate an in-house delivery service) with more than 50 employees will have to provide clear information on prices and complaint procedures to their customers. They also need to report annually to the national authority on the number of employees, number of deliveries, etc.

Product safety – innovation under the spotlight

Novel Foods Regulation: From 1st January 2018, suppliers need to verify whether the goods they intend to place on the market may fall within the widened scope of the regulation.

Organic Products Regulation: This regulation is expected to take effect after Brexit. UK producers will need to comply if they want to export to the EU market.

Spirit Drinks Regulation: Spirit drinks produced and placed on the market after the application date (yet to be finalised) will need to conform with the updated requirements on labelling and the geographical indications registration procedures.

Personal Protective Equipment (PPE) Regulation: From 21st April 2018, manufacturers will need to issue a Declaration of Conformity with each PPE and obtain compulsory EU Type Examination Certificates which last for maximum 5 years.

Gas Appliance Regulation (GAR): Revises the current framework and expands the scope to include air conditioning, laundry and alternative fuel sources. This regulation will come into effect from 21st April 2018 with the exception of Article 43(1) on penalties, which will apply from 21st March.

Compliance and Enforcement Regulation: Not yet finalised - requires appointment of a responsible person and market surveillance for numerous non-food products to the EU.

Draft UK Code of Practice on Corrective Actions and Product Recalls: Businesses need to ensure they have a plan in place to ensure effective monitoring, assessment, notification and correction of unsafe products. This is expected to be finalised in early 2018.

Marketing & advertising – data at the heart of the business

Draft E-Privacy Regulation: Aligned to the GDPR, this has a wide impact on retail sector, marketing and website owners. It includes changes to cookie consents and direct marketing requirements where retrospective consent may be required for existing users. Date of finalisation has not yet been confirmed.

Ban on sexual portrayal of under-18s and Rule on gender stereotypes in ads (ban in place; consultation on rule expected in spring 2018): recent movements such as Time's Up or #MeToo have heightened public scrutiny and regulators' expectations on sensitive and controversial issues which might have been overlooked in the past. A bad reputation on these issues may cost companies far more than the investment lost in the advertisement production.

Other matters

Court ruling on distribution of luxury goods: A recent ruling by the European Court of Justice may support brand owners' requests to stop their distributors from using 3rd party online platforms, such as Amazon or eBay, as this practice may be seen as damaging to the luxury goods status.

EU Trade Secret Directive: Coming into force on 9th June 2018, this Directive may not be adopted by the UK government as the substance has already been broadly in line with existing UK law. However, any differences may have an effect on UK manufacturers and retailers operating in the EU.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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