Office of fair trading

Office of fair trading

The Fair Trading Act 1973 set up the office of Fair Trading (OFT) but is now comes under the Enterprise Act 2002.

The act's purpose is to promote fair trading, efficient markets, competition and the protection of consumers from unfair commercial practices. It deals also with restrictive practices and mergers.

The OFT is run by a chairman who reviews the whole consumer protection spectrum and acts as a kind of watchdog. It looks at consumer protection, measures, monopolies and uncompetitive practices. It has powers to assist and advise the Secretary of State and to propose new measures. It can also publish advice direct to consumers.

The Act is enforced at a local level by the trading standards authorities who have powers to make test purchases, enter premises and inspect and seize goods and documents.

The OFT looks at the broader issues rather than individual complaints.   Matters can be addressed to it by parliament or by members of the public but the main link between the OFT and the public is the network of Citizens Advice Bureaux.

 The OFT can consider complaints where it decides there is a prima facia evidence of an unfair trading practice in connection with the supply of goods or services including insurance relating to,

• the terms and conditions on which the goods and services are supplied;
• the manner in which the terms and conditions are communicated to consumers;
• the promotion of the supply of goods and services;
• the method of salesmanship employed;
• the way in which goods are packaged;
• The methods of demanding or securing payment for goods and services.

Provisions of professional services and complaints about prices do not fall within the act.   Whilst the act could cover insurance complaints they would normally be taken to the Financial Ombudsman’s Service under the FSMA 2000.

The OFT can investigate a complaint and if they think that the practice is unfair then they can put in a recommendation to the Government to restrict or prohibit the practice.   If the Government agrees it can decide what course of action is required.

Under the Act the OFT must try to protect consumers and get an assurance from any one doing a restrictive act, that they will decease from doing such act. If they can not get an assurance or the assurance once given is broken, then the OFT can prosecute.

The OFT also works with trade associations to encourage them in their work and to encourage the build up of good trade practices. The OFT also has powers in conjunction with the Competition Commission in monopolies and mergers.

In 1974 the OFT’s powers were extended so that they now deal with the supervision of the Consumer Credit Act.   The OFT now issues consumer credit licences. Which are required by all businesses providing or advising on credit.   If the OFT is not satisfied with the actions of a business it can revoke or suspend the licence.   A business can not act in this area without a consumer credit licence. Failure to have the correct licence is a criminal offence.

The OFT also has oversight of the unfair contract terms legislation and the Competition Act 1998.

The OFT must also keep the FSA rules and practices under review in respect of their effect on competition.   If the OFT think that the FSA’s rules prohibit for restrict competition then they can report to the Treasury, the Competition Commission and the FSA. The Competition Commission then review the report and report to the Treasury, the FSA and the OFT.   The Treasury, to whom the FSA report, can then decide what if any actions needs to be taken.