Towards a new Law on Consumer Protection

1. Towards a new Law on Consumer Protection Prof. Th. Bourgoignie Team leader and Key Legal Expert September2013

2. Law on Consumer Protection of 2010 • Major step to provide consumers with a high level of protection while at the same time approximating Serbian consumer law to the EU Acquis. • Transposition of 15 EU Directives. • However, chapters on consumer institutions (whether State or non-State) and on enforcement remain by far too few, limited in scope and confuse.

3. IPA Project Strengthening Consumer Protection in Serbia Overall objective is to make the Law of 2010 better enforced and more effective: law in action vs. law on paper. Roadmap: • Defining policy goals and priorities = Strategy 2013-2018. • Strengthening the public institutional framework for consumer protection • Empowering private consumer organizations through increased cooperation among them and participation mechanisms • Designing effective enforcement and consumer redress tools • More active market inspection/surveillance • Making the law better known by all stakeholders (traders, judges, academics, etc.)

4. IPA Project Strengthening Consumer Protection in Serbia One common guideline: ALIGNMENT WITH • EU ACQUIS • and practice in EU member states.

5. Reasons why changes are needed 1. To ensure full compatibility with the EU Consumer Acquis Examples: • Contracts concluded at distance or off-premises (Art. 28 to 43 ) (EU Directive 2011). • Duty to inform the consumer (Art. 16 ) (EU Directive 2011). • Obligations relating to the time of delivery of products in sales contracts (Art.49)(EU Directive 2011) • Out-of-court resolution of consumer disputes (e.g., mediation schemes) (Art. 132 to 136) (EU Directive 2013). • Actions for an injunction for the protection of the collective interest of consumers (Art. 137 to 146) (EU Directive 2009/22 not fully transposed).

6. Reasons why changes are needed 2. To consolidate the Law on Consumer Protection • Bringing clarifications where practice shows that new concepts or wording remain confuse or misunderstood. Examples: Chapter 6 on sales contracts. • Obligation of the seller to guarantee that the product delivered is “in conformity with the contract” • Choice of consumer remedies in case of defective product (repair, replacement, refund) • Harmonizing definitions of some terms throughout the law (e.g., trader vs. seller)

7. Reasons why changes are needed 2. To consolidate the Law on Consumer Protection • <Umbrella> legislation =To confirm that the LCP prevails over sector legislation in case of contradictory provisions, except if the sector provision gives to the consumer a higher level of protection. Need to remove doubts about the application of the LCP to sectors such as financial services, telecommunications, services of general economic interest, transport, etc.

8. Reasons why changes are needed 3. To give concrete follow-up and clear legal basis to reforms announced in the National Strategy on Consumer Protection 2013-2018 and Action Plan Especially urgent with regard to: • Institutional changes • Enforcement tools • Role and coordination of consumer organizations

9. Reasons why changes are needed 4. Strengthening the public institutional framework for consumer protection policy • Centre for Resolution of Consumer Disputes (CRCD) NEW • Status: independent legal entity, public agency • Head: Director • Budget: • Staff, infrastructure and running costs: State budget • Additional resources from activities such as delivery of trainings, ADR/ODR monitoring, codes of conduct, % of compensation allocated in actions for an injunction, etc. • Consumer subaccount NEW: % of additional resources.

10. Reasons why changes are needed Centre for Resolution of Consumer Disputes (CRCD) • Main role is to contribute to the enforcement of the law while the Ministry Department for Consumer Protection remains the competent policy-making body. CPD capacity remains by far insufficient to meet all tasks under the Law. • 4 main areas: • Commercial practices • Terms in consumer contracts • Consumer complaints • Consumer disputes.

11. Reasons why changes are needed Centre for Resolution of Consumer Disputes (CRCD) • Main competences: • Monitoring the market with regard to unfair commercial practices and unfair terms in consumer contracts • Encouraging and participating to the development of codes of conduct with traders • Receiving, registering and handling consumer complaints + management of the Consumer Complaints Register (see below) • Conducting out-of-court resolution of consumer disputes

12. Reasons why changes are needed Centre for Resolution of Consumer Disputes (CRCD) • Certifying compliance of ADR schemes with the criteria set in the Law and implementing regulation. • Developing an on-line platform for the resolution of consumer disputes (ODR) • Initiating actions for an injunction • Organizing trainings for consumer protection stakeholders • Conducting education, information, advise and awareness raising activities.

13. Reasons why changes are needed Strengthening the public institutional framework for consumer protection policy • Increased role of local self-government bodies (NEW) • Consumer information, advice, education. • Support given to consumer organizations (providing facilities and/or equipment, funding projects, etc.). • Encourage consumer participation of consumer representatives to local decision-making bodies, incl. providers of services of general economic interest. • Support the establishment of out-of-court resolution schemes on their territory.

14. Reasons why changes are needed 5. Empowering consumer organizations and associations • Basic criteria applicable to ALL associations pretending to be consumer organizations (NEW): goals are to avoid deceptive claims and to enhance credibility of/trust in consumer movement. 4 criteria: • Associations registered in Business Register Agency • Targeted area is consumer protection • Not-for-profit organizations • Independent from traders and political parties

15. Reasons why changes are needed Empowering consumer organizations and associations • Additional conditions applicable to these associations willing to register by the Ministry In order to: • Apply for funds from State budget in the course of public calls • Initiate actions for an injunction • Participate to the Assembly of consumer organizations and associations (see below) and, if designated by the Assembly members, to the National Council for Consumer Protection. • Represent consumers in front of State bodies.

16. Reasons why changes are needed 3 additional conditions: • Being active for at least 1 year (NEW) • Having adequate experience, expertise and skills • Submitting annual reports to the Ministry

17. Reasons why changes are needed Empowering consumer organizations and associations • Promotion of Consumer Associations (CAs) (NEW) • Goal is to enhance joint cooperation and joint activities among COs, to encourage the building of networks , and to enable participation of non-registered COs. • <Association> • Regroups at least 10 consumer organizations • More than half of member organizations must be registered. • Associations may register under the same conditions as COs

18. Reasons why changes are needed Empowering consumer organizations and associations • Setting-up the Assembly of COs and Cas (NEW) 2 purposes: • To strengthen the voice of the consumer movement • Will enhance coordination and cooperation among registered COs and CAs. • Will increase the responsibilities of COs and CAs as they will decide about the organization and operation of the Assembly. • Will increase the participation of consumer representatives to the decision-making process through consultation

19. Reasons why changes are needed • To enhance transparency in governance by involving COs and CAs in the designation of their representatives in the National Council for Consumer Protection (1/3 members must represent consumers).

20. Reasons why changes are needed Empowering consumer organizations and associations • Increasing financial support to COs and CAs through the Center’s Consumer Account (see above) (NEW) • Allowing for compensation requests in the course of actions for an injunction (see below) (NEW)

21. Reasons why changes are needed • Making law enforcement more effective (= EU priority) • One new institution: Centre for Resolution of Consumer Disputes(see above) (NEW) • One new knowledge-based policy tool: Consumer Complaints Register (NEW - operational by November 2013): nation-wide web-based system for collecting, registering and handling of consumer complaints and enquiries (in compliance with EU Acquis = ECCRS).

22. Reasons why changes are needed Making law enforcement more effective • Broader scope of intervention of Market Inspectorate: ALL infringements of the LCP vs. 1/3 currently (NEW, in compliance with EU Acquis) • Out-of-court resolution of consumer disputes promoted (NEW, in compliance with EU Acquis) • Common set of criteria defined for out-of-court schemes involved in the resolution of consumer disputes (to ensure that such schemes are consumer-friendly) (NEW, in compliance with EU Acquis)

23. Reasons why changes are needed Making law enforcement more effective • Market Inspectorate given legal standing to bring actions for an injunction (NEW, in compliance with all MS practice) • Exclusive competence to deal with injunctions given to commercial courts (higher expertise in trade affairs, increased efficiency, fair justice) (NEW, in compliance with all MS practice) • Possibility given to the judge to order the trader against whom an injunction was delivered to compensate the claimant for the damage caused to the collective interest of consumers (NEW, EU initiatives; several MS practice).

24. Reasons why changes are needed Making law enforcement more effective • Possibility for the judge to impose fines in case of non-compliance with an injunction order (NEW, in compliance with all EU MS practice) • More deterrent criminal penalties (NEW, in compliance with all EU MS practice)

25. Conclusion: Advantages of adopting a new Law • Number of needed changes by far exceeds 50% of current law. • Obligation to make the law fully compatible with EU Acquis and in line with MS practice. • High demand from public opinion and media for making consumer protection under the law more effective. • High expectations from COs for clear criteria regarding their independence and representativeness and for increased participation • High expectations from EU regarding the strengthening of State institutions in charge of consumer protection, more vigorous enforcement and better organized consumer movement. • Public debate on first set of amendments clearly concludes to the demand for a new law. • Consensus among all stakeholders, including traders.

26. Action Plan between now and mid-December 2013 • Strategy : approved 2. Institutional reforms: 4key measures: • Center for Resolution of Consumer Disputes ( in new LCP) • Internal reform within Ministry in order to strengthen the CPD: • Coordinate Center and CPD • Increased resources in law. • Promoting Cas(in new LCP) • Assembly of COs and Cas(in new LCP)

27. Action Plan between now and mid-December 2013 3. More vigorous enforcement: 5 key measures: • CCR (in new LCP) • ADRs network (in new LCP) • Broader scope of competences of Market inspectorate (in new LCP) • Actions for an injunction: COs, Market inspectorate, Center (in new LCP) • More deterrent penalties (in new LCP)

28. Action Plan between now and mid-December 2013 4. Law changes: = to give legal basis to all new actions described here above. • Draft new LCP approved by Government • EU compatibility 5. <Go public>: • Press campaigns (Ministry + IPA Project) • Minister’ s participation to some key events organized by IPA project, including End conference • Enhancing support from other line ministries and State bodies (ex. Justice, Economy, Local self-governments)

29. Action Plan between now and mid-December 2013 6. Close cooperation between IPA project and Ministry team/cabinet.