After a lengthy consultation process, the Chartered Trading Standards Institute (‘CTSI’) has today published its ‘Guidance for Traders on Pricing Practices’ (‘the new Guidance’). The new Guidance replaces the Department for Business, Innovation and Skills (‘BIS’) Pricing Practices Guide (‘PPG’), which was published in November 2010.
The origins of the new Guidance date back to 1988, when the ‘Code of Practice for Traders on Price Indications’ (‘the 1988 Code’) was approved by the Secretary of State. The 1988 Code was made under s. 25 of the Consumer Protection Act 1987, which provided for a statutory code of practice on pricing. Whilst contravention of the 1988 Code did not of itself create liability, breach of or compliance with the 1988 Code was admissible in enforcement proceedings.
The 1988 Code was replaced by the Department for Business, Enterprise and Regulatory Reform (‘BERR’) Pricing Practices Guidance in 2008 (‘the BERR PPG’), when the Consumer Protection from Unfair Trading Regulations 2008 came into force. Unlike its predecessor, the BERR PPG was not statutory. The same was true of the BIS PPG, which effectively republished the BERR PPG under a different name in November 2010.
In 2013 the CTSI was tasked with updating the BIS PPG. A widespread consultation ensued, culminating in today’s publication of the new Guidance.
Status of the new Guidance
The new Guidance expressly states that its aim is to provide practical guidance to traders; it does not set out a strict and comprehensive regulatory code. Compliance with or breach of the new Guidance will not automatically determine liability.
The new Guidance focuses on seven key areas:
- Reference prices (which include introductory/after-promotion prices, recommended retail prices (RRP), comparisons to a competitor’s price, comparison with prices in different circumstances)
- Time limited offers
- Volume offers
- Use of the word ‘free’
- Additional charges (fixed, variable and optional)
- ‘Up to’ and ‘from’ claims
In some areas, the new Guidance helpfully provides illustrative examples of practices that are more, or less, likely to be compliant.
The most important change, however, is the absence of the so-called ‘28-day rule’ (whereby a trader that wanted to claim a price saving could only do so if the goods had been marketed at the higher price for a minimum of 28 days). The rule had its origins in the Trade Descriptions Act 1968 and proceeded to find its way into each pricing practices guide issued thereafter (albeit in a somewhat diluted form). The new Guidance simply advises a trader to consider a number of factors, including “How long was the product on sale at the higher price compared to the period for which the price comparison is made?”
The approach of the new Guidance accords with the underlying legislation, which requires each case to be assessed on its own merits. There are no hard-and-fast rules and each factor (e.g. the duration of price establishment) will need to be considered alongside others.
The new Guidance is available here.