BIS consults early on the Consumer Rights Directive Ban on Excessive Charges

The Department of Business Innovation & Skills (BIS) is consulting on proposals to implement the excessive payment surcharges ban ahead of the 13 June 2014 deadline, which falls in line with the Government’s announcement back in December 2012 to take action following a Which? super-complaint made to the Office of Fair Trading (OFT).  The consultation closes on 15 October 2012.


The Consumer Rights Directive was adopted by the EU in October 2011 and the deadline for implementation by member states is 13 June 2014.  Article 19 of the Directive provides that “member states shall prohibit traders from charging consumers, in respect of the use of a given means of payment, fees that exceed the cost borne by the trader for the use of such means”.  This effectively prohibits excessive surcharges being levied to consumers, allowing traders to recover the cost of processing payments.

The Directive will apply to the sale of goods and supply of services contracts and to contracts for the supply of water, gas, electricity, district heating and digital content, including supplies by third sector and public bodies.

Following the super-complaint to the OFT, certain airlines have already agreed to change the way they impose surcharges to their customers for using debit and credit cards to pay for flights.

Whilst under the Government’s transposition guidance, early implementation of EU measures is not allowed, unless there are compelling reasons for it, the Government considers that there are compelling consumer protection and economic reasons for the early implementation of the Directive’s excessive surcharge ban and also notes that many other EU member states already have equivalent national legislation in place.

The Consultation

The Government proposes to use a statutory instrument to implement the ban with text being lifted from the Directive so far as possible.  The Consultation will close on 15 October 2012 and the Government’s response is due by 15 January 2013, though the Government has stated that, if it decides to proceed, it hopes to lay the order before Parliament before the end of 2012.

The consultation will focus on the following key issues:

  • Implementation date;
  • Meaning of “costs borne by the trader”;
  • Quantification of costs;
  • Enforcement;
  • Direct Debit discounts;
  • Off-premises transactions to a value of less than Euros 50;
  • Package travel;
  • Healthcare services provided by regulated professionals, social services and timeshare contracts;
  • Micro-enterprises.

BIS acknowledges that traders may choose to stop applying payment surcharges and instead increase their headline prices, but this will be left to competitive forces to bring the prices down.