Member Article

The Provision of Services Regulations 2009 (Regulations) came into force on 28 December 2009 and created new obligations for service providers.

The Regulations stem from the EU Services Directive (Directive), which aims to simplify regulatory and administrative procedures in relation to establishing and carrying on services in the EU, thereby encouraging more services to be provided on a cross-border basis.

Whilst most of the requirements of the Directive fall on the member states themselves, there are a number of obligations which apply directly to service providers in relation to making certain information available to customers, complaints handling and abiding by the principles of non- discrimination in the provision of services.

What is a relevant service?

A 'service' is defined as 'a self employed economic activity normally provided for remuneration and which is not a contract for employment'. The activity could be industrial or commercial in nature and includes a craft or the activity of a profession. Remuneration is interpreted widely and includes payments in kind.

Who is caught?

Subject to the excluded categories of services set out below, the Regulations apply to all service providers offering or providing relevant business-to-business and/or business-to-consumer services in the UK, whether they are of UK origin or from another EEA state.

However, the provisions of the Regulations which impose duties on service providers apply to all relevant service providers offering or providing relevant services in the UK, regardless of where they are established.

The following categories of services are excluded from the scope of the Regulations:

• financial services
• electronic and communications services and networks
• transport services
• services of temporary work agencies
• healthcare services
• audiovisual services (including cinemas and broadcast services)
• gambling services
• activities connected with the exercise of official authority
• social services
• private security services
• services provided by notaries and bailiffs
• services relating to taxation
• non-economic services of general interest

In addition, the Regulations do not affect the manufacture or sale of goods. However, there are a raft of ancillary services to which the Regulations could apply. For example, post manufacturing servicing and support.

What are the benefits to businesses?

The main benefits for service providers appear to be a reduction in red-tape, and an easier process for expanding into the EEA.

For example, service providers will have the benefit of a Point of Single Contact (PSC) in each member state to which they can apply for the necessary authorisation to operate. Service providers in the UK who wish to expand into the EEA can find the PSC for the relevant country through www.businesslink.gov.uk. Once there they will be able to determine what rules and regulations will apply to them and access all licences required for their expansion.

Competent authorities (those bodies with a regulatory or supervisory role over the provision of services, such as professional bodies like the Solicitors Regulatory Authority, or a central or local government authority) within the EEA are only permitted to impose conditions on service providers that are justifiable against specified and restricted criteria.

Member States must ensure information is readily available by electronic means for consumers on rights and redress when buying services cross-border. In the UK this information is being provided by the European Consumer Centre for Services (www.ukecc-services.net) run by the Trading Standards Institute.

What must you do?

Provision of information

From 28 December 2009 every qualifying service provider must make the following information available to customers in a clear and unambiguous manner, and in good time before the contract for the services is concluded (unless it is information which a customer has requested after the contract has been concluded):

• its name, address, legal status and contact details
• details of the trade registrations it holds or is required to hold
• where there is an authorisation scheme, details of any relevant competent authority or PSC
• its VAT identification number
• details of any regulating body, if it is a regulated profession
• the terms and conditions applicable to the provision of its services, including those relating to jurisdiction, after sales guarantees, prices that are pre-determined by it, main features of the services and professional guarantees or insurance
• details of any applicable non-judicial dispute resolution procedure which it is subject to as a member of a trade or professional body

This information can be made available to customers by any one of the following means:

• supplied on the service provider's own initiative
• made easily accessible at the place where the services are provided
• made easily accessible electronically by means of a website address
• included in any information documents that it uses to describe its services, such as terms and conditions documents or marketing materials

In addition, the following information must be provided to customers if requested:

• information on prices that are not pre-determined, or the method used to determine the price or a sufficiently detailed estimate
• any professional rules applicable to the services and where to access them
• information on other activities undertaken by the service provider which are linked to the service (if any) and measures taken to avoid conflicts of interest between the two activities
• details of any codes of conduct to which the service provider is subject, along with the website address where they can be viewed

The Regulations also require you to provide certain information to a competent authority in relation to any application for authorisation and after the authorisation has been granted.

Complaints procedures

Under the Regulations you must:

• supply contact details to which all customers in any member state can send complaints or a request for information
• respond to complaints as quickly as possible and use your best efforts to find a satisfactory solution to any complaint
• inform complainants of any non-judicial means of dispute resolution open to them via your trade association or professional body

Non-discrimination

Your general conditions of service must not include any provisions which discriminate against customers on the basis of their nationality or place of residence (unless objectively justifiable).

Risks of non-compliance

Similar to other consumer legislation, the OFT and Local Authority Trading Standards will take action against breaches which harm the collective interests of consumers. For example, by applying for an enforcement order to stop the breach, failure to comply with which could lead to fines and imprisonment.