CMA handed new powers to fine firms who have broken consumer law

Tough new powers have been handed to the Competition and Markets Authority (CMA) to fine firms that have broken consumer law.

Plans announced today by Business Secretary Greg Clark reveal that firms that overcharge or mislead their customers could be hit with direct fines without the need to go to court.

The government said the measures were designed to help tackle bad practice, including the imposition of unfair terms on care home residents.

The CMA announced in February that it had launched legal action against Care UK over upfront fees as part of its probe into the care home sector (see BREAKING NEWS: CMA launches legal action against Care UK over upfront fees). While Care UK has stopped charging the fee it has refused to refund any residents.  The care home provider said there was no evidence that its residents had been disadvantaged or that its fees had breached consumer law.

The CMA also secured £2m in compensation for Sunrise Senior Living residents last year as part of an investigation into compulsory ‘upfront’ fees (see CMA secure £2m in compensation for Sunrise residents).

Speaking on today’s announcement, Prime Minister Theresa May, said: “For far too long, many big companies have been getting away with harmful trading practices which lead to poor services and confusion among customers who have parted with their hard-earned cash.

“The system as it stands not only lets consumers down but it also lets down the vast majority of businesses who play by the rules.

“It is high time this came to an end and today we are confirming our intention to give much stronger powers to the CMA, to strengthen the sanctions available and to give customers the protection they deserve against firms who want to rip them off.”