07 September 2016

In July 2016, the Government published its 'Response to Consultation' on application of the Consumer Rights Act 2015 (CRA) to rail. Subject to one temporary exemption, it concluded that rail should become subject to the full CRA regime from 1 October 2016. The DfT had previously stated that a further exemption would be granted "to allow time for TOCs to consider how existing compensation arrangements can be improved to better reflect the rights granted by the Consumer Rights Act 2015" and stated that "Whilst the exemption is in force the Department will be working with the industry to improve the claim process and access to compensation". 

However, on 6 September 2016, the DfT announced there would be no such exemption and that the full CRA regime will apply from 1 October 2016, saying: "We believe rail customers should be entitled to seek statutory redress from 1 October if train operators fail to provide a passenger service with reasonable care and skill, or breach other consumer rights provided under the CRA. This includes compensation awarded for delays and cancellations where the train operator is at fault. The existing rail industry compensation schemes will continue to be available after 1 October 2016, and will remain the main means of redress for customers when things go wrong.”

This potentially raises problematic and immediate issues for the rail industry because the interface between the incoming provisions of the CRA and pre-existing operator compensation schemes is uncertain in terms of timing, scope and effect. The removal of the expected exemption accelerates the question (and potential challenge) as  to how existing compensation regimes and the CRA regime will operate, whether as separate regimes or with one effectively overlapping the other. It remains to be seen how the Department will work with the industry to improve the claim process and access to compensation – watch this space!

As things currently stand on 1 October 2016, CRA will operate as an entirely separate regime providing consumers with a right of redress were certain terms (implied into contracts by CRA) are breached. Two key terms for Operators (and NR at managed stations) are (paraphrasing):

  • Section 49: operators must provide service with reasonable care and skill
  • Section 50: anything said or written to the passenger by or on behalf of the Operator will be treated as binding if the consumer takes it into account in making a decision about the service.

If either of the above is breached, CRA provides that the passenger is entitled to an "appropriate amount" of price reduction (up to the full amount) paid within 14 days of the Operator agreeing the right to refund. The means of payment for the ticket must be used for the refund. These CRA terms cannot be excluded. The CRA right to compensation is stated differently to existing operator schemes, raising (but not answering) the question whether the existing industry regimes are enough to cover off any liability under the CRA. 

The DfT's position is that that CRA and existing regimes can run in parallel (see quote above). However applying CRA provisions to real scenarios in practice may raise some difficult questions.  

There is the potential for consumer confusion about access to rights under CRA and how that may relate to existing compensation schemes. For example, as the 'Response to Consultation' noted, existing Delay Repay regimes work on a 'no-fault' basis, with pre-defined compensation levels calibrated by reference to delay, and a clear process for reclaim. By contrast, section 49 CRA works on the basis of fault, with compensation being a price reduction of an undefined "appropriate amount", requiring reclaim through litigation. For these and other reasons, parallel regimes may also prove complicated for industry operators to apply in practice, particularly where fault allocation is uncertain.  

Section 50 places a potential additional spotlight on contacts with passengers, for example where wrong information is given on which train to catch or which ticket to buy, or where advice on service conditions given correctly is later overtaken by events.

Some may view these as hypothetical uncertainties. In the face of such questions, previous Government publications have noted that these sort of  issues do not seem to have been a problem in the bus industry, where the CRA regime has now been in full force for some time. Experience will establish whether the potential difficulties will play out in practice or whether this relatively sanguine view will prove to be correct.

This article was written by Lloyd Nail and Chris Jackson.

Key contact

Chris Jackson

Chris Jackson Partner

  • Infrastructure
  • Procurement and State Aid
  • Transport

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