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DSA approaches OFT code approval

PN 84/02     3 December 2002

The Direct Selling Association has passed the first milestone towards OFT approval for its new consumer code of practice.

The trade body has successfully completed stage one of the two-stage process for OFT approval. This means that the code of practice in principle meets the core criteria set out by the OFT. The next stage will involve the DSA demonstrating that the promises made at stage one have been delivered in practice.

The DSA code of practice promises:

• guidance to direct sellers to ensure they act with integrity and do not use misleading, deceptive or unfair sales practices
• a right to cancel within 14 days for most customers (this right is given in addition to the statutory provision for a seven-day cooling off period, which only applies to unsolicited visits)
• an independent arbitration scheme at no cost to the consumer.

The DSA code also features a new annexe on the Distance Selling Regulations for code members who use that sales method.

Doorstep selling forms the basis of a super-complaint from the National Association of Citizens Advice Bureaux (NACAB), which the OFT is currently investigating. The DSA code covers many of the concerns highlighted in the super-complaint and provides a best practice model for its members.

The DSA must now prove that the code is working well in practice to offer real benefits to consumers before receiving approval. The OFT will assess the DSA's performance in monitoring various aspects of the new code's effectiveness.

Codes that achieve approval will carry an OFT logo and receive official promotion. Only codes that are shown to safeguard and promote consumers' interests will be approved.

Welcoming the DSA's work towards stage one, Penny Boys, Deputy Director General of Fair Trading, said:

'The DSA is a well-respected trade association and has worked very closely with the OFT towards achieving stage one under our regime. We look forward to working with the DSA as they progress towards stage two approval.'

NOTES

1. The DSA submitted its code on 26 September 2001 for assessment under the OFT's new approach to approving and promoting business-to-consumer codes of practice. The DSA covers 396,000 individual direct sellers.

2. The OFT has set out new core criteria for codes to ensure they are effective in promoting and safeguarding consumer interests. The criteria cover the organisation of the code sponsor, the preparation and content of the code, complaints handling procedures, monitoring, compliance and publicity.

3. The new regime consists of two co-dependent stages:
Stage one - the code sponsor makes a promise that its code meets the OFT's core criteria in principle. The sponsor must make sure its code contains measures designed to remove or ease consumer concerns and undesirable trading practices in its sector.
Stage two - the code sponsor must prove its code lives up to the initial promise. The burden of proof lies with the sponsor. The sponsor must show that the code is being effectively implemented by its members and that consumer disputes are properly resolved.
Only when a code sponsor has passed both stages and an evaluation of how effective the code is working has been made will the code receive OFT approval.

4. The OFT set out its criteria for the selection of priority sectors for the new code approval scheme in February 2001 with the consultation paper 'The OFT's new approach to codes of practice'. Seven sectors were listed - used cars, car repair and servicing, credit, funerals, travel, estate agents and direct marketing. Code sponsors were invited to submit their codes for assessment.

5. The Enterprise Bill, which received Royal Assent on 8 November 2002, will broaden the OFT's role in promoting self-regulation through codes of practice.

6. The National Association of Citizens Advice Bureaux (NACAB) wrote to the OFT on 3 September 2002 to submit a super-complaint enclosing its report Door to Door: CAB clients' experience of Doorstep Selling. The OFT announced that it would investigate doorstep selling following the complaint on 12 November 2002. See PN 75/02

7. In this press release the functions of the Director General of Fair Trading (DGFT) are for simplicity described as the functions of 'the OFT'. The Enterprise Act will replace the office of the DGFT with the OFT, to which will be transferred the DGFT's functions.

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