Recent changes to consumer contracts law mean that, if you see clients outside your office - for example, in their home or workplace - you will need to update your terms of business and client care letter. Paul Bennett explains.
What’s the issue?
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 are now in effect. This means that your terms of business may need updating.
All sole practitioners and Small Firm Division members, including partnerships and companies, involved in work where the client is seen in their home or workplace – that is, outside the office – will need to update their terms of business and client care letter.
The new regulations replace the Consumer Protection (Distance Selling) Regulations 2000 and Cancelation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008.
Commercially, your firm’s retainer may be invalidated if you do not change your terms of business. Individuals, partners and directors may be prosecuted.
As sole practitioners, who often give a highly personalised service, have been identified as an at-risk group for the changes.
What are the major effects?
- The cooling-off period is extended from seven to 14 days for cancelling instructions.
- The commencement rules for the cooling-off period are amended against the current regime.
- Clients must now give express consent for any payments in addition to the remuneration agreed for the main obligations.
What are the regulatory effects?
Firstly, breaching the regulations is a summary offence, which may be pursued in the magistrates court and attracts a fine after conviction (regulation 19). Regulation 22 extends the criminal prosecution risk to directors and partners by virtue, so limited status does not negate the personal risk.
Secondly, the Solicitors Regulation Authority and the Legal Ombudsman expect law firms to amend the information they give to their clients.
Failing to give clients the correct information on their right to cancel instructions may be considered a breach of the SRA Principles and Code of Conduct.