Office of Fair Trading

Office of Fair Trading
Office of Fair Trading (Welsh: Swyddfa Masnachu Teg)
OFT Logo.png
Non-ministerial government department overview
Formed 1973 (1973)
Jurisdiction United Kingdom
Headquarters Fleetbank House, 2-6 Salisbury Square, London, EC4Y 8JX
Employees 683
Annual budget £61 million (2009-2010) [1]
Non-ministerial government department executive John Fingleton, Chief Executive
Website
oft.gov.uk

The Office of Fair Trading (OFT) is a not-for-profit and non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator. The OFT's goal is to make markets work well for consumers, ensuring vigorous competition between fair-dealing businesses and prohibiting unfair practices such as rogue trading, scams and cartels. Its role was modified and its powers changed with the Enterprise Act 2002.

Contents

Role

The majority of the OFT’s work consists of analysing markets, enforcing consumer and competition law, merger control, licensing and supervisory work (of consumer credit, estate agency, anti-money-laundering supervision), advocacy, delivering information, education programmes and campaigns to business and consumers, and advice through Consumer Direct.[2]

Studies into how markets are working

The OFT investigates markets to see whether they are working well for consumers and customers. Where appropriate, studies will lead to market investigation references to the Competition Commission, to enforcement action, consumer awareness campaigns or to recommendations to government, which will be published.

Communication to explain and improve awareness and understanding

Showing how competitive markets that work well are important for consumers, fair dealing businesses and economic performance; explaining its decisions transparently; promoting compliance by explaining to business what the law is and how the OFT will apply it; promoting consumer awareness and confidence; coordinating effectively with enforcement partners locally, nationally and internationally, and advising government on how to achieve the most effective regime for competition and consumers.

Structure

The OFT structure is divided by market sector - Services, Goods, Consumer and Infrastructure - with officials specialising in the different legal and regulatory regimes working closely together in each of these market sectors. Each group typically consider potential breaches of competition law, review competition undertakings and performs market studies in their sector of the economy. These market sector groups sit alongside two other OFT groups - mergers, and cartels and criminal enforcement. The OFT is situated[3] off Fleet Street, near to Blackfriars station. It is next to St Bride's Church.

Markets and Policies Initiatives

Based on expanded powers granted under the Enterprise Act 2002, the OFT explores how different market sectors operate, in order to help markets work well. They may research one particular market in detail or, for example, how codes of practice or professional rules operate across different markets in a range of businesses. The results of the research, which are published, help the OFT to assess what action, if any, needs to be taken to protect consumers' interests. They may recommend stronger enforcement, or a change in the regulations, or suggest an awareness raising campaign for consumers (but will not always recommend intervention and when this is the case, will ensure that any non-intervention decision is well-informed and open to public scrutiny).

In 2006, the OFT restructured in response to Treasury proposals for splitting the department into separate consumer and competition regulators. The OFT argued that to protect consumers effectively, it had to be able to use both consumer law and competition law approaches in a holistic fashion. Moving away from division by legislative area, the OFT created divisions based on market sector. These officials are supported by a dedicated economics branch also including statisticians and financial analysts (the Office of the Chief Economist), a legal specialist, and a policy advisory branch.

Cases

Credit card charges

In 2006 the OFT investigated the charges being imposed on customers of credit card companies. In its report, the OFT confirmed these charges were unlawful as they amounted to a penalty, rather than the actual losses suffered by the companies. It said it would be prepared to investigate any charge over £12 [£16 for Egg credit card accounts][4] indicating that £12 would not be a "fair and acceptable charge" itself. The OFT said it would be up to a court to determine such an amount based on the established legal precedent that the only recoverable cost would be actual costs incurred, i.e. liquidated damages.

The credit card companies did not produce evidence of their actual costs to the OFT, instead insisting their charges are in line with clear policy and information provided to customers. Charges have been as much as £38 per item, which campaigners argue is well beyond the cost of sending a computerised letter.

OFT investigations on Debt Management Companies

On September 2010 the OFT sent warnings to 129 firms after its review of debt management companies found widespread problems, with firms putting profits ahead of customer care. Since it issued that warning, 35 firms have surrendered their licenses and the OFT is forcibly revoking licenses from eight more in 2011.

Reputation

The OFT has been criticized for being ineffective and for many of its investigations leading to no action, in contrast to the more vigorous approach of US (United States Department of Justice Antitrust Division) and European Union (DG COMP of the European Commission)[5] regulators. Criticism has been levied, among others, in the cases of:

  • Supermarkets[6]
  • Oil companies retail sales / petrol - in October 2008 the UK Prime Minister Gordon Brown threatened oil companies with an OFT investigation unless lower oil prices were passed to consumers;[7] this was despite several OFT investigations in the past giving the industry a clean bill of health.

The National Audit Office issued a report in March 2009 on the OFT's competition enforcement work[8] which indicated progress in 7 out of 10 objectives, but also concluded:

...So whilst the OFT has improved the value for money it provides, there remains scope for further improvement.

According to the same report, in 2007-08 the OFT estimated that its competition enforcement work led to direct savings to consumers worth £77m per year and that its market studies work had saved consumers £98m in 2007-08;[9] the OFT costs for these areas of work in the same year were approximately £26million of its £78m expenditure in 2007-8.[10]

The OFT board

The board is[11]

  • Philip Collins - Chairman[12]
  • John Fingleton - Chief Executive
  • Clive Maxwell - Executive Director
  • Robert Laslett - Executive Director
  • Vivienne Dews - Executive Director

and seven non-executive members:

  • Alan Giles
  • James Hart
  • Professor Frédéric Jenny
  • Anthony Lea Cock
  • Dr Philip Marsden
  • Alan Cooks
  • William Moyes

Super Complaints

The following bodies and companies are designated by the Secretary of State as being able to bring a super-complaint to the OFT:[13]

See also

References

External links


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