Select Committee on Constitution Minutes of Evidence

Memorandum by the Office of Fair Trading


The Office of Fair Trading (OFT) is a competition and consumer protection authority, rather than a sectoral Regulator (although it does have specific responsibilities to ensure that only "fit" persons hold a consumer credit licence. In order to assist the Committee's inquiry, this paper sets out a brief description of the OFT's role and the ways in which it is accountable to citizens and Parliament. Details of the OFT's position in relation to the questions posed in the Committee's Call for Evidence are set out in the annex to this note.


  The OFT's goal is to make markets work well for consumers. It does this through:

    —  Communicating.

    —  Investigating markets.

    —  Enforcing competition and consumer law.

  Further details of the OFT's work are available at:

  From 1 April 2003 the OFT has a corporate structure. The members of the OFT board are appointed by the Secretary of State for Trade and Industry under the Enterprise Act 2002. The first members are:

  Allan Asher.

  Lord Blackwell.

  Penny Boys (Executive Director).

  Christine Farnish.

  John Vickers (Chairman).

  Richard Whish.

  Rosalind Wright.

  Further details on OFT members and the board are available at: The Board is responsible for setting our strategic direction, establishing priorities and objectives, and monitoring our performance. It brings a wide range of experience and expertise to the OFT which has recently acquired increased powers and responsibilities under the Enterprise Act 2002.

  The OFT is vote-funded through Parliament. The budget for 2003-04 is £55 million. The Comptroller and Auditor General has the responsibility for auditing the OFT's accounts.

  Transparency—providing a clear explanation of what we are doing, and how and why—is a vital part of accountability. The OFT is open and receptive to the ideas and concerns of everyone who has an interest in what we do. We must observe statutory requirements to keep certain information confidential, and ensure that we act fairly towards those who are facing regulatory or enforcement action by us. Otherwise, we publish the results of all of OFT market studies, decisions and reasons to make market investigation references, our response to super-complaints, decisions on mergers, decisions and some other actions under the Competition Act and all orders and injunctions secured from the courts under consumer law. In addition we consult on and issue guidance on how we intend to use our enforcement powers.

Accountability to Citizens

  Under s.3 of the Enterprise Act, the OFT publishes its proposed work programme for the year ahead and consults fully on those proposals before publishing its main objectives and priorities (the Annual Plan). The first such plan, for the financial year 2003-04, was published at the end of June. Everyone interested has the chance of commenting on our Plan and influencing what we do. Our draft Annual Plan for 2004-05 will be issued for consultation at the beginning of December. A meeting has been arranged following each publication to discuss the Annual Plan directly with our stakeholders. There will be additional stakeholder meetings in 2004 on specific policy areas. Our National Liaison Strategy is for regular meetings and discussions with more than 50 national consumer, trade, and regional government groups.

  Under s.11 of the Enterprise Act, some consumer organisations (those so designated by the Secretary of State for Trade and Industry) have a right as "super-complainants" to require the OFT to deal with their complaints about markets. Market studies are undertaken at the OFT's discretion, but the OFT is receptive to ideas and suggestions about what to look into.

  Anyone who believes that we should investigate a particular matter under the Competition Act 1998 is encouraged to bring their concerns to the OFT. In 2002, we opened 1,038 cases based on such complaints.

  The OFT is the front line authority for assessing mergers (around 300 per year) that may affect competition in the UK. Those likely to be affected by a particular merger, are invited to comment before the OFT decides on whether to clear a merger or refer it for further investigation to the Competition Commission. In a typical year, the OFT receives around 500 such representations from interested parties, including members of the public.

  The OFT does not have a role in seeking redress for individual consumers and front line enforcement of consumer law is for Trading Standards Departments of local authorities. Our role in relation to consumer law is to take enforcement action on behalf of consumers generally and to regulate the consumer credit market. We received around 2,500 letters and nearly 10,000 emails in 2002 alerting us to matters of concern.

Appealing OFT Decisions

  In general under the Competition Act, the OFT's decisions, and the level of penalties, can be appealed (by the parties or third parties with sufficient interest) to the Competition Appeal Tribunal (CAT) which provides a full re-hearing. The CAT also has the power to review (on judicial review principles) OFT decisions to clear mergers or refer them to the Competition Commission and decisions on whether or not to make a market investigation reference to the Commission. There is a further right of appeal on points of law to the Court of Appeal. The OFT's decisions to refuse or revoke consumer credit licences following procedures supervised by the Council on Tribunals may be appealed to the Secretary of State for Trade and Industry. The DTI remits such appeals to independent experts who sit as a tribunal, conduct a re-hearing and advise the Secretary of State. There is a further right of appeal on a point of law to the High Court. There are similar arrangements in respect of powers to ban persons from estate agency work.

  The OFT enforces consumer law ultimately through the courts (although many matters are resolved by agreement with the parties).

Letting citizens know what we have done

  In addition to publishing our decisions and a large amount of guidance, under s.4 of the Enterprise Act, the OFT publishes an Annual Report which includes an assessment of what has been achieved and how financial resources have been allocated. Everyone interested can form their own assessment of our performance.

Empowering consumers by giving them advice and helping business to comply with consumer and competition law

  The more citizens and businesses understand what the law is and what their rights are the more effective the law will be in making markets work well for consumers. We have an active programme of media campaigns, regional Roadshows, and press briefings and have issued 150 press notices this year. We have held more than 75 free seminars on the Enterprise Act. Our website is regularly updated: it received nearly 1.2 million hits in 2002.

  We publish guidance on all the legislation which we enforce. We have also published guidance for consumers on a wide range of issues. A full list is available at This is complemented by advice to businesses as to their rights and obligations under consumer protection and competition law.

Initial access

  In addition to our website, we have an Enquiries Unit which deals with calls from the public. In 2002 it dealt with 72,600 calls, 9,900 e-mails and 2,500 letters.

Accountability to Parliament

  The OFT's Annual Plan and Annual Report are laid before Parliament. As noted above, the OFT's Accounts are audited by the Comptroller and Auditor General and are thus subject to scrutiny by the Public Accounts Committee.

  The OFT's work in protecting consumers' interests was reviewed by the PAC following a report by the National Audit Office in November 2000. A follow-up report has been published by the NAO and a PAC hearing on its findings took place on 17 March 2003.

  Other Parliamentary Committees require evidence from the OFT as part of their investigations. For example, the OFT gave evidence to the Transport Sub-Committee's inquiry into the bus industry in May 2002; to the House of Lords Economic and Financial Affairs, Trade and External Relations Select Committee on the review of the EC merger regulation in May 2002; to the Health Select Committee on 3 April 2003 on our Pharmacies report; and twice this autumn to the Treasury Select Committee (on credit cards). The OFT also briefed the Trade and Industry Committee about its work in April 2002.

  Parliamentary Questions about the OFT and its work are dealt with by Ministers from the Department of Trade and Industry. The OFT is always ready to meet and correspond with MPs and members of the House of Lords to discuss particular issues. In 2002, the OFT replied to over 340 letters from MPs raising issues on behalf of their constituents. We replied to a further 8 letters from members of the House of Lords. There was correspondence too with members of the Welsh and North Ireland Assemblies, MSPs and MEPs.

1 December 2003

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