Tammy Samuel and Zoe Harris explore what the new Consumer Rights Act 2015 could mean for Toc’s and their passengers…
On 6th April 2016, certain provisions of the Consumer Rights Act 2015 came into force which provide railway passengers with a number of statutory rights if railway services are not performed with reasonable care and skill, for a reasonable price, within a reasonable time, and in accordance with any statements or information made about the train operator or the services (if these are taken into account by the passenger). Passengers may now therefore make a claim against a train operator not only where a train service is delayed or cancelled, but also where certain ‘add-ons’ to the service are not available – for example, complimentary Wi-Fi catering or even provision of a seat.
In addition to a claim for damages, a passenger may be entitled to require repeat performance or (more likely in a rail context) to seek a price reduction or refund from the train operator. Any refund must be given without charge and undue delay. Train operators are unable to contract out of these statutory rights and remedies.
These new provisions could have far-reaching consequences for train operators, particularly in relation to how existing compensation schemes operate and how train operators advertise and sell their tickets with complimentary services.
Delay and cancellations
The Department for Transport undertook a consultation late last year proposing to exempt train operators from certain provisions of the Act – specifically those provisions which grant passengers the right to make a claim if a train service is delayed or cancelled. The DfT considered that the existing compensation schemes available (such as the National Rail Conditions of Carriage and the Delay Repay scheme) are ‘well-established and can be used without needing to resort to the courts to seek redress’. The DfT also suggested that ‘An exemption would help to keep costs down, which would otherwise be passed back to customers through increased ticket prices’. DfT’s public consultation ran from 29 October 2015 to 30 November 2015 and remains under review.
The Office of Rail and Road did not agree with the DfT in all respects. In responding to the DfT consultation, the ORR pointed out that the current rights of passengers are potentially inadequate in two important ways: (1) train operators are able to exclude their liability for compensation for delays beyond the price of the ticket, so that passengers are limited to the original price of the ticket and not able to claim additional damages; and (2) there is a lack of awareness and utilisation of the compensation currently available. ORR also questioned whether the introduction of the new rights would indeed increase costs to the industry.
The ORR therefore considered that there are good reasons for the DfT not granting an exemption to train operators and maintaining the new statutory rights and remedies alongside existing compensation schemes.
Other related services
The Act opens up the possibility for wider claims where a train operator fails to meet the expectations of passengers. If a passenger makes a seat reservation but there are no reservations on the train, or if perhaps on-board Wi-Fi or catering services have been advertised and are not available, the passenger may be able to make a claim for a refund against the train operator. This will apply even if the additional service is ‘complimentary’ and therefore not charged for on the face of the ticket.
Train operators will therefore need to exercise caution in things said about their services, as these representations may be considered as terms of their relevant ticketing contracts. Under the new Act, adverts or hypothetical phrases such as ‘Never miss a Wi-Fi connection’ and ‘Complimentary Dining in First Class’ could be considered to be contractual terms that are potentially vulnerable to passenger claims if the service is not available.
If the new statutory rights and remedies continue to remain available to passengers alongside existing compensation schemes, train operators may receive parallel claims for a delay or cancellation or unavailable services both under their Delay Repay procedures and under the Act. Operators may have to speed up the time in which they deal with such claims (to 14 days) and they will have to pay any refund in the same way that the initial payment was made (and not in vouchers – although many train operators already offer this option).
Importantly, train operators may also need to assess how their liability for delay, cancellation and wider claims may impact upon their bids for franchise agreements – and reflect the potentially increased risk in their fares, subsidy or bid premiums.
Tammy Samuel is a partner and Zoe Harris is an associate in the rail team at Stephenson Harwood LLP