Extra protections to stop customers being unfairly left out of pocket must be included in proposed new laws bolstering consumer rights, a committee of MPs has recommended.
Under a major shake-up of rights, which the Government predicts will help boost the economy by £4 billion over the next decade, shoppers will be able to get some money back after one failed repair or replacement, demand that substandard services are redone or compensated with a price reduction, and receive a repair or replacement of faulty digital content such as film and music downloads.
But the Business, Innovation and Skills Committee warned that the plans do not go far enough to protect customers in some areas and called on ministers to make changes before full legislation reaches parliament.
It highlights inconsistencies in the planned reforms that mean customers would have the right to a refund if they bought a faulty CD but would not be entitled to have their money back if a download of the same music did not work.
MPs also warned that plans to apply a statutory right that traders must carry out services with reasonable care and skill will do little to help customers.
Committee chairman Adrian Bailey said: "The risk of creating a right that services must be performed with reasonable care and skill is that traders see it as the standard to meet rather than a minimum requirement. It is also extremely difficult for consumers to prove that a service was not provided with reasonable care and skill.
"The Government's proposals do not offer sufficient protection for the consumer. Ultimately, consumers are less interested in whether a service was conducted with reasonable care and skill than whether it achieved the stated result. The law should reflect this."
Ministers say the draft Consumer Rights Bill will streamline overlapping and complicated areas from eight pieces of legislation for consumers who currently spend more than 59 million hours a year dealing with goods and services problems.
It also proposes a set 30-day time period for when consumers can return faulty goods and get a full refund and aims to help businesses to spend less time having to work out their legal obligations when dealing with complaints from customers.
MPs called on ministers to look at finding ways to boost protections for customers who use their right to cancel contracts but still lose out. It pointed to a recent case involving Bank of Ireland customers who pulled out when it increased the rates payable on fixed term base rate tracker mortgages but were still hit financially because they were unable to find equivalent deals.
Mr Bailey said: "When the Bank of Ireland triggered a little-known contract clause and increased the interest rate of its tracker mortgage, serious consumer detriment resulted. In this scenario, the consumers' right to cancel the contract did not protect them as they could not get a similar deal elsewhere.
"Consumers need to be protected in situations where their right to cancel a contract does not provide an adequate defence against detriment."
The committee was also sceptical about plans to require traders that have breached consumer law to compensate consumers, warning it is unlikely that public authorities would have the time and money to pursue the cases.
"Currently, victims of consumer law breaches only rarely gain redress," Mr Bailey said. "Criminal prosecution of the offender may discourage illegal practice but it does little to help the consumer who has lost out.
"The enhanced consumer measures have the potential to fill this void and are to be welcomed. However, they will only do so if they are used. Given that public enforcers may not have the resources to do so, the measures should be extended to private enforcers too, with appropriate safeguards.
"The collective proceedings regime is at risk of becoming bogged down in the swamp of procedural litigation. Clarifying the certification criteria collective proceedings is crucial to avoid this and to ensure the effectiveness of the collective proceedings regime."