UK Govt Gives Consumers and Cross-border Traders a Dose Of #BrexitReality

Friday is never always the best day for the UK government to call people's attention to important issues. And so it proved with the critical alert on the impact of a 'No Deal' Brexit on your consumer rights. But just in case you did happen to be more concerned with wrapping up your week or queuing all day for a phantom train to your weekend destination, here's at least one key paragraph amongst all the gumph pearls of bureaucratic wisdom:

As the UK will no longer be a Member State, there may be an impact on the extent to which UK consumers are protected when buying goods and services in the remaining Member States. The laws of those states are similar but may differ in some areas to UK law both as respective laws evolve over time as well as due to differing levels of harmonisation between Member States in some areas. UK consumers will also no longer be able to use the UK courts effectively to seek redress from EU based traders, and if a UK court does make a judgement [er, judgment for court decisions], the enforcement of that judgement (sic) will be more difficult as we will no longer be part of the EU. In addition, there will no longer be reciprocal obligations on the UK or EU Member States to investigate breaches of consumer laws or take forward enforcement actions... UK consumers would need to seek redress through the courts of that state rather than UK courts.

There's also some fantastic news for consumers and businesses on some specific areas:

1. Alternative Dispute Resolution and Online Dispute Resolution;
2. Package travel;
3. Timeshare;
4. Textile labelling; and
5. Footwear labelling

some of which is in Annex A.

Of course, the paper omits any helpful links to warnings from the governments of the remaining 27 EU member states to their consumers about dealing with UK traders. I guess that information is being held back for another Friday...

In Brexit Britain Retail Will Be Mainly Online

When high street goods retailers call for increased taxes on e-commerce to subsidise their local business rates, you know their business models no longer make sense. Online retail sales now represent 17% of total retail sales in the UK, up from 5% in 2008. E-commerce is steadily taking over and UK consumers cannot afford to resist. Consumer debt is at its highest in history. So, add the rise in zero hours contracts with a Brexit headwind, and the shift to mainly online sales of goods should happen even faster. That in turn should boost the market for online sales more generally.

In typically populist fashion, all the usual suspects are blaming someone else. Tesco’s CEO has dubbed his plea for a 2% tax on any goods sold online an “Amazon tax”. He reckons this would raise a meagre £1.25bn but wants that spent on lowering the business rates for his physical stores. In other words, like newspapers, he doesn't make enough through his own online sales to subsidise his own under-performing bricks-and-mortar. 

Such a small sum will barely touch the sides within Tesco, yet it will increase all consumer prices for the ever-increasing volume of online sales. But the UK's over-indebted consumers simply can't afford that - and even if unemployment remains low, the number of zero hours contracts has tripled to account for a quarter of employment growth, and 2.8% of overall employment.

 

Similarly flawed is the UK Chancellor's populist "threat" that tech companies face a “digital services tax”.  It sounds good, but will be futile to protect UK offline retailers and simply raise consumer prices that won't be affordable.

The problem is high street retailers' failure to adapt to the long term trend of rising online sales. You can't blame that on the tax system. Taxes are something businesses have to factor into their planning, not the other way round. And taxes should be technology neutral, rather than making consumers and taxpayers subsidise legacy technology over innovative competition.

So, the sale of goods on the UK high street is doomed as we know it. But as they adapt or fade away, e-commerce for goods should boom. That will boost the market for directly related online services, such as point of sale finance, as well as the market for online services more generally.

Brits Look Away Now: Free Movement Of Non-Personal Data In the EU

The EU's "Digital Single Market" strategy has been boosted by an agreement to remove requirements for non-personal data to be stored in any one EU member state. The new law, approved in plenary by 520 votes to 81, with six abstentions, is due to be approved by the EU Council of Ministers on 6 November. It will apply six months after its publication in the EU Official Journal.

Restrictions on the free movement of personal data have long been relaxed under the EU data protection framework. The latest move is expected to double the value of the EU data economy to 4% of GDP by 2020.

The agreement builds on a report into "Building a European Data Economy",  statistics on the use of cloud computing by businesses, a study on the legal and administrative restrictions on the free flow of non-personal data (often mistaken) and study of the economic benefits of cloud computing uptake and free flow of data within the EU.

In summary, the agreement means that:

• public authorities cannot impose "unjustified" data localisation restrictions;

• the data remains accessible for regulatory and supervisory control even when stored or processed across borders within the EU;

• cloud service providers are encouraged to develop self-regulatory codes of conduct for easier switching of provider and porting data back to in-house servers, by mid-2020;

• Security requirements on data storage and processing remain applicable when businesses store or process data in another Member State or outsource data processing to cloud service providers;

• Single points of contact in each Member State will liaise with other Member States’ and the Commission to ensure the effective application of the new rules. 

EU Acts To Cut Fees For Cross-Border Payments In Non-Eurozone Member States

The pesky EU is at it again, this time trying to level the playing field for EU consumers and businesses by putting an end to the high cost of cross-border payments in currencies of Member States outside the Eurozone. Only Sweden took up the option to align the fees charged for those cross-border payments in Swedish krona with fees for krona payments within Sweden. Other non-Euro area countries, like the UK, did not oblige their banks to invest in the systems to do this. So, the European Commission is proposing a regulation to force banks in those Member States to cut their fees.

I've experienced the problems personally, as would anyone doing business across borders, travelling for business or pleasure, or shopping internationally online.

Business payments

Expecting the worst from Brexit (but hoping the whole fiasco will end with the UK remaining in the EU), I've added an Irish side to my business. That means getting paid in Euros and changing into GBP (if the funds are needed in the UK at all). To receive international payments to my GBP business bank account, my bank says I need an extra current account on its commercial banking platform (which I won't be able to see through the online access to my normal business current account). For that extra account, I'll have to pay £20 a month, plus their charge for converting each payment, plus their margin on the foreign exchange rate.

Compare that to £0 for receiving a UK payment in GBP to my existing, fee-free UK current account!

A study by Deloitte revealed other examples that punish small and medium sized businesses, as well as consumers.  It costs €24 to send €500 from Bulgaria to Finland, for instance, but sending €500 from Finland to France is like any normal payment within Finland or France - which is what the Commission wants to see in the non-Euro area.

Travelling or shopping

On a more personal level, you'll also be familiar with the tedious additional "choice" that everyone is forced to make when the currency of their payment card is different to the local currency. It's not so intrusive online, but a real pain for both you and the person serving you in a crowded shop, bar or restaurant. You have to be asked, or indicate on the card terminal whether you want (a) the "dynamic currency conversion" option, to pay in the currency of your card (at an unspecified rate that may include both margin for the local bank service provider and 'spread' for the retailer); or (b) to pay in the local currency, taking the risk that the conversion rate via the card scheme and your own bank's foreign transaction charge (if any) that you eventually see on your card statement will mean you're at least no worse off than whatever the local conversion rate was.

In this case, the Commission is proposing a short term cap on conversion costs, then a new model that shows you the actual cost of those options before you choose one.

After all, it's just data, folks! 

Cost Savings

The Commission found that extending the new rule from Euro transactions in the Eurozone to non-Eurozone Member States will save the affected customers €900m a year. That's because (a) the banks already have access to the modern system required, (b) at least 60% of cross-border transactions in the non-Eurozone Member States occur in Euros and (c) the cost of domestic transactions in those states is already low and couldn't be raised to subsidise the savings on the cross-border Euro transactions under competition rules.

It's worth noting that Eurozone banks did not raise fees when the first controls were imposed on cross-border payments in Euros - and in fact charges steadily decreased. Nor did Swedish service providers suffer when Sweden opted to extend the scheme to the krona.

Personally, I'm going to ignore the bank for my Euro payments until it gets its house in order - which might be never anyway. Even if the Euro/GBP conversion charge drops to zero, I'm sure it will still oblige me to take the commercial account on the more expensive platform and pay £20 a month for the privilege. It will argue that the move to a new current account does not relate to any single payment transaction or conversion, even though that's the only purpose I'd be taking the extra account.

No, what I'm going to do instead is open an account with one of the new foreign currency providers, so that a law firm can pay the provider in Euros, and the provider will pay me in GBP for a small, flat fee. 

FinTech wins again!

Ah, but Brexit...

Of course, all bets are off if the UK leaves the EU and decides to diverge from the EU trade rules relating to financial services.

In that case, banks - like telecoms companies who hate the EU's limit on roaming charges - will heave a sigh of relief.

Big business doesn't refer to the UK as "Treasure Island" for nothing!

The Irony Or The Ecstasy? The UK Centre For Data Ethics And Innovation

You would be forgiven for uttering a very long string of properly ripe expletives on learning that the current UK government has the cheek to create a "Centre for Data Ethics and Innovation"!  Personally, I think they've missed a trick with the name. With a little more thought, the acronym could've been "DECEIT" - and maybe in some languages it would be - so let's go with that.

You might say that it's better to have, rather than not have, an 'independent' policy body focused on the use of data and "artificial intelligence", even if it's set up by a government controlled by those who masterminded and/or benefited from the most egregious abuse of data ethics in UK history.

Or you might be relieved by the notion that it's easier for the dominant political party of the day to control the ethical agenda and results achieve "the best possible outcomes" if the source of policy on data ethics is centralised, especially within a body being hastily set up on the back of a quick and dirty consultation paper released into the febrile, Brexit-dominated summer period before any aspirational statutory governance controls are in place. 

At any rate, we should all note that:

"[DECEIT], in dialogue with government, will need to carefully prioritise and scope the specific projects within its work programme. This should include an assessment of the value generated by the project, in terms of impact on innovation and public trust in the ethical use of data and AI, the rationale for [DECEIT] doing the work (relative to other organisations, inside or outside Government) and urgency of the work, for example in terms of current concerns amongst the public or business."

...

"In formulating its advice, the Centre will also seek to understand and take into consideration the plurality of views held by the public about the way in which data and AI should be governed. Where these views diverge, as is often the case with any new technology, the Centre will not be able to make recommendations that will satisfy everyone. Instead, it will be guided by the need to take ethically justified positions mindful of public opinion and respecting dissenting views. As part of this process it will seek to clearly articulate the complexities and trade offs involved in any recommendation."

Political point of view is absolutely critical here. This UK government does not accept that the Leave campaign or Cambridge Analytica etc did anything 'wrong' with people's data. Senior Brexiteers say the illegality resulting in fines by the Electoral Commission and further investigation by the ICO and the police are merely politically motivated 'allegations' by do-good Remainers. Ministers have dismissed their own "promises" (which others have called "fake news" outright lies and distortion) as merely "a series of possibilities". There is no contrition. Instead, the emerging majority of people who want Brexit to be subjected to a binding vote by the electorate are regarded as ignoring "public opinion" or "the will of the people" somehow enshrined forever in a single advisory referendum in 2016; and as therefore expressing merely "dissenting views".

Against this gaslit version of reality, the creation of DECEIT is chilling.

Meanwhile, you might ask why there needs to be separate silo for "Data Ethics and Innovation" when we have the Alan Turing Institute and at least a dozen other bodies, as well as the Information Commissioner, Electoral Commission and the police. Surely the responsibility for maintaining ethical behaviour and regulatory compliance are already firmly embedded in their DNA?

I did wonder at the time of its formation whether the ATI was really human-centric and never received an answer. And it's somewhat worrying that the ATI has responded to the consultation with the statement "We agree on the need for a government institution to devote attention to ethics". To be fair, however, one can read that statement as dripping with irony. Elsewhere, too, the ATI's response has the air of being written by someone with clenched teeth wondering if the government really knows what it's doing in this area, anymore than it knows how to successfully exit the EU:

We would encourage clarity around which of these roles and objectives the Centre will be primarily or solely responsible for delivering (and in these cases, to justify the centralisation of these functions), and which will be undertaken alongside other organisations.

... We would encourage more clarity around the Centre’s definitions of AI and emerging technologies, as this will help clarify the areas that the Centre will focus on.

Reinterpreting some of the ATI's other concerns a little more bluntly yields further evidence that the ATI smells the same rat that I do:

• DECEIT will have such a broad agenda and so many stakeholders to consider that you wonder if it will have adequate resources, and would simply soak up resources from other stakeholders without actually achieving anything [conspiracy theorists: insert inference of Tory intent here, to starve the other stakeholders into submission];
• the summary of "pressing issues in this field" misses key issues around the accountability and audibility of algorithms, the adequacy of consent in context and whether small innovative players will be able to bear inevitable regulations;
• also omitted from the consultation paper are the key themes of privacy, identity, transparency in data collection/use and data sharing (all of which are the subject of ongoing investigation by the ICO, the police and others in relation to the Leave campaign);
• the ATI's suggested "priority projects" imply its concern at the lack of traction in identifying accountability and liability for clearly unethical algorithms;
• powers given to DECEIT should reinforce its independence and "make its abolition or undermining politically difficult";
• DECEIT's activities and recommendations should be public;
• how will the "dialogue with government" be managed to avoid DECEIT being captured by the government of the day?
• how will "trade offs", "public opinion" and "dissenting views" be defined and handled (see my concerns above)?

I could add to this list concerns about the government's paternalistic outlook instead of a human-centric view of data and technology that goes beyond merely 'privacy by design'. The human condition, not Big Tech/Finance/Politics/Government etc, must benefit from advances in technology.

At any rate, given its parentage, I'm afraid that I shall "remain" utterly sceptical of the need for DECEIT, its machinations and output - unless and until it consistently demonstrates its independence, good sense, not to mention ethics.