Expand your business - The Provision of Service Regulations 2009

What do the Regulations do?

There are a number of barriers to entry in providing cross-border services within the EU. For example, a UK business may not be aware of what authorisations and licences are required to carry out services in Spain. Such barriers have acted as a deterrent to UK businesses wishing to expand and develop their operations throughout the European Economic Area (EEA). Indeed, the Department of Business, Innovation and Skills has noted that services account for 70% of both EU output and EU employment, yet account for relatively low shares of intra-EU trade and investment (24%).

The aim of the Regulations is to remove such barriers to entry, making it easier for business to trade cross-border. Each member state is required to:

• remove unjustifiable or discriminatory requirements affecting businesses providing service activity
• set up a point of single contact allowing the service providers to apply and pay for authorisations and licences online
• require the service providers to make certain information available in relation to their services (for more details see below)
• set up a portal to enable consumers to find out what their rights are in relation to each country.

What businesses are affected?

The vast majority of service sectors fall within the ambit of the Regulations, including services that are B2C (e.g. estate agents and leisure services) and B2B (e.g. consultancy services, advertising and marketing). The Regulations, however, do not apply to a number of specifically excluded sectors including:

• financial services
• electronic communications services networks
• services in the field of transport
• services of temporary work agencies
• health care services
• audio visual services
• gambling services
• private security services.

What will businesses have to do?

Although the majority of the obligations under the Regulations are placed upon the member states, there are obligations imposed on businesses to provide information (both proactively and on request).

The information requirements are similar to those required by the E–Commerce Regulations 2002 (2002/2013/EC) and include simple information about the businesses including:

• providers name
• providers legal status
• name of any regulatory body
• geographical address
• VAT number
• main features of the services
• any after-sales warranty not imposed by law
• general terms and conditions or contractual terms used and the main features of the services.

Such information is deemed to have been given if:

• it is supplied on the providers own initiative;
• it is easily accessible to the recipient at the place where the service is provided or the contract for the service is concluded;
• it is easily accessible to the recipients electronically by means of an address supplied by the provider; or
• it appears in any information document supplied to the recipients by the provider in which the provider gives detailed description of the service.

The Regulations require businesses to provide complaints handling and also impose restrictions on discrimination on the grounds of nationality or place of residence.

It is still unclear what the consequences will be for any business that falls foul of the Regulations. Service providers should be reminded, however, that the Office of Fair Trading will still be permitted to take injunctive action against businesses which cause harm to the interest of consumers. It remains to be seen what the position is when a breach affects businesses.

What are the benefits?

The Regulations provide greater opportunity for businesses wishing to expand into the EEA. Service providers will be able to access an online facility by which they can apply for all licences needed to do business outside the UK. Given the potentially huge opportunity for service providers, businesses should begin to formulate their strategies now.