TfL finds Uber no-longer ‘fit and proper’ to operate in London

26 September 2017

What reasons were given for the decision?

Transport for London (TfL) is a statutory body with responsibility for London's transport system, including the regulation of taxis (black cabs) and the private hire trade (minicab and chauffeur).  TfL sets regulations and policies in relation to taxis and the private hire trade that are designed to ‘protect customers, and ensure vehicles are safe, accessible and meet strict environmental standards’. In order to operate, all taxi and private hire drivers must be licensed by TfL, and this requires applicants to meet certain criteria in order to satisfy TfL that they are 'fit and proper' to hold a licence.  The same applies when a licence comes up for renewal. Without a licence, a company cannot accept private hire bookings.

Uber was launched in San Francisco, California in March 2009. It grew rapidly into a global company and now operates in hundreds of cities around the world, including dozens in the UK. It launched in London in July 2012 after TfL granted the company’s London operation, Uber London Limited, a private hire operator licence. Since then, Uber has become ubiquitous in London and had a huge impact on the private hire market. With great success in London and around the globe, however, have come significant challenges. The company has faced criticism for, among other things, its corporate culture and the rigour of its screening of drivers. When Uber’s licence came up for renewal ahead of its expiry date of 30 September 2017, some of these issues seem to have weighed heavily in the balance.

In announcing the decision to refuse Uber’s application for renewal, TfL explained that Uber had failed to demonstrate that it remained 'fit and proper' to hold a licence because the company’s approach and conduct demonstrated a lack of corporate responsibility, particularly in relation to three areas with potential public safety and security implications. These were the reporting of serious criminal offences, the approach taken to how medical certificates are obtained, and the approach taken to how Enhanced Disclosure and Barring Service (DBS) checks are obtained. TfL also criticised Uber for its lack of cooperation with regulators, including how it explained the use of ‘Greyball’ software in London, which could be used to block regulatory bodies from gaining access to the Uber app and prevent officials from undertaking their duties in relation to the company.

All of these criticisms appear to link back to some of the public outcry Uber has faced in the British media. Critics have long been expressing concerns about Uber’s alleged treatment of its drivers and failure to take more responsibility for the safety of its passengers, and it has been claimed that Uber has added to congestion in the capital, which is a major issue that the Mayor has been seeking to tackle. In May of this year, Uber was also dealt a blow by the opinion of an advocate of the European Court of Justice to the effect that the company qualifies as a transportation company, rather than a digital service, as argued, and therefore should abide by stricter rules. Additionally, in June of this year, a number of employees were fired following an investigation into sexual harassment.

It is also interesting to note that, before TfL made the decision,  it was reportedly threatened with judicial review proceedings by the GMB in the event that it granted Uber’s renewal application without the imposition of conditions on the company’s licence. This is a reminder of the potential importance of timely interventions deploying public law arguments in the run-up to major decisions of this kind.

Will Uber challenge the decision?

Uber has 21 days from last Friday to appeal TfL’s decision under the procedures in section 25 of the Private Hire Vehicles (London) Act 1998 and, under the same legislation, Uber will be able to continue to operate until any appeal is determined. It seems inevitable that Uber will appeal, and the essence of any appeal will be for Uber to address the areas for which it has been criticised. In particular, it appears from recent commentary and press coverage that responsibility for DBS checking is likely to be a significant theme.

In addition to any appeal, Uber is already reported to be engaged in talks with TfL. The outpouring of public feeling since TfL’s decision (including a petition against the decision that has received over 750,000 signatures) also points to a parallel contest in the court of public opinion. From a regulatory perspective, one question likely to come under scrutiny is whether it is right for TfL to refuse Uber’s licence altogether, rather than imposing strict conditions on its operation. This would allow Uber to work with TfL to improve on the areas of concern. 

What impact might the decision have in other major cities?

This is not the first time Uber has faced setbacks. The Uber app is no-longer available in several countries and regions around the world, including Italy and Australia’s Northern Territory, and around the world it has come under fire from taxi drivers, regulators and interest groups for matters ranging from safety to employment practices. However, the company has continued to thrive.

If Uber is unable to overturn TfL’s decision on appeal, the specific legislative framework governing the private hire trade in London is not directly analogous to the arrangements in other cities, so it is difficult to predict what bearing it will have elsewhere. Even if the essential licensing questions are similar, the people making the decisions on future Uber applications will be different and will need to exercise their discretion in the light of the particular circumstances in their area at that time.

That said, having such a major city’s private hire regulator come out against Uber on the basis that it lacks ‘fitness and propriety’ sends a powerful message which may resonate with licensing authorities well beyond the British capital. Uber has, however, proved itself remarkably innovative and adaptable to change, and perhaps this latest adversity will spur it on to greater things.

Our specialist Public Law team can assist you to challenge or help defend a decision by a public body. Additionally, if you work in a regulated industry and need support in dealing with your regulator, please contact our Regulatory team.

 A version of this blog was first published on LexisNexis on 22 September 2017.

                                                                    

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