Digital Markets, Competition and Consumers Bill (Fourteenth sitting)
Tuesday 11th July 2023
(10 months, 1 week ago)
Public Bill CommitteesDigital Markets, Competition and Consumers Bill 2022-23 View all Digital Markets, Competition and Consumers Bill 2022-23 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 11 July 2023 - (11 Jul 2023)
The Chair
Before we begin, I have a few reminders. Clearly, given the heat, please feel free to remove jackets. Please switch electronic devices to silent. No food or drink is permitted during the sitting, except for water. Any notes can be passed to Hansard colleagues.
Clause 283
Meaning of “ADR” and related terms
The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)
I beg to move amendment 83, in clause 283, page 189, line 5, leave out subsection (9) and insert—
“(9) For the meaning of “exempt ADR provider” and “exempt redress scheme” see section 287.”
The amendment provides a signpost for the reader to clause 287, which identifies who are exempt ADR providers for the purposes of Chapter 4.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Government amendments 84 to 89.
Clauses 284 and 285 stand part.
Government amendments 90 and 91.
Clause 286 stand part.
Kevin Hollinrake
It is a pleasure to serve under your chairmanship on hopefully the last day of this Bill Committee, Dame Maria. Chapter 4 of part 4 of the Bill aims to strengthen the quality of alternative dispute resolution available to consumers. The chapter replaces EU-derived regulations on ADR with a stronger regime that requires ADR providers to be accredited. Clause 283 defines ADR, which includes mediation, arbitration, early neutral evaluation and action under an ombudsman scheme, and who is an ADR provider. It applies only where ADR is provided in the context of a consumer contract dispute.
Government amendment 83 makes a consequential change to clause 283 in connection with amendments to clause 287. Clause 284 defines consumer contracts and consumer contract disputes. Consumer contracts include suppliers of electricity, gas, water and heat. Government amendments 84 to 88 add references to Scottish and Northern Irish legislation in relation to the supply of those utilities, which were omitted on introduction. Government amendment 89 removes a superfluous definition. Clause 285 prohibits ADR providers from carrying out ADR unless they are accredited or acting for someone who is. That is subject to the exemptions provided in clause 287. It also prohibits ADR providers arranging for third parties to carry out ADR on their behalf unless their accreditation or exemption permits that.
Clause 286 restricts the fees that accredited ADR providers may charge consumers to fees approved by the Secretary of State and those that are published. That will prevent excessive fees and ensure transparency in fee charging. Government amendments 90 and 91 clarify that the limited conditions under which fees may be charged apply only to accredited ADR providers. I commend the clauses to the Committee.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Dame Maria. I thank the Minister for his opening remarks. This is an important part of the Bill. Clause 283 defines ADR and related terms for the purposes of the chapter. Part 4 makes accreditation of ADR providers compulsory unless an exception applies. It includes examples of ADR, such as mediation, arbitration, early neutral evaluation and action under an ombudsman scheme. In her evidence, Tracey Reilly from Consumer Scotland welcomed measures in the Bill as making it
“easier for consumers to seek redress through ADR systems that are appropriately regulated and standardised.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 36, Q49.]
We welcome the straightforward definitions, as well as the broader chapter, which will hopefully increase trust in and use of ADR services in disputes between businesses and consumers. The Government’s policy paper on ADR released in April highlights that
“46% of consumers using alternative dispute resolution had problems including concerns over the time the process took, customer service or a perception that the process favoured the business. 54% of cases took longer to resolve than the 3 months allowed—16% of consumers who went to court did so because the business refused to comply with a previous alternative dispute resolution decision.”
That demonstrates the scale of the challenge that we face in reforming ADR provisions so that they work for consumers. We welcome this chapter as a first step in seeking to meet that challenge.
As Graham Wynn, of the British Retail Consortium, noted in his evidence,
“the accreditation system and making sure that companies abide by what they are supposed to do in ADR is vital to have confidence in general.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 51, Q84.]
Not having a full assessment of ADR providers has been an issue with the current arrangements.
Amendment 83 provides a signpost to clause 287, which identifies who are the exempt ADR providers for the purposes of chapter 4. We recognise that this amendment provides greater clarity in the legislation.
Clause 284 defines other terms for the purposes of this chapter, and they include “Consumer contract” and “Consumer contract dispute”. We welcome these definitions, and we support amendments 84 to 89.
Clause 285 introduces provisions prohibiting a person from carrying out alternative dispute resolution in relation to a consumer contract dispute unless they are accredited or exempt, or acting under “special ADR arrangements”. The explanatory notes state:
“Special ADR arrangements are designed to cover ADR schemes under which the ADR is provided through persons who might, for instance, be styled as ‘case handlers’, ‘adjudicators’ or ‘ombudsmen’”—or women—
“who are employed, or engaged by, or on behalf of, an ADR provider running the scheme. In that case, the person providing the ADR would not need accreditation, so long as the ADR provider running the scheme is accredited or exempt and is permitted to make special ADR arrangements.”
We will need to ensure that there is clarity in distinction and that there is cover in terms of regulatory cover and also expectations of quality, and we recognise that this clarity about special ADR arrangements will be important for that purpose. This is a welcome clause, ensuring that ADR providers are accredited and not liable to act against the interest of a consumer seeking redress. With regard to the exemptions, I will make a few remarks on clause 287.
Clause 286 limits the fees that accredited ADR providers may charge consumers to those charged in accordance with provisions approved by the Secretary of State, and published in a way likely to come to the attention of consumers. Although the Opposition welcome the provisions limiting the fees that consumers can be charged, I would welcome the Minister expanding on this clause slightly. I would, for example, welcome further explanation of the process by which the fees will be approved by the Secretary of State, and their transparency. It is important that there is predictability, fairness, consistency and transparency for consumers when it comes to any fees around ADR, so it will be important to have clarity from the Minister in this regard.
Finally, we support amendments 90 and 91.
Kevin Hollinrake
Clearly, the Bill sets out the fact that ADR providers are restricted in what they can charge for. It is therefore very much the assumption that the fees that they charge will be fair and transparent; that is the basis of this. I am not sure what clarification the hon. Lady might be seeking other than on those particular points.
Seema Malhotra
This is more about ensuring that there is a fair process and that it is clear, so that we do not have a situation in which consumers are being charged more than they ought to be because there has not been clarity about the Government expectations as to how those fees will be set. I was just seeking clarity on that.
Kevin Hollinrake
I do not have anything further to add. Perhaps we can have a discussion about this offline.
Amendment 83 agreed to.
Clause 283, as amended, ordered to stand part of the Bill.
Clause 284
Other definitions
Amendments made: 84, in clause 284, page 189, line 34, leave out “(the gas code)” and insert “, or by section 12(1) or (2) of the Energy Act (Northern Ireland) 2011 (2011 c. 6),”.
The provisions of the Gas Act 1986 referred to in clause 284(3)(b) do not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.
Amendment 85, in clause 284, page 189, line 39, leave out “(the electricity code”) and insert “or by paragraph 3(1) or (2) of Schedule 6 to the Electricity (Northern Ireland) Order 1992 (S.I.1992/231 (N.I.1))”.
The provisions of the Electricity Act 1989 referred to in clause 284(3)(d) do not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.
Amendment 86, in clause 284, page 190, line 4, at end insert “or Part 2 of the Electricity (Northern Ireland) Order 1992”.
Part 1 of the Electricity Act 1989 does not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.
Amendment 87, in clause 284, page 190, line 6, at end insert “or Part 2 of the Gas (Northern Ireland) Order 1996 (S.I.1996/275 (N.I.2))”.
Part 1 of the Gas Act 1986 does not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.
Amendment 88, in clause 284, page 190, line 8, at end insert—
“(b) a person supplying water under a water services licence within the meaning of the Water Services etc. (Scotland) Act 2005 (asp 3), or
(c) a water undertaker within the meaning of the Water and Sewerage Services (Northern Ireland) Order 2006 (S.I.2006/3336 (N.I.21)).”
The definition of “water supplier” in Part 1 of the Water Industry Act 1991 only extends to England and Wales. This amendment would add references to the corresponding suppliers in Scotland and Northern Ireland. In the current text of the definition, the words after “means” will become paragraph (a).
Amendment 89, in clause 284, page 191, leave out line 4.—(Kevin Hollinrake.)
The amendment deletes an unnecessary word: the term “business” does not need to be defined as it is not used in Chapter 4 of Part 4 of the Bill.
Clause 284, as amended, ordered to stand part of the Bill.
Clause 285 ordered to stand part of the Bill.
Clause 286
Prohibitions relating to acting as ADR provider
Amendments made: 90, in clause 286, page 191, line 39, after “the” insert “accredited”.
This is a drafting amendment to clarify which ADR provider is referred to in clause 286(2)(a).
Amendment 91, in clause 286, page 192, line 4, after “the” insert “accredited”.—(Kevin Hollinrake.)
This is a drafting amendment to clarify which ADR provider is referred to in clause 286(2)(c).
Clause 286, as amended, ordered to stand part of the Bill.
Clause 287
Exempt ADR providers
Kevin Hollinrake
I beg to move amendment 92, in clause 287, page 192, line 11, leave out subsection (1) and insert—
“(1) In this Chapter—
“exempt ADR provider” means a person who—
(a) is listed (or of a description of persons listed) in Part 1 of Schedule 22, or
(b) is (when carrying out ADR or making special ADR arrangements) acting under or for the purposes of an exempt redress scheme;
“exempt redress scheme” means a scheme or other similar arrangement which is listed (or of a description listed) in Part 1A of Schedule 22.”
The amendment reflects the approach proposed by the government amendments to Schedule 22 to have two lists: Part 1 will list particular authorities (or descriptions of authorities) who are (if and to the extent they carry out ADR or make special ADR arrangements) exempt ADR providers. Part 1A will list “exempt redress schemes”. A person who carries out ADR or makes ADR arrangements under or for the purposes of an exempt redress scheme will be an exempt ADR provider.
The Chair
With this it will be convenient to discuss the following:
Government amendments 93 to 96.
Clause stand part.
Government amendments 108 to 111.
That schedule 22 be the Twenty-second schedule to the Bill.
Kevin Hollinrake
Clause 287 and schedule 22 exempt various bodies that, so far as they provide ADR, it is not considered appropriate to regulate, and also exempt ADR under statutory redress schemes regulated by other legislation. Clause 287 allows the exemptions to be reviewed and updated.
Government amendments 92 to 96 amend clause 287, and Government amendments 108 to 111 amend schedule 22. They distinguish more clearly between the two categories of exemption. They also add exemptions for the local government and social care ombudsman, the Independent Adjudicator for Higher Education, the Parliamentary Commissioner for Administration and redress schemes for social housing, lettings agencies and property management.
Seema Malhotra
Clause 287 introduces schedule 22 into the Bill, which sets out the persons exempt from ADR provisions. I will also make a few remarks on schedule 22. Clause 287 also introduces a provision for the Secretary of State to add or remove from the list of exemptions. I want to clarify with the Minister why this delegated power has been left to the negative procedure. There may be a good reason for that decision, but it would be helpful to understand that.
We support amendments 92 to 96; the Minister has spoken to them. Schedule 22 sets out the list of ADR providers exempt from the regulations. As the explanatory notes explain and the Minister said:
“These include persons or bodies providing, or administering, dispute resolution services which are regulated under other legislation, who are exempted in order to avoid duplication or conflict between statutory regimes”.
That is important because obviously we do not want to have over-regulation or confusion between different parts of statute.
I ask the Minister for assurances that consumers using exempt providers will be able to expect the same level of protection from those that are non-exempt ADR providers. We do not have time in Committee to go through all the comparable regulations that exempt providers will be subject to, but from a consumer perspective the expectation should be that the protections, in terms of expectations of service and the regulations, will be comparable. I would be grateful for the Minister’s confirmation of that, and an assurance that the analysis has been done, because legislation is passed at different times and we want to be sure of that consistency.
Amendment 108 alters the list of persons in part 1 of schedule 22. There are other changes within amendments 108 to 111. We have no issue with any of those amendments, and we support them.
Kevin Hollinrake
On the use of the negative procedure, we feel that these are technical and mechanical changes, just to ensure that the statute remains up to date and clear, and to prevent excessive use of parliamentary time. Clearly, ADR providers are regulated by other means. We see no duplication in their regulation. The Financial Ombudsman Service, for example, is already regulated and overseen by the Financial Conduct Authority. We think that it would be needless to duplicate that kind of oversight.
Amendment 92 agreed to.
Amendments made: 93, in clause 287, page 192, line 19, leave out subsection (3) and insert—
“(3) Regulations under subsection (2) may, in particular—
(a) provide for an entry in Part 1 of Schedule 22 to apply to a specified person or to any person of a specified description;
(b) provide for an entry in Part 1A of that Schedule to apply to a specified scheme or any scheme of a specified description;
(c) limit the scope of the exemption given to a person by virtue of an entry in Part 1 or IA of that Schedule, whether in relation to carrying out ADR or making special ADR arrangements (or both).”
This amendment clarifies the scope of the power to make regulations under clause 287(2). The effect of the exemption given to a person by an entry in Part 1 or 1A of Schedule may be limited, for example by reference to the purposes for which an otherwise prohibited activity is carried out or to the kinds of otherwise prohibited activity that are (or are not) exempt.
Amendment 94, in clause 287, page 192, line 34, leave out subsection (5) and insert—
“(5) Subject to any limitation on its scope provided for by Schedule 22—
(a) an exemption given to a person by virtue of an entry in Part 1 of that Schedule covers anything done by the person in the exercise of the person’s functions that would otherwise be prohibited, and
(b) an exemption given to a person by virtue of an entry in Part 1A of that Schedule covers anything done under or for the purposes of an exempted redress scheme that would otherwise be prohibited.”
The amendment clarifies the general scope of an exemption that will apply by default, unless there is provision in the Schedule for it to be more limited.
Amendment 95, in clause 287, page 192, line 37, after “section” insert
“—
‘prohibited’ means prohibited by section 285(1) or (2);”.
The amendment defines “prohibited” for the purposes of the clause by reference to clause 285.
Amendment 96, in clause 287, page 193, line 1, leave out subsection (8).—(Kevin Hollinrake.)
The amendment omits a subsection that is no longer needed as a result of the other government amendments to clause 287 and Schedule 22.
Clause 287, as amended, ordered to stand part of the Bill.
Seema Malhotra
On a point of order, Dame Maria. I would be grateful for your guidance. The Minister made some remarks in response to my questions and I did not get the chance to intervene on him. I know that we have moved on, so is it best that I write to him on the questions that he did not answer on comparable regulation?
The Chair
I think that it would be easier for the Committee were you to deal with those things outside of the Committee now that we have moved on, but obviously if pertinent issues are raised by further parts of the Bill, you might be able to cover some of those issues then.
Schedule 22
Exempt ADR Providers
Amendments made: 108, in schedule 22, page 356, leave out from beginning of line 31 to end of line 11 on page 357 and insert—
“List of exempt persons
The Commission for Local Administration in England (also known as the Local Government and Social Care Ombudsman) and each Local Commissioner within the meaning of section 23(3) of the Local Government Act 1974
The Consumer Council for Water
The Health Service Commissioner for England
The Legal Ombudsman
The Northern Ireland Public Services Ombudsman
The Office of the Independent Adjudicator for Higher Education (registered company number 04823842) in relation to its functions as the designated operator under section 13 of the Higher Education Act 2004
The Parliamentary Commissioner for Administration
The Pensions Ombudsman”.
This amendment alters the list of persons in Part 1 of Schedule 22. The listed persons will, subject to any limitation on their exemption provided for in the Schedule, be exempt from the prohibitions in clause 285. The first, sixth and seventh entries are new. Other entries currently in Part 1 are omitted because they are superseded by entries in Part 1A of Schedule 22 as proposed by Amendment 109.
Amendment 109, in schedule 22, page 357, line 15, at end insert—
“Part 1A
Exempt redress schemes
An approved estate agents redress scheme
An approved postal operators redress scheme
An approved social housing ombudsman scheme
Approved public communications provider dispute procedures
The Financial Ombudsman Scheme
A qualifying lettings agency work redress scheme
A qualifying property management work redress scheme
A qualifying redress scheme for the gas or electricity sector”.
The amendment inserts a Part 1A in Schedule 22 listing schemes or similar arrangements that are to be “exempt redress schemes” for the purposes of Chapter 4 of Part 4 (ADR).
Amendment 110, in schedule 22, page 357, line 18, leave out “Part 1” and insert “this Schedule”.
This amendment is consequential on the insertion of Part 1A of Schedule 22 proposed by Amendment 109.
Amendment 111, in schedule 22, page 357, line 28, at end insert—
“‘approved social housing ombudsman scheme’ means a scheme which is approved for the purposed of Schedule 2 to the Housing Act 1996;
‘qualifying lettings agency work redress scheme’ means a redress scheme which is approved as mentioned in section 83(1)(a), or is a government scheme for the purposes of section 83(1)(b), of the Enterprise and Regulatory Reform Act 2013;
‘qualifying property management work redress scheme’ means a redress scheme which is approved as mentioned in section 84(1)(a), or is a government administered redress scheme for the purposes of section 84(1)(b), of the Enterprise and Regulatory Reform Act 2013;”.—(Kevin Hollinrake.)
The amendment defines three expressions used in entries in Part 1A as proposed to be inserted by Amendment 109.
Schedule 22, as amended, agreed to.
Clause 288
Applications for accreditation etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to consider the following:
Government amendments 97 to 100.
Clauses 289 and 290 stand part.
Government amendment 101.
Clauses 291 and 292 stand part.
That schedule 23 be the Twenty-third schedule to the Bill.
Clause 293 stand part.
Government amendments 102 to 105.
Clause 294 stand part.
Government amendment 106.
Clause 295 stand part.
Government amendment 107.
Clause 296 to 300 stand part.
Government amendment 112.
That schedule 24 be the Twenty-fourth schedule to the Bill.
Clause 301 stand part.
Kevin Hollinrake
Clauses 288 to 292 and schedule 23 cover the accreditation process for ADR providers, which ensures that standards are high and providers perform well. Clause 288 covers the application process and application requirements, including fees, must be published.
Clause 289 covers the outcome of those applications. Applicants will be accredited only if they satisfy the accreditation criteria, which I will explain in the context of clause 292. The Secretary of State can reject, limit or impose conditions on an accreditation, and the applicant must be told why.
Government amendments 97, 98 and 99 clarify that, in extending a limited accreditation at a later date, the Secretary of State can impose new conditions or alter existing ones. Government amendment 100 provides that conditions can be imposed to make an ADR provider responsible for the acts of a third party carrying out ADR on its behalf.
Clause 290 sets out how non-compliant ADR providers can be suspended, or their accreditation limited or revoked. It contains safeguards, including the right for ADR providers to make representations before these sanctions are imposed. Clause 291 allows the Secretary of State to charge accredited ADR providers for the cost of their ongoing accreditation.
Government amendment 101 corrects a drafting error regarding those fee provisions. Clause 292 and schedule 23 specify the accreditation criteria. These encompass standards relating to accessibility, expertise, fairness, independence, impartiality and transparency. Clause 292 allows the criteria to be kept under review and, if necessary, modified.
Clause 293 empowers the Secretary of State to issue enforcement notices to ADR providers who operate without accreditation or violate key obligations. Non-compliance with that notice can be enforced as if it were a court order. The clause contains safeguards, including giving the ADR provider an opportunity to make representations before an enforcement notice is issued.
Clause 294 allows the Secretary of State to make regulations requiring ADR providers and others to provide information about ADR to the Secretary of State or publish it for consumer awareness. The clause limits the purposes for which the Secretary of State can require provision of information. Government amendments 102 to 105 ensure that those limits will apply if the Secretary of State’s functions are conferred on another person under clause 298.
Clause 295 allows the Secretary of State to direct ADR providers and regulators to provide information. This allows the provision of specific information from a person when circumstances require it.
Government amendment 106 removes a definition of data protection legislation that is not needed as it is defined elsewhere. Clause 296 allows the Secretary of State to publish or disclose information they hold in relation to this chapter, subject to data protection.
Government amendment 107 is a drafting improvement to recognise that clause 296 contains several disclosure powers. Clause 297 defines terms used in clauses 294 to 296.
Clause 298 allows regulations to confer functions on persons other than the Secretary of State. This might, for instance, be used to confer accreditation functions on a regulator within the sphere of its regulatory activities.
Clause 299 requires traders, when responding to a consumer contract complaint, to inform consumers about any ADR or dispute resolution arrangements in which that trader is required to participate. Clause 300 and schedule 24 revoke the EU-derived ADR regulations of 2015 and amend other legislation.
Government amendment 112 is a drafting amendment to ensure there is an accurate description of the content of paragraph 11 of schedule 5 to the Consumer Rights Act 2015. Clause 301 makes transitional arrangements, including to ensure that chapter 4 does not apply to ADR already in progress when it comes into force.
I hope that hon. Members will support Government amendments 97 to 107 and Government amendment 112. I commend the clauses and schedules to the Committee.
Seema Malhotra
As the Minister outlines, clause 288 sets out how persons or companies wishing to become accredited as ADR providers should apply for accreditation under chapter 4. Specifically, the clause sets out how a person wishing to be accredited must apply to the Secretary of State.
I want to raise a concern with the Minister about some of the details that are lacking in the Bill and, from what I could see, the Bill’s supporting documentation; he may want to direct me to other documentation that we have missed. My question concerns subsection (4), which states:
“The Secretary of State may determine the procedure to be followed in relation to an application for accreditation.”
Subsection (5) then lists some criteria, but the procedure is still very open. If a consumer wants to know how people or organisations are accredited, the Bill does not provide clarity. That gives rise to concerns about what scrutiny will be possible if the procedure is not, for example, set out in detailed regulations. I would therefore be grateful if the Minister could explain what further detail there is.
The providers will have quite a significant role in dealing with disputes. As I have said previously, we have heard about the Government’s research into consumers’ experiences, and the quality of ADR providers will be in part determined by the quality of the process by which they are accredited. That is why this issue is important. I would be grateful for the Minister’s response, because a lot could be left to the Secretary of State’s discretion. The Minister might become the Secretary of State—we do not know, although obviously that would be a great thing for the Minister—but we have to make legislation that is future proof for future regimes, so that people can have confidence in it.
If further detail on the procedure is to be published, when might that happen? Will it be after the Bill has attained Royal Assent, which, according to the impact assessment, may not happen until 2025? If further guidance is needed on what people need to do to be accredited, that will cause further delays. Are we potentially talking about 2026 before ADR providers are in place? That feels like quite a long way away.
The ADR provisions are important for increasing consumer protection, and we welcome them. However, this key part of how we ensure the quality of that provision, which would deal with the issues of confidence I referred to in my previous remarks, should be more clearly addressed. If necessary, more detail should be in the Bill itself.
Clause 289 deals with how the Secretary of State would determine applications for accreditation or for the extension of an accreditation, but does not provide us with detail about how those decisions will be made. That relates to the same points I raised in relation to clause 288, and the Minister may therefore want to address it directly.
Amendment 97 makes it clear that new accreditation conditions imposed when extending an accreditation are not limited to any particular part of the extended accreditation. We support the amendment.
Amendments 98 and 99 are drafting amendments to clarify which accreditation conditions can be varied or removed by the Secretary of State when extending an accreditation. I would be grateful to discover whether any of the changes that might be made for ADR providers will be published so that they are on the public record. I do not know whether there will be a public record of ADR providers, so perhaps the Minister will also clarify that. If there is to be a public list, where will it be? That point relates to other issues, such as how people will be aware of those who might be able to provide the service.
Government amendment 100 will make it clear
“that accreditation conditions can be worded so as to make an accredited ADR provider directly responsible for things done by another ADR provider who carries out ADR under special ADR arrangements made by the accredited provider under its accreditation. This could enable regulatory action under clause 290 or 293 to be taken against the accredited ADR provider in relation to acts of the other ADR provider.”
This is important. It is a common-sense amendment, and it will extend protections for consumers.
Clause 290 will enable the Secretary of State by notice to revoke, suspend or limit an accreditation, or impose further conditions on a previously accredited ADR provider. Will the Minister clarify how that might come about? I should say that ADR providers could apply to have their accreditation revoked, and there are grounds on which the Secretary of State could apply specified sanctions. How will the changes come about? How will the information need to be received to meet a condition under subsection (3), listing contraventions? Might one route be through a consumer complaints system on the ADR process? How will that work?
Perhaps I missed it, but I am not clear about when a consumer with concerns might challenge an ADR provider’s service or whether that is a route through which such matters might come to the notice of the Secretary of State in order to revoke, suspend or limit an accreditation or impose further conditions. Will the Minister clarify how the system is joined up from the perspective of the consumer and how the process will be managed? That would be extremely helpful. Otherwise, we welcome the clause as a necessary element of the new ADR provisions and as necessary to ensure that any ADR providers not fulfilling their duties to protect consumers can be stopped from acting as such a provider.
Clause 291 sets out how the fees that accredited ADR providers will be required to pay to the Secretary of State will be determined. We recognise the need for the clause, and the potential need for ADR providers to pay periodic fees to maintain their accreditation and commitment to remaining accredited. However, I would welcome further explanation from the Minister because we are not clear about the amount to be paid in fees, the frequency of the fees or their purpose—where they will go. That is not clearly set out in the Bill or in the accompanying paperwork. Will the Minister clarify whether some of these issues will come back in secondary legislation or whether we can identify the answers to those questions in other parts of the supporting paperwork?
I think the legislation might suggest that the fees cover the costs of the functions under the chapter, but it is important for legislative scrutiny that we have clarity on that. Small businesses might be involved, and we want clarity and fairness in the process.
Amendment 101, which we support, will correct a mistake in clause 291. We support clause 292. Schedule 23 sets out the criteria for an ADR provider to become accredited, including the provision of information to consumers, the independence and impartiality of the provider, and so on. We welcome the schedule in ensuring that there are important and clear criteria for people acting as ADR providers.
Kevin Hollinrake
The hon. Member for Feltham and Heston has raised a number of points for me to respond to. As an overarching point, we are moving from a voluntary to a mandatory system of ADR regulation, so we should not look at it as if we were starting from scratch. We are improving an existing system, which should give us some assurance that this is an improvement, not a step back from improving standards in this area.
One of the hon. Lady’s principal points was about the criteria that we apply for accrediting an ADR provider. They have to be kept high-level, because there are a wide variety of different providers, so it would be wrong to be too specific about the criteria we apply. However, clause 292 and schedule 23 both set out the principles behind what accreditation will look like at every scheme level, including standards on accessibility, expertise, fairness, independence, impartiality and transparency. Clause 292 will allow the criteria to be kept under review and to be modified if necessary and appropriate. On the public record, yes, there will be a list of ADR providers.
Seema Malhotra
I recognise what the Minister says about moving to a mandatory system and the improvements being made, which is why it is important that we do not leave gaps. However, I want to push him on my point about expertise.
Kevin Hollinrake
I will come to that. Criterion 3 in schedule 23 clearly sets out that a provider will be required to have the relevant expertise. Has the hon. Lady read that criterion?
Seema Malhotra
I have, and I quoted it to the Minister. What I asked him was how he will determine expertise, because in other legislation on ADR that we have debated, there has been some process. Have the providers been accredited? Is it based on experience? Do they have particular qualifications? Otherwise, expertise can be very subjective. That was the question I asked.
Kevin Hollinrake
And that was the question I answered. In response to the hon. Lady’s points, I said that the criteria have to be kept high-level. It would be wrong to be too specific about how we judge “expertise”, because of the wide variety of different ADR providers. What we all need to do is trust the process, which the Secretary of State oversees, of trying to make sure that each provider has the relevant expertise in each scheme area. As I said, there are schemes already in place that we are now putting under the mandatory regime. Of course, expertise will be judged on a scheme-by-scheme basis, but it is difficult to set out exactly what expertise we will require in any particular scheme, other than that we would expect the person to have the relevant experience and expertise.
Seema Malhotra
Of course I will trust the process, where I am sure that the process is a robust one. I do not think that we need to debate the issue much further, but it is not resolved, if I may say so. As I mentioned, I have been involved—it may have been with the Minister’s predecessor—with previous legislation relating to the ADR process. Anyone can say that they have expertise in something, but the important question is what their qualification is and how it is determined. I will look again at the issue, and I may follow up with the Minister in writing.
The Chair
May I just remind members of the Committee that interventions should be pithy?
Kevin Hollinrake
I am happy to continue the debate with the hon. Lady and to correspond with her on the matter.
There is a broader picture here, which I am trying to set out in my response to the hon. Lady. There will certainly be the public list of ADR providers that she referred to. Where people are most likely to find that list will be in dealing with a particular trader in a particular scheme, regarding the requirement set out in clause 299 for a trader responding to a consumer contract complaint to inform consumers about the ADR process. That is where we expect people to be most likely to find the ADR scheme available.
The hon. Lady asked how somebody can complain about ADR schemes. That ties in with a broader point about how we manage the whole process, and to other points that she made. People can, of course, complain directly to the Secretary of State if they are dissatisfied with an ADR provider. However, I think a complaint is more likely to come through other routes such as Citizens Advice, which is largely funded by the Government, through trading standards or through letters to Government Ministers from Members of this House; I often respond to such letters that raise concerns. That is how we build a picture of the efficacy or otherwise of a particular ADR scheme. We would expect that at that point, if there are a number of complaints about an ADR provider, the Secretary of State will intervene and use their capabilities under the Bill.
As the hon. Lady set out, the Bill provides for ADR providers to pay fees to cover the cost of processing applications and their ongoing accreditation. Under the existing accreditation regime, the Department for Business and Trade charges fees at a pro rata daily rate of £750. That is the context in which we expect fees to be set.
The hon. Lady asked what we will do about ADR providers who do not do the right thing and do not provide the proper service. Revocation is available to the Secretary of State. The accreditation criteria will ensure, among other things, that ADR providers meet standards of expertise, fairness and impartiality. If ADR providers do not meet those standards, their accreditation may be revoked or suspended, or additional conditions may be put in place to improve their performance. We have tackled the issue of sufficient expertise, on which we may agree to differ.
The hon. Lady raised clause 294, which allows the Secretary of State to make regulations requiring the provision of information about ADR. As clause 294 sets out, that can be for the benefit of consumers, but it can also be with regard to the operation of particular schemes. Again, that is a reason why the information might be requested. It might not be suitable for public consumption, or there could be other reasons, such as commercial sensitivity or data protection, why that information might not be published, but it can be published if the Secretary of State sees fit.
The hon. Lady referred to clause 298, which allows regulation to confer functions on persons other than the Secretary of State. That provision might be used, for instance, to confer accreditation functions on a regulator. It gives broad oversight of other areas of the ADR regime that are not directly covered by this legislation.
Question put and agreed to.
Clause 288 accordingly ordered to stand part of the Bill.
Clause 289
Determination of applications for accreditation or extension of accreditation
Amendments made: 97, in clause 289, page 195, line 3, leave out “as extended”.
This is a drafting amendment to make clear that new accreditation conditions imposed when extending an accreditation are not limited to any particular part of the extended accreditation.
Amendment 98, in clause 289, page 195, line 4, leave out “condition on the existing” and insert “existing condition on the”.
This amendment and Amendment 99 are drafting amendments to clarify which accreditation conditions can be varied or removed by the Secretary of State when extending an accreditation.
Amendment 99, in clause 289, page 195, line 21, leave out “condition on the existing” and insert “existing condition on the”.
See the member’s explanatory statement for Amendment 98.
Amendment 100, in clause 289, page 195, line 26, at end insert—
“(14) Where an accreditation covers the making of special ADR arrangements, conditions on the accreditation may be framed so as to secure that the accredited ADR provider is responsible for acts or omissions of other ADR providers who carry out ADR under special ADR arrangements made by the accredited ADR provider.”—(Kevin Hollinrake.)
This amendment would clarify that accreditation conditions can be worded so as to make an accredited ADR provider directly responsible for things done by another ADR provider who carries out ADR under special ADR arrangements made by the accredited provider under its accreditation. This could enable regulatory action under clause 290 or 293 to be taken against the accredited ADR provider in relation to acts of the other ADR provider.
Clause 289, as amended, ordered to stand part of the Bill.
Clause 290 ordered to stand part of the Bill.
Clause 291
Fees payable by accredited ADR providers
Amendment made: 101, in clause 291, page 197, line 9, leave out “potential applicants for accreditation” and insert “accredited ADR providers”.—(Kevin Hollinrake.)
The amendment would correct a mistake in clause 291(3) which should refer to accredited ADR providers, as they are the persons who pay fees under the clause.
Clause 291, as amended, ordered to stand part of the Bill.
Clause 292 ordered to stand part of the Bill.
Schedule 23 agreed to.
Clause 293 ordered to stand part of the Bill.
Clause 294
ADR information regulations
Amendments made: 102, in clause 294, page 199, line 1, after “(1)(a)” insert “or (b)”.
This amendment, with Amendments 103 to 105, would ensure that the power in subsection (1)(b) of clause 294 is subject to similar constraints to those currently provided for by subsection (3) in relation to the power in subsection (1)(a). The regulation making powers in clause 294(1) are not to be available for imposing requirements to provide information for purposes other than those set out in subsection (3)(a) to (c).
Amendment 103, in clause 294, page 199, line 3, leave out from “following” to end of line 4.
See the explanatory statement for Amendment 102.
Amendment 104, in clause 294, page 199, line 5, leave out
“provided to the Secretary of State”.
See the explanatory statement for Amendment 102.
Amendment 105, in clause 294, page 199, line 10, at end insert—
“(3A) It is immaterial for the purposes of subsection (3) whether the publication, monitoring or evaluation is carried out by the Secretary of State, by a person with functions conferred by regulations under section 298 or by any other person acting under arrangements made with that other person by the Secretary of State or a person with such functions.”—(Kevin Hollinrake.)
See the explanatory statement for Amendment 102.
Clause 294, as amended, ordered to stand part of the Bill.
Clause 295
ADR information directions
Amendment made: 106, in clause 295, page 200, line 13, leave out from “legislation” to end of line 14.—(Kevin Hollinrake.)
The amendment would omit words that unnecessarily duplicate a definition in clause 297(6).
Clause 295, as amended, ordered to stand part of the Bill.
Clause 296
Disclosure of ADR information by the Secretary of State
Amendment made: 107, in clause 296, page 200, line 35, leave out
“power conferred by this section is”
and insert
“powers conferred by this section are”.—(Kevin Hollinrake.)
The amendment would clarify that the words at the end of subsection (4) apply to both of the powers conferred by the clause.
Clause 296, as amended, ordered to stand part of the Bill.
Clauses 297 to 300 ordered to stand part of the Bill.
Schedule 24
Chapter 4 of Part 4: consequential amendments etc
Amendment made: 112, in schedule 24, page 360, line 22, leave out “duties and powers” and insert “legislation”.—(Kevin Hollinrake.)
This is a drafting amendment to ensure there is an accurate description of the content of paragraph 11 of Schedule 5 to the Consumer Rights Act 2015.
Schedule 24, as amended, agreed to.
Clause 301 ordered to stand part of the Bill.
Clause 302
Provision of investigative assistance to overseas regulators
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clauses 303 to 308 stand part.
That schedule 25 be the Twenty-fifth schedule to the Bill.
Kevin Hollinrake
Chapter 1 of part 5 of the Bill enhances the UK’s ability to co-operate internationally on competition and consumer matters, as open and fair competition globally ensures the best opportunities for UK businesses and consumers. Clause 302 would introduce a new power for the Competition and Markets Authority and certain consumer protection regulators to provide investigative assistance to an overseas regulator. This power will apply to civil investigations or proceedings related to competition and digital markets and consumer protection.
The clause sets out three core requirements that must be met before investigative assistance is provided. First, the overseas regulator requesting assistance must be carrying out a function that corresponds to a function that the UK regulator has under UK law. Secondly, the UK regulator must assess whether it would be appropriate to provide the assistance requested by the overseas regulator, using the conditions set out in clause 304. Thirdly, the Secretary of State must have authorised the UK regulator to provide the assistance in accordance with clause 305.
Clause 303 sets out that the request must be made in writing by the overseas authority, describe the matter for which assistance is requested, and detail any potential penalties that might be imposed following the overseas investigation. Clause 304 provides a framework for UK authorities to assess whether it is appropriate to provide the investigative assistance requested by an overseas authority; it also sets out the circumstances in which a UK authority has no discretion and must reject an incoming request for investigative assistance—for example, if there is no reciprocity and no overriding public benefit to the UK in providing the assistance in any event.
Clause 305 outlines the factors that the Secretary of State must consider in deciding whether to approve a request for assistance. For example, the Secretary of State may reject a request for assistance where they consider that it would be more appropriate for any investigation to be carried out by the UK authority solely for its own purposes. Clause 306 requires the UK authority to notify the Secretary of State where it has received for assistance and considers it appropriate to provide the requested assistance.
Clause 307 places a duty on the CMA to publish guidance in connection with requests for investigative assistance and the provision of that assistance. Any regulator with the powers to provide investigative assistance must have regard to that guidance, which must be approved by the Secretary of State. Clause 308 and schedule 25 amend the existing legislative framework to ensure that the new investigative assistance regime slots in properly and runs smoothly. For example, the usual time limits for the CMA to be able to impose civil penalties for failures to comply with merger information notices would not work in cases where the CMA is providing assistance, so schedule 25 creates a bespoke time limit specifically for such cases.
Seema Malhotra
Clause 302 acts as a gateway to investigative assistance provisions. This is an important provision, enabling regulators in the UK to assist an overseas regulator. The Minister outlined the conditions under which the UK regulator may assist. We understand that the issues around consumer protection and competition must increasingly be dealt with internationally, because they are increasingly digital in nature and when they arise abroad can impact consumers here, as well as the other way around. As we have gone through these matters with short remarks today, my overall comment is that while we need this provision, the safeguards that might be needed and what is or is not to be published are less apparent.
Kevin Hollinrake
There are just a couple of points to make, I think. On clause 302, the hon. Lady asked whether the police would be involved in any of the investigations. The clause sets out clearly that those are civil matters, not criminal matters. The overseas regulator requesting system is supposed to carry out a function that corresponds to a function that the UK regulator has under UK law.
Seema Malhotra
Either I was not clear, or the Minister mistook me. I was not talking about the police being involved. I was asking whether there are processes of sharing information akin to the way that information is shared with police, so that it can be done in more confidence. The question was about what will be known to those whose information may be shared, if there is that request.
Kevin Hollinrake
In the course of anybody’s work, if there is evidence of criminal activity, we would expect an enforcement agency or regulator to share that with the relevant enforcement authorities, including the police. Was that the point the hon. Member was trying to make?
Seema Malhotra
If I can put it a bit more simply, my question was about how the information will be shared, who will know that the information is being shared, and what that information is being shared about?
Kevin Hollinrake
If the hon. Lady has any further points that she wants clarified, perhaps she will write to me, as I am not quite sure what she is referring to.
The hon. Lady asked about safeguards and the considerations to be taken into account when agreeing to requests for assistance. The clauses provide significant safeguards with regard to the conditions that the authority itself needs to consider and, when it comes to the authorisation by a Secretary of State, consideration of appropriate protections, for example, around confidentiality and other considerations set out in the Bill.
Further details about the process and how investigative assistance will work in practice will be set out in detailed guidance. That is another point that the hon. Lady referred to—discussions between the regulator and the Secretary of State—that we expect to see in guidance. We expect the regulators and the Secretary of State to engage closely in considering whether to provide assistance. Guidance will be put in place and agreed between the regulators and the Secretary of State to set out how the measure will work in practice.
Question put and agreed to.
Clause 302 accordingly ordered to stand part of the Bill.
Clauses 303 to 308 ordered to stand part of the Bill.
Schedule 25 agreed to.
Clause 309
Disclosing information overseas
Question proposed, That the clause stand part of the Bill.
Kevin Hollinrake
Clause 309 provides clearer rules and more efficient gateways for information sharing between UK authorities and their overseas counterparts. The powers will apply to all UK public authorities covered by part 9 of the Enterprise Act 2002—primarily authorities with functions in connection with competition and consumer protection law. The existing overseas disclosure gateway in part 9 will be replaced with three new gateways. Under the first, a relevant UK authority may share information with an overseas authority for the joint purpose of facilitating both its own statutory functions and the functions of the overseas authority.
Under the second new gateway, a relevant UK authority can share information only to facilitate the functions of an overseas authority. When deciding whether to make a disclosure under the two gateways, the UK public authority will need to have regard to a number of factors, such as whether the laws and the practices of the other country can ensure that confidential information is appropriately stored and protected.
When deciding whether to make a disclosure to facilitate the functions of the overseas public authority only, the UK authority must give due regard to an additional layer of considerations. That includes whether the reason for the request is sufficiently serious to justify the disclosure of information. The Secretary of State will retain a power to modify, add to, or remove any of the considerations for each gateway. That is to ensure that the list of considerations remains balanced and appropriate.
There are restrictions that apply to the use and further disclosure of any information that is shared under the two gateways. The restrictions mean that, unless the disclosing authority provides its consent, information disclosed must not be used by the overseas authority for any purpose other than the one for which the information was originally disclosed; nor may the information be passed on to a third party. The Secretary of State will retain the existing power to prevent overseas disclosure of information if they consider the relevant proceedings or investigation would be more appropriately brought or carried out by authorities in the UK or in another country.
Finally, the clause introduces a new gateway for overseas disclosures by a UK public authority for the purposes of facilitating the terms of a designated co-operation arrangement. The Secretary of State will have a power to designate suitable co-operation arrangements in regulations if they are satisfied that they meet the safeguards set out in the legislation.
Seema Malhotra
I thank the Minister for his detailed remarks on clause 309. I will keep my remarks brief. I have concerns about some of the detail. The clause deals with disclosing information overseas. It will amend part 9 of the Enterprise Act by replacing the current overseas disclosure gateway in section 243 with new provisions governing the ability of the CMA and other UK public authorities to exchange information with overseas public authorities.
As the Minister outlined, there will be three new gateways that allow for overseas disclosures in defined circumstances, with safeguards to protect specified information. We welcome the clause. It will be important to see how it is taken forward in the guidance. It is important to have this provision in legislation, not least because tackling competition issues requires us to play an active role in global competition and consumer protection policy.
Question put and agreed to.
Clause 309 accordingly ordered to stand part of the Bill.
Clause 310
Duty of expedition on the CMA and sectoral regulators
The Chair
With this it will be convenient to discuss that schedule 26 be the Twenty-sixth schedule to the Bill.
Kevin Hollinrake
Clause 310 introduces a statutory duty of expedition in relation to the CMA’s competition and consumer law functions, including the functions relating to the new digital competition regime. Schedule 26 makes changes to the legislation that empower the sector regulators to exercise their concurrent competition powers so that they are under an equivalent duty when they do so. The new duty will require the CMA to have regard to the need for making a decision, or taking action, as soon as is reasonably practicable. It will apply to casework functions and decision making, but will exclude auxiliary functions such as the publication of guidance.
The impact of the new duty of expedition will vary on a case-by-case basis. For example, if a business asks for repeated extensions to deadlines for providing information, the duty will bolster the CMA’s ability to move the investigation along. The CMA will need to continue to ensure fair process and make evidence-based robust decisions. Parties will continue to have a right to appeal against decisions made by the CMA.
Seema Malhotra
The Minister has outlined the detail of the clause. Again, I will keep my remarks brief. Clause 310 would insert a new schedule into the Enterprise and Regulatory Reform Act 2013 to provide for a statutory duty of expedition in relation to specified CMA competition, consumer law and digital markets functions. The new provisions expand and replace the duty that previously applied in relation to the CMA’s functions. A new provision inserted by the clause specifies that, in making any decision or taking any action for the purposes of any of its functions within the new schedule, the CMA must have regard to the need to do so as soon as is reasonably practicable. That obligation would apply to all steps of the relevant investigatory, regulatory or enforcement process. The clause also introduces schedule 26, which imposes a duty of expedition on sectoral regulators in respect of their competition functions that are exercisable concurrently with the CMA. We support the schedule.
Question put and agreed to.
Clause 310 accordingly ordered to stand part of the Bill.
Schedule 26 agreed to.
Clause 311
Interpretation
Question proposed, That the clause stand part of the Bill.
Kevin Hollinrake
Clause 311 defines various terms used throughout the Bill, such as “digital content” and “firm”.
Clause 312 provides that expenditure incurred by the Secretary of State or CMA as a result of the Bill is to be met from funds provided by Parliament.
Clause 313 gives the Secretary of State a power by regulations to make any provision that is consequential on the Bill or any provision made under it. The power can be used to amend any legislation, but it is limited to primary legislation passed or made before the end of the parliamentary Session in which this Bill is passed. This limitation also applies to any secondary legislation made under the primary legislation.
Clause 314 makes further provision in relation to powers to make regulations under the Bill, including interpretative provisions about the relevant parliamentary procedures. This clause does not apply to commencement regulations.
Clause 315 sets out that the Bill will apply to England, Wales, Scotland and Northern Ireland.
Alex Davies-Jones (Pontypridd) (Lab)
As we know and as the Minister said, the clause sets out the meanings of various terms used in the Bill. Throughout the debates in Committee, we have raised fundamental questions on several points where we feel that the interpretation of the Bill requires further confirmation. I welcome the Minister’s clarity on a number of those issues. In the rest of the clauses in the group, we see clarity around financial provisions, regulation, extent and the short title—all as is fairly standard.
We all understand the need for this Bill and welcome many of the provisions. That is why Labour has been generally supportive as we have proceeded through Committee. I hope we can also agree that the measures in the Bill must come into force as soon as is reasonably possible. That is particularly important when we know that the digital markets unit has essentially been operating in shadow form for a number of years. It must be compelled to draw on the lessons learned and able to act meaningfully from day one. All things said, we obviously support this grouping, and we look forward to the Third Reading of the Bill before supporting its progression to the other place.
Question put and agreed to.
Clause 311 accordingly ordered to stand part of the Bill.
Clauses 312 to 315 ordered to stand part of the Bill.
Clause 316
Commencement
Neil Coyle (Bermondsey and Old Southwark) (Lab)
I beg to move amendment 136, in clause 316, page 221, line 25, at end insert—
“(3) Sections 245 to 273 come into force from April 2026.”
This amendment provides an explicit implementation period for the subscription contract provisions.
The amendment suggests the need for an explicit implementation period for the subscription contract provisions debated earlier in clauses 245 to 273. That comes about for several reasons. The Government say and Ministers tell us that they have consulted businesses, but I note that the Federation of Small Businesses has raised concerns about the provisions in the Bill, including timing and coverage, as have Sky and other larger organisations. There seems to be a concern that there is no specific time or date. In an earlier sitting, we heard the Minister tell us that some provisions would be immediate and some provisions would be for new contracts, not for existing contracts, but business organisations and representative organisations were unaware of the Government’s plans, despite the need to prepare to implement provisions and allow for the costs of new regulations to take effect on businesses.
Businesses have said that the Bill goes further than the Government’s initial consultation expected, including on things such as clauses 245 to 273 and reminders. I think that this correspondence went to all members of the Committee, but Sky suggests that
“measures have shifted away from a high level, principles-based approach”—
which was in the consultation initially—
“with government opting instead for highly prescriptive requirements on the face of the Bill itself. This change was made without any substantive consultation with businesses, despite the material difference such an approach makes to compliance and implementation costs.”
That is from Sky, which has 12,000 jobs focused on this issue, so it is in a better position than smaller companies to get on with that work. Its concern is that the Bill does not do what the Government said it would do, and that new costs will be imposed.
It is not just the FSB that has raised concerns about the costs. Sky said that the Government’s impact assessment suggests that the new requirements
“will cost UK business £400 million to set up and £1.2 billion in the first year alone.”
This is not a benign set of requirements in legislation; it is a costly endeavour. The amendment seeks to give UK businesses space to prepare to implement the provisions and absorb some of the costs, which would not have been in their business plans if they were set some time ago.
In an earlier sitting, I asked the Minister about the timeframe, and the amendment attempts to achieve some clarity about that. It would be good to hear how the Government will address the concerns of the business community, which has been surprised—let me put it that way—by what the Government have come forward with, in terms of the level of the measures, the fact that the requirements are on the face of the Bill, and the lack of a timeframe to prepare to deliver them.
I politely suggest that Ministers take a bit more time to work with the business community before the Bill goes any further to ensure UK businesses are ready, are not hit with further costs, and are prepared to implement the provisions of the Bill.
Kevin Hollinrake
I thank the hon. Gentleman for his amendment, which is very sensibly thought out. It proposes that the new rules for subscription contracts come into effect from April 2026. I very much admire his wish to balance the needs of businesses and consumers; that is exactly what we should be doing. Competitive markets that rely on business investment are good for consumers too, so there is a delicate balance to strike.
The hon. Gentleman seeks to ensure that businesses have clarity about the start date and know when the new rules will come into effect so they can make appropriate preparations. We have listened very closely to the needs of business. I met Sky and others that will be affected by the change to hear their concerns.
The hon. Gentleman said that the proposal goes further than other measures set out previously. They do not go as far as his Front-Bench colleagues would like them to go, in terms of cost to business. We believe we have struck the right balance.
Our opinion about notifications differs from that of the various providers that have made submissions. We think notifications are important because we want users to understand the contracts they are in and the methods of exiting them. The basic principle is that it should be as easy to exit a contract as it is to enter one. Some providers still want to require the customer to ring a call centre. We are having discussions, but we think we have struck a reasonable balance.
There are certainly issues relating to cooling-off periods, which the hon. Gentleman and I have discussed previously. We want to ensure that consumers cannot game the system by entering a contract, benefiting from it by downloading lots of information or content, watching it, and then cancelling without paying. We are dealing with that through secondary legislation.
The hon. Gentleman talks about the cost to business. Yes, there is a cost to business: the expectation is that the annual business impact will be about £170 million a year, but there are establishment costs too. It is not exactly a zero-sum game, because we want competition to develop through the provisions in the Bill. That will be good for consumers and businesses, so we believe there will be a net gain from this legislation. We want to ensure that consumers are treated fairly. Businesses should do well, but not at the expense of unfairly treated consumers. We seek to strike that balance.
Neil Coyle
If this is about balance and fairness, businesses are right to say that there is an annual reminder system for other regulated services, such as broadband and telephones. The Bill proposes a six-monthly reminder system for new services, so is the Minister saying that other services should be better regulated and that the reminder system should be more frequent to help consumers get fairness, or is he saying that businesses are being treated better in some circumstances than the Bill will allow? I am confused about which bit of Government policy he does not support in that domain.
Kevin Hollinrake
I think there are differences in different sectors, and the hon. Gentleman referred to things such as mobile phone contracts. Lots of people subscribe to things they do not know about, as set out in the impact assessments and the various different evidence we have had from different parties. There are differences, and we believe it is right to have slightly more frequent requirements, such as six-monthly notifications, but we are continuing to discuss these issues. Yesterday we met a representative of the media industry, who raised similar concerns, and we are listening to them. We certainly hope to strike the balance that the hon. Gentleman seeks, but we think it is wrong to put a commencement date on the face of the Bill, given that there is quite a lot of work to do to get it to pass through both Houses.
Again, the balance we need to strike must not delay the commencement of the Bill, because it will benefit consumers, and we are also making sure that stakeholders, including businesses, have time to understand and implement the new rules. We will continue to engage to make sure that both we and they fully understand the operationalised impact of the new rules. I hope the hon. Member will withdraw his amendment on the basis that we will keep those conversations ongoing.
Neil Coyle
I think the point has been made that businesses need space to make sure that they can implement what the Government are asking them to do without undue cost, while also trying to retain the benefits of the greater consumer provisions. I hope that the Minister’s meetings and further consultation garner better business confidence in the Government’s plans, which the other place will see later. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Kevin Hollinrake
Clause 316 makes provision regarding commencement of the Bill. Part 6 and powers to make regulations will commence at Royal Assent, and all other parts will commence by way of regulations made by the Secretary of State. Clause 317 establishes the short title.
Alex Davies-Jones
We have no further comments, Chair.
Question put and agreed to.
Clause 316 accordingly ordered to stand part of the Bill.
Clause 317 ordered to stand part of the Bill.
New Clause 1
Decision not to make final offer order
“(1) The CMA may decide not to make a final offer order in relation to the transaction where it has reasonable grounds to believe that there has been a material change of circumstances since the final offer initiation notice was given.
(2) For the purposes of this section and section 42(3) a material change of circumstances includes an agreement between the designated undertaking and the third party with respect to terms as to payment in relation to the transaction.
(3) Where the CMA decides not to make a final offer order, it must give a notice to that effect to the designated undertaking and the third party.
(4) The notice must include the reasonable grounds referred to in subsection (1).
(5) As soon as reasonably practicable after giving a notice under subsection (3), the CMA must publish a statement summarising the contents of the notice.”—(Kevin Hollinrake.)
This new clause, together with Amendment 10, ensures that the CMA can end the final offer mechanism without making a final offer order at any time after giving a final offer initiation notice. It would appear after clause 41.
Brought up, read the First and Second time, and added to the Bill.
New Clause 8
Limit on secondary ticketing
“(1) The Consumer Rights Act 2015 is amended as follows.
(2) After section 91 (prohibition on cancellation or blacklisting) insert—
‘91A Limit on secondary ticketing
(1) This section applies where a person (‘the seller’) re-sells a ticket for a recreational, sporting or cultural event in the United Kingdom through a secondary ticketing facility.
(2) The operator of the facility must—
(a) identify the maximum number of tickets available for a consumer to buy from the primary market for any event for which tickets are being re-sold through their facility; and
(b) check that the seller has not bought more tickets than they are permitted to buy as set out in subsection (2)(a) with the intention to re-sell, unless the seller provides proof that they have bought more tickets than they are permitted to buy from the primary market with the consent of the event organiser.
(3) The operator of the facility must not allow the seller or any associate of the seller to list more tickets for an event than can be bought by a consumer through the primary market.
(4) If the operator breaches its duties in subsections (2) and (3), they are jointly liable with the seller for enforcement action against them as set out in section 93’”.—(Seema Malhotra.)
This new clause would amend the Consumer Rights Act 2015 to introduce provisions banning sellers on secondary ticketing sites from selling more tickets than can be bought by consumers on the primary market.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 9—Secondary Ticketing: duty to verify seller’s details—
“The Consumer Rights Act 2015 is amended as follows—
‘After section 90 insert—
‘90A 90A Duty to verify seller’s details
(1) The operator must—
(a) obtain from any seller using their facility the information set out in subsection (2), and
(b) verify that information.
(2) That information is—
(a) proof that the seller owns the ticket they are intending to sell through the facility,
(b) proof that the information specified in section 90(3) is accurate; and,
(c) the seller’s address.
(3) If the operator breaches the duty under subsection (2), the operator is jointly liable with the seller for enforcement action against them as set out in section 93.’’”
This new clause amends the Consumer Rights Act 2015 to impose a duty on secondary ticketing platforms to verify further details from sellers using their platform.
New clause 10—Secondary ticketing regulation: reporting requirement—
“(1) The Secretary of State must—
(a) prepare a report on the merits of introducing a new regulatory function for regulating the secondary ticketing sector; and,
(b) lay a copy of this report before parliament.
(2) The report must include consideration of the recommendation to introduce a new regulatory function to the secondary ticketing sector as set out in the CMA’s ‘Secondary Ticketing’ report published in August 2021.
(3) The report must be laid within the period of 12 months beginning with the day on which this Act is passed.”
This new clause would introduce a reporting requirement on the Secretary of State to produce a report on the merits of introducing a new regulatory function in the secondary ticketing sector, as recommended by the CMA in their August 2021 ‘Secondary Ticketing’ report.
Seema Malhotra
These new clauses all relate to the secondary ticketing market. In particular, they aim to further regulate the market in order to protect consumers in a sector where they are all too often left to fend for themselves. I do not plan to press these new clauses to a vote today, but I do want to speak to them. The Minister’s response will determine how we choose to move forward on Report or in further stages, because this is an important issue.
New clause 8 would amend the Consumer Rights Act 2015 to introduce provisions banning sellers on secondary ticketing sites from selling from more tickets than can be bought by consumers on the primary market. That is a direct recommendation from the CMA’s August 2021 “Secondary ticketing” report. The intent is simple: it would filter out sellers who have obtained tickets through the use of illegal bots with the intention to sell them on at a significantly inflated price. It would also reduce the risk of consumers being sold fake tickets.
New clause 9 would amend the Consumer Rights Act 2015 to impose a duty on secondary ticketing platforms to verify details from the sellers who use them. That would make it harder for bad actors who intend to scam or rip off consumers to use secondary ticketing platforms, as it would be far easier to track their details. That is also a direct recommendation from the CMA’s 2021 report. New clause 10 would introduce a requirement on the Secretary of State to produce a report on the merits of introducing a new regulatory function in the secondary ticketing sector, as recommended by the CMA in its report.
I will take a step back from the specifics of the new clauses to briefly address the broader picture of the secondary ticketing market, where consumers are continually ripped off or put at risk of falling victim to a scam. I am sure that many Committee members, and those who may be watching our proceedings, will have either had their own experiences or heard of constituents being ripped off or scammed for tickets to musical or sporting events. That is not to say that every person who resells on the secondary ticketing market is attempting to scam or rip off consumers—far from it. However, the Minister will know that when those scams and rip-offs occur, there is little in the way of enforcement against either the seller or the platforms that host and legitimise them.
The CMA’s 2021 report helpfully outlined the major areas of concern in the current secondary ticketing market. It said:
“We are concerned that some approaches used by professional resellers to buy up tickets may be illegal – involving committing fraud and/or breaching legislation introduced to prevent the bulk purchase of tickets using computer bots...Such illegal activity will reduce the number of tickets available at face value on the primary market – and increase the number of tickets advertised through secondary ticket platforms at significantly higher prices. The CMA often receives complaints about these practices but does not have the powers to tackle them.”
It went on to say:
“We are concerned that professional resellers may be i) speculatively advertising tickets that they do not own and ii) advertising tickets with inaccurate information about the ticket or the seller’s identity, which sellers are required to provide, by law, when listing tickets for sale. The CMA’s recent enforcement cases required viagogo and StubHub to put in place certain safeguards to ensure key information was gathered and displayed to consumers and that where such information was being displayed inaccurately this could be addressed. However, even if platforms comply in full with these obligations, speculative listings and inaccurate information may still appear if the resellers do not provide correct information to the platforms about themselves and/or the tickets they are listing.”
In each of those cases, there is a clear risk of consumer detriment, through being scammed or ripped off. As a result, the CMA in the same report made a series of recommendations to Government that would enable more robust enforcement in the sector. But shortly before the Bill was introduced, the Minister wrote to the CMA, stating that the Government would not adopt its recommendations. Specifically, and as part of what seems to be the quite weak rationale by the Government for not adopting those proposals, there was the suggestion that the conviction of just two ticket touts three years ago acts as a robust enough deterrent to bad actors. That seems more like the Government kicking the can down the road and failing to act in the interests of consumers, which was so powerfully highlighted by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) on Second Reading.
I urge the Government to consider seriously these new clauses. This need not be party political; in fact, it is far from that. They are direct recommendations from the CMA, given the work that it has done and that it does. It is a regulator whose judgment we all clearly and rightly value, considering the increased powers—and expectations for its work—granted in the Bill. The new clauses are cost free and would significantly increase the protections available to consumers using the secondary ticketing market in the UK—they would dramatically increase protections for all consumers. I look forward to the Minister’s response.
Kevin Hollinrake
Two of these new clauses seek to add further regulation on secondary ticketing and platforms. The third would provide for a report on the introduction of a new regulatory function for the secondary ticketing market, to be prepared within 12 months of the Bill receiving Royal Assent. I thank the hon. Member for these new clauses. I am also grateful for the work of her colleague, the hon. Member for Washington and Sunderland West, who has worked so hard in this space.
The new clauses reflect the recommendations made by the CMA in its secondary ticketing report from 2021, as the hon. Member for Feltham and Heston said. She also referred to our position, which we set out on 10 May 2023. At this point, it is too early, we believe, to bring forward further regulation on secondary ticketing.
One overarching point that I think it is fair to make here is that we should all encourage the primary market to do more to inhibit touting and report breaches of existing law. If anybody went to Glastonbury recently, they would have found great difficulty in—in fact, the impossibility of—selling on tickets, because they are limited to the person who bought the tickets in the first place, so it is clear that primary markets can do more to clamp down on secondary ticketing malpractice where it exists.
The Bill, under part 3, will itself give more powers to the CMA and other public enforcers to enforce existing consumer protection law, which includes legislation applicable to the secondary tickets sector. The shadow Minister referred to good work that is going on in this area, including existing laws. As she said, the National Trading Standards eCrime Team successfully prosecuted two ticket touts for fraud and consumer law breaches. They received prison sentences of four years and two and a half years and were subject to a £6.2 million confiscation order. Despite the imposition of additional regulation by the Breaching of Limits on Ticket Sales Regulations 2018, it is those general consumer protection law powers that the regulators have tended to use most effectively.
New clause 8 would make the platform liable where the number of tickets resold on a platform by an individual seller exceeded the maximum set by the event organiser in the primary market. It is already an offence to use automated software to buy more tickets for events than permitted, with a view to financial gain. If the rules are applied, there should be no need for further action on the secondary market, such as that proposed. However, we will work with the CMA to monitor the market and technological developments to assess whether the measure is both practical and necessary.
New clause 9 seeks to put a strict obligation on a secondary ticketing facility to verify certain information provided to it by a seller. The CMA acknowledges that placing a strict liability on platforms in this way would be an unprecedented step. Moreover, thanks to previous enforcement work of the CMA and others in the secondary ticketing market, choices and associated costs are more transparent than they were five years ago. Therefore, it is not clear to me that the proposal would amount to proportionate regulation.
Seema Malhotra
I thank the Minister for his response. I think his overall message is that the existing legislation is enough and is proportionate. I take on board that he will keep it under review. He will know that there are different views on whether the regulations are enough, and it will be important to do further work with stakeholders on this. If there are ways that existing regulations can be used further to deal with at least some of the challenges, we would obviously all want to see that.
The principle of not having regulation that we do not need if it can be dealt with by existing regulation is an important one that we all share. I think the question is whether it is enough, because currently the story suggests that it is not. However, I will not press the new clause to a vote today. We reserve the right to bring it back on Report, by which time we will have had further discussions with stakeholders on this. I hope it will be an issue on which we can move forward with the Government if we can demonstrate that there is a need to do more. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
The Chair
I gently remind the Committee that we have a hard stop at 11.25 am.
New Clause 11
Annual Report on Operation of CMA Functions Under Parts 2 and 3
“(1) The CMA must, within 12 months of this Act being passed and every 12 months thereafter, prepare a report on—
(a) the effectiveness of the operation of the CMA’s functions under Parts 2 and 3,
(b) the impact of the operation of those functions on maintaining competition in digital markets, and
(c) the impact of the operation of those functions on the enforcement of consumer protection law.
(2) The CMA must arrange for a copy of the report prepared under subsection (1) to be laid before each House of Parliament
(3) This new clause would introduce an annual reporting requirement on the CMA to report to Parliament on the operation of their functions under Parts 2 and 3 of the Act.”—(Seema Malhotra.)
This new clause would introduce an annual reporting requirement on the CMA to report to Parliament on the operation of their functions under Parts 2 and 3 of the Act.
Brought up, and read the First time.
Seema Malhotra
I beg to move, That the clause be read a Second time.
New clause 11 would introduce an annual reporting requirement on the CMA to report to Parliament on the operation of their functions under parts 2 and 3 of the Act, complementing the new clause debated earlier in Committee that would have introduced such a report in relation to part 1 of the Bill. Specifically, the report under new clause 11 would need to include the effectiveness of the operation of the CMA’s functions under parts 2 and 3 and the impact of the operation of those functions on maintaining competition in digital markets and on the enforcement of consumer protection law.
The report would have to be laid before both Houses of Parliament and be produced annually. The core principles behind the new clause—principles I would hope the Minister agrees with—are transparency and scrutiny. The legislation rightly confers significant powers on various regulatory bodies in the UK, not least the CMA. However, to ensure those powers are used as effectively and as fairly as possible, Parliament must be able to fully scrutinise their use and effectiveness in achieving their aims.
There is also the question of where the report goes and who scrutinises it on behalf of Parliament and the public. While I appreciate and recognise that the CMA will have frequent communication and contact with various Departments and Secretaries of State, opportunities for scrutiny are more disparate. With the former Regulatory Reform Committee being subsumed by the Business and Trade Committee, much of the opportunity for scrutiny is supposed to lie there. However, House of Commons Library research highlights that in the past five years, the CMA has appeared before the Committee just five times, and three times since 2021. The CMA does an incredibly significant job in our economy. While an average of one Select Committee appearance a year is appreciated, with the new functions granted by the Bill, one cannot help but feel that the oversight and scrutiny need to become more frequent and detailed to ensure parliamentarians and the public are as informed of the CMA’s work as possible.
I note the Regulatory Reform Group, made up of MPs from the Minister’s own party, has recently called for a cross-party Committee to oversee the performance of regulators and to offer a systematic appraisal of the UK’s regulators that cover key economic sectors. Its members are not the only ones concerned by the overall lack of transparency and scrutiny of the performance of regulators and competition authorities. There is a need for better mechanisms to allow issues to be identified earlier and reforms to be made.
Clearly, there is appetite in Parliament for further scrutiny of our regulators, not least the CMA. That is not to criticise the regulators in any way, but it is a reflection of their increased importance, our increased responsibility and the growing impact of their work in a digital economy, subject to that greater scrutiny. As a result, I hope the Minister agrees that parliamentary scrutiny of the kind that the new clause would provide is important for the effective operation of this new regulatory regime. I urge him to consider supporting the new clause—I know he has been sympathetic to similar clauses in earlier parts of the Bill—so that we see reports and discussion on the scrutiny measures of this House.
Kevin Hollinrake
I wholeheartedly agree that the CMA should be firmly accountable to Parliament across its digital competition and consumer functions. However, that is already the case. The CMA is already required to present an annual report to Parliament. That includes a survey of developments relating to its functions, assessments of its performance against its objectives and enforcement activity, and a summary of key decisions and financial expenditure. The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide an annual strategy steer.
In relation to the CMA’s new consumer direct enforcement functions under part 3 of the Bill, clause 193 gives the Secretary of State the power to request a report from the CMA from time to time on the effectiveness of interventions. Such a report must also be published by the CMA, so that it is available to parliamentarians and the public. I noted her points on the Regulatory Reform Group. I met Lord Tyrie and my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami). They made some interesting points, which I am sure the wider House will have heard. These matters should be kept under review, but for these reasons, I hope the hon. Lady will withdraw the new clause.
Seema Malhotra
I thank the Minister for his remarks. New clause 11 was inspired by new clauses with a similar purpose in the United Kingdom Internal Market Act 2020, so there is an important precedent. I will not press the new clause to a vote, but we will keep the matter under review. I take this opportunity to thank all the Clerks who have been involved in the Committee. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Kevin Hollinrake
On a point of order, Dame Maria. I put on the record my thanks to all the Clerks and the many people who worked on the Bill, including all the officials and my private office, for doing a tremendous job. I thank Opposition Members for their constructive dialogue.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Further to that point of order, Dame Maria. The Under-Secretary of State for Science, Innovation and Technology, the hon. Member for Sutton and Cheam agreed in our proceedings to send a letter and told the Committee that a letter had been sent. No letter has been received and no letter is in the Library. Will the Minister please send the letter as promised?
The Chair
I will leave the Minister to deal with that outside the sitting. The Committee has finished its work.
Bill, as amended, to be reported.