The Deputy Chairman of Committees (Baroness Harris of Richmond) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 20: Right to reject
Amendment 14
Baroness Jolly
Baroness Jolly (LD)
My Lords, I appreciate that the government amendments are technical in nature, so I would like to take some time to explain what they do.
The Bill sets out key statutory remedies, such as the right to reject substandard goods, which entitle the consumer to reject goods, treat the contract as terminated and get a refund, but there is also court-developed common law regarding contracts for goods, and the Bill is intended to work alongside much of that. Amendments 14, 17 and 18 are to explain how the rights to reject goods under the Bill work, where contracts are severable under contract law. By severable, I mean contracts where parts are intended to be independent of each other, so different parts of the payment can be assigned to different parts of the trader’s performance. For example, it could be a contract for numerous goods where payment is due per item or for building work where payment is due pro rata for work done, regardless of whether all of the work has been done. That is distinct from obligations which are entire, when the consumer has to pay only when all the trader’s obligations have been fulfilled—for example, a building contract under which the trader must carry out all the work before the consumer has to pay a lump sum. It is that existing common-law distinction and principle to which the amendments refer.
Let me state from the outset what the amendments are not about. They are absolutely not about preventing consumers from rejecting faulty goods. Where goods are faulty, the consumer has the right to reject them under the amendments. The amendments clarify that where the contract is severable, the consumer has the right to reject the faulty goods and may also have the right to terminate the whole of the contract. Above all, the amendments provide clarity that the Bill would not override the distinction between severable and entire contract, which currently exists in common law.
The Bill, like the Sale of Goods Act, explains the position for contracts where the parties agree to deliver and pay for goods in instalments. A contract, including a mixed contract, such as one where goods are supplied alongside services, may be considered to be severable in other situations. For example, goods may be delivered in instalments but paid for monthly rather than per instalment. I gave some other examples earlier.
Under the Sale of Goods Act, much of the detail of how the right to reject operates is dealt with by common law, whereas in the Bill we have greater clarity about the right to reject. To provide that greater clarity without cutting across the existing concept of severability, we consider that it would be helpful to include some clarification about how the right to reject operates for severable contracts, other than those for delivery and payment in instalments.
Under current law, if a consumer and a trader make a contract which is severable and an item supplied under the contract is faulty, the consumer may be entitled to compensation in relation to the faulty item, or may be able to terminate the whole contract—it will depend on the nature of the goods, the fault, and the detail of the contract. The amendments are intended to set out the position in the Bill.
If the contract is not severable—for example, if the consumer is required to pay only once and the trader has carried out all of the work—the amendments do not bite. The consumer could terminate the whole of the contract if there is a fault in one of the goods.
I turn to the amendments. First, Amendments 14 and 17 are to clarify that the rights to reject goods take account of this common-law distinction between severable and entire contracts. The Bill provides that a consumer should be able to reject goods, including those supplied as part of a mixed contract, where the goods breach one of the statutory rights in the Bill. However, where the contract is severable, in some cases the faulty goods supplied might represent only a small part of the whole contract. These goods or the fault with them may have little impact on other things which the trader must do or supply under the contract. Of course, in other cases the faulty goods may represent most of what the consumer is paying for under the contract, or the fault in the goods may be representative of an inherent fault in other goods which are to be supplied. That is why the amendments provide that the consumer’s right to reject may apply to a severable part of the contract or that the consumer may also have a right to terminate the wider contract.
Whether the consumer can treat the whole contract “as at an end” may depend on the circumstances and the contract. Under common law, the main tests for deciding whether a consumer may treat the whole contract as being at an end in such cases are the extent of the breach compared to the whole contract and the likelihood of the breach being repeated in the other things that the trader is to supply. Imagine, for instance, that a trader has renovated a bathroom and billed the consumer separately for the different items. There is no issue with the trader’s work or most of the items but there is a fault with the sink. Amendment 17 is to make clear that the consumer’s right to reject would apply to the severable part of the contract and not to the whole contract, unless the circumstances justified this. In my example, therefore, a consumer could reject the part of the trader’s performance which did not meet the consumer’s rights—here, it is the sink—but not necessarily the whole bathroom.
Amendment 18 ensures that the distinction between entire and severable contracts is also reflected in Clause 21, which enables a consumer who has the right to reject goods under a contract to choose to reject only some of the faulty goods. Where a contract is severable, the consumer might have the right to reject goods supplied under part of the contract but not all the goods under it. The amendment therefore makes it clear that in this situation, too, the consumer may choose to reject only some of the faulty goods which they are entitled to reject.
As I said at the start, I appreciate that these are technical amendments and if the noble Baroness, Lady Hayter, would like additional time to consider them more fully, the Government are willing to withdraw and not move them at this time and reintroduce them on Report.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I do not want to run before my horse by talking about an amendment which I shall bring up later but I was listening carefully to what my noble friend was saying about the ability to reject part of a contract. In the case that I shall come to in a minute, which will be about custom-made double-glazed units, will that mean that one window only could be rejected?
Baroness Jolly
My noble friend makes a very good point. I have extensive speaking notes on that part and we will come to it later in the afternoon.
Baroness Hayter of Kentish Town (Lab)
I thank the Minister for that. Perhaps it would be helpful if I put on the record what our questions are. I take very much the offer that she has made to withdraw and not move these amendments so that we can come back to them; with them being tabled at this stage, we obviously have not had all the time that we need. Neither have they been scrutinised by the BIS Select Committee or in the Public Bill Committee in the other place. That would give us a little more time and we are grateful for that.
The real question, which the Minister helpfully set out, is whether it is reasonable for a consumer to reject every part of what they think was bought under a single sales contract or only the faulty parts. With the example given, it may be that an entire bathroom suite has been ordered—all in the same pale blue or whatever one wants for a bathroom suite—but if the sink is faulty, that may have implications on the bundle and on whether the quality of the whole is affected by one part.
Though hearing and understanding the intention, we are worried that this proposal could have consequences for big, very expensive items, particularly whether the amendments would create an incentive for traders to supply related goods under separate orders or contracts to try to make the contract more severable. That could apply to a whole furniture suite, a music centre, a matching table, chairs and cupboards, and so on where the householder thinks that they are buying a complete look. Rather like the Minister, I have focused on kitchen equipment and those sorts of things. However, telecoms and media bundles, which can include phone, broadband and television, are increasingly purchased by consumers. Such purchases raise the same issues as to whether they are a single contract or severable.
I should like to lay two further issues on the table because we will, with the Minister’s generous offer, come back to this. Thinking of the whole area, it will at least be possible for the installer or the retailer to take out insurance against the whole or the parts, whereas an individual consumer cannot at the point of installation. The Minister has kindly offered further discussions on the point at which one pays and whether one simply pays at the end of a contract. If it is for something fairly small, that may be simple, but when I have had building work done, money quite rightly has been wanted up front to buy components. We have tended to pay in bits, which makes it sound as if each bit is separate, although it was really just to help a small trader. Again, we would like the time to look at that. If this amendment really is to clarify current law, we would have fewer worries. For the moment, we are grateful for the time and hope that we will be able to sort this out.
Baroness Jolly
I thank the noble Baroness for her comments and appreciate that she needs more time to consider the amendments more fully in the light of remarks on this issue. I am happy therefore to withdraw the amendment with a view to revisiting it on Report.
“( ) A consumer shall not be obliged to incur any costs when returning rejected goods except those incurred in returning the goods to the place where they acquired physical possession of those goods.”
Lord Stevenson of Balmacara (Lab)
My Lords, Amendment 15 would ensure that a consumer would not have pay to return faulty goods other than any costs incurred in returning them to the place where they originally acquired physical possession of them. It is intended to stop traders charging additional costs, such as large postage costs or costs for delivery of large items. I understand the Government’s view and I expect the response to be along the lines of that raised in the other place when this issue was raised; namely, that the present arrangements under the Sales of Goods Act 1979 should be continued. Basically, what is being said here is that when a consumer exercises a right to reject faulty goods, they are not obliged to return the goods unless they have agreed to. All the consumer needs to do is to make the goods available to the trader. The consumer and trader can arrange for the consumer to return the goods but it would be the consumer’s choice.
Of course, it does not exactly make it the trader’s responsibility in that circumstance to do that. The whole of this appears to be on an edifice of good will and sound trading, which often does occur but, in reality, sometimes does not. Good traders are not the ones we have to worry about: it is the unhelpful, nitpicking, take-it-or-leave-it traders who we have all come across and who may say, “Oh yes, we will give you a refund on your sofa but you have to bring it back to the depot”. You then work out how on earth you are going to do that and probably give up in despair.
It has already come up in our Committee that there is clearly an invisible but rather firm line on the part of the Government regarding where they want to go on some of these issues where they feel that the evidence that comes from the earlier legislation is sufficient. However, times are changing, and the sharp practices and issues that have been raised with us as we have approached the Bill need to be addressed. This very simple amendment would put into the Bill something that we think would be good practice. It would help consumers, particularly vulnerable ones, to deal with poor traders, and would level the playing field between the good and the bad retailers. I beg to move.
Baroness Jolly
The noble Lord has eloquently described how unfair it would be for a consumer to have to pay the cost of returning substandard goods. I have a lot of sympathy for the sentiments that he conveys; to receive substandard goods is disappointing and frustrating in itself, but to have to pay the cost of returning them really would heap insult upon injury. Where I think we differ is that I am not convinced that further protection is required. This is because of the protections already in the Bill and in common law. Moreover, there seems to be little evidence of bad practice from traders insisting that consumers fund the return of shoddy goods. Some large online retailers already cover the cost of returning goods, either by arranging for a courier or by providing a freepost sticky label.
The Bill already provides protection by stating in Clause 27 that there is no need for the consumer to return the goods unless they have specifically agreed to do so. The consumer need only make the goods available to the trader—for example, to facilitate their collection. Furthermore, if the consumer rejects the goods and terminates the contract, he or she can also pursue a damages claim against the trader in order to recover further costs that they have incurred, and these damages could include the cost of returning the goods to the trader if they had been required so to do. So although I am with the noble Lord opposite on the spirit and intention behind the amendment, I question the need for it. I therefore ask him to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, that was not unexpected, although I noticed, as the Minister was framed by the TV behind her, that Christmas bells were ringing, and I thought my time had come and this was going to be the first crack in the edifice that has been erected between us in this debate, but sadly not.
We are so close on this that I do not understand why the Minister cannot accept the argument. I find it very strange that the Government would be happy to rest on a situation where a poor, vulnerable consumer, with a sofa that is bulky, difficult and unfit for purpose, has to rely on the good will of the trader to send a courier van, as she has described it, or even to send a sticky label—though I do not think that that would be much use—in order to send the sofa back to the warehouse. What happens if the trader does not do that? Are we really saying that everyone in the country has to become expert in raising small claims charges in small claims courts to try to persuade recalcitrant traders to do what is obviously the expected thing? I do not think so. I hear what the Minister says and I understand where she is coming from, but we might wish to return to this. I beg leave to withdraw the amendment.
“( ) The entitlement to reject shall not apply, notwithstanding the right to repair set out in section 23 and the right to a price reduction under section 24, if the contract is for goods that---—
(a) are made to the consumer’s specifications or are clearly personalised, or(b) have been installed following significant alterations to the existing fabric of a building so as to render return of the product impractical.”
Lord Hodgson of Astley Abbotts
My Lords, this amendment appears to be sticking one’s head in the lion’s mouth, in that it appears at first sight to be an amendment in favour of double-glazing salesmen. Like many Members of the Committee, I have seen examples on various consumer protection programmes where the behaviour has been completely unacceptable. Before Members switch off completely, though, I wonder whether they will bear with me while I drill down a bit into the issue. There have been egregious examples of fly-by-night double-glazing operators but equally there are many reputable firms, some of which offer guarantees as long as 10 years for the performance of their products. It is of course also worth being aware that double-glazing plays an important part in improving the insulation of people’s homes and in the fight against global warming. Therefore this industry has an important commercial role to play in our society. However, the nature of its bespoke—I use the word carefully—way of working can make it the victim of the unscrupulous customer. I will explain briefly what I mean.
New double-glazed windows have to be custom-made. They have to be measured individually, and the new window is thereafter made appropriately. Under present regulations—the consumer contracts regulations; I am sure that the Minister will correct me if I have this wrong—if the windows are wrongly installed, the customer has, quite appropriately, the right to repair. If the repairs are unsatisfactory, the customer is entitled in the end to a discount on the price. Those remedies are of course reinforced in Clause 23: the “Right to repair or replacement”, or in Clause 24: the “Right to price reduction or final right to reject”. I think the industry, and others, would say that in so far as the new provisions do not repeal the existing consumer contracts regulations, we need to make sure that they mesh up and match precisely. The industry supports the provisions of Clauses 23 and 24, as my amendment makes clear.
The challenge to the industry comes from the provisions of Clause 20 and the apparent lack—I hope that the Minister will be able to reassure me on this—of any test of proportionality. If I may take an example, a customer might order a dozen windows to double-glaze his or her house. The windows are measured, manufactured, and fitted. At that point, the provisions of Clause 20 appear to give the customer almost any grounds for rejecting the goods and treating the contract as being at an end. There is no requirement, as I read it, to seek any remedial work before ending the contract. At this point, the supplier is of course in a very weak position. The fitted windows have no alternative use, as they have been specifically measured and made. Moreover, they now form part of the structure of the building, which makes their removal even more legally complex. Amendment 16 merely seeks to achieve some equality of arms, that this absolute unproportional right of rejection as in Clause 20 is limited where goods are personalised and have been installed in a building.
To conclude, this Bill is entitled “Consumer Rights Bill”, and I support its principles. However, not all consumers are angels; therefore there is a concern that without some protection of proportionality these firms may find themselves taken advantage of by the unscrupulous. In addition, of course, the better the firm, the greater the risk, because the fly-by-night operators who should be the focus of our regulatory efforts will by then be over the hills and far away. I beg to move.
Lord Clement-Jones (LD)
My Lords, I will briefly support the amendment in the name of the noble Lord, Lord Hodgson. He has made an even better case than the one that was presented to him in the first case. It struck me that in principle, if we set our minds to it, we could probably find quite a number of other areas apart from double-glazing, which was the example that the noble Lord gave, where goods are manufactured, bespoke, to a customer’s requirements. This particular case is very strong because of the construction work that is required to be done, which you cannot undo without serious damage to a property. I therefore hope that the Minister can give either clarification or assurance that something in the Bill deals with these kinds of made-to-measure products. A very valid point has been raised, and the noble Lord, Lord Hodgson, has put the case extremely well.
Baroness Hayter of Kentish Town
My Lords, the amendment as it is written, not necessarily as it is intended, is what concerns us. As written, it would undermine the right to reject. We do not see why a consumer should have any less of a remedy when something has been made to their specification than anything else. In fact, very often if it is made to their specification it may be particularly valuable, desired and even expensive. They certainly should not lose their rights just because of that. To some extent their rights should be stronger. because they have negotiated and explained exactly what it is that they want. As I was saying to the Minister earlier, I am wearing a made-to-measure garment.
Baroness Hayter of Kentish Town
For readers of Hansard, you would love my crimson chiffon, off-the-shoulder, diamante-encrusted gown. However, at that level, yes, I have made-to-measure clothes, but my grandchildren, called Poppy and Isaac, have “Poppy” and “Isaac” embroidered all over their swimming towels and things like that. I had a very nice hand-painted plate made for my godchild’s wedding. What I would not like to see is that, as a consumer of those made-to-measure or personalised goods, I would lose my rights to reject if they were faulty. If they are for a wedding I am afraid that a replacement probably would not arrive in time. I am not convinced that personalised, made-to-measure things should lose their rights. If it is bespoke it is probably something that has been made fairly specifically.
I understand that the wording used has probably been carried across from the distance contracts rules, where if one orders a personalised product then one obviously cannot reject it simply because one has changed one’s mind, because there is nothing else the supplier can do. We understand that completely, but that is obviously not the same as where a personalised product is faulty. Our worry is that the amendment from the noble Lord, Lord Hodgson, as worded would undermine the rights that a personalised order should have.
If we have read this correctly, the amendment would be not a clarification, but a change in the current law. Our understanding is that the current law has not produced any problems in the past. We have certainly heard no catalogue of complaints, although the Minister might know more than we do about that. Our worry therefore is, whether it is simply my dress or a tailor-made kitchen, that we would want consumers to retain their rights if such a kitchen was full of faults or badly installed. It is a bit like what my noble friend Lord Stevenson said on the previous amendment: I do not think good traders have anything to worry about, but it is the others that we are worried about, who would be the ones most likely to misuse something such as this. Many personalised goods are expensive and very much thought about. If they are in one’s own house it is not that easy to keep having them changed: one has to take more days off work to have that done. This is one’s home we are talking about.
We hope that the Government are not going to accept this amendment, which I am sure is well intentioned but perhaps unnecessary.
Baroness Jolly
I thank my noble friend Lord Hodgson of Astley Abbotts for the reasoning behind his amendment. I also welcome his general support for the principle of the Bill. My noble friend Lord Clement-Jones is absolutely correct in pointing out that the amendment’s application would be wider than double-glazing: spectacles are another really good example of something that is personalised. I am grateful to have the support of the noble Baroness opposite.
The Government disagree with the approach that the amendment takes. The rights to reject in the Bill—both the short-term and final right to reject—represent fundamental protections for consumers where goods do not meet the consumer’s rights under the Bill.
Lord Hodgson of Astley Abbotts
I am grateful to the Minister and particularly to my noble friend Lord Clement-Jones for his support. This is a probing amendment and, quite rightly, some of its defects have been pointed out. However, my noble friend did not answer on whether partial rejection could take place. If I may use the example given by the noble Baroness, Lady Hayter, let us suppose that she bought not just an aquamarine off-the-peg but a crushed raspberry and a shocking pink as well, and let us say it turned out that the garment in crushed raspberry was poorly manufactured. Was she entitled to return them all? Is that part of the same contract? The issue for my noble friend is this: if in the example that I have given there are 12 windows and one is faulty, does the right to reject extend to all 12 windows, or is it limited to the specific article about which problems have been found? In the example given by the noble Baroness, of course she can return the one dress, but can she return all the dresses that formed part of a single order? That is what I am not clear about. I do not know whether my noble friend can illuminate me any further now.
Baroness Jolly
Indeed, my Lords. I will try to keep out of people’s wardrobes. Of course we are keen to ensure that rejection is a proportionate remedy. Amendments 14, 17 and 18 on severable contracts, which we have already discussed, were intended to give clarity here. As was explained in that debate, if the contract is severable, the consumer would have the right to reject the affected part, and the circumstances of the case would determine if they could reject the other parts of the contract.
Lord Hodgson of Astley Abbotts
My Lords, we seem to be getting some good clarity there. I will read carefully, take some further advice, thank my noble friend and all noble Lords who have taken part, and beg leave to withdraw the amendment.
Baroness King of Bow
“( ) Where, given the nature of the goods and all the circumstances existing at the time the contract was entered into, it is reasonably foreseeable to the parties that the consumer will not be able to ascertain whether the goods are in conformity with the contract within the time period set down in subsection (3), the time limit for exercising the short-term right to reject in relation to those goods shall end once the consumer has had a reasonable period in which to ascertain whether the goods are in conformity with the contract.”
Baroness King of Bow (Lab)
My Lords, Amendment 19 allows the period within which a consumer can exercise the short-term right to reject to be extended beyond 30 days when necessary to give the consumer sufficient time to assess the goods. In other words, the amendment is about limited flexibility and maintaining rights available to consumers under current law.
When the Law Commission recommended a 30-day period for a consumer to exercise the initial right to reject, it was on the basis that 30 days would be the “normal period” but that there would be flexibility in appropriate circumstances. The Bill recognises that some goods will typically perish within 30 days, and in those cases a 30-day right-to-reject period clearly is not appropriate. However, the Bill does not recognise that a longer period may be needed in some circumstances. Under current law, a consumer has a “reasonable” period within which to exercise the initial right to reject. The Law Commission recognised that for many purchases a court may consider a reasonable time to be longer than 30 days. We have some of the current case law, including the court finding it reasonable for a consumer to reject a new car after seven months. Presumably without this amendment a consumer would not have that protection from the courts. A more obvious example is a pregnant woman buying a pram before her baby’s birth or goods bought out of season—skis during the summer, lawnmowers in the winter, or the obvious Christmas present scenario.
Without the ability to extend the right to reject in such circumstances, consumers might be worse off under the Bill than under the current law, which allows that reasonable period. That is obviously our concern—and not just ours: apart from the Law Commission, the BIS Select Committee recommended that,
“the Government reconsider an exception to the time limit for the early right to reject where it is reasonably foreseeable that the consumer would need a longer period to inspect the goods and to try them out in practice”.
Amendment 19 would implement that recommendation. I beg to move.
Lord Clement-Jones
My Lords, I am intervening rather unfairly on this amendment to say that I do not support it and that, as the Bill’s passage carries on, a number of sectors will have their voices represented. I want to raise issues that have been raised with me by the motor sector, particularly the Finance and Leasing Association, which represents a wide range of those who finance the purchase of motor cars by consumers.
As we heard, Clause 22 introduces this 30-day right to reject goods if they are of unsatisfactory quality, however minor the defect. Sellers are unable to deduct the costs incurred—for example, depreciations—while the goods have been used by the consumer. As a result, the right to reject could have a particular cost implication in the world of motor finance, where 75% of private new car sales are bought on finance. New cars, as my noble friend may know, typically lose 15% to 20% of their value in the first 30 days, and in the event of a defect the car dealer will have to offer to repair the car, although the customer is not obliged to accept that and can simply opt to hand back the vehicle. In a worst-case scenario, as the FLA says, the customer might have had the car for a month and driven it extensively, clocking up thousands of miles, only to hand it back because of a very minor defect—for example, the windscreen wipers failing to work properly. That is the case that the FLA makes.
I am very happy for my noble friend to write, since this is a rather unexpected intervention. There is clearly a balance to be struck between ensuring that customers are able to return faulty goods and preventing potential abuse. I therefore ask my noble friend whether the department will clarify, in the accompanying guidance to the Bill and in any associated publicity, that this new short-term right to reject should be invoked only if the quality of the goods is genuinely unsatisfactory—that is, the defects are not simply minor mechanical or cosmetic ones—and ideally it should be done as soon as possible within the 30-day period.
Secondly, could my noble friend confirm how this new short-term right to reject fits with Section 75 of the Consumer Credit Act, which already allows the customer to make a claim against a supplier or lender for breach of contract? This Consumer Rights Bill gives the consumer a right to challenge the supplier, whereas Section 75 of the CCA establishes an additional right to pursue the creditor for breach by the supplier. Will the Government be making clear in the guidance that the customer must obtain recourse from the supplier first, and that the supplier must not renounce responsibility on the grounds of Section 75?
Baroness Jolly
My Lords, this amendment reflects a recommendation by the Law Commission in its 2009 report, Consumer Remedies for Faulty Goods. Many of the recommendations in that report are implemented in the goods chapter of the Bill. Indeed, a normal period of 30 days was recommended by the Law Commission as giving a reasonable opportunity for a consumer to inspect goods, as well as meeting the expectation of consumers. However, I am concerned that the amendment would undermine the benefits of certainty provided by the 30-day time limit for the short-term right to reject.
Here I am staying with the example of the pregnant lady buying a pram. Let us look at the example of a pregnant woman who buys baby equipment in preparation for the birth of her child. The amendment would allow her to exercise the short-term right to reject potentially months after purchasing the goods, should it transpire that they were faulty. On the face of it, that may seem fair, but I see many issues that could arise to make this impractical. If a friend who was not pregnant bought the same goods for the same unborn baby, it is not clear whether it would be reasonably foreseeable that there might be a delay before they were used. Should all baby-related goods be subject to a longer period for rejection because it is not unreasonable to think that they may be for a baby who has not yet been born? Or would this only be reasonably foreseeable if the consumer said something to indicate it, or had a sign, such as being pregnant?
If it was reasonably foreseeable that there may be a delay before the consumer would use the goods fully, it seems difficult to know what the reasonable period would be. Take the example of a consumer buying skis in the summer. What is the reasonable period for the consumer to be able to test them? A week into the European ski season, or a month? Not until the end of the season? How would the trader know when the consumer came to return the goods whether a delay was reasonably foreseeable when the consumer bought them? Would the trader have to keep a record of who bought what and any relevant circumstances, such as when they said they would start to use it? This would be extremely burdensome on businesses.
Baroness King of Bow
My Lords, I thank the Minister for her response but the key point here is that consumers, in some circumstances, will see a reduction in their rights under the current law. That is what would worry me, if I were one of the Ministers taking the Bill through. It is the Consumer Rights Bill, not a consumer rights reduction Bill. Notwithstanding the examples of pregnant women all over Britain, we want to see those rights upheld. The Minister spoke about the undue burdens on business. In theory, I could have some sympathy with what she was saying but in fact, as things stand, we do not see Britain awash with businesses in disarray as a result of the current law. Given that, it seems strange that we would reduce the rights that consumers currently have.
I thank the noble Lord, Lord Clement-Jones, for raising the issue of balance because that is the key issue here: the balance of rights for both businesses and consumers. So, lastly, we think that this is an important issue. Both sides seem to come back to the pregnant women conversation. On hearing of this debate, should any pregnant women with backache in the middle of the night be reading the Hansard of this Committee, they will no doubt hope that they do not have overdue babies but women who have premature babies may rejoice at the current passage of the Bill. I beg leave to withdraw the amendment but we may well return to it at a future date.
“(a) do so as soon as reasonably practicable and in any event within 14 days, unless the consumer expressly agrees otherwise;(aa) do so without significant inconvenience to the consumer; and”
Baroness Hayter of Kentish Town
Amendment 20, which stands in my name and that of my noble friend Lord Stevenson, aims to provide greater clarity on how long a repair should take and, therefore, how long a consumer must wait before they may be entitled to a refund or a price reduction. At Second Reading, the whole House was very supportive of the aim of the Bill to increase clarity. Under current law, and under the Bill, where a consumer asks for a faulty good to be repaired, the trader has to do so within a “reasonable time”. However, “reasonable” is not specified, which causes uncertainty for the consumer but probably for businesses as well.
We are very keen that the Government’s new remedies should work but they will do so only if customers feel confident about their rights, particularly about when they can exercise those rights. As we have just been discussing, elsewhere in the Bill there is a significant change that we welcome, where the 30 days replaces the reasonable period to reject. The Minister has just emphasised the clarity of that. Our concern is that in this area the word “reasonable” remains as regards how long it takes to complete a repair. Clearly, the range of goods covered goes from yo-yos to the double glazing referred to by the noble Lord, Lord Hodgson. It would apply to an enormous range of goods and therefore it is difficult to have a precise time for all repairs.
Amendment 20 therefore proposes a longstop, coupled with an obligation for traders to effect the repair sooner if possible. For most repairs, 14 days would be absolutely adequate, even if spare parts had to be sourced from overseas. But the amendment also would provide flexibility where the consumer could agree to a longer period where they are happy to do so. This may be in cases such as those raised by the Glass and Glazing Federation where on-site visits will have to take place before any repair could be ordered, let alone fitted. That flexibility obviously would be possible. For other goods, there is no reason why they should not be repaired in less than 14 days. In a Which? survey, more than half of the respondents said that traders should not have more than 14 days to effect a repair. After all, that would leave a customer without the goods for quite a long time.
The clarity that this amendment seeks is to empower consumers to exercise their rights. In other words, they will know that they can ask for a repair to be done in that time. We think that it will reduce unnecessary disputes as to what is reasonable because both sides will know what to expect. It will also deter poor practice. The problem that the consumer has is that, while they are awaiting a repair, they are caught: they do not have the good; they do not have the money, so they cannot replace it at another shop; and they cannot have it repaired by another trader because they would have to pay for it. At that time, they would be very vulnerable. We hope that this amendment will facilitate the clarity that the Government seek in this Bill. I beg to move.
Baroness Jolly
My Lords, first, I acknowledge that a minority of consumers may be frustrated by lengthy waiting times when they have asked for a repair or a replacement. We have found little evidence that the time taken for repairs is a common problem. The Consumer Engagement And Detriment Survey 2014 found that of those consumers who had experienced a problem with goods and services, only 5% had a problem with a failed or delayed repair and, of this group, delayed repair is likely to be a smaller problem.
BIS has considered a time limit with regard to repairs and replacements. There was a consultation in 2012 and we discussed the issue further with stakeholders, consumer organisations and traders. On the basis of that consultation and those discussions, we concluded that the best approach is a simple limit of one repair or replacement of goods that must be provided within a reasonable time and without significant inconvenience to the consumer. I am concerned that setting a longstop date for repairs or replacements lacks the necessary flexibility to deal with all types of goods in all circumstances. Attempting to apply such a broad rule would at the least be burdensome to some businesses, but may also lead to unwanted consequences.
The Bill provides flexibility because the time needed to carry out a repair will depend on the goods and the circumstances. In most cases of repairs there are a number of factors beyond the control of the trader, so a backstop period may impose a burden. If goods are faulty and the consumer wishes to reject them under the short-term right to reject, this is a simple process. The consumer need only notify the trader that they wish to do so. On the other hand, repair or replacement of goods is a more involved process which will vary according to the goods in question and the type of fault. The application of a specific time period for repair work cannot effectively take account of all the relevant factors that affect the trader’s ability to provide a repair or replacement.
Repairs are often not carried out by the trader themselves, so the goods may need to be transported to and from the repairer. Further time is added if parts need to be ordered. For complex goods, time-consuming processes of diagnosing the fault and testing the repair may also be needed. The amount of control that the trader has over those factors is proportionate to the size of the trader. Small businesses have relatively little or no control over their suppliers and so would bear a larger burden. The British Retail Consortium gave the following evidence when this issue was discussed in the other place. It said that for small and medium businesses, setting a deadline for repairs is,
“more difficult … because they cannot have control over third parties that are perhaps coming in to do the repair … If that was regulated, clearly that would be one-size-fits-all, and would, I fear, penalise small, medium-sized and micro-businesses”.—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 33.]
The amendment would enable the consumer to agree to an alternative timescale. While this goes some way to providing flexibility we do not believe that it does enough, for two reasons. First, it opens up the possibility of the consumer simply refusing to agree an alternative timescale where it is impossible for the trader to provide a repair or replacement within 14 days. This creates an opportunity for the consumer to circumvent the first-tier remedies altogether, to the cost of the trader. Secondly, the amendment suggests that the alternative timescale should be agreed in advance. In many cases it will only become clear in the course of carrying out the repair that a longer period is necessary. If a repair takes a long time, of course, the consumer may well suffer inconvenience from being without the goods. The Bill already allows the consumer to move to the second-tier remedy if that happens. That protects the consumer, while still allowing the flexibility needed for the rules to work for different goods and circumstances.
The second main concern we have about this amendment is the risk of unwanted consequences. I underline the fact that we believe that repair is a vital remedy; it provides the trader with the opportunity to put right what has gone wrong, while enabling the consumer to have the goods they wanted. If done properly, it meets the needs of the consumer while reducing the burden on the trader and is more environmentally friendly as it is less wasteful than rejection. We are therefore concerned about any amendment, such as this one, that could shift the balance and lead to more rejections over repairs.
Imposing a backstop date may lead to a reduction in the quality of repairs. The trader may feel pressured to do a “rush job” to get it back in time rather than having the time needed to get it right. If consumers begin to lose faith in repairs, this could lead to an increase in rejected goods, which would be wasteful and costly. This is not just limited to repairs. Flexibility is also needed where a trader is to provide a replacement, as the necessary time will depend on factors such as stock, their source, and whether the goods were bespoke. Bespoke goods are a good example of where the amendment could be problematic. Many bespoke goods will take longer than 14 days to make, in the case of a replacement, or to repair.
Creating a backstop 14-day period, and requiring the consumer’s agreement for a longer period, means that the consumer would always have an automatic right to veto the repair or replacement and move directly to rejection or money off for these types of goods. This would be hugely detrimental to the whole industry, which is especially concerning when you consider that many of the businesses offering bespoke goods are small, specialist traders that would be hit hard by these costs. I therefore ask the noble Baroness to withdraw the amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that thoughtful reply. Maybe we should revert to day one of Committee, though: if the Minister is going to help micro-businesses, we should make them consumers under the Bill. However, we decided that on an earlier day. I want to put on record that we welcome the main point about having one repair before rejection; we do not in any way question that.
I have only one comment. Which?, representing consumers, is very much in favour of this, and although I said its research showed that half its respondents said that 14 days was the right limit, one in five of them actually said that it ought to be seven days. I did not use that figure before. It is interesting that that group of consumers want quick repairs whereas the Minister quoted the British Retail Consortium, which clearly represents a different interest, and to some extent this is a balance between the two. I thank her for her comments and beg leave to withdraw the amendment.
Lord Clement-Jones
(a) ”
Lord Clement-Jones
My Lords, I shall speak also to Amendment 20B. I am afraid that I am going to do exactly what the noble Baroness, Lady Hayter, did not want to do, which is to question the “one repair” point. I return to some of the concerns of the motor industry. The Society of Motor Manufacturers and Traders and the National Franchised Dealers Association have raised significant concerns over the wording of Clause 24 regarding “one repair” and the right to reject the product and demand a refund. These concerns are centred not on the principle of the right to repair or replacement itself but rather specifically on what “one repair” entails. This issue is of course particularly pertinent to the final right to reject in Clause 24.
At present the Bill does not specify what “one repair” would entail but the draft guidance states that one repair means a single attempt at repair and that the trader can offer further repairs and replacements, but only if the consumer agrees. Members of the motor industry and the trade seek clarity over the definition of “one repair”, and do not accept that the current status of the draft guidance provides a fair interpretation of what is really needed to give clarity. They point out that the notion of a single attempt at repair, as set out in the draft guidance, is problematic for highly complex consumer goods such as motor vehicles. They say that these complex products may show a fault that requires more than one repair, involving a series of visits to the garage so that the fault can be diagnosed and tested, and have causes ruled out. In addition, a repair may appear complete but the fault may reappear, as can be the case with electrical faults, and a second or subsequent repair may fix the problem. These issues are likely to become increasingly apparent as motor vehicles become even more technologically complex, as they have done over the past few years.
The amendment seeks to include a definition of “one repair” to permit a process of repair and provide traders and dealers with a fair opportunity to fix these complex goods. It is worth noting that the consumer will still be fully protected by the right to repair or replacement under the amendment, as the process of repair would still need to be completed within a reasonable time and without significant inconvenience to the consumer. I hope that at least meets the interest of my noble friend, as this is a matter of considerable concern. On the previous amendment to which I spoke while seeking further clarification on the guidance, I note that my noble friend answered the second point about the CCA but not the first: what clarification the guidance would give for minor defects. Perhaps my noble friend can write to me on that matter. In the mean time, I beg to move.
Baroness Hayter of Kentish Town
We think that the noble Lord has brought an interesting issue to the Committee; I do not know whether the Government find it such. However, we are unconvinced that this needs to be detailed in the Bill as suggested. The Bill simply states that repair means making the goods conform to the contract, which means making them deliver what was promised. I do not think that it says “at one go”. Obviously, we look forward to hearing what the Minister will say on that.
However, the Committee will not be surprised that our worry is that the danger of the new wording is to allow a trader to make more than one repair and then claim that it was simply different stages of the same job, whereas actually they may have tried this, that and then something else—and want another go if they did not do it at first. I recognise that that is not what the noble Lord, Lord Clement-Jones, is aiming at, but the wording might allow for that. It is exactly to avoid such situations where consumers are fobbed off by a number of unsuccessful repairs before they can move to the next stage that we like the clarity of the Bill and would not want it jeopardised by these amendments, no matter how well-intentioned they might be.
As we are into personal stories, such as my clothes, let us take my new car. Of course, it got a great big problem and I took it back to Nick but rather than opening the bonnet all he did was to put a computer on top of the car, which seemed to tell him what was wrong. I do not know how that worked but 55 minutes later it was completely mended. Cars, which I no longer understand even if I once did, may be more complex but one does not want to have to keep going back to the trader. We worry that the amendment would lose the clarity that there is in the Bill.
Lord Borwick (Con)
My Lords, Clauses 23 and 24 as they stand seem to state that a consumer can have their money back if one repair does not fix the problem. That is reasonable for a product such as a television but it may cause problems where the fault is less obvious. Some products are incredibly complex; just as complex as consumers.
While we are telling personal histories, from my time in the London taxi industry I know that the clause would cause huge problems for car repairs. We had a customer bring in a taxi for repairs to his rear axle. My mechanics could not find anything wrong with it, and they therefore stupidly said that they had mended any problem that existed. However, the customer brought the car back, insisting that he was hearing dreadful noises from the back of the car. It turned out that the customer had spanners stored in the boot of his taxi that were slipping around. He removed them to bring the car to the garage, which is why no fault could be found. He then put the items back into the boot and so began hearing strange noises again as things slipped around, so he brought the taxi back in. Would the clause as drafted mean that we would have had to refund him because we did not fix the problem the first time around? You can have two problems—one masking the other—and you may need a process, as suggested in the amendment, to resolve some problems.
Baroness Jolly
I thank my noble friend Lord Clement-Jones for his clear explanation of the purpose of these amendments, and other Peers who have added their thoughts. The amendments reflect concerns that the motor industry in particular has about a single repair or replacement. Officials have engaged with the industry on this throughout the Bill process—I do not think that spanners came into the conversation. If it will help to allay the noble Lord’s fears, my noble friend Lady Neville-Rolfe or I will be happy to meet with representatives of the motor industry to discuss their concerns.
I am concerned, however, that these amendments would undermine the clarity of the Bill and the consumer protection that it provides. When the Law Commission consulted in 2008 on clarifying when consumers can move to a second-tier remedy, it concluded that the best and simplest way to make the law on repairs and replacements an effective protection for consumers was to create a cut-off so that after one failed repair or replacement the consumer was entitled to a second-tier remedy. In 2012 BIS consulted again on this matter and reached the same conclusion.
In both consultations, evidence was given by Which? and Citizens Advice of consumers becoming trapped in a cycle of repairs or replacements that failed to fix the problem but where it was not clear whether the existing triggers for the second-tier remedies were met. In fact, one of the examples given was that of a car. The limit of one mandatory repair or replacement before the consumer is entitled to money back mitigates this risk. The consumer should never find themselves without a clear route to a satisfactory outcome for them.
These amendments would entirely undermine that certainty. For complex goods, they would allow a single repair to be extended indefinitely over a number of attempts. The intention in the Bill is that after a single repair attempt, the consumer is entitled to a second-tier remedy if the goods are still faulty. Under the amendments, while the consumer would not be trapped in a series of failed repairs, they could easily become trapped in one ongoing repair without an end in sight. Just to be clear, the effect on the consumer would be the same, and I am sure that noble Lords can see that.
The noble Baroness, Lady Hayter, talked about one repair and there have been some comments about what “one repair” means. The Bill is clear that a repair is an attempt to bring the goods into compliance with the Bill’s requirements. One repair is complete once the trader returns the goods to the consumer in response to the consumer’s request for a repair.
Of course, it is also important to remember that the Bill does not prevent the consumer from agreeing to further repairs. If goods do not conform to the contract after a single repair attempt and the consumer would prefer the trader to carry out a further repair rather than rejecting the goods, they are entitled to choose that.
I know that the motor industry has an excellent track record in providing good service to consumers, and that rejection is rarely resorted to by consumers because of the warranties supplied for motor vehicles and the repairs that they provide. There is no reason to believe that consumers will change this behaviour under the Bill; they already have the right to reject under the current legislation but choose not to do so in many cases.
If noble Lords consider the consumer’s position when a fault occurs with a vehicle, they will see that a repair, rather than rejection, is often in the consumer’s interest. It makes sense that consumers take time to choose expensive items. It also makes sense that it is not very appealing to give up on something that one has spent a lot of time and money considering and selecting. Presumably, the consumer has the car for practical reasons such as going to work, the school run, or doing the shopping. If the consumer rejects the vehicle, they will have the inconvenience of getting another one to carry out these normal day-to-day activities. However, the industry says that repairs are generally completed quickly, and where there could be a delay a courtesy car is often provided to mitigate any inconvenience to the consumer.
I believe that repair will remain a crucial remedy that consumers want so long as business, such as the motor industry, continues to provide effective, convenient repair. Crucially, the consumer is protected in the Bill in the worst-case scenario of a series of repairs failing to bring the vehicle up to standard. These amendments would remove that protection.
Where the faith of the consumer in the trader is eroded following a repair, the consumer should have the right to exit the contract or get some money back. They should not be trapped without further recourse. On the basis that the amendments undermine a key consumer protection that the Bill establishes, I must ask my noble friend to withdraw the amendment.
Lord Clement-Jones
My Lords, I thank my noble friend for her response, rather negative though it was. I suspect that to some degree we are victims of our own personal experiences in this respect. The noble Lord, Lord Borwick, whose support I am grateful for, has had some unfortunate experiences from a business point of view; on the other hand, the noble Baroness, Lady Hayter, looks at this through rose-tinted glasses, having had her car repaired in a trice. It therefore depends on where you stand on this. I do not accept the Minister’s point that the amendment would have the effect of extending the repair indefinitely or undermining, which was the word that she used, the whole edifice that has been established here—that is a rather an extreme view about this.
The Minister’s statement about what “one repair” constitutes may go further than the wording of the guidance, some of elements of which I found quite helpful. That may horrify her, but she may have gone further than guidance, in which case I would ask that the guidance is looked at in the light of what has been constructed as a response today. That would be helpful.
I suspect that the industry will continue to kick the tyres of these clauses, to coin a phrase. It is still concerned about them. It may be that some tweaking could be done without opening the door in the way that the Minister thinks we have done in these amendments. I think that there will be some further discussions and I welcome in particular her offer, and indeed on behalf of her noble friend Lady Neville-Rolfe as well, to continue those discussions with the industry, which after all is an extremely important sector for us. In the mean time, I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, we now move to a tricky and, from our point of view, rather serious amendment. The other amendments have been serious, but this is a significant amendment that we wish now to move. Amendment 21 stands in my name and that of my noble friend. I shall speak also to Amendment 22.
Clause 24 deals with the right of the consumer to receive a refund for faulty goods. It allows the seller to make a deduction from that refund to reflect the use that the consumer has had of the goods if it has been over some time. For example, if a sofa falls apart after a year—and, no, I do not have such a sofa—the seller can deduct a proportion of the price which reflects the use that has been made of it at that time. However, if the refund is sought within six months, there should be a full refund with no deduction for use.
However, the Bill creates an exception to that full refund within six months for items that it describes as having an “active second-hand market”. Our fear is that this could undermine the otherwise clear and final right to reject. Our amendment would remove that exception and retain the principle of a full refund in the first six months for all goods.
Our understanding of the background to the introduction of the “active second-hand market” let-out is that it addresses the particular issues of new cars, which it is estimated lose 40% of their value in their first year, about 10% in their first couple of yards as they are driven off the forecourt and up to 20% in the first 30 days. The argument is that a car dealer should not be required to provide a full refund in the first six months when, simply because of the way the car market works, the car has lost a significant amount of its value.
However, it seems to us that if the consumer, wanting a new car, has bought a faulty one, they should get a full refund. Otherwise they cannot replace what they thought they were buying—a new car—with another new car, because there will have been this deduction in value. They will not be put back in the position where they can buy a car and be the first registered owner, which is what makes it especially expensive to be the first owner of a car. The sums involved are quite considerable. I have it on good advice—since I have not bought a new car but, rather, have a newly bought car—that a new car could cost £35,000 but, if it was faulty, the dealer could reduce what they got back by £5,000. That leaves the consumer without a new car but with only £30,000 instead of £35,000 in their bank, and perhaps only 500 miles on the clock.
The other issue about the drafting of this clause is that it does not restrict the exemption from the deduction for use only to cars but covers every other sale of goods where the trader can demonstrate that there is an active second-hand market. The Government have argued that they have carefully drafted to cover only second-hand markets for sale “by traders to consumers”, to exclude the general eBay type of second-hand markets of individuals selling to individuals. There are a lot of other second-hand markets of traders to consumers, both online and on the high street, of furniture, second-hand clothing, vintage jewellery and—as I know better—bicycles, and so on, but if you buy a new one and that turns out to be faulty, you want the money back to buy another new product.
We are therefore worried that consumers will be denied a full refund for new furniture that collapses, clothing that is so damaged that you cannot even wear it, or broken jewellery, simply because there is an “active second-hand market” for these and the trader says, “I’ll deduct it for use because you had some use of it”, even if they could not wear it or carry it, or whatever the case may be. Another problem is that, as the clause currently stands, the seller determines how much should be deducted for use; it is not a negotiable price. That creates quite an escape clause for dodgy traders, who have the freedom to set that reduction-for-use amount without it being reviewable as an unfair term because it would count as priced.
The then Office of Fair Trading and the Law Commission have both opposed this exception. The OFT thought that the drafting on “trader to consumer” did not exclude eBay-type comparisons, as many traders operate on eBay. The Law Commission opposed the deduction for use for the first six months and has urged us in Parliament to consider removing it, citing how much ill-feeling was caused by such deductions. As it said:
“Consumers felt that where they had paid for new goods, they wanted new goods. If the first goods were faulty, they wanted to be able to start again, with enough money to buy other new goods, not second hand ones”.
Which? worries that the let-out,
“could leave consumers out of pocket”,
and,
“does not give consumers the certainty and protection they need”.
I understand that the Government have been focused on this let-out being for these very high-value goods, which lose their value very rapidly. The Minister in the other House said that the drafting had followed the recommendations of the BIS Select Committee. However, the Select Committee was critical of the drafting, pointing out that the lack of a definition of an “active second hand market” had been criticised in many submissions that it received. It also said that it would apply to most goods, which rather contradicts what the Government said about there “normally” being no deduction for use. The committee felt that the drafting would cover a lot of goods, and pointed again to the advice of the Law Commission that the deduction for use was “inflammatory” for consumers. According to the Select Committee, the Law Commission also said that it was rarely employed, so it may be an unnecessary complication.
The Select Committee concluded that,
“neither the policy … nor the drafting … on deduction for use is clear”.
It did not believe that the exemption from the six-month refund rule was workable, and recommended the deduction-for-use clause. It said that, should the provision be retained, the reference to a second-hand market comparison should be removed, with any deduction for use being based on the lifespan of the goods. In the case of the car I assume that this means that, if you had it for five months, the deduction would be based on five months’ use rather than on whether you could actually buy a five month-old car.
The clause may again be well intentioned and aimed at a particular problem with a particular product, but the catch-all is so wide now that it is probably misguided. It certainly seems unworkable, could be unfair and could undermine consumers’ rights on a much wider range of goods.
The British Vehicle Rental and Leasing Association supports our amendment. It pointed out that in certain industries, particularly electric cars, there has not yet been enough time to develop a second-hand market, which might make it less likely that people would buy a new type of car. They would know that if anything went wrong with it they might lose their rights and be less likely to get their money back, the second-hand market not being a deep one.
I urge the Government to rethink the clause. If it really is simply cars that they have in mind, it might be better to deal with them in a different way rather than risk a much wider range of goods being caught by this provision. I beg to move.
Baroness Jolly
I thank the noble Baroness for outlining the reasoning behind her amendments, and will look first at Amendment 21. The principle of deduction for use is fair. Where the consumer has enjoyed uninterrupted use of the goods, the consumer should be accountable for that use. For example, if a consumer has been driving a car around for three years of normal use and then a fault manifests, the trader should be able to reduce the refund to take account of those three years of unaffected use. Of course it is right that consumers should be able to exit the contract at that point, but it is unfair to require the trader to bear the costs of that use.
When the Government consulted on the issue, only a very small minority of respondents to BIS’s consultation favoured scrapping the deduction for use, and two-thirds of online respondents agreed that it was right to allow a deduction to be applied in some instances. However, it is frustrating for consumers to get a partial refund even though they have had little use of the goods. The irritation of having to deal with a fault often eclipses what little enjoyment the consumer may have had from the goods, so the Bill includes a new protection that prevents, in most cases, a deduction from being applied within the first six months. There is a limited exception to this rule and it is this exception that Amendment 21 would remove.
Baroness Hayter of Kentish Town
I thank the Minister for that. Unfortunately what she said—that this is aimed at complex and high-value goods, which I absolutely understand—is not stated in the Bill, so it will not just cover those goods. It will cover things where there is a make and model, but that does not necessarily make them complex or high-value. We can perhaps come on to whether or not it affects cars, but we have a real concern that this will go far further than complex and high-value goods: it may cover yachts, helicopters, jets, planes and cars, but it will include anything else where a make and model can be covered. We continue to have worries on that. This will therefore be something we will need to come back to, but for the moment I beg leave to withdraw the amendment.
Baroness Howe of Idlicote
“Right to redress
(1) Where the consumer does not believe that remedies offered adequately resolve the original problem, the consumer has a right to seek redress from an alternative dispute resolution scheme, as provided for in statute or as approved by the competent authority.
(2) The Secretary of State must appoint a single competent authority.
(3) For areas not covered by an approved or statutory alternative dispute resolution scheme, the Secretary of State must appoint a residual body to provide this service.
(4) The Secretary of State must ensure that consumers have a single point of contact to identify the relevant alternative dispute resolution scheme.”
Baroness Howe of Idlicote (CB)
My Lords, the Bill offers an excellent opportunity to simplify and improve the consumer rights and redress landscape across the UK. Much of the Bill is certainly to be welcomed, consolidating and simplifying the existing landscape surrounding consumer redress as it does. However, it is notable that reference to alternative dispute resolution —ADR—as provided by ombudsman schemes and strongly backed by Which?, is absent from the Bill.
ADR provides benefits to both customers and businesses. For consumers, it offers free, fast and effective redress when things go wrong. For businesses, it provides a cost-effective way of improving the trust in and performance of their organisation. However, the current landscape surrounding ADR is complex and confused. ADR is available in some sectors but not others. In some sectors, ADR schemes cover only part of the market; in others, multiple ombudsman schemes exist. This patchwork of provision means that consumers face a complicated and confusing landscape and are often unaware of what support is available to them. I believe that my amendment would help to improve the situation.
In keeping with the ethos of the Bill, the amendment would simplify the ADR landscape and, importantly, strengthen access to redress for consumers across all sectors. Importantly, too, the new clause would formally set out the existing rights to redress that consumers have and ensure that all ADR schemes are consistent in standards and quality of services, improving the support and protection available to consumers. It would also ensure that the Bill complements work currently being undertaken as part of the transposition of the EU directive on ADR. The directive, to be transposed by spring 2015, requires businesses across all sectors to offer redress via an ADR scheme, either as a specific scheme or as part of a wider residual scheme. Lastly, and equally importantly, it would provide for a single point of contact for consumers, who could then be directed to the relevant ADR scheme depending on the nature of their problem.
The amendment would materially benefit consumers across all sectors by formally establishing the right to redress through ADR, paving the way for wider coverage of ADR schemes and achieving simplification in the system. I beg to move, and would welcome the views of the Government and others on the amendment.
Baroness Drake (Lab)
I support the noble Baroness, Lady Howe, on Amendment 23. At the moment, in so many areas of retail, the primary route to a remedy if there is a dispute is to go to the courts, but going to a court is far too daunting and complicated for many people. The paperwork may well put them off. The court fees may act as a disincentive, especially if the goods purchased are modest in monetary value. Even if a consumer wishes to begin by going to the small claims court, if a case is considered complex by the judge, it may be transferred to the normal county court list, which would definitely deter and daunt most people.
I realise that mediation has been introduced in small claims cases, but the psychological impact of going to court—its legalistic aura, the language of the courts and dealing with the necessary paperwork—can all still be off-putting and a deterrent. The behavioural response of consumers to alternative dispute resolution and the courts is very different. The court system is not really fit for purpose for many ordinary consumers, certainly in respect of smaller consumer rights claims. As the noble Baroness put it so compellingly, alternative dispute resolution is essential, otherwise consumers will have their rights enshrined in a new Bill but many will be deterred from exercising them. Consumer inertia in pursuing rights and securing remedies will remain strong—an assumption, unfortunately, that some traders build into their responses and their market behaviour.
Consumer rights and access to an effective means of enforcing them need to be inseparable. You can give consumers all the rights in the world, but if they are deterred from exercising them because the process is off-putting, complicated, disparate or whatever, as was clearly set out by the noble Baroness, their rights will not be effective and the market will remain dysfunctional in part.
The Bill has several clauses that relate to redress, but it does not lock into an alternative dispute resolution scheme. It seems extraordinary that a Bill so focused on securing and improving the position of consumer rights does not seize the opportunity to lock into ADR. I know that the Government are consulting on the details of such a scheme in the light of the EU directive, but that in itself is not a reason for missing the opportunity to use the Bill to place a duty on the Secretary of State to implement such an alternative dispute resolution scheme. As the noble Baroness pointed out, a key purpose of the Bill is to consolidate, simplify and strengthen consumer law.
The Government agree—it was confirmed by the Minister, Jenny Willott—that if we are to have a consumer rights system that works, ombudsmen and alternative dispute resolution will be critical parts of it. Having conceded that fundamental analysis and intellectual point, we have this big omission in the Bill. Although the Government are working on implementing the EU directive and looking at the different options, the amendment does not inhibit or undermine that detailed work. It does not prescribe exactly how the directive will be implemented; rather, it makes clear in the Bill that the right to redress for consumers must include access to an effective, independent alternative dispute resolution regime and that the duty is on the Secretary of State to ensure that that happens. The amendment would not prejudice the outcome of the consultation on the implementation of the ADR directive but would clearly place the duty on the Secretary of State. Having followed the debate on this in the Commons, it would appear that the only argument mobilised by the Government is that somehow it would prejudice the outcome of consultation. I do not think that it does, because it enshrines a fundamental principle which the Government concede is essential to an effective system of consumer rights. The detail of implementing that principle can be left to the outcome of consultation and subsequent regulation.
Baroness Crawley (Lab)
My Lords, I, too, support the amendment in the name of the noble Baroness, Lady Howe of Idlicote, and, in doing so, refer noble Lords to my consumer interests in the register.
As we know, the alternative dispute resolution directive requires the existence of simple, efficient, fast and low-cost ways of resolving domestic and cross-border consumer complaints—without the need to go to court, as my noble friend Lady Drake just said. It also assists business, as the noble Baroness said. ADR should have expertise; it should be independent; it should be impartial. The process should be transparent, effective, fair and legal. Member states are required, as the noble Baroness, Lady Howe, said, to identify competent authorities to ensure that ADR entities are competent to deliver the directive’s requirements. That process is ongoing.
The important point to keep in front of us today is the need to keep the environment as simple and as accessible as possible for the consumer. Although there is a need for sectoral expertise in transposing the directive, it is also important to have a low number of brands involved and a common front end or entry point, as both noble Baronesses have referred to, for the consumer to access a resolution to their complaint, be it a low-level complaint or a highly complex one.
The amendment in the name of the noble Baroness, Lady Howe, backed as it is by respected consumer bodies, will give consumers the confidence of legislative heft when it comes to this important new aspect of justice for consumers, which has attached to it a date of spring 2015.
Accepting the noble Baroness’s amendment is not gold-plating in any way; it is ensuring that the Government’s implementation of the ADR directive is a feasible process in the first place. I hope that he ramendment is given the serious consideration that it deserves.
Baroness Hayter of Kentish Town
My Lords, as has been clearly stated, the proposed new clause addresses what my noble friend Lady Drake says is the extraordinary absence from the Bill of any mention of the EU directive on ADR, the absence of any right to go to independent redress, and indeed the absence of any reference to what has just been mentioned—the competent authority to be set up to approve such schemes according to the EU directive.
The amendment would also add a very welcome missing element from the directive: the right for a consumer to have their complaint heard by such an alternative dispute scheme. Without such a scheme, we wonder what will happen to consumers when they cannot agree on the remedies set out in the Bill. Elsewhere, the Government have said, “They should go to Citizens Advice”, which I hope will be well funded to do all this. However, even if they do so, Citizens Advice cannot adjudicate; nor can it enforce any remedy. As has been said, the only alternative then is for the consumer to go to court for damages, and the reality is that that will not happen. At the moment, legal and financial clients, social housing tenants and patients can all go to an ombudsman; there are statutory ombudsmen for all those. The Government are in due course going to implement the directive, so they agree with us that consumers should have access to ombudsmen across the whole market.
The BIS Select Committee asked the Government why on earth the EU directive had not been included in the Bill. Which? regretted that it was omitted, and the OFT, as it was at the time, asked for the incorporation of the directive into the Bill. Two really quite good things are happening. I know that I am not allowed to say that the Government are doing good things—but they are with the Bill. Some people would not like me to say that the EU was doing good things, but I am happy to say that it is with its directive. So we have two good initiatives coming along, but would you know it? They are being handled in different ways with different legislative processes and on different timing.
It is not as if this is a difficult issue. The British Retail Consortium and the Federation of Small Businesses welcome the alternative dispute approach to dealing with problems, rather than going to court. As Martin Lewis commented when he was giving oral evidence to the Public Bill Committee, unless the Bill and the directive are joined up,
“you are going to have a wonderful Bill that gives people many new rights”—
he went further than I would about the Bill—
“that they are never going to be able to use”,—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 55.]
because they will be without redress. The Government have assured us that the new directive will be implemented by spring. However, we still await their response to the submissions that BIS got to its consultation, which I think finished five months ago. The clock may be slow in this Room today, but it is ticking. We may have no chance to debate BIS’s response to the consultation because it may not be dealt with in primary legislation, which also seems a shame.
Most importantly, the two items are two sides of the same coin, so we hope very much that the noble Baroness the Minister will accept the amendment today. Whether or not the exact words please her we understand, but if she could accept that there should be reference to and embedding of the ADR in the Bill, that would be to the credit of the Government. We will then try to seek credit for it, but we will give it to the noble Baroness, Lady Howe, instead. It would be a wise Government who did this and took the full credit for it.
Baroness Oppenheim-Barnes (Con)
Could I just highlight one of the main points? The noble Baroness mentioned the AER. One of the directives that she has mentioned as dealing with the way in which payday loan information is given by the providers is that it is still given in the old form, with the AER only, with no written amount. The noble Baroness might recall that we had an amendment to the Financial Services Act, during which we were told that the Government at that time—this is some time ago—were busily discussing that directive and would be wanting to implement it as soon as possible. It seems to me that the request from the EU about AER was a very small, perfectly justified and overdue one, and it is particularly disappointing if the Bill becomes law before that amendment has been made by the Government.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, I thank the noble Baroness, Lady Howe, for raising this very important issue. Her interest and expertise in consumer problems was demonstrated at Second Reading, which I missed, so it is very good to have her engaged on this important subject. The noble Baroness, Lady Drake, also rightly underlined the value and importance of ADR and of ombudsmen and ombudswomen.
I want to make it clear that the Government are very supportive of alternative dispute resolution, which provides a more accessible route than the courts for consumers to obtain redress. Accessibility was a point well made and emphasised by the noble Baroness, Lady Crawley, and, as the noble Baroness, Lady Howe, said, it is also good for business. The noble Baroness, Lady Hayter, described the advantage of wider ADR and talked—rightly, I think—of the benefits of both this Bill and the ADR directive, so I thank her for that.
Before I address the specific amendment, I shall take a moment to reflect on what the Bill seeks to achieve. The Consumer Rights Bill sets out a simple and modern framework of consumer rights and, where appropriate, enhances measures to protect consumers. Clearer rights and remedies mean that both consumers and businesses will be better equipped to resolve any issues at an early stage. Having said that, we recognise that there will be occasions when problems arise that cannot be so easily resolved between the parties. In these instances, access to alternative dispute resolution can prove invaluable.
I am glad to say that the Government will be strengthening the framework for alternative dispute resolution when it implements the European directive on ADR in July 2015, to which I think all the noble Baronesses referred. Currently there are well established mandatory ADR schemes in sectors with a high risk of consumer detriment. It is worth remembering that. One example is financial services, and I was interested to read that the largest ADR provider in Europe is the UK’s financial ombudsman, and that last year it resolved 500,000 cases. Another example is energy, but in other sectors access to ADR is limited. The directive requires us to address these gaps and ensure that ADR is widely available.
We recently undertook a consultation exercise, which has been referred to, on the best way to implement the ADR directive. Stakeholders were asked for their views on the issues covered in this amendment, and we addressed several other issues in our consultation. We proposed that the compulsory use of ADR should continue to be targeted at sectors where consumers most need it. We said that our preferred option was not to gold-plate the directive by introducing a blanket compulsory requirement for all businesses to use ADR; that would come at significant cost to businesses, which pay for the provision of ADR through a mixture of annual fees and case fees. However, we expect the directive’s requirement for businesses to inform consumers with complaints about ADR and to encourage much greater participation in ADR schemes. We will very shortly be publishing our consultation response document, which will outline the Government’s proposals for implementing the ADR directive and improving and simplifying access to redress for consumers, a point raised by the noble Baroness, Lady Crawley.
Baroness Hayter of Kentish Town
Can the noble Baroness tell us when the consultation will be published?
Baroness Neville-Rolfe
All I can say is that the consultation will be published shortly. I confirmed that the implementation date for the directive is 2015. The noble Baroness anticipates what I was going to say at the end, which I will say now. I assure your Lordships that our implementation plans for the Bill, which we discussed on Monday, will also advise businesses of their forthcoming responsibilities under the ADR regulations. Similarly, information to consumers will be available in one place—to meet the point that we will be joined up.
If I may elaborate, our response will explain how we intend to make ADR widely available and accessible for consumer disputes and our plans for competent authorities to monitor the provision of ADR. I hope that noble Lords will understand that I cannot set out the full detail of the Government’s response before publication. We consulted on whether a consumer complaint helpdesk would be useful to help consumers and business to access ADR, which was a point made by the noble Baroness, Lady Drake.
We will publish our intentions in our consultation response document. Once we have published our response, we will work with partner bodies to prepare for implementation. We will then publish draft regulations to transpose the ADR directive by spring 2015.
I would not want to affect the ongoing work to implement the ADR directive in regulations by amending the Bill. The noble Baroness, Lady Howe, said that her amendments would achieve consistency and simplification. However, the ADR directive contains many provisions, several of which are linked. That is why we feel that it is far better and more straightforward for businesses to implement the ADR directive in one package. Our consultation response document will set out our plans for doing so. We certainly want to avoid any unhelpful confusion that could be caused by implementing the directive partly through the Bill and partly through regulation.
The noble Baroness, Lady Drake, raised an important point about the need for the implementation of the ADR directive to complement consumer rights. I am glad to say that the changes that we will make to implement the ADR directive will complement the reforms in the Bill and improve access to and awareness of the ADR. We want to take the same comprehensive approach to ensure that we deliver the best possible ADR framework. Our plans for implementation allow us to do so. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Oppenheim-Barnes
Before my noble friend sits down, can she tell the Committee what AER stands for?
Baroness Neville-Rolfe
ADR stands for alternative dispute resolution. I thank the noble Baroness for her intervention, which I did not think called for comment but I am happy to discuss it with her on another occasion.
Baroness Howe of Idlicote
My Lords, first, I thank the Minister for putting so explicitly the Government’s position of where they intend to be going with ADR—now we all know what the initials stand for. She has raised a lot of expectations and some hope. We are all concerned to ensure that it is kept on the agenda. We would not want it to be as slow as she has in mind. It is clear that those of us who feel similarly will need to table another amendment, which may be rather different, at Report to see how things are progressing.
Once again, I thank all my colleagues for so kindly joining in to support the amendment from their professional background, and I beg leave to withdraw the amendment.
“Product safety and recall
(1) The General Product Safety Regulations 2005 (SI 2005/1803) are amended as specified in the following subsections.
(2) In regulation 9 (obligations of producers and distributors), after paragraph (3)(d) insert—
“(e) a summary of what the producer or distributor suspects, or has reasonable grounds to suspect, is the number of consumers affected and the type of personal injuries and property damage which the risk associated to the product has caused”.(3) In regulation 32 (reports), after paragraph (5), insert—
“(6) Before completing any report under this regulation, the Secretary of State shall consult the enforcement authorities, such bodies representative of producers and distributors, such bodies representative of consumers and such other persons as he thinks fit.”
(4) In regulation 33(3) (duty to notify Secretary of State and Commission)—
(a) after “specifying the reason for taking it” insert “, and shall publish such measure, and the reasons for taking it, on his department’s website”,(b) after “of any modification or lifting of such a measure” insert “and shall publish any such modification or lifting immediately on his department’s website”.(5) In regulation 33(5)—
(a) after “the Secretary of State shall immediately” insert “publish such measure or action on his department’s website and”,(b) after “of any modification or withdrawal of any such measure or action” insert “and shall publish any such modification or withdrawal immediately on his department’s website”.(6) In regulation 39 (information)—
(a) in paragraph (1), for “shall in general make available to the public such information as is available to it on the following matters relating to the risks to consumer health and safety posed by a product” substitute “which has received a notification under regulation 9(1) shall immediately publish on its website in respect of the product”.(b) after paragraph (1)(b), insert—“(c) a summary of the number of people reasonably suspected of being affected, and the type of personal injuries and property damage reasonably suspected of being caused by the risk”. (c) in paragraph (1), for “and the measures taken” substitute “and the measures or action taken, whether on a compulsory or voluntary basis,”.”
Baroness Hayter of Kentish Town
My Lords, Amendment 24, which stands in my name and that of my noble friend Lord Stevenson, addresses a very serious and sometimes fatal weakness in consumer protection for electricity safety: when there is a generic and dangerous fault in a particular model of electrical goods. There is no adequate mechanism whereby other owners of the same make and model are notified of the need to stop using it and exchange it.
The amendment therefore requires manufacturers to inform enforcement agencies of the number of consumers affected, and of the extent and type of damage and injuries that have been caused. It also requires the Secretary of State to publish information on dangerous products and to consult consumer groups when publishing their five-yearly report on consumer protection regulations.
This is an issue of great sadness, because it is very much about deaths and injuries. There are probably 40 or 45 deaths a year in domestic fires that have been caused by faulty appliances. Although there is a system for manufacturers to recall faulty products, it is very flawed because of the difficulties of alerting customers who have unwittingly bought such faulty products. It has also been undermined by unjustifiable delays on the part of some manufacturers in recalling products, even once they know them to be unsafe. Such cases relate to potentially fatal faults, such as risks of fire, electrocution or carbon monoxide poisoning.
It has been estimated that there are up to 2 million unsafe products in people’s homes. Manufacturers currently have no obligation to declare how many of those dangerous appliances are in circulation. Once manufacturers become aware of faults in their goods there is no specific timeframe in which they have to take action. In several instances, manufacturers have taken years to take action after a fatal accident caused by one of their appliances. Current BIS guidelines say that a recall is expected,
“as soon as the manufacturer becomes aware of a problem”.
That is not specific—more than that, it is not mandatory.
The Government do not feel that this should be mandatory; they want to continue with the voluntary approach. In the Commons, the Minister said that most—I emphasise, most—businesses take their customers’ safety seriously. I do not think that is good enough: “most industries” is not “all industries”. We have to safeguard consumers not from the good businesses but from those which do not take safety seriously.
Electrical Safety First detailed a particularly sad case of a preventable death that happened because of failures in the recall system—I am sure other noble Lords have received the same information. Mr Santosh Benjamin-Muthiah, a 36 year-old father of two, died in 2010 because of a fire in his home caused by a recalled fridge-freezer. The manufacturer had been aware of a fault with the defrost timer on that defective fridge-freezer three years before 2010, but did not issue a safety notice until 2011, by which time as many as half a million had been sold. In 2013—two years after the recall had started—the manufacturer estimated that, although 190,000 had been repaired and 186,000 were scrapped, about 114,000 were still unidentified and still in someone’s home. The coroner at the quite recent inquest on Mr Benjamin will, I think, have written to the Chief Coroner rather than to the Government. However, he has written through his official channels calling for the creation of a simple, easy-to-use and government-funded all-national website where all products can be registered and accessed by consumers and retailers. He also called for increasing fines for manufacturers who fail to notify and for the creation of a code of practice on product recalls. The Chief Fire Officers Association has also called for manufacturers to take legal responsibility for eradicating risks caused by faulty appliances. Peter Dartford of the Chief Fire Officers Association has said:
“The reality is that it is the manufacturers who have created these risks and it is their moral and legal responsibility to ensure that these risks are eradicated from homes”.
Our amendment would strengthen consumer protection in line with the coroner’s recommendation and the fire officers’ views. Perhaps even more importantly, our amendment is in line with the views of the families, who have been quite needlessly bereaved of their loved ones. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I support this amendment and I thank the noble Baroness, Lady Hayter, for her example of Mr Benjamin, as it saves me the trouble of giving that same very tragic example. It seems not unreasonable for the trader to record the consumer’s details at the point of sale and return the guarantee card to the manufacturer. This would seem a more efficient way of dealing with it than the present, somewhat haphazard system of leaving it to the consumer to fill in and return the guarantee—a document which is often at the bottom of the packaging and sometimes overlooked. If such a system were in existence, it would be much simpler to compile a register of consumers and contact them individually when and if a product recall is necessary. This would ensure that all those affected by product recalls were aware, rather than some being left in the dark about the risks they run by continuing to use the product.
Consumers, once they are aware of a product recall, are generally assiduous in returning their products to the relevant trader for repair or replacement. This is particularly important, as we have heard, where the product has an electrical fault which could lead to damaging and life-threatening domestic fires. The fire service, as we also heard, is able to produce quite frightening statistics on domestic fires caused by electrical faults, some of which tragically involve death. It is really important that we do all we can to protect consumers from this fate and I am pleased to support this amendment.
Baroness Neville-Rolfe
My Lords, there is already robust legislation on product safety that is based in large part on an EU-wide regime. I have listened to the debate and I would like to address the general, because I think the amendment is a general one, and then look at the electrical issues that have been raised.
The General Product Safety Regulations 2005 place strict duties on producers and distributors to ensure that only safe products are supplied. Importantly, these duties are backed by criminal penalties. However, there will unfortunately be occasions when things go wrong and a product needs to be recalled. I very much share the concerns of the noble Baroness, Lady Hayter, about accidents, especially fatal accidents. We need to learn all the time from such experiences. When a recall is necessary, producers and distributors are legally obliged to notify and collaborate with trading standards to ensure that all reasonable measures are taken so that unsafe products are swiftly removed from the market and the risks to consumers are addressed.
Baroness Crawley
The Minister has reiterated a number of times the role of trading standards in crucial product recalls. However, does she agree that the serious cuts to the trading standards departments across the country and throughout local government over the last number of years have impaired the effectiveness that she talks about?
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Baroness for giving me the opportunity to say what a good job I think trading standards do in many of those very difficult cases, having worked with them for many years. It is true that many government services have suffered from cuts as a result of the need to get the economy back on track and deal with the deficit problems that we inherited.
As noble Lords know, spending and resourcing decisions about local trading standards are made by the individual local authorities. They, rather than central government, are best placed to make decisions about the enforcement needs of their local communities. However, I have talked to them about how you can focus and get local authorities to focus on the real areas of importance, and they are trying to do that in often deeply difficult circumstances. BIS greatly values their work protecting consumers from everything from rogue traders to scammers and so on. That is one of the reasons why we have set up the National Trading Standards Board and work with the Local Government Association on trying to improve enforcement in local authority areas in important areas. Of course, product safety and risk of death always come very high on their agenda.
Baroness Hayter of Kentish Town
My Lords, I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for her support for this amendment.
The Minister’s response will be deeply disappointing to the fire officers and Electrical Safety First, who worked on this and who have earned this amendment. They are the stakeholders who are referred to, and they do not feel that what the Government are doing is enough, which is why they have called for this amendment. The Minister said that the legislation is robust, but it is not working. We are having a death a week because of faulty appliances, so that is not working. I do not ask for the information now, but it would be helpful if she could write and say how many prosecutions there were in the last five years of companies for not having reported and taken necessary action.
However, my noble friend Lady Crawley raised an extraordinarily important point. It is also a surprise to find that this Government are saying that on this issue they want the public sector—that is, trading standards—to deal with it, rather than the people who done wrong—the manufacturers—who acted unwittingly to begin with, but who made a faulty product that is leading to carbon monoxide poisoning, electrocution, or death by fire. It is interesting that the Minister wants not to absolve them of that but to say that the major responsibility is to tell trading standards—that is, the public sector—which will do something about it. Other things that come from the Government are all about the public sector doing less and all of us, whether it is the big society or manufacturers, doing more. Therefore I am surprised but also disappointed that the Minister does not want to put more of an obligation on to the manufacturers who have made these fire traps. However, she will understand from what I am saying that we feel very strongly about this, and we will come back to it. It certainly does not seem to be good consumer protection when once a week somebody dies when they do not have to. However, for the moment I beg leave to withdraw the amendment.
“Secondary ticketing platforms: ticket information
(1) Where a ticket is sold through a secondary ticketing platform—
(a) the seller must provide all relevant information about the ticket, and(b) the secondary ticketing platform must publish all the information about a ticket provided by the seller in a prominent and clear way.(2) Information to be requested by the secondary ticketing platform and provided by the seller for the purposes of subsection (1) should include, but is not limited to—
(a) the name of the seller of the ticket;(b) the face value of the ticket;(c) any age or other restrictions on the user of the ticket; and(d) the designated block and row and the seat or ticket number, where applicable. (3) Where tickets are being resold in contravention of the terms and conditions agreed to by the original purchaser, this must be stated prominently by the secondary ticketing platform at every stage of the purchasing process.
(4) Information provided by virtue of this section must be—
(a) accurate; and(b) prominently displayed before a buyer is able to complete their purchase.”
Lord Stevenson of Balmacara
I shall speak also to Amendments 26 to 31, which I am glad have been grouped, because they deal variously with one or two aspects relating to ticketing, and I think that there is a great deal to be taken from the fact that an all-party alliance is putting forward the various points. I hope that the Government are in listening mode, at least on these matters.
What is a ticket? That is definitely not a rhetorical question. We have a real problem about what we understand by the word “ticket”. What does purchasing a ticket confer on the purchaser in terms of rights and responsibilities? I would be very grateful if the Minister, when she replies, would spend some time explaining what the Government think a ticket is, because I would be illuminated by that.
There are two strands of thought. The promoters of many of our larger sporting and entertainment events feel that a ticket is an intangible right to attend an event or performance, a personal licence for the person who bought the ticket—and, presumably, those for whom he or she has bought the ticket—to attend a specific event, occupying a designated seat. That is not what is believed by the secondary ticket companies, who take the view that a ticket is real property and, once bought, is available to the original purchaser to sell and resell to any third party willing to pay a market price for it.
The problem is that there is no real accommodation between those two approaches. On the one hand, the promoters of events feel that tickets which have not been released are being advertised and sold, which means that the seller cannot guarantee that they will ever be able to honour that transaction. Tickets are being sold at prices well above their face value and the purchasers have no idea that that has taken place. Fans can end up buying tickets which do not guarantee them entry even to the event to which they think that they have bought a ticket, because there may be terms and conditions for the sale that have not been disclosed to them, which prevent them being transferred. I was at an event last weekend where I had a ticket issued by a reputable national theatre company which said clearly on its face that it was not valid if sold at a premium price. Of course, I knew that, because I could read it; but others may not have spotted that. In general, the view taken by many promoters is that consumers are being priced out, mis-sold or even defrauded when tickets are resold on the secondary market.
Two principles underlie that. The first is that promoters should make tickets available to people at affordable prices and that that should be protected; but also that consumers should be provided with more information about what they are buying when purchasing tickets through secondary outlets.
The secondary ticket market takes the view that people should have the right to buy surplus or unwanted tickets, and argues that by providing a platform for buyers and sellers, it offers an excellent service. In many cases, that is true. It also thinks that the traditional model means that only a very small number of tickets are made available, with the balance being sold at premium prices to sponsors and corporate hospitality organisations.
It is fair to say that this issue has a long history, with both this Government and the previous one trying to respond to public pressure, which is clearly pulling in two directions. On the one hand, people want access to tickets when they go on sale, but they are also against thousands of tickets being bought by people seeking to make a profit rather than attending the event. Equally—people will say this within a few seconds—they feel that they ought to be able to buy tickets if they decide, perhaps late in the day, that they would like to see the event after all and get very annoyed if they find that there are no tickets available or the price is extraordinary.
Recent technological changes have had an effect on this. We often find computerised botnets—as I think they are called—hoovering up tickets on sale online. What chance have ordinary punters to get tickets in the first place? Most people will either have been or will know of people who were trying desperately to buy tickets for the Olympic Games when they first went on sale, and spent many hours on the phone waiting for someone to respond or online waiting for something to respond. Sometimes you won; sometimes you did not. Obviously, with very popular events there will be a problem however you do it, but computerisation is both an advantage and a disadvantage.
We are beginning to worry about money-laundering and criminal gangs active in this area. If that is the case, where should the public interest now lie?
There is already a huge amount of legislation. I will not go through it in detail but there is the Civic Government (Scotland) Act, the Criminal Justice and Public Order Act and the London Olympic Games and Paralympic Games Act, and in addition to specific legislation on touting there are legal remedies under existing criminal law relating to theft, deception, obstruction or threatening behaviour. In addition to primary legislation, there is a substantial amount of secondary legislation coming through from the Consumer Protection from Unfair Trading Regulations 2008 and the Price Indications (Resale of Tickets) Regulations 1994, some of which have a direct impact on the way in which people are going to be treated if they are caught transacting secondary sales.
Lord Clement-Jones
My Lords, I shall speak to Amendments 29 to 31. Although I think that I am singing very much from the same hymn sheet as the noble Lord, Lord Stevenson—I apologise if I go over some of the same ground because, as was the case in the Commons, these amendments are in parallel to those of the Labour Front Bench—these amendments follow directly from the conclusions and recommendations of the recent excellent report by the All-Party Group on Ticket Abuse. I happen to be a member of that group but, since I was not able to take part in the inquiry, I cannot claim any credit for it.
The amendments are not an attempt to shackle an important and growing service for consumers or to ban the resale of tickets. While accepting that there is a role for a legitimate secondary ticket market, the all-party group found considerable problems with how this market, which is estimated to be worth about £1 billion a year, works at present.
In particular, it does not adhere to the same principles of transparency and consumer protection to which other markets are held. With internet ticket selling becoming more streamlined, touts are able to use sophisticated computer systems to buy large volumes of tickets automatically, mere seconds or minutes after they are available online. That can often mean that it is practically impossible for genuine fans to access the event, forcing them to rely on an artificially created secondary market and depriving content creators of revenue for their event.
As the noble Lord, Lord Stevenson, mentioned, the Met Police published a comprehensive report on fraudulent ticketing and the dangers it posed to the Olympics. It specifically cited ticket fraud, touting and ticket reselling websites as areas of concern. The report stressed the need for an open and transparent system for ticket reselling, with clear and appropriate regulations. The new clauses address those shortcomings and would increase consumer confidence in the secondary market.
The first two new clauses address the lack of transparency, which the noble Lord, Lord Stevenson, emphasised. Amendment 28 is about who is selling the ticket. It would place a duty on secondary ticketing platforms to provide basic identifying information about the individual or business offering a particular ticket or set of tickets for sale. It would allow consumers to say how prolific and reliable a particular seller was; that would make the secondary ticketing platforms much more transparent. Importantly, it would also require secondary ticketing platforms to be transparent in cases where the seller was also the event holder. The practice of events organisers secretly allocating whole blocks of tickets directly to the secondary market has been on the rise. It was the subject of the Channel 4 “Dispatches” programme broadcast in 2012, entitled “The Great Ticket Scandal”. There is also a dishonest practice whereby a secondary ticketing platform, or rather its employees or shareholders, buy and sell tickets themselves, as the “Dispatches” programme also exposed.
Amendment 29 relates to the transparency of the ticket itself. I was very interested in the introduction of the noble Lord, Lord Stevenson, when he talked about the ticket itself; in many cases, knowing the characteristics of a ticket would make a material difference to a buying decision, particularly in the case of seated events, in which a person’s position in the venue can make a significant difference to their enjoyment of the performance or experience. Providing that information would also give consumers the confidence that the individual or company selling the ticket actually had tickets in hand and was not just speculating that it would be able to provide them at a later date. Making sure that consumers are made aware of the original price of the ticket that they are buying at the earliest opportunity gives them another piece of the information that they need to make an informed choice about whether to enter into such a purchase. Any genuine fans who need to sell on their tickets should not have a problem providing the basic information about the product that they are selling; nor should any professional reseller. The secondary ticketing platforms which claim to have higher standards should therefore have no problem adapting to the new provisions.
Amendment 30 concerns the recourse available to consumers. There have been numerous reports of event-goers being turned away with counterfeit or invalid tickets that they have bought via the big four secondary ticketing websites, all of which heavily promote their reliability and guarantee that their tickets are genuine. Of course those websites offer refunds, but people who come to venues with unusable tickets have all incurred at least some travel cost getting there. In some cases, they have come from abroad for the express purpose of using the ticket. For such people, a full refund on the ticket, while welcome, will still leave them out of pocket. The new clause would therefore allow those consumers to claim back the extra cost associated with attending an event, up to a reasonable level.
In practice, some resellers already offer reimbursement of travel costs. The new clause would place primary responsibility for that initial payback on the secondary ticketing platforms because they offer guarantees which, they say, consumers pay for in their significant service charges. However, having paid out that money, the new clause makes clear that the secondary ticketing platform may recover it from the seller of the ticket. The only individuals or businesses that the new clause would hurt, therefore, are those who have sold fake or invalid tickets and consequently caused financial loss to the consumer. The new clause would have the positive benefit of giving consumers the confidence that they would not be left out of pocket when they purchased tickets through the secondary market.
Baroness Heyhoe Flint (Con)
My Lords, I wish to speak specifically to Amendment 28, which, as my noble friend Lord Clement-Jones has so eloquently put, is inextricably linked to Amendments 26, 27, 29 and 31. I am pleased to have the opportunity to return to the subject I raised at Second Reading. I am delighted that, in doing so, I am joined by colleagues from all sides, made up of many distinguished people—all finely tuned athletes, of course—who have been campaigning for many years to promote the interests of British sport.
The support for Amendment 28 demonstrates the need for specific action to protect the interests of sports fans when they purchase tickets to sporting events. I apologise if I am repeating what has also been stated so clearly by the noble Lord, Lord Stevenson, but just because we call them fans does not mean we should forget that they are consumers. I identify to the House that I am on the Board of the England and Wales Cricket Board, which is one of many sporting organisations that have expressed support for these amendments, such as the RFU, Wimbledon and the Ryder Cup, to name but three global event presentation organisations.
I thank the Minister for taking the time recently to meet with sports delegations on this issue. I shall reflect on that meeting in my comments and touch on the examples she requested. She asked for more feedback and we too would like more feedback.
First, I will address whether, as was suggested to us, the amendment would place too many restrictions into the market place and act as a burden on the buyer and the seller. I cannot see how the amendment can place any unnecessary burdens on the ticket buyer. It is in their interests to be told the face-value price of the ticket they are buying; its location in terms of block, row and seat number, so that they understand where they will be sitting; and, most crucially of all, whether that ticket is rendered invalid if it is transferred. These facts are material to making an informed decision about whether to purchase the ticket.
As for the seller, I do not see that having to provide this information is a restrictive burden. All the major sites that sell tickets already have online forms that people have to fill in with their ticket details. It will take just a few seconds more to add this additional information. Indeed, I tested it myself. I think it takes about 20 seconds to provide this information, which is nothing in the context of having to log in and enter other information. Alternatively, in this modern age people have the option of taking a picture of the ticket with their phone and uploading it, but I have not currently conquered that art of IT communication.
The Government already require information to be provided through the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 —I almost ran out of breath there. That is a very minor step, due to the lack of information and transparency to the buyer. My first question to the Minister is whether she accepts that the amendment places very little burden on the seller and that it is merely an extension to the existing regulations her department introduced this summer. I am sure that the Minister will respond to this short debate by referring to those regulations. They are of course welcome and a step in the right direction. Indeed, they show me that the amendment is in line with the Government’s existing policy approach. However, these regulations, as has already been pointed out, have certain flaws. The main one is that they apply only to sellers who are defined as “traders” and do not apply to consumers selling to other consumers, as happens so often and is the business model for secondary ticket sites.
Let me give an example. Last year one of our major venues, Durham County Cricket Club, managed to uncover the activities of Nicholas Hubscher—this in the public domain—a British Airways pilot who was found to be,
“touting on an industrial scale”,
as a sideline from his main occupation. I have a six-page selection of the cuttings and e-mail reports officially identifying the 800 tickets that Hubscher touted, with a face value of between £50 and £100, during the tests at the Oval, Old Trafford and Durham. These tickets were partially sold for hugely inflated prices on third-party ticketing websites such as Viagogo and Seatwave. The tickets were obtained not though sophisticated software but through using multiple credit cards and names. The England and Wales Cricket Board, in conjunction with the venues, successfully brought a civil action against him in the High Court but it was a stroke of luck that they found him. It had nothing to do with the regulatory regime that the Government have in place. Yet in this case, despite selling hundreds of tickets, Hubscher would not be caught under the existing regulations as he would not come under the definition of a trader.
Even when the sales are placed on secondary sites deliberately to make a profit—which is surely acting as a trader in any other sense—it circumvents the regulations that the Minister says will assist us. Can she therefore confirm that, at present, the application of the regulations only to traders allows for organised touts and others to evade the new regulations?
I am sad to tell the Committee that so many people are doing this. Just yesterday, I went online again to research the issue. On the Viagogo sites, I found scores of tickets for the opening Ashes match at the SWALEC stadium in Cardiff next July—tickets, incidentally, which were only recently put on sale. Those tickets have not even been sent to purchasers yet. Perhaps I may cite an e-mail sent to the England and Wales Cricket Board from a frustrated and angry consumer:
“Dear Sir/Madam, I have tried and been unsuccessful in obtaining three tickets for day three of next year’s test match at Edgbaston in the Ashes. Just by looking online for tickets, I have come across this advert”—
this relates to an eBay advert. The consumer went on:
“Can you please explain to me how these companies get all these tickets and sell them at extortionate prices when genuine fans cannot get them?”
In one instance, four tickets are listed at hugely inflated prices but nowhere does the post tell me the face value of the tickets. Nor does it tell me the exact seating location or whether Glamorgan County Cricket Club, which is the host of the event, is permitting that ticket to be transferred. This advert—there are many more like it on this and other sites—demonstrates the flaws in the existing regulations. Will the Minister look at these ads on sites such as Seatwave, Get Me In! and Viagogo? Perhaps she has already, because I know that my noble friend the Minister is a keen cricket fan. Can she confirm that they are currently in breach of existing regulations and that consumers are not getting the protection we would all wish to see?
I have also seen example after example from Wimbledon of consumers from around the world purchasing tickets at inflated prices and not receiving what was advertised. There are examples referring to debenture tickets which were bought in good faith yet were not debenture tickets, which classify which rather exclusive zone you sit in at Wimbledon. There are complaints from members of the ticket fraternity or the supporters and fans of Wimbledon from the USA about tickets which they did not receive or with which they were refused entry. There were tickets that were not even for the original place that they had booked and paid for. There were also tickets that had previously been stolen from another source. There are these fears in the background, which have alarmed all the people who have spoken so far.
This amendment will make it a specific requirement that the fan buying the ticket must be told what the terms and conditions of the transfer of that seat to them are. Many sporting events do not allow seats to be transferred above face value or without prior approval. As the noble Lord, Lord Clement-Jones, pointed out, we are talking about a £1 billion worldwide “business”. I hope that the Minister will review carefully the case for this amendment, work with those Peers and sporting organisations who have called for change and consider whether this amendment or a revised version of it is the right approach, ahead of Report and Third Reading in this House.
Lord Pendry (Lab)
My Lords, I will talk to this clutch of amendments, but specifically to Amendments 26 and 27.
Protecting sports fans from ticket touts and being ripped off when buying tickets for leading sporting events is an issue that I and others have been working on for over 20 years. At that time the focus was of course mainly on disorder issues in football, which were highlighted by Lord Justice Taylor and his report after the tragic events at Hillsborough stadium in 1989. Way back in 1994 I led from the Labour Benches in the other place a campaign to have the then Government extend the provisions they were introducing to ban ticket touting at football events to other sports, in the Criminal Justice and Public Order Act 1994. We were partly successful in that we obtained reserve powers to be added to that Bill to allow a Home Secretary to designate other sporting events. The amendment to that Bill was added in this place—just to show that we often have greater wisdom here than in the other place—but sadly, the measure has not yet been used, by successive Governments.
Back then I was working with the noble Lord, Lord Moynihan, on this issue, and here we are today still battling away to protect sport and its fans. I hope that today we will be successful, as the amendments before us have the support of the Opposition Front Benches and eminent Peers with a long-standing interest in sport, including the noble Baronesses, Lady Heyhoe Flint—as we have just heard—Lady Grey-Thompson, and others. They know well the issues that arise from certain individuals and companies who try to rip off genuine sports fans.
Of course, the Government acted to ban ticket touting at the London Olympics—at the behest of the IOC—and clearly the noble Lord, Lord Moynihan, must have had a major say in that decision. It is a great shame that we did not learn from that experience. Everyone agrees that one of the joys of the Olympics was the ambiance and general good will of the Games. That was aided by the fact that the approach to sporting venues was not inundated with shady touts doing their business and adding the air of menace they often bring. Instead, we had smiling volunteers and a general ambiance as real fans entered the various venues.
We also saw the wonderful atmosphere that it generated at the sporting events, as the legislation restricted the secondary market and helped more fans to get tickets. What a shame that we did not learn directly from that experience and create a positive legacy for all sporting events. I know that we often hear about the legacy benefits that the Games created, but in that area we certainly have yet to learn from that past experience. Today, we have an opportunity to make a difference. The amendments before us would not criminalise ticket touting. That is a debate for another day, although I hope it comes pretty soon. Instead, we can today provide more protection for fans who buy tickets and introduce more transparency into the arrangements. As others have said, it is an extension of measures that the Government already have and, for that reason, I am hoping that the Minister will accept the amendment.
The proposed new clause builds on existing government regulations by making requirements of certain ticket details that must be provided. To my mind, this is sensible. It will enable a sports fan to know the exact location of the seat that they are purchasing, its original cost and whether or not it is in the terms and conditions for that ticket to be transferred. This is important, as we know that fans are often grossly overcharged for tickets with no awareness that this is happening. In the most serious cases, the fan may not even get into the event they have bought the ticket for. If it is against those terms and conditions for the ticket to be resold, they find it invalid.
Will the Minister address this particular question when she replies? Can she explain why it is not in the interests of the consumer for them to be made aware whether it is within the terms and conditions of a ticket for that ticket to be transferred? Clearly, the basic principle is that to sell something that does not actually exist is wrong. This proposal would place no extra burden on consumers. For the seller, it would probably add seconds for the information that they have to provide when listing a ticket for sale—or if they have the technical ability, which I certainly do not, to take a snap of it on their smartphone and upload that picture to the online sales process.
Finally, as we have heard from the noble Lord, Lord Stevenson, the amendments have the support of sporting organisations including the British Horseracing Board, the England and Wales Cricket Board, the Rugby Football Union and Wimbledon tennis. All of them have contacted me—and others, I am sure—to say how it would help them to meet their objectives of protecting their sporting events for the many and not the few. I urge the Minister to accept the amendments before her. In future all sports fans could have greater protection to see their favourite sporting events not being marred by the unscrupulous, who currently are content to see genuine sporting fans being ripped off.
Lord Borwick
My Lords, very few secondary markets are perfect but they are certainly welcome in that they provide liquidity to the primary market. These amendments on secondary ticketing platforms would get in the way of the primary market. When somebody buys a ticket for an event, they are investing in something that is often way into the future. Tickets for big shows are often released a year in advance or more, so buying tickets to such events strikes me as a rather entrepreneurial activity. It is risk-taking: you cannot know whether you will enjoy the show or event and there are no reviews to read or critics to listen to. Yet if you decide that you cannot go to the event or change your mind, it is a good thing that there are proper secondary platforms developing to sell those tickets. These amendments would mean that people would think twice about that risk of buying tickets in the first place. They would be distortionary.
The noble Lord, Lord Stevenson, mentioned botnets. I think they were also mentioned by the noble Lord, Lord Clement-Jones, with whom I entirely agreed on his earlier amendment. I am afraid that I disagree with him now because surely there are very good pieces of software that can stop the purchasing where computers buy automatically. Those aggravating things where you have to fill in a distorted word to prove that you are human can stop the botnets.
The noble Baroness, Lady Heyhoe Flint, talked about her aggravation that somebody was paying £4,000 for a ticket to a cricket match. I am aggravated that that £4,000 is not going to the cricket club but rather to somebody else. If somebody is prepared to pay £4,000 for a ticket to a cricket match, why is the cricket club not charging that figure? That money would then go to the sport rather than to somebody else. Of course, the real problem is the ticket touts outside railway stations or on street corners who are selling outright fake tickets or perhaps their electronic equivalents. Selling electronic tickets or trading on the street without a licence is illegal; there is already legislation to deal with this problem. The secondary platforms are already ensuring that resold tickets are valid. They usually insist that the face value of the original ticket is stated during the transaction. The market is providing solutions. We do not need new legislation and new burdens. In any case, these amendments would hit the good guys instead of the bad guys.
Lord Moynihan (Con)
My Lords, I shall speak to Amendments 28 to 31, standing in the name of my noble friends Lady Heyhoe Flint and Lord Clement-Jones. I see significant merits in Amendments 26 and 27, which I would support had we not tabled our own amendments to effectively the same objective.
In the spirit of the noble Lord, Lord Stevenson, and my noble friend Lady Heyhoe Flint, I begin with the question: what is a consumer? In the context of the amendments before us, the answer is a sports fan.
It is a rare occasion for the title of a Bill fully and concisely to reflect its intentions. On this occasion, the Consumer Rights Bill achieves that objective: it is a Bill about consumers and it rightly seeks to protect and, where appropriate, strengthen consumer rights. It is a Bill that addresses inadequacies in consumer protection and derives its strength from addressing malpractice against consumers, who can be exploited by loopholes in the law or interpretations of it which, without legal backing, can lead to the exploitation of consumer interests for commercial gain. It is therefore important in the context of these amendments to recognise that, in every sense, consumers are sports fans.
The amendments should be seen as a constructive step towards protecting the interests of fans. As my noble friend has said, they would make it a specific requirement that a fan buying a ticket must be informed of the terms and conditions of the transfer of the seat to them.
This was a key issue for us when hosting the Olympic Games. The subject of ticketing gained prominence for two reasons. The first was a decision made by the International Olympic Committee not to provide a ticketing platform, a platform that incrementally built on the experience of previous Games. The IOC Games department took the view that each host city should start from scratch and that the role of the IOC in this context would be purely advisory. I made my view very clear at the time: that ticketing each and every event at an Olympic and Paralympic Games, while taking into account the myriad contractual requirements of the IOC and the Olympic family for free tickets, required a platform built on experience and expertise that should be refined and improved by each host city, not one that is reinvented every four years. A pattern will emerge of the demand by the world’s athletes for free tickets, greatest—not surprisingly—after they have completed their events. I believe that, had that been in place, we would not have faced at the beginning of the Games the issue of empty seats in areas allocated for the Olympic family.
The second reason emanated from the legal framework for the Games and is directly relevant to these amendments. The Olympic legislation was introduced by this Government specifically to protect fans who sought to buy tickets for the Olympic and Paralympic Games. The Government were initially nervous about addressing this issue at the time. Historically, they had consistently taken a position that the resolution of any problems through voluntary action by the market participants was strongly to be preferred; that new regulation would be considered only as a last resort, even for the Olympics, and only where there was clear evidence that it was in the public interest; and that new regulation and the associated cost of enforcement were likely to impose greater burdens and restrictions of consumer choice as compared to market-led solutions.
However, the Government, along with the police, the fans and the organisers of the Olympic Games, collectively took a very different view after the Olympic Games were over and they had time to reflect on the effectiveness or otherwise of the legislation that had been put in place. In that context, I say to my noble friend in sport, the noble Lord, Lord Pendry, that I believe the Government learnt a lesson that I hope they will not go back on as a result of the experience that was derived from those Games.
Lord Addington (LD)
My Lords, I was debating whether or not I should speak but, having been told that I am expected to, I think that I probably have to. I should declare a couple of interests. Probably the most important one is that I am a lifelong rugby player. Even now at this advancing age I still occasionally don a jersey and wander around the pitch—I would say “run” but wandering is a bit closer to it now.
One of the first points made by the noble Lord, Lord Stevenson, was that if you are generating income from these major events, at least some of it—as much of it as possible—should go to the grass roots, and many of the events that we are talking about do that.
Then there was the other major point about the fact that by touting in this way you are devaluing the event for the fan, the people who often actually make it a special event. To talk about Rugby Union, and I thank the RFU for once or twice giving me tickets, I would say that makes those games so special is the fans, so you are actually damaging your base if you allow these things to happen. These people do not go to an “event”; they are going to watch a sport and give some enthusiasm. That will be helped by this amendment; you will help to build it up and layer it through. Please pay attention to this.
The Government have been given—what shall we say?—a very moderate set of proposals. Any one of these amendments, or any combination of them, could probably achieve a great deal to make the situation slightly better. That is all we are asking for—to try to make it slightly better and preserve what is important. That is about all that we can hope for. As my noble friend Lord Moynihan has pointed out, we have tried and succeeded with a more draconian system for an event that was at the top of sporting demand, the Olympics, so surely having something here that at least gave greater certainty could not hurt.
Lord Stoneham of Droxford (LD)
My Lords, I am somewhat reluctant to go slightly against the tide in the face of noble Lords who I greatly admire in the sporting world speaking here today. I have great sympathy with what my noble friends Lord Clement-Jones and Lord Moynihan, the noble Lord, Lord Hendry, and my noble friend Lady Heyhoe Flint said about the war on ticket touts; I support that, and I support the values in it. However, we have to ask a number of specific questions about these amendments and what this legislation can actually do.
Most authorised resale ticket sites give guarantees on the validity of tickets or provide a value back if the tickets are not valid. One of the issues is how we get people to use those sites more. We do not want to upset anyone to move away from them, which would be into the hands of people who are fraudulent and are trying to break the system.
The other thing that is very important is that the public want the opportunity to resell and buy in the secondary market. This is particularly important when tickets are being sold a year ahead of the event. Another problem is that often the tickets are not issued until six weeks or so before the event, so some of the information that might be required in the resale market might not be available.
There is already considerable legislation against fraud and against competition and there are issues of restraint of trade, all of which need to be taken into account. We also have to ask ourselves why this primary legislation is being asked to make specific requirements in one sector. Should it be doing that? Should we not have more embracing legislation that deals with this issue? All the recognised operators have an interest in preventing fraud; that is what actually protects their brand, as any fraud inevitably undermines their genuine business.
There is an issue with sellers providing information, particularly individual consumers. I am not sure that I want my name going on a ticket that I might have had if it has gone through a recognised secondary provider—in fact, I certainly would not want that. So the guarantee is the key, as is establishing that the tickets are valid.
Baroness Neville-Rolfe
My Lords, we have heard a range of detailed and informed comments during this debate and I thank all noble Lords for their contributions, to which I have listened very carefully; it was good to have a variety of points made, and I am grateful to all noble Lords who have spoken. I am also grateful to the various sports, music and ticketing businesses that have spent time briefing me and the Government on these issues. In fact I should probably declare an interest as a big sports fan and a mother of cricketers.
Given the breadth of this issue and the different angles that people are coming from, I will divide my response into the two main types of sales in this market: sales from a trader to a consumer, and sales between consumers. I will then touch on the issue in Amendment 30 concerning refunds and compensation.
Before I do that, I shall briefly address the philosophical question posed by the noble Lord, Lord Stevenson, of whether a ticket—because it is either a goods item or an intangible legal right—is even capable of being sold on or transferred. The answer is that it is possible for a ticket to be defined either way. However, I am advised that this is ultimately a matter for judicial consideration, so it is not appropriate to attempt a determination in this Bill, or indeed for the Government to state publicly how we think a court would or should determine that question.
I turn to Amendments 26, 28 and 29 on business-to-consumer sales. I reassure the Committee that when traders sell to consumers there are already rules in place to ensure that consumers are aware who they are buying from and what they are buying. My noble friend Lord Clement-Jones said that the market was not subject to the same rules on transparency as other sectors, but this is simply not the case. The ticketing market is subject to consumer laws, including information requirements, to the same extent as any other retail sector.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, to which my noble friend Lady Heyhoe Flint referred, set out clearly in list form what information must be provided. For distance and online sales, such as ticket sales, that includes the price, the identity of the trader, contact details for the trader and the main characteristics of the ticket. In fact, there are no fewer than 24 information requirements on that list covering all the information that the consumer needs to make an informed decision.
In guidance on the regulations, we have included a specific paragraph on how the information requirements apply to tickets. I can quote directly from the guidance to reassure your Lordships that much of the information listed in the amendment is already required. The guidance states:
“Information on the main characteristics of the tickets and their total price (including delivery costs and other charges) must be given to the consumer in a clear and comprehensible way before the consumer purchases the ticket … For a ticket associated with a particular reserved seat (e.g. Seat 1, Row A) the seat number is a main characteristic”.
The regulations build on existing consumer law. The Consumer Protection from Unfair Trading Regulations 2008 protect consumers from being misled into a purchase by a trader.
The noble Lord, Lord Clement-Jones, asked about the October regulations. They are the Consumer Protection (Amendment) Regulations 2014; is that right?
Lord Clement-Jones
I did, but before my noble friend moves on to that, I quoted from the guidance and pointed out that, effectively, this is voluntary. The guidance states:
“Main characteristics include (if known to you)”.
I directly quoted from the regulations, as well. My noble friend has cited other parts of the guidance, but that is the crucial part.
Baroness Neville-Rolfe
I thank the noble Lord for that clarification. Perhaps I can continue to address the trader side. Where a consumer is sold a ticket that is claimed to be on the front row, for example, which turns out to be on the back row, that would breach the 2008 regulations. Advertising for sale a ticket that a trader is not in a position to sell because the ticket is either not available through the primary outlet yet or because the trader is awaiting the outcome of a ballot would also be a breach of the regulations, as well as a potential Fraud Act offence. Criminal penalties reinforce the legislation. A trader or a marketplace can be subject to a fine or even imprisonment if these regulations are breached. In conclusion, we believe that there is already sufficient law in place to ensure that consumers have all the information they need about what they are buying before they buy from a trader.
The noble Lord, Lord Stevenson, asked about botnets. A range of offences is available to law enforcement to tackle the fraudulent sale of tickets and the criminal harvesting of tickets from online ticket sales. The Computer Misuse Act 1990 sets out the framework of offences associated with interfering with a computer, including the criminal use of tools or articles to commit a computer misuse offence, such as a botnet. It was good to hear from my noble friend Lord Borwick that he believes that we are on the way to solving the botnet problem.
The noble Lord, Lord Stevenson, also asserted that there is evidence of large-scale criminal activity. We disagree. Europe Economics found that 90% of sales are by consumers such as you or me. There is already a strong framework to deal with criminality, such as fraud and money-laundering laws, which the noble Lord mentioned, that might take place in a market. Additional legislation for ticket marketing would not address such criminal activity. Obviously it is important to work with the police and other enforcement authorities, and we will review the data that the noble Lord asked for to see what up-to-date data we have. I will write to him on that point.
My noble friend Lady Heyhoe Flint said, “Will the Minister look at the websites?”. I will, but the enforcement of the law is for the CMA and trading standards. We have done some research. These sites already require key information to be given. All these sites have money-back guarantees. Most ticket transactions pass without problem—it is over 90%—so I think progress has been made there.
My noble friend Lord Moynihan gave us a very interesting summary of his experience with the Olympics—that wonderful summer which we all enjoyed in the brilliant sunshine, and the success of the Games. Indeed, as he described, it was very successful in terms of ticket sales, although of course there were some gaps in the audience, which was a sadness for consumers who would have liked to have been sitting in those seats. A ticket resale regime was a condition for hosting the Olympic Games. We brought that in and said at the time that such cases have to be considered on a case-by-case basis. I do not think that my noble friend was suggesting that this should be extended widely but he was asking us to consider that issue.
My noble friend Lord Moynihan also asserted that other countries had found a good way to regulate ticket sales. Our finding is that the evidence is mixed. New South Wales has a draft Fair Trading Amendment (Ticket Reselling) Bill restricting ticket resales, and we do not yet know its impact. As we understand it, these new restrictions are not the same as those in one of the amendments under discussion today. We have also seen press reports arguing that Queensland’s anti-scalping laws, as I think they call them, have had little effect. However, obviously we will keep those under review.
I have tried to talk about traders. I should now like to turn to the subject of Amendments 26, 28 and 29, which is consumer-to-consumer sales. We want consumers to be active and empowered in the market as buyers and sellers. It is a fact of life that sometimes consumers have a ticket that they cannot use. At this time of year I might buy tickets for my husband, a son and myself for a classical concert in the Royal Parks next summer. If my husband is taken ill six months later and cannot attend, I need to resell the ticket. That means that I can get my money back and it gives other consumers the chance to attend the sold-out event. We see no need to restrict this. Consumers should be able to freely and easily resell in this way tickets that they cannot use; my noble friend Lord Borwick made this point very well. The OFT has said that secondary agents can,
“provide a useful function for consumers who need tickets for events and are willing and able to pay premium prices”.
My noble friend Lady Heyhoe Flint asked about the impact of her amendment and how to build on the 2013 regulations. I shall try to answer. We know that over 70% of consumers think that they should be able to resell their tickets. Not only is it the right thing to do to allow this market to operate, but that statistic also indicates that if we restricted the legitimate resale market, consumers would find other ways to sell on the black or grey markets. We also know that consumers care about protecting their data and identity online. The Communications Consumer Panel reports that nearly two-thirds of social network users said that they had a high level of concern about the use of information from profiles by companies. In that same survey, the largest top-of-mind concern related to the safety of personal details or ID theft, with just over one-quarter of internet users spontaneously mentioning it.
Most consumers would not be comfortable having their contact details prominently displayed on a website. I am not sure I would like that—but I am sure I am not the only one who already receives too much junk mail. Consumers want to sell online and to protect their personal data. The current regulatory system allows that, while protecting consumers when they buy from traders.
Lord Clement-Jones
Before the noble Lord, Lord Stevenson, responds, I want to make just a couple of comments. I, of course, also will read Hansard carefully. I am somewhat disappointed because I am not sure that the voices in the debate have been heard clearly. I feel that somewhat of the straw man or Aunt Sally is being erected here as if the proponents of these amendments are trying to restrict the secondary market and prevent resale. My noble friend Lord Stoneham talked about restraint of trade. I thought that that was quite extraordinary and that we were almost in the realms of the EU or something. That is not the intention; nor is it the intention to drive people away from the event organisers to the secondary market. I do not believe that that would be the impact of what we are talking about here; that is, to get the benefit of a guarantee delivered by a secondary market in the possible event that a ticket is invalid or fraudulent. Surely, when you buy it from the event organiser, you know that it jolly well is not fraudulent or invalid. I am not really sure about that argument.
I could say many other things. As to the whole notion of the secondary market being entrepreneurial, if you know that a major sporting event is coming down the track, I do not know how entrepreneurial you have to be to reckon that a ticket for the World Cup is worth money and will be worth a great deal more money the nearer the time. I am sure that the noble Lord, Lord Borwick, is a great friend of entrepreneurs but there is entrepreneurialism and entrepreneurialism, in my view, in all of this. I think that a little bit of a splendid smokescreen is being erected around this issue. However, I take it from what my noble friend has said that there is an issue about the information given about an ordinary seller who is an ordinary consumer who has bought a ticket and wants to resell it, and the whole of their history is revealed for all to see on the secondary market. That is a perfectly valid objection and it may be a bridge too far. But there are many other aspects of these amendments which are extremely important.
My noble friend prayed in aid the regulations. The fact is that they are there but they are not adequate. I am grateful to the noble Lord, Lord Moynihan, for using the word “forensic”. If you look at the impact of these consumer regulations, you see that they are not sufficient to drive good behaviour, which is all that we are talking about in these circumstances. The main four resellers in the secondary market may well do what they can. They do not always publicise exactly what the tickets relate to. There may be merit in considering some sort of regulation where consumers do not have to pay for their tickets until the identity is known. It may be that you need a condition precedent: for example, having made the reservation, the consumer perhaps should not have to pay until the seat number can be stated. It is perfectly possible to think of a situation where that would be a valid way of behaving.
I will chew over what my noble friend has said but we have quite a bit more discussion to take place. Clearly, she recognises the strength of feeling in Committee. I think that this is a matter that we will take further during the course of the Bill.
Lord Stevenson of Balmacara
My Lords, I share the disappointment that the noble Lord, Lord Clement-Jones, expressed at the response to the debate. It was a very high-quality debate with some very important and influential speakers with track records and experience. It is not so much that their points were rebutted—that is what Governments do—but to have them rebutted in such an inventive way seems to me to trivialise what is an important point. We need to think very hard about what the next steps in this should be. For example, the Government do not seem to have a view on my genuine question of what a ticket is, yet they are regulating out of their ears—or that is what they say they are doing. To do so on the basis of not knowing what the central point is seems to be specious in the extreme. If they do not know what a ticket is, is it any wonder that the regulations do not do the trick?
It is absolutely clear from what has been said today and from the evidence that we have received that the current regulatory structure is a bit of a joke. It does not do what it is required to do: to make an efficient market for those who are trying to sell tickets for events they are running and for those who wish to attend them in a genuine capacity. It is not catching all the activity that is going through. The Government say that it is designed for traders, but somehow consumers are in a different category. I do not think that distinction stands up in what we are doing.
The guidance that has been issued has been tried and tested already and is clearly failing. It does not work. We need to do something about that. Under the regulations that have been in force since June 2014, I have been told by several sports bodies that no tickets that they can find on sale have the seat numbers or seller details provided. Are we to believe that no tickets at all are being sold by these traders? I do not think so.
Also, what exactly is a trader? During her response the Minister seemed to imply that there would be a case for arguing that people who bought tickets in excess of their personal demand could be treated as traders. If that is the situation, why do we not say that in regulatory form so that it is clear? It is currently up to the seller to define whether they are a trader or a consumer. In the example given by the noble Baroness, Lady Heyhoe Flint, the BA pilot who was caught selling several hundred Ashes tickets would definitely have been a trader by any definition yet was not prosecuted in that way. This is largely about consumer protection. Consumers are not going to be concerned about whether their ticket is coming from a trader or a consumer. They should have the right to know what they are buying. That is the basis of all the consumer discussions we have had on the Bill so far. It seems odd to carve this out in a different way.
I take the view that, if the Government are not going to outlaw secondary ticketing—I do not think they should—they must regulate properly for what they want: the desirable things, the things that will help the sports and help consumers. That will help to create a proper and open arrangement that is not susceptible to criminal activity of the type that we heard about from the noble Lord, Lord Moynihan, but which seemed to be rebutted by the Minister when she responded. The noble Lord, Lord Moynihan, said that there were about 1,000 people involved in criminal activity from known facts as a result of the Government’s investigations into the Olympic and Paralympic Games. What exactly is she saying if she says that some economists say that there is not any criminal activity because it was consumers who were buying the tickets? Of course it was consumers who were buying them, but if they were arriving through some form of criminal gang activity, that is not a very satisfactory situation.
As was made very clear in the debates, the amendments taken together give a range of options for the Government to look at. That is a rich opportunity for the Government to come back with something sensible at later stages in the Bill. We are not saying that there is a particular solution to this; there is a range of things that the Government could do. We are tending not to be draconian. We are not insisting on banning secondary ticketing; we are trying to say that there is a gap here in expectation. The genuine fan, the keen person who wishes to go to an activity but cannot access tickets at the beginning of the process and has to pay over the odds for them, is not well served by the information requirements. This simply is not working well. It could be changed through very minor regulatory change. It should be in the Bill because it is clear that the secondary legislation is not working. I really cannot understand why the Government are happy to be accused of standing by while consumers are being exploited.
We will undoubtedly return to this. I hope that between now and when this matter comes back on Report there may be an opportunity to have a further, more in-depth discussion with the Minister where we might get further down the line on this. In the interim, I beg leave to withdraw my amendment.
Baroness Neville-Rolfe
My Lords, this may be a convenient moment for the Committee to adjourn.
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
The Committee stands adjourned.