The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, it is now 3.30 pm. I must start, as I am obliged to do, by advising that, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 51: Reasonable price to be paid for a service
Amendment 50A
“( ) Where the consumer is required to pay for a service via a third party as part of another contract, for the purposes of assessing whether the charges they are required to pay are reasonable, they will have a right to the full details of any contract including all charges and costs to which they are contributing.”
Baroness Hayter of Kentish Town (Lab)
My Lords, Amendment 50A is about transparency of charges. This is something we know that the Government support. They are very much in favour of transparency, particularly given their very welcome provision elsewhere in the Bill to make letting agents disclose their charges. However, other groups of home owners and tenants have a similar need to know what they are being asked to pay, whether it is insurance in respect of a holiday or an add-on to a main product. I hope that the example I am about to give will help the Minister to respond to the amendment. It concerns leasehold management where there is leasehold ownership of a block of flats and either the managing agent or the ground landlord takes out an insurance policy or has building work done, but then, because of the contract, the leaseholders have to pay up although they are not shown the details of the cover, if it is insurance, or, indeed, of the price and bids for the work if it is, for example, building or gardening. These details are available to the freeholder, and probably to the managing agent, but not to the leaseholder. When they ask for this, the insurance company or, indeed, the contractor in the case of buildings often says that their agreement is with the freeholder and therefore they will not give the leaseholder the information, even though the leaseholder is paying.
We have had an example of this from my colleague in the other place. It will be obvious who it is when I say that this was about some leaseholders in Walthamstow. They managed to get their hands on their insurance policy and discovered that there was an extra premium covering terrorism. We were slightly surprised that Walthamstow should be high on that agenda. When they inquired, they discovered that it was because a newspaper article had once reported that somebody involved in a plot to blow up a plane lived in the area. That may be an extreme example but I think that we all know of cases where the person who actually pays is not the contractor or is not the person who is party to the contract; they have to pay via a different contract. Therefore, Amendment 50A says basically that when somebody has to pay via a third party, they should have the right to obtain the information relating to the charge to which they are contributing. I beg to move.
Baroness Jolly (LD)
My Lords, like other noble Lords, I, too, have looked carefully at the discussions on this issue which took place in the other place and I am aware of the circumstances and purpose which has given rise to the amendment. As I understand it, the purpose of the amendment is to assist leaseholders in establishing whether the insurance cover and the contributions paid towards the insurance premium are reasonable. I entirely agree that transparency is important and that leaseholders should have access to information about insurance and, indeed, other service charges.
Having carefully considered the amendment, its purpose and effect, I am happy to reassure noble Lords that the law already provides leaseholders with the right to obtain the information that this amendment seeks to provide. Leaseholders contributing towards the cost of building insurance and service charges more generally have for some years had the right to access and obtain copies of this information. This includes being able to request in writing a copy of the insurance policy or the landlord/managing agent providing reasonable facilities to inspect the policy and all other supporting documents, for example. This is in addition to the ability to request a summary of service charges in general, which would include the costs of insurance, and to inspect the invoices, receipts and other supporting documents that make up the costs.
If a landlord or, indeed, a managing agent on their behalf, fails to comply with a request for information without reasonable excuse, they commit a summary offence, which is subject on conviction to a level 4 fine on the standard scale of up to £2,500. Ultimately, as noble Lords will be aware, leaseholders can apply to the First-tier Tribunal Property Chamber for a determination about the reasonableness of the costs of insurance that they contribute towards and other service charge payments. Grounds could include, for example, that the level or type of insurance is not appropriate, in addition to the reasonableness of the premium.
It is, of course, in the interests of parties to try to resolve concerns or disputes amicably, by discussion or alternative dispute resolution where possible, before resorting to the tribunal system. Noble Lords will also be aware of the requirement for letting and managing agents now to belong to one of three redress schemes approved by the Government. This requirement came into force on 1 October 2014, and is something that the noble Baroness, Lady Hayter, inspired through the Enterprise and Regulatory Reform Act. It is also important that we avoid creating a situation in which changes to legislation result in confusion or doubt about how existing legislation operates, or in weakening that legislation. This could potentially act to the detriment of the very leaseholders whose interests noble Lords are looking out for.
Guidance about leaseholders’ rights, including acquiring information about insurance, can be found on the GOV.UK website. Free, independent, initial legal advice about leasehold law and the rights available, including accessing information is also available from the government-sponsored body, the Leasehold Advisory Service. I hope, therefore, that I have been able to reassure the Committee that the law already provides leaseholders with the protections and rights the amendment seeks to introduce, and on why the Government are not convinced that noble Lords’ amendments will achieve their goals. For those reasons and the reassurance I have provided, I ask the noble Baroness to withdraw the amendment.
Baroness Hayter of Kentish Town
I particularly thank the Government for giving serious consideration to this. It is interesting that the Minister said, quite rightly, that we do not want conflicting laws. Part of the problem is that what she quoted about the right of leaseholders to take the freeholder to the leasehold tribunal to get this information does not enable them to get it from the insurance company. It seems to be the insurance companies that do not seem to know that they should be providing residents with information on their cover. Residents can obviously get a copy of the insurance but it will not cover all these small points. What we were trying to write into the Act was to make sure that everyone knows their responsibility, including insurance companies, who should not wriggle out of giving this information. I think that the noble Baroness is going to give me some more helpful comments.
Baroness Jolly
Certainly. The landlord or freeholder has to get the information from the insurer in the first place in order to show it to the resident.
Baroness Hayter of Kentish Town
I thank the noble Baroness for that clarification. The point was that leaseholders were hoping to get the information directly from the insurer because that is where their money went. I will withdraw the amendment because there is another issue that we shall come to about the amount of risk that is covered. That is for the next amendment. I beg leave to withdraw the amendment.
“( ) Where the consumer is being supplied with a financial service, the consumer shall be provided with such information as shall enable them to know the risks that were taken into account in calculating the applicable premium and the profit that either—
(a) the financial services company, or(b) the financial broker,anticipates to make on that premium if there is no claim on the policy.”
Baroness Hayter of Kentish Town
In moving the amendment, I shall speak also to Amendment 50D in this group. Amendment 50B does what all good financial service providers should, which is to help people to understand risk so that they can make an informed choice about the sort of product to buy and the sort of price that is worth paying. The amendment very much covers financial products such as annuities, where consumers are really buying blind as very often providers fail to reveal the risks covered or their service charge. It is bundled up in one price, without knowing the degree of risk that is covered or, indeed, the service charge being taken by the provider. So consumers are presented with an insurance quote for terrorism, in the example just given, but that may not explain the underlying risk that it has been assessed that they face and therefore need to be covered for, and they have no way in which to find out why that quote comes to be. Is the risk associated with where they live, underneath a plane that might drop, or is it based on their life expectancy or assumptions about future market movements—or, as we have seen, some change in the likelihood of flooding, terrorism or anything else? In other words, the underlying risk is not obvious.
The amendment tries to get greater clarity, in addition to the financial market, about life annuities and things like that, and car insurance. The Competition Commission in 2013 reckoned that car insurance was not working well for consumers, as they have very little information about the add-on to insurance products, such as replacement cars in the event of an accident. It is impossible to know how much that cover is worth when it is in with your car insurance.
In the Commons, the Minister said:
“The amendment is unnecessary because the Financial Conduct Authority’s conduct of business rules already cover the provision of pre-contract information”,
and claimed that,
“the requirement to disclose risk information … could have an adverse impact on the insurance market”.—[Official Report, Commons, Consumer Rights Public Bill Committee, 4/3/14; col. 428.]
According to the Government, it would require insurers to disclose their business model and confuse consumers, because companies use different models to calculate risk. What it means is that the degree of risk that the insurance company thinks it faces, and therefore why the charge should be there, is absolutely not explained to customers or clients.
The Minister also cited an apparent absence of demand for consumers to know how their premiums are calculated. I consider that that somewhat underestimates people’s attitude for information. As soon as they understand the importance of it, and therefore the effect that it has on the price and how much they are willing to pay, they may understand more. If young drivers, who get a very high premium, are told that that is because so many young people drive at night, they may be able to say, “I promise not to drive my car at night—could I have a lower insurance premium?” We know that exactly that has happened, but it took that degree of knowledge for young drivers—admittedly, represented more as a group—to be able to negotiate a different sort of insurance once they knew the underlying risks for which the insurance company was charging them more.
Transparency from providers to consumers should be one of the things that we try to get. It is particularly important with car insurance because it is a captive market—we all have to have it. I am assured that that means 26 million cars, which sounds like rich pickings for any industry. It is not a very competitive industry, in that only four companies account for half the £13 billion market. So premiums are high, and it is an example of where groups of consumers, if they understand more about their risk, might be able to negotiate a better deal. It is probable that everyone in this Room has managed to lower their car insurance premium by phoning up and complaining. You can usually get your car insurance reduced, which tends to suggest that it is not a very competitive market.
We will come on to another issue, which is that the add-ons often cover things like legal expenses, but again we are not told what the real degree of risk is and therefore it is impossible to know whether they are worth buying or whether it would be better to cover oneself through the house insurance premium for all legal costs rather than just those for the car. Without this knowledge, it is very difficult to shop around.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, I have a lot of sympathy with the intention behind Amendment 50B. It seeks to help consumers get a better deal from their insurers through the provision of more information, which would help them to make an informed choice. I am glad that we are discussing the issue today. But I am equally concerned that the amendment could lead to customer confusion and might even hamper competition in the insurance market, which ultimately is not in the interest of consumers. I shall first address the requirement under the amendment to disclose risks taken into account when setting insurance premiums. An example of that would be the age of a driver, as has been mentioned.
The idea of equipping the consumer to make informed choices is in my view an admirable one, but mandating the provision of complex information would be likely to result in the opposite outcome. A complex algorithm would not help the consumer and competition could be affected. In my experience, there is good practice out there. As it happens, only yesterday I was renewing my motor insurance on my mobile phone, which kept giving up on me, so I had to ring in again. However, in the end I did succeed. It was actually quite interesting because I had a discussion about some of the options. I asked, “If I take one of my sons off the insurance, will it be cheaper?” and so on. They were very clear and also went through extra things that one might want to purchase but had no obligation to do so. Those were the sorts of thing that the noble Baroness mentioned, such as legal expenses or a replacement car.
As we know, it is important that consumers—who are busy and not always financially literate—take in the key information needed to decide whether to buy an insurance product. To overload them with more information can put them off reading any of it at all. There appears to be little appetite from consumers to understand the complexities of how premiums are arrived at. We know that consumers concentrate on price. A key part of price competition comes from the respective capabilities of insurers to assess risk. Asking insurers to disclose these assessments could harm competition as it would be tantamount to giving away the secrets of an insurer’s business model. I think that that was the argument discussed in the other place. Further, the price of premiums could increase as a result of this amendment as it imposes an additional cost burden on insurers to provide a breakdown of detailed premiums—which inevitably will be passed on to consumers. This cost burden could damage an industry that employs 320,000 people in the United Kingdom.
The amendment also has a requirement to disclose profit relating to a policy where no claim has been made. Information about expected profit if there is no claim on a policy can be only speculative. Insurance works by pooling risks together—that is the whole principle of it. If no claim has been made on a policy, this does not necessarily mean that an insurer makes a profit on that policy. I also highlight that the Financial Conduct Authority’s conduct of business rules already cover the provision of pre-contractual information by insurers—that is, what you are told before signing up—so creating a separate set of rules in this area is unnecessary.
The Financial Conduct Authority’s General Insurance Add-ons Market Study highlighted that there is currently no consistent or common method for measuring the value of these products, and proposed that insurers should publish claims ratios to increase transparency and focus on value. This would be an aggregate: how much they pay out relative to income for the whole fund. The FCA has not yet concluded that work so it is important that we allow the regulator space to draw its conclusions before taking additional action. Of course, it has powers to add or amend its rules—in this case, the Insurance: Conduct of Business Sourcebook.
Turning to Amendment 50D, I am again concerned about the risk of adverse consequences for consumers and about the potential conflicts with existing rules on claims handling set by the FCA. I will explain my concerns by going back to the fundamental nature of some insurance claims. For example, as the noble Baroness mentioned, property insurance claims for riot or flood damage can take a long time to resolve simply because of the scale and nature of the damage. A flooded property can take many months to dry out and it is vital that the property is dry before any renovation takes place. In these cases, to assist the claimant through a period and alleviate hardship, interim payments and temporary accommodation are usually paid immediately.
Instead of helping consumers, the amendment could have perverse effects. It could encourage insurers to rush people back into their homes and close the claim just to be within the law rather than because it is the best outcome for the customer. I am sure that that is not the noble Baroness’s intention but that is a risk, as was suggested in the other place—and one that I am very keen to avoid in this important piece of legislation. Further, I am particularly mindful that artificial deadlines would put a strain on customers to quickly evidence the loss to validate their claims, and might even encourage what could be seen afterwards as fraud.
I know from experience that processing and verification can take some time. I also know that insurers, in general, take their obligations very seriously. Insurance is an important industry and pays out £452 million every day. Good insurers earn loyalty and a good reputation which allows their business to flourish and grow.
I think it is also relevant to set out how the Government have responded to recent flooding in the UK. To ensure that home insurance is affordable for 350,000 properties at highest flood risk the Government have worked with the industry to create Flood Re. We debated this during the passage of the Water Bill. When up and running in 2015, Flood Re will effectively limit the amount that most UK households at the highest flood risk will pay for flood insurance. We have also announced record levels of government investment in managing flood risk.
Still on the subject of delays, the insurance industry complies with all-encompassing consumer protection and redress rules set down by the FCA which in many cases exceed the measures proposed in the Bill. The FCA’s Conduct of Business Sourcebook, which I have already mentioned, requires that insurers settle claims promptly once settlement terms are agreed. The FCA has recently undertaken work on household claims in particular. This year, it conducted a review which concluded that there was no evidence of insurers deliberately delaying settlement. Where things go wrong, as they unfortunately occasionally do, consumers have the right to complain to their insurer and can also go to the Financial Ombudsman Service. A ruling made by the service is binding on the financial service provider.
We have discussed a very serious matter. I feel we have the balance right in this Bill, for all the reasons I have outlined, and I ask the noble Baroness to withdraw the amendment.
Baroness Hayter of Kentish Town
The Minister clearly needs some advice about topping up her phone battery if she is going to be renewing her insurance that way. We trust she got it through all right.
I am delighted that the insurance industry is paying out £452 million a day. We do not know how much it is getting in per day, which from the point of view of the consumer is the interesting figure. I was trying to multiply 452 by 365, but I did not manage to do it. However, that is the issue. If you get a no claim bonus for not having made a claim in the previous year, which I hope the Minister got, the real issue is that you have no idea of its value. In other words, you do not know how much the insurer has saved by the fact that you have not claimed.
I think I made it clear, after what was said in the Commons, that we are not saying that this will be an artificial deadline. The amendment states only that the fact that someone has had to move out of their primary accommodation can be taken into account when determining the timeframe. We were not saying that it was the determinant.
On Amendment 50B, the issue is that we want consumers to shop around. We want them to have the details to be able to judge price, and without some of the underlying assumptions it is hard to do that. I hope we can find a way of strengthening the consumer in this way, whether through the FCA or this Bill, but the FCA’s responsibilities are wider than just consumers whereas this Bill has consumers at its heart.
Baroness Neville-Rolfe
We have consumers at our heart in relation to this Bill and many other pieces of legislation, but there has to be a balance. I am sure we agree that if you put up costs inappropriately, the consumer is the loser because costs tend to be passed on in higher prices. We have to work together to find the right balance.
Baroness Hayter of Kentish Town
I certainly agree with that, but I am not always convinced that having better-informed consumers leads to higher prices. That may be for another discussion. I beg leave to withdraw the amendment.
Baroness King of Bow
“( ) Where the service provided is for an additional assistance service, a reasonable price will be one which is judged by reference to the guidance set out by the original provider of the service who has approved the provision of such an additional service including specifying a range of costs for its provision which can be considered reasonable.
( ) An “additional assistance” service for the purposes of this Act is any service assisting a consumer to use the original service that does not alter the original service provider’s intent in operating this service.”
Baroness King of Bow
My Lords, Amendments 50C and 56A both seek to ensure that the final provider of services approves any website offering services through them. This area is the digital equivalent of the cowboy mechanic charging people left, right, and centre for services they do not need. We know it is important to take action on copycat websites: the question is, how far will we go?
I start by examining how far they go to con consumers out of money. The examples are legion. I shall not detain the Committee for too long, but I will follow the top three copycat websites with a special commendation for con artistry, because I simply could not resist. Here are the top three copycat websites, in reverse order, identified in a poll of 1,750 people for moneysavingexpert.com. These people were all caught or nearly caught by those website scams.
In third place are websites for driving licence applications and renewals. They are supposed to cost £20 but these websites were charging up to £80. In second place are passport applications and renewals. They are supposed to cost £137; people were being charged up to £237. In first place are European health insurance cards. These are free, yet hundreds of people were being charged £25 for a free service.
There is a special commendation for con artistry. This goes to the copycat websites covering tax returns, because they are simply superb at what they do; that is, conning and scamming people. As we know, HMRC provides a free service to all taxpayers, yet the taxreturngateway.com website charges consumers between £150 and £1,000 for processing a self-assessment tax return. The company said this was justified because forms were checked for mistakes, but Which? points out that this is clearly misleading as that is exactly what the HMRC official site does.
You might think that you would have to be a bit of an idiot to pay for a free service; in that case I put myself in the idiot bracket. To be slightly gentler, we might be called idiots/people in a rush. You know how it is: you have a lot of things to do, you go online, and you click on what you believe to be an official site. I did that before I travelled to America. Instead of paying $14 for an ESTA visa I paid $40. Yes, I did feel like an idiot when I realised that I had paid a 300% surcharge simply because I was convinced I was on an official website when I was not.
The important point is that as the Government move to put more public services online, it is incumbent upon them to take all possible measures to prevent public service users and consumers being ripped off on an hourly basis. The Government have taken action on this. It is good news, for instance, that Google have removed misleading sponsored adverts. But at the end of the day it is the Government who need to take responsibility in this area, certainly more than a private company.
This is about consumers being legally scammed and ripped off in a calculated manner. The new single web domain, GOV.UK, is indeed welcome for providing the best way to access government services. But the Government can do more to prevent this problem at source, and this is what the amendments propose. Agencies should be able to detect, for instance, when mass applications are coming from the same IP source, because at that point there is an opportunity to evaluate whether the companies are providing a service that is actually value for money. If they are not, these websites can then be blocked by the agency.
For instance, many noble Lords in this Room will presumably be aware of what TfL has done, for instance. Consumers were regularly being overcharged for the congestion charge by copycat websites, with between £2 and £8 being added to their payment. TfL has now said in a public consultation:
“We are proposing an amendment to the Congestion Charging legislation so that we can refuse to accept Congestion Charge payments which are made by these unofficial websites or other unauthorised third parties which mislead road users into paying a fee in addition to the Congestion Charge. TfL will accept payments from third parties for someone else’s vehicle where there is no charge or commercial gain for making payment on their behalf; for example, payments made by people using car hire vehicles. We are planning to refuse payments from unauthorised third parties from December 2014”.
That is incredibly welcome, but instead of every single provider having to change legislation, why can we not ensure through this legislation that other providers can do the same?
The Transport Select Committee is the latest body to criticise the Government on this, saying:
“It is illegal to deliberately mislead the public or obtain money by fraud; the agencies providing services on behalf of the Government should do everything practicable to prevent users of their services from being misled or becoming the victims of fraud”.
TfL’s work here is a really strong and practical example of why just getting Google to police the internet is not the only thing on which the Government should concentrate. It is not the only practicable action that the Government can take.
Another point is that companies and service providers want to be able to control who sells on their services. We can all understand that—sometimes they may be a good thing. One option to explore is around having approved retailers, and we have that example with the Post Office. The ASA has also taken action on misleading adverts and websites. Can the Minister confirm that it cannot take further action against those websites as they exist at present? What further protections will the Bill give consumers in dealing with that problem, above and beyond what the Government have done to date? Does the Minister see a case for expanding “check and send” style services available in local post offices, where they provide a clear benefit for consumers?
In summary, I recognise that the Government have taken action in this area. Indeed, the letter from the Cabinet Office Minister dated 8 October illuminates the impact of government activity to date, which is a very good thing. But the fact is that clearly more could be done to stop copycat websites at source. That is what these amendments ask for, and that is why I beg to move the amendment.
Lord Harris of Haringey (Lab)
My Lords, I repeat my declaration of interest: I chair National Trading Standards. Its particular relevance to this amendment is that that body funds and supports the work of the National Trading Standards eCrime unit, which has recently taken action that has led to the arrest of a number of people associated with the delivery of copycat websites.
In moving this amendment, my noble friend highlighted the sorts of issues that arise in this regard. The most striking example is that of the European health insurance card, which is provided free. Those who have applied for renewal, as I have recently, will have found it an extremely simple and easy process. The fact that people were persuaded to pay up to £25 demonstrates how easy it was for the scammers behind some of these sites.
It is also clear that this is extremely big business, and there is no doubt that the area is under-reported. My noble friend in moving this amendment admitted her embarrassment in realising that she had been caught in this way. I rather suspect that most of us would feel embarrassed and stupid. Because people do not apply that often for European health insurance cards or passports, they would simply write it off to experience and hope to remember to do it differently in 10 years’ time, or whenever the time came.
The reality is that this area has been under-reported for many years. I am reluctant to comment too much on the arrests that have taken place, or the individuals involved, but I saw an article in the Mail on Sunday, which no doubt checked its legal position, about the scale of the revenues, and so on, that may be involved in this. It is clear to me that we may be talking about tens of millions of pounds, and maybe more, which individual citizens have paid unnecessarily through these copycat websites. The profits for those behind them are no doubt extremely large. So something needs to be done.
Again, my noble friend referred to the recent letter from the Cabinet Office setting out a number of initiatives that should take place, but there are a number of areas where everyone needs to make their contribution. Clearly, we as members of the public need to be better informed, and I am pleased that the National Trading Standards eCrime unit recently produced a public information guide called The Owl and the CopyCat, which was designed to demonstrate to people exactly how they ought to behave, and the dangers of going on copycat websites. So the public have a responsibility.
Secondly, the search engines have a responsibility. It may well be in their commercial interest to accept ads from these dubious websites and to place them at the top of search results, but that is not acceptable, and I am pleased that the Government have sought to persuade the search engines that this is inappropriate.
Thirdly, there is a responsibility on law enforcement and trading standards to investigate and to establish whether offences have been committed in terms of misleading the public.
The fourth area relates to the legitimate websites themselves. This is what the amendments in this group are all about. They will know—they must know—where the money is coming from. They will know if it is being channelled through particular IP addresses. They should take steps to monitor what is happening; they should take steps to intervene. The amendment clearly makes it an offence to charge unreasonably for any services associated with applying for a particular public service: the additional assistance element. The second amendment in the group suggests that the legitimate websites should look at whether the charges are legitimate, appropriate and proportionate to what is required.
I mentioned the European health insurance card. The process for applying for this is extremely simple. It is difficult to see what conceivable value additional assistance could provide as far as that is concerned; you would still have to provide your national insurance number or whatever it is to the copycat website, and that is all you have to enter. I recently had the experience of applying for a Russian visa for my daughter. This is an arduous process at the best of times. It is even more arduous when dealing with the bureaucracy of the Russian state. When I embarked on the process, I found what I assumed were a number of copycat websites. I thought, “No, I won’t be caught like this, I’ll go through the GOV.UK website, which will refer me to the correct Russian visa site and so on”. I embarked on the process and I have to say that at the end of it I would happily have paid somebody fifty quid to deal with the bureaucracies involved.
That is why we should take this back to what is an appropriate and legitimate charge for additional assistance. What the copycat websites are doing is saying somewhere in the small print that they are not the official site but are providing a service. We need to get beyond that and ask, first, whether the service that they are providing is necessary and, secondly, whether the charge that they are making is proportionate to the complexity of what they are providing to the consumer.
These amendments go beyond that to say that it would be entirely possible for the official websites to determine which additional service providers are authorised and to produce a scale of legitimate charges that could be made.
If we are placing an obligation on members of the public to be more vigilant and to carry out their own due diligence, and if we are placing an obligation on the search engine providers to be more vigilant and provide that service, surely it is legitimate to say to the legitimate websites that they should exercise due diligence and provide information and a measure by which we can determine whether any additional assistance provided is worth it. Where it is not, they should not accept payment from those sources.
Baroness Neville-Rolfe
My Lords, I make it clear that sites that try to palm themselves off as legitimate government services need to be stopped. We do not want cowboys battening on the services that are legitimately provided by the state. Therefore I sympathise with these amendments. This is a problem that the Government recognise and are taking action on. I was to glad to hear from the noble Lord, Lord Harris, about some of the successes that trading standards has had. He is right to emphasise the scale of the issue and the numbers involved in copycat websites.
We know that the way most people inadvertently end up on misleading websites of this kind is by clicking on adverts that are prominently displayed on search results pages. The Government Digital Service, which the noble Baroness mentioned in relation to the Cabinet Office letter, has been working with search engine providers such as Google to take down adverts for these sites. They are in breach of the search engines’ own policies and many of them have been removed.
There are a lot of parallels here with the problem of websites offering copyright-infringing material which also tend to be found through search results. We have been working on that, too. I have had meetings with some of the ISPs and others, and I am pleased to say that the main search providers are fully engaged on the issues.
We have also made sure that the existing law is being effectively enforced. Earlier in the year, my colleague Jenny Willott MP provided £120,000 in additional government funding to the National Trading Standards eCrime Team to support enforcement action against copycat websites. In late June, four search warrants were executed on properties in England. The operation led to the arrest of five individuals and disrupted the operation of at least 25 copycat websites. A criminal investigation is ongoing. This sort of action matters because it sends a message to the cowboys that this will not be tolerated.
Government agencies are also proactive in this area. The Intellectual Property Office is pursuing, prosecuting and putting out of business two operators of websites masquerading as official IPO services. That action was pursued successfully using the common-law remedy for passing off.
The noble Baroness, Lady King, mentioned the ASA. It continues to take action on a case-by-case basis and can take action on repeat offenders. It took action in November 2013 on Jars Services Limited which was trading—wait for it—as www.drivinglicence.org.uk. In September 2013, it took action against TAD Services trading as UK-Passport.net, and in June 2013, it took action against European Health Insurance Card trading as EHIC. The noble Baroness made a good point about the areas where this fraud is being perpetrated. We need to work to get those sites taken down.
The IPO case has been helped because for the first time ever, we have set up a website where consumers and traders can report copycat sites. This is specifically to protect and empower other consumers. Full details can be found on the excellent GOV.UK website which we are all pleased to see up and running. It allows a modern and dynamic response appropriate to the online era.
I reassure noble Lords that there is already law in place to protect consumers from being misled into a purchase. The Consumer Protection from Unfair Trading Regulations 2008 have been much mentioned during our debates and are very important. We also take enforcement action against these websites under intellectual property law. With a robust legal framework in place, we have been working to enforce the law and go further in partnership with industry.
However, I am not convinced that the law needs to be changed in the way proposed today. The amendment would in effect require government to regulate every third-party service. Government would need to approve it, issue guidance and determine reasonable cost scales. That would be a significant intervention in this marketplace. We should not take such steps unless the interventions we already make are not working and there is clear evidence that further intervention is needed.
People’s behaviour and expectations with regard to online services are constantly evolving and difficult to predict. We are keen not to stifle innovation or negatively impact websites that are honest and legitimate and provide value-added services. The most effective option is to enforce the existing legal sanctions against misleading websites which breach consumer protection legislation or IP law. In addition, we are going further by supporting search engines in assessing whether a third party offering services related to a government service is actually a genuine service. This complies with the search engines’ own guidelines and polices.
Lord Harris of Haringey
Could the Minister elaborate on that point? If the Government are working with search engine providers and essentially saying to them, “This is a legitimate additional service provider”, or, “That is not”, are they not already starting the process of regulating what she talked about as a legitimate marketplace? They must make that judgment already to be able to say to the search engine providers, “This is an illegitimate, copycat website”, or, “That is a legitimate service provider”.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord for raising that point. I know what is happening in certain areas but not across the board. If I may, I will take the noble Lord’s question away and come back to him. It is also important to publicise better the sort of things that are being done in this area. I have tried to do that in a small way today, as has the noble Baroness, Lady King. For the present, I ask her to withdraw her amendment.
Baroness King of Bow
My Lords, from what the Minister said and in conjunction with the points raised by my noble friend Lord Harris, I think the Government are saying, essentially, that it would be too much work for government departments to approve websites offering additional services. The point I wanted to make—as my noble friend did—is that that does not really make sense, for a couple of reasons. First, the extra work is minimal. Indeed, as my noble friend pointed out, it appears that it is already being done to some extent at the moment. Secondly, that extra work—whatever it may be—is insignificant when compared to the detriment being done to the consumer. That is the point we must consider here.
We also have to take into account all the time currently spent by government departments or other offices answering consumer complaints in this area. For example, the DVLA has received 170 complaints about scam websites since 1 March. The Home Office, in nine months in 2013, received 590 written customer complaints about scam passport sites. As for TfL, it had an extraordinary 1,000 complaints a day. Does not that shed some light on one of the reasons why TfL has been so proactive in this area? Would it not be helpful if Government encouraged other providers to be just as helpful to the consumer?
The other problem with the Government’s approach of leaving it really up to Google to monitor websites is that although Google has agreed to take down some of the adverts and monitor future ones, this requires much more continuous monitoring work than cutting off copycat websites at source. Critically, this approach also inevitably leaves some consumers unprotected for some stretches of time, and therefore undermines consumer rights. As my noble friend Lord Harris made clear, these websites are big business. They make their living by inflicting detriment on the consumer in an entirely parasitic manner. If we are all to play our part, it must include legitimate providers taking the time to say whether a site provides an additional service. That is the purpose of these amendments.
At the start of her speech the noble Baroness said that these sites need to be stopped. I welcome that forthright attitude, but I am sure she will understand my disappointment that it simply is not being followed up with what would be very simple measures.
Baroness Neville-Rolfe
Perhaps I could make one point about the idea of new legislation, which I think is what the noble Baroness is calling for. We are very concerned not to stop legitimate organisations that do provide added-value services related to those provided by government from advertising via search engines. That is an important objective; there are always two sides to these questions. At the same time, as I said earlier so robustly, we want to stop those who make false or misleading claims, who do not provide any added value to users, and who thus understandably frustrate and upset those who, as in the example given by the noble Baroness, choose the wrong sort of website.
The difficulty is that people’s behaviour and expectations with regard to these services are constantly evolving and difficult to predict. That is why we are pursuing the option of supporting search engines in assessing whether a third party that is offering services related to a government website is actually a genuine one which complies with the search engine’s own policies. I think that it would be difficult for us to do this on our own. We have set up the website page www.gov.uk/misleading websites, which I mentioned earlier, and we will monitor the effectiveness of this approach over the coming months. We need to work in this evolving and important area, and I can assure the noble Baroness that we are determined to make a difference.
Baroness King of Bow
The problem I have with the Minister’s response is twofold. First, the legitimate business issues she is talking about would not suffer any problems as a result of the amendments we have put down because they would be providing additional services. Secondly, when the Minister tells us, as she just has in her intervention, that Google is looking at which copycat websites are appropriate and which are not—obviously if they are appropriate, they are not copycat websites, but I am sure the Minister gets my meaning—if we take the example of TfL and the congestion charge, surely TfL is better placed to determine whether a website is providing an additional service or not. Why should the people at Google, clever as they may be, essentially have to do the job that a provider is far better placed to do? I genuinely do not understand the Government’s persistent objections on these points and I would be very grateful if the Minister could pay serious attention to reviewing them. However, until that point, I will withdraw the amendment.
Baroness Neville-Rolfe
Before we finish on this important matter, which I think we both care about a lot, perhaps I may say a few more words. Before we decry the work being done with Google—I think the noble Baroness is asking whether it is sufficient—in the period between November 2013 and June 2014, click-through rates to the official sites improved as a result of work with Google. From November 2013 it was 43% on passports and by June 2014 it was 72%. Obviously there is still a problem, but we are seeing an improvement. Driving licences: 41% in November 2013 and 69% in June 2014, and of course we are now in October. I believe that this is an area where we have to work with the industry. However, I will respond to the point made by the noble Lord, Lord Harris, about how we can link in and identify the third parties in every relevant area. As I say, I will come back to him and to the Committee on that issue.
Baroness King of Bow
I thank the Minister for that intervention. One of the issues comes back to what I have heard the Government say—namely, that they are going to take all practicable measures to deal with this matter. Our point is that these amendments represent very practical measures that could deal with it. I mentioned the letter from the Cabinet Office setting out the impact that the Government’s steps had had, and I welcomed them. The Minister just referred to driving licences and said that the relevant figure had gone up from 41% to 69%— that being the number of consumers coming through legitimate routes as opposed to other routes where they may face surcharges. However, that still leaves approximately a third of consumers uncovered. Given that we are discussing the Consumer Rights Bill, I simply cannot understand why we would not want to strengthen the position of the one-third of consumers and ensure that they have the whip hand rather than the parasites who are out to make money unfairly. Therefore, although I shall withdraw the amendment, I do so with a heavy heart, albeit a hopeful one, because I am sure that the Government will agree that these are fair amendments that would help consumers save money and stop legal scams. I beg leave to withdraw the amendment.
“(3A) Where the conduct of the service can be reasonably considered to lead to a risk to the personal safety of the consumer, the consumer has a right to—
(a) a full refund of the cost of the contract, and(b) any additional fees associated with the service.(3B) Any action taken under subsection (3A) will not prevent the consumer from seeking other remedies or further compensation for the consequences of this installation.”
Baroness Hayter of Kentish Town
I am feeling very proud as I managed to renew my passport online and got it from the Passport Office in, I think, 48 hours. I thank the Passport Office for being able to do that online and for its incredible efficiency.
In moving Amendment 50F, which stands in my name and that of my noble friend Lord Stevenson, I will speak also to Amendments 50H and 50J. These concern issues that we addressed when we discussed the Bill’s provisions in relation to goods. We are worried about consumers whose personal safety is at risk due to the quality of workmanship in their house. They should not have to have the same people back to make a first attempt at repairing whatever they have botched before being able to ask for a refund of their money and any associated costs. The importance of the amendment will be clear to all consumers.
A trading standards representative gave written evidence to the Public Bill Committee in the other place that the remedy in the Bill was insufficient where dangerous service was involved. In these circumstances consumers should have the right to end the service and get their money back. At present, the Bill enables consumers who find that a service is not undertaken with reasonable skill and care—a normal service, if you like—to have that service undertaken again and to get their money back or obtain a price reduction only if the repeat service does not work. These amendments address the problem whereby a consumer’s personal safety is at risk and would allow them to move straight to obtaining a refund rather than risk their safety any further by having to have a repeat performance by an incompetent or careless supplier.
On a previous occasion we gave the example of a gas fitter who services a boiler and causes a leak or a builder who knocks down the very wall that he is meant to be building. These may appear extreme cases but, sadly, we know that they happen and we know that we would not want such tradesmen back in our houses. Therefore, we would like a consumer to be able to obtain a refund and employ another company in these circumstances without first having to have the same company attempt to repair the damage.
I know that the Government have looked at these measures in another place and feel that they are not necessary as the consumer will retain access to a common-law remedy for damages. The Bill sets out clear remedies and courses of action but for consumers to have to argue with the tradesperson in court in order to solve this problem does not seem to us a clever way forward, in addition to all the expensive legal action that is bound to be involved. This amendment would give clarity and keep these issues out of court. I beg to move.
Lord Harris of Haringey
My Lords, I will speak in support of this amendment. I declare a personal interest in this matter. I appreciate that this Committee has turned into an opportunity for all of us to explain our recent experiences of various sorts, but I suspect that this is one of the most recent experiences. Having had a series of problems with a boiler installed in my home, we called out—for the second time in this instance—a contractor to come to try to put it right. Last Tuesday evening I got home and, despite a slight cold, detected what I took to be a smell of gas. We summoned the appropriate people, who came with their little sniffer things, and so on, and declared that whoever had allegedly repaired this boiler and the flues had left it in a state whereby not only was there a serious gas leak but there was a serious leak of carbon monoxide. Fortunately, the boiler is in a basement area, although presumably it could have become an excitingly combustible place. However, the reality was that it had been left in a seriously dangerous situation.
After I had spent some time swearing at the contractors—and I am tempted to use parliamentary privilege and name them, so that residents of north London are warned of these people—the offer was made that they should come to put it right. They were shocked, as I was, that they might have left this in a dangerous situation. My immediate reaction, which remains my reaction, despite the fact that we have no gas at all in the house, because the gas board has been in and disconnected everything for the sake of safety, was that these were the last people whom I would like to come in and rectify the problem. Indeed, I notice that the contractor has e-mailed and phoned me today, clearly because he wants to be paid for the work that was originally done.
This is precisely one of those areas where the consumer needs a very clear legal position. I had not actually looked at my noble friend’s amendment until today, but this is exactly what is required under these circumstances. I wish that this could be made retrospective and that I would simply be able to point to Section 54 of the Consumer Rights Act, as it would then be, and say, “Hang on, there’s no question that we’re having a full refund of the cost and any additional fees associated with bringing somebody else in”. That is what most sensible people would expect. If the Government are serious about giving the consumer sensible rights, they should provide that in the Bill.
Baroness Jolly
My Lords, we have taken great care in developing these remedies, for obvious reasons, and we have had a very good example today. Services are a vital part of our economy. In addition, SMEs and micro-businesses make up the vast majority of services businesses. It is therefore essential that we get these remedies right.
When we consulted on these remedies in 2012, respondees supported the approach that we are taking. They considered it a sensible, balanced approach. Based on the support that we received for this approach to remedies, I am not convinced we need to amend them as this amendment proposes. The remedies that we have are clear for traders and consumers, and it is set out clearly in the Bill when the consumer can ask for each remedy. This is important: The British Retail Consortium told us that it agreed that,
“this approach would be helpful to the extent it is practical and realistic”.
However, we have also catered for the more extreme cases where personal safety is at risk. Here I should say that these notes were written before we had heard the story just told by the noble Lord, Lord Harris. Let me reassure him that the Bill does not force the consumer to have a trader whom they do not trust back in to repeat a service. The remedies set out in detail in this chapter of the Bill are not the only remedies available. To make this clear, we have written into Clause 54 that the consumer retains their access to common-law remedies.
Baroness Oppenheim-Barnes (Con)
Before my noble friend goes too far, what are the other remedies and how soon are they available?
Baroness Jolly
I will come back to the noble Baroness with chapter and verse on the remedies, but they will not be available until the Bill has been passed.
The remedies consumers retain under common law are the right to damages or, in some cases, the right to treat the contract as at an end, rather than being limited to the statutory remedies in the Bill, as long as they do not claim for the same loss twice. I am sure that no noble Lord would do that.
I recognise that consumers and traders will not want to go to court in most cases. That can, in some cases, be expensive and time-consuming. However, knowing that they retain the right to go to court is intended to empower the consumer to ask for their money back. It should also encourage the trader to agree with the consumer to do this. The consumer’s rights under this chapter of the Bill are not the only legislation ensuring that services are performed safely. For example, building regulations require that building work does not compromise the safety of people in and around the building.
Many service providers rely on their reputation and word-of-mouth recommendations. If they have made a mistake, they will want the opportunity to return to fix it. It would not be fair on those traders to take away that opportunity. Many consumers would also want the trader to rectify a problem with a service rather than have the inconvenience of finding another provider. There is also nothing to stop the trader volunteering to give the consumer a price reduction without a re-performance. The trader and the consumer are free to come to an arrangement separate to the statutory remedies in the Bill. Reputable traders will negotiate a remedy with the consumer, taking into account what the consumer has asked for. Given that consumers will be able to access compensation where re-performance is not desired and that our consultation showed broad support for our approach, I ask the noble Baroness to withdraw the amendment.
Baroness Hayter of Kentish Town
The noble Baroness, Lady Oppenheim-Barnes, asked a wonderful question. It was short and acute and went to the heart of the issue because the other remedies, the common-law remedies, are expensive and take a long time and any trader will know that no one is going to take them to court for £200 or £300—even my good and noble friend Lord Harris of Haringey. I am tempted to offer to come and help.
Lord Harris of Haringey
Is this on the public record, because I am still in discussion with the trader concerned?
Baroness Hayter of Kentish Town
I take my noble friend’s point about making this retrospective.
There is a serious issue here. The consultation at the beginning may not have thrown this up because when any of us respond to consultations we have not always thought about all the implications and what could happen and that there might be something dangerous. I urge the Government not to rely too much on consultation on what was a big Bill at the time. No one actually thought about this.
There are a number of issues. The major one is that on quite an important issue it reverts to the old way, which is to go to court, and that does not suit consumers. I do not think it is very good for court expenses or for the trader. Just because the consumer has a right to a refund and to find another trader, it does not mean that they will. The Minister said that some consumers will want the same trader back because they do not want to look for another one. That is fine. Nothing will stop them doing that. The amendment does not require the consumer to have a refund instead of having the old trader back. It states that they should not have to go through one repair before they have their money back.
As I think we said when we raised this and the other safety issues at an earlier stage, this is something we will need to come back to because if consumer rights do not provide the basics such as keeping consumers safe, there is something missing. We will have to think about how we can pursue this on Report. For the moment, I beg leave to withdraw the amendment.
“Services delivered on behalf of a commissioning bodyServices delivered on behalf of a commissioning body
(1) In this section “commissioning body” means a government department, local authority in England or other public body.
(2) Where a commissioning body commissions another person to deliver a service to a consumer, the contract between the commissioning body and the provider of the commissioned service must include—
(a) a requirement for the provider of the commissioned service to operate a complaints procedure;(b) provision for reporting any complaints to the commissioning body; and(c) a requirement for the provider of the service to provide information about the complaints procedure to the consumer.(3) The information required by subsection (2)(c) must include—
(a) an explanation that the complaint can be referred to the commissioning body;(b) where the commissioning body is named in Schedule 2 to the Parliamentary Commissioner Act 1967, an explanation that the complaint can be referred to the Parliamentary Commissioner for Administration; (c) where the commissioning body is named in section 25 of the Local Government Act 1974, an explanation that the complaint can be referred to the Commission for Local Administration in England.”
Baroness Hayter of Kentish Town
I move Amendment 50K in this group on behalf of my noble friend Lord Stevenson and I will speak to Amendments 50M and 105A. This is an important and rather different set of amendments. Amendment 50K was tabled because of the increasing use of private or voluntary sector bodies to deliver services that historically were carried out by central or local government. In the UK, we have a long-standing and highly regarded system of ombudsmen for such services—for local or national government—whether provided by the NHS or by local councils, with such ombudsmen being free, independent and easily accessible. Indeed, it is one of the many advantages that users of local government services have, including recipients of social care. Where they have a complaint about any service, they can at a final stage take that to the independent Local Government Ombudsman, who adjudicates on the matter and can award redress if the service was found not to be up to standard. However, it is not clear to everybody whether users of contracted-out or commissioned services have equal access to the relevant ombudsman, so the amendment seeks to clarify this, not least to mandate clear signposting to first-tier complaints systems as well as to the ombudsmen.
There are wider questions about the redress landscape, which the Public Administration Select Committee has described and which Oliver Letwin, I understand, is now about to review. There are issues about the way things work now—for example, with, we hope, increasing and better co-ordination between hospitals and social care and a seamless move between the two. Interestingly enough, if there is a problem on the health side, it goes to one ombudsman, whereas if it is on the social care side, it goes to a completely different ombudsman. On the handover between the two, it can be difficult to know who was at fault. Even if you can identify that, you then have to find which ombudsman is the appropriate one. Luckily—I hope that some people in the Room will excuse me for saying this—both those ombudsmen are women, so they tend to get together and sort it out, but of course that will not always be the case with such organisations. The Committee will understand the problem.
This amendment does not try to solve the particular problem of overlap, but it deals with situations where a public authority contracts out work to a private provider. It aims to ensure that the user still has a clear pathway to the relevant ombudsman. Given that many public services are delivered these days through a range of bodies, it is hard for the consumer to follow the chain of accountability and to know where to turn if a service lets them down. Indeed, people do not always realise that if a local council has contracted out, it is still accountable, even though it may be another organisation that is delivering the service on the council’s behalf. Whoever is delivering publicly funded services, we believe that users should have access to clear, effective complaints processes, as well as the reassurance that in the final analysis they could take their complaint to an independent ombudsman.
Amendment 50K would ensure that the contract between the commissioning authority and the provider requires a proper complaints procedure, in addition to users knowing that they can refer their concern back to the local authority and then to the ombudsman. At the moment, councils always signpost complainants to the Local Government Ombudsman, but this amendment would ensure that all users of public services—we are particularly talking about social care—are equally well informed.
A brief example from the Local Government Ombudsman was where it had to remind councils that they remain responsible for the actions of, for example, care homes with which they work. The LGO undertook an investigation into Merton Council, which was responsible for a contracted private home. That home asked the family of an elderly resident to pay a top-up fee, but in fact the home had no right to that fee. The family happened to contact the council about where the payment should go and it was only then that it came to light that they were not due to pay the fee because the council had paid everything and the care home was not entitled to any more money. Interestingly, that complaint ended up in the right place because it had come to the notice of the local authority. However, in her findings, the Local Government Ombudsman, Dr Jane Martin, found against the local authority, reminding it that the law is clear: the actions of the care provider shall be treated as actions on or on behalf of the council, so the council was responsible for the care home seeking to extract funding from the family. She went on to warn other councils that they are responsible for any contracted activities that are provided. Clearly, not all councils and not all care homes know that and, even more obviously, not all users know it. We want public providers to ensure that all users are clear about their right to go to the independent ombudsman.
In the case of the Parliamentary and Health Service Ombudsman, the health service is already required to signpost patients to the ombudsman. However, that is not the case for government departments, agencies or other bodies, such as the Electoral Commission, the Charity Commission and Monitor, against which complaints can be taken to the Parliamentary and Health Service Ombudsman. If even those bodies do not know, certainly anyone they contract to do their work will not know either. An individual consumer could be applying to find out something from the Charity Commission and have a complaint, but of course they would not be signposted on. If they were involved in any payment, which they could be if it was for a service, they should be covered by this Bill.
The Parliamentary and Health Service Ombudsman knows that, where signposting is inadequate, there is a strange absence of complaints. Research undertaken in 2012 showed that almost half of the inquirers said that they had not been informed about the Parliamentary and Health Service Ombudsman by the service provider. It is interesting to note that the remit of ombudsmen allows them to follow the public pound and therefore review the actions of bodies acting on behalf of the relevant public bodies, but few citizens know that. Under this Bill, where there is any sort of consideration or payment, as there could well be in respect of a day centre or for other services, we want to ensure that people are absolutely clear about their right to go to an ombudsman.
Amendment 50M speaks for itself. It asks the Government to look at how consumers who use contracted-out or commissioned public services are going to get a better deal along the lines provided for in the Bill. The chapter on services is pretty clear. When we have our windows cleaned or a kitchen installed, as we discussed last week, we know our rights. We know from earlier discussions that the Bill is also going to cover public services where there is an element of payment. We will be interested to know how the users of publicly funded but privately provided services will have their rights under this Bill enforced, as well as what independent advice they might be given to help them in this regard.
Finally, Amendment 105A would require statutory regulators to ensure that they develop proper user or consumer representation on their boards, as well as reviewing annually the consumer experience of the industry, including whether they are sufficiently well represented and listened to so that their rights under this and other legislation are protected.
Regulators exist in exactly those industries where the consumer cannot on their own behalf get a fair deal because the industries are effectively monopolies, or because the nature of the service is so complicated and specialised, as in the law, that clients are in no position to evaluate it or shop around, or because it is an essential service, or for some other market failure. Despite this, not all regulators put the consumer, in whose interest they are meant to work, first—sometimes because of industry capture or sometimes because they fail to see the consumer impact as they work at such a helicopter level. However, it is usually because they do not embed the end-users’ views into their decision-making. They decide policy without researching the consumer’s experience or views. They simply do not understand the ordinary person who pays the bill. This amendment would embed the consumer voice into the regulators’ governance, where it should have been from the start. I beg to move.
Lord Knight of Weymouth (Lab)
My Lords, the amendment raises an interesting question, which I thought I should take the opportunity of posing to the Minister. A cursory glance at Hansard from the other place suggests that the Government’s intention is that consumer rights in this legislation should apply to consumers of public services as well as private services, which is what the amendment addresses. The question that arises refers back to the last time I attended this Committee, when we were discussing consumers’ rights in the context of digital.
With normal goods, one has the right to return them and seek a refund or replacement. I am intrigued as to how that would work with some public services. For example, does this apply to the licence fee? If I do not like what I consumed on my television, do I have the right to a refund or replacement? Of course not, but how does that work in the context of the Bill? If I have paid tuition fees and I am not satisfied with the nature of the service that I receive from a university— I hazard a guess that quite a few students might at times have problems with, for example, the amount of access they have to face-to-face tuition—am I considered, in the context of the Bill, to be a consumer with the same rights as I would have in the private sector? I should be interested to know how that plays out. Or do we, as the amendment suggests, rely on the regulator? In which case, is that all pinned down properly in the Bill?
Lord Whitty (Lab)
My Lords, I support what my noble friend has said in moving the amendment. I want to address for a couple of minutes Amendment 105A, which deals with the issue of consumer representation and how it is reflected within the structures of our regulators.
In general, it is stated early in each of the relevant Acts that the regulators are there to protect, advance or reflect the interests of consumers of gas, electricity, water, telecoms or whatever it may be. Much of the drive within those regulators is indeed geared towards that. However, it is also true that a whole lot of other broader, less direct duties in relation to consumers fall to those regulators. Successive Governments have, rightly or wrongly—I will not go into that too much—placed additional responsibilities on regulators to have regard to wider issues, to long-term and short-term issues, and to social and environmental consequences, for example. One understands all this if we are to develop industry in a way that meets those wider objectives and looks after the interests of consumers.
Put gently, in some cases the duty to look after the interests of consumers, in a simple sense, has been slightly lost. Some of that reflects the fact that the personnel who form the boards and the senior management of these regulators by and large do not come from a consumer background. They come from various technocratic and business backgrounds and in some cases from an academic background and they have the expertise that is necessary to understand the industry that the regulator is dealing with. However, the voice of the consumer in a clear sense is much more difficult to identify.
Baroness Jolly
My Lords, this has been a fascinating debate. Some really interesting questions have been posed, not least by the noble Lords, Lord Knight and Lord Whitty. I reassure noble Lords that I will write to all noble Lords who I have not answered by the end of my response and place a copy in the Library.
We all care passionately about the provision of public services. I am sure I do not need to remind noble Lords that our reason for not including improvements to our public services explicitly in the Bill is not that we do not consider them important. They are vital, and I am proud to say that this Government have done much to change and improve public services.
This Bill will benefit all consumers by setting out in one place consumer rights. This Bill will empower consumers. To maintain that clarity and consolidation, we have not included specific provisions for public services in the Bill. When asked in the other place, the Office of Fair Trading said:
“If you want to deal with consumer rights and the public sector, there is probably a different way to go. This is a simplification and consolidation Bill that is trying to ensure that consumer rights are clear and in one place”.—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 49.]
While there are no explicit provisions in the Bill on public services, some public services will attract the rights and remedies under the Bill. Services will attract these rights and remedies if they are supplied under a contract between the consumer and a public body. That is the test. This is because the definition of “trader” is wide enough to capture the activities of any government department or local or public authority. Consumers of public services provided under a contract with the provider will therefore benefit from the Bill with clearer rights, clearer remedies and ultimately better outcomes. That is a good thing. We will make it clear in our guidance to consumers and traders that this is the case.
Turning to those public services that are not covered by the provisions in the Bill, let me be very clear that these consumers are nevertheless protected—and in a way that often provides more tailored, specific and appropriate safeguards, designed to fit the particular service. Many of these tailored regimes already incorporate just the sorts of protections that these amendments discuss: independent advocacy, regular reporting and established ombudsman schemes.
Several sectors have well established alternative dispute resolution services. For example, the role of the Parliamentary and Health Service Ombudsman is to investigate complaints that individuals have been treated unfairly or received poor service from government departments, other public organisations or the NHS in England. The ombudsman’s powers are set out in law and the service is free for everyone. In 2012-13, the Parliamentary and Health Service Ombudsman resolved 26,358 inquiries for consumers. In 2012-13, the Local Government Ombudsman responded to more than 90,000 contacts from the public.
We all share the vision of public services provided to a high standard, where consumer feedback and consumer choice work to push up standards. The noble Baroness, Lady Hayter, mentioned the issues of signposting to ombudsmen. As my honourable friend Jenny Willott explained in the other place, the Minister for Government Policy, my right honourable friend Oliver Letwin MP, commissioned Robert Gordon to review the ombudsman landscape, thus considering the case for a single public sector ombudsman. He will report to the Minister before Christmas and we are committed to considering his recommendations. It would be premature to take action in this Bill before the review is completed.
I turning to the specific amendments tabled. The first is Amendment 50K. I am sure that all noble Lords are aware of the Open Public Services agenda. It is based on five principles for reform: decentralisation; choice; diversity of provision; fair access; and accountability. To achieve these objectives, we want to ensure that consumers of public services are empowered to raise concerns and that service providers learn from those complaints. In March, the Public Administration Select Committee published a report following its inquiries into complaint handling across government and the role of the Parliamentary and Health Service Ombudsman. As my right honourable friend the Minister for Government Policy made clear at the time, we agree that the ombudsman can play an important role in improving complaints handling and we are committed to working collaboratively with the Parliamentary and Health Service Ombudsman and other public service ombudsmen to deliver an accessible and effective complaint-handling process from first contact with a service to final resolution by an ombudsman.
There is now a set of choice frameworks covering NHS care, social housing, schools, funded early education and adult social care. These documents clearly set out the choices available to service users, as well as instructions for seeking redress if those choices are not satisfied. To offer clarity to the noble Baroness, Lady Hayter, these frameworks tell the consumer who is responsible and who to complain to. We are now looking at new digital channels for the public to register complaints about public services. This is in response to the Public Administration Select Committee’s report on complaint handling in the public sector. By way of example, we are working with the Department for Work and Pensions and the Land Registry on initial trials during the autumn.
On independent advocacy, as we said before in Grand Committee, we also prioritise making sure that consumers know their rights. Consumers of public services have access to advice, information and advocacy from government-funded channels such as Citizens Advice or GOV.UK. In addition, other bodies such as Age UK act as consumer advocates, especially for more vulnerable consumers.
Citizens Advice provides much of this advocacy. A spokesman was asked in the other place about including reforms to public services within the Bill. He said:
“I am not sure about that, if I am honest. It is not something that we have thought through sufficiently to get to a yes or no answer to that question. There are other ways of dealing with public sector services problems than a consumer rights Bill”.
When asked the same question, Which? said that,
“there are so many things that could fall within the scope of the Bill or could be added to it, and it could become unwieldy. So it is a question of priorities”.—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 7.]
I agree with those views. Public services are indeed important. We are committed to their improvement, but that is ongoing—outside this Bill.
Moving to the regulated sectors and Amendment 105A, it is important that consumer rights in regulated sectors are protected and that they are given sufficient information to make informed decisions. Regulators already have a statutory duty to look after consumer interests and must report annually on how they do this. Also, consumers within the sectors regulated are represented by relevant consumer bodies: for example, the Consumer Council for Water, Passenger Focus and Consumer Futures, which is now part of Citizens Advice.
There is also a lot happening to ensure consumers are able to get the best possible information across the board. In 2012-13, Citizens Advice helped 2.1 million clients through its bureaux with free advice. There were nearly 1 million contacts through its consumer helpline and also 14 million hits to its website. Some 91% of consumers reported that they would use the service again. This service reports to Government twice yearly on its performance against agreed standards.
Noble Lords can therefore feel reassured that regulators indeed do a lot for consumers already. With regard to the provision of advice and information, Citizens Advice reports twice annually on its performance. There is also much being done both by regulators and government to help consumers. Therefore, the amendment proposed is an unnecessary duplication of effort. I ask noble Lords not to press their amendments and to withdraw Amendment 50K.
Baroness Hayter of Kentish Town
My Lords, I thank my noble friends Lord Knight and Lord Whitty for the questions they raised and for their support. The public service issue is really interesting. It is no secret that now that universities have realised that it will affect them, one or two are getting a little jumpy. That shows what a very good Bill we have here. There is an interesting thing between those students who would pay a fee—the word in the Bill is “consideration”—and those who would not, where the latter would not be in as good a position as regards their rights. We will come back to this when we move an amendment on higher education. It might be useful at that stage—I give a bit of notice—to tease out some of those things. There was a lot of interest in this from colleagues around the House, many of them chancellors of universities, who I think have already been in touch with the Minister. Certainly, those of us interested in consumer rights are very happy that it will cover this, but I know that some clarity will be needed.
Working backwards, I am very sorry about the comment on regulators. As someone who chaired one of the consumer panels, was vice-chair of another panel and sat on another, it was not the same as being embedded in and a member of the regulator. Partly, you do not get things until they are more or less in the public domain, by which time of course decision-making is a long way down its route. Actually, it is in getting questions asked at the beginning, and the beginning of the formulation of policy and decision, where we want to embed a real consumer voice.
Baroness Hayter of Kentish Town
I think that I have made the point that the difficulty, even with consumer panels, is that they are not included at the beginning of policy development. That is even more the case as regards external bodies such as Citizens Advice, which see something only once it has been published and are therefore always in the negative position of trying to take action afterwards. As my noble friend Lord Whitty said, the whole point is to get the voice of the consumer absolutely embedded into the way in which the regulator defines the problem, what it looks for and how it does its research.
I want to make only one other point in response to the Minister on the issue of signposting to an ombudsman. She mentioned that Robert Gordon is looking at—and I welcome the report he is preparing—the possibility of there being a single ombudsman. The Minister said that it might be premature to require signposting but it seems to me that whatever we come out with, the issue of signposting will still be key.
Baroness Jolly
I think that the noble Baroness may have misheard me. What I actually said was not that it would be premature to signpost but that it would be premature to take action in the Bill before the review was completed.
Baroness Hayter of Kentish Town
While I understand that, the only action that we want is on signposting. If anything were to be commissioned, signposting would have to take place, and whatever Robert Gordon comes out with, that requirement should still be there. Indeed, if there were to be a single ombudsman, there would have to be a new name and, no doubt, a new location and website. It would be even more important to signpost.
As I said, we will come back later to the issue of public services, in which I know there will be a lot of interest. However, I hope that the Government will look at the regulators. Even if it is not in this Bill, they could still take action with each regulator because the issue represents the other side of the Bill. It is not simply about providing consumer rights but about making sure that those rights are looked after by every regulator. I beg leave to withdraw the amendment.
Lord Whitty
“Access to data
Schedule (Access to data) has effect.”
Lord Whitty
I shall speak also to the rather more substantial Amendment 81A for which Amendment 50L is the paving amendment. For this purpose I have briefly and temporarily transformed from a humble Back-Bencher to speak on behalf of the Labour Front Bench, but it will not last.
These amendments are about access to data for consumers. It is true that under existing data protection legislation British consumers have a legal right to request access to the personal data that businesses hold about them, but the majority of consumers have no idea of that, very few of them do it and, for those who do, it takes an inordinately long time to get the information out. Which? did a survey indicating that for those who do, it can take up to 40 days.
The Government are seized of this issue because in 2011 they set up the midata project, which is a voluntary programme covering four specific sectors. They are very important sectors, but there are only four: energy, mobile phones, providers of credit cards and providers of current accounts. The aim was to give consumers better access to their personal data in portable electronic form. The midata project has so far been somewhat disappointing. After 2012, the Government took an order under the Enterprise and Regulatory Reform Act to compel businesses within those areas to release consumers’ consumption and transaction data in a machine-readable portable electronic form on request. This has not really worked, and there has been no extension beyond those sectors. Data sharing between individuals and service providers and between intermediaries and those suppliers is still clunky and limited and, particularly for vulnerable consumers, difficult and potentially hazardous.
Our amendment in the new schedule which Amendment 81A would introduce is designed to tackle these problems by, first, ensuring that access to data is clearly a key consumer right and, secondly, by making sure that the Government use the powers that, in general, they already have to ensure that consumers are able to access portable data through the midata project and the provisions of the Enterprise and Regulatory Reform Act. That includes engaging third parties—the so-called next generation intermediaries in particular—to that data with appropriate protections. That can lead to redressing the balance significantly by at least allowing for the possibility of some collective bargaining for a group of consumers.
The amendment also asks the Government to report on other sectors to which the present midata provisions should and could apply; provides for traders to have to ensure that they have the best information; ensures safe data handling, including the consent of the individuals concerned and the appropriateness and identity of those concerned; and ensures that where there is a public benefit from generalising that data on an anonymised basis, it is genuinely anonymised and that consumers know their rights about their own data.
This amendment requires the Government to use their existing powers and to report back on how those powers should be extended. It requires them to look at other services and at the interplay with the intermediaries. First-generation intermediaries are what we call, generally speaking, comparison sites. There are problems with the quality of the data in comparison sites, as recent reports have shown. It is not always clear what range of companies within the sector comparison sites cover, nor is the commercial relationship between the comparison site and the providers clear.
The authentication of comparison sites is not yet substantially in place. The former Office of Fair Trading attempted to establish a confidence code. In the energy sector, there was a point when my old organisation, Consumer Focus, was subcontracted by Ofgem to look at the effectiveness of comparison sites, but there is no overall approach to ensure that those sites are genuinely doing the intermediary job of providing a range of information that would ensure that consumers can make a sensible and understandable choice. Millions of consumers benefit from access to comparison sites, but some sites are significantly better than others. Some are more subject to possible corruption—although corruption may be too strong a word. The relationship with the people whose information they provide to consumers is on a commercial basis and excludes other providers. This is an area in which the Government should intervene, as technology allows us to move further into the use of consumer data in these areas.
My noble friends under earlier amendments referred to the issue of the public sector, which also runs major projects on consumer transactions, particularly in the NHS and social care. Access to and knowledge of that information needs to be covered by any regulation and any provision of extension of rights for consumers on the data that public services provide. That includes not only the public services in the sense of the NHS itself but those organisations commissioned by the NHS to provide public services—so when they are outsourced, data also need to be covered by the provisions. We need tough penalties for the public sector as well as for the private sector when such information is misused.
This is a wide area on which we are asking the Government to report, but an important one. An empowered consumer should be able to rely on these intermediaries to present the information to them and to ensure that their own transactions are not misused in the compilation of both the providers’ and the intermediaries’ use of data. I would hope that the Government could at least accept the principle that a report on these areas should be required and should be, in our words,
“within six months of the passing of this”,
Bill, so that we can look at what further provisions are necessary. Then we can protect the consumer while enhancing the effective use of data and access to data in a way that empowers rather than threatens consumers, particularly the more vulnerable ones. I beg to move.
Lord Knight of Weymouth
My Lords, I strongly support this amendment. There are many good reasons to want to extend access to data for consumers of both private and public services. When Tim Berners-Lee famously invented the world wide web, he as famously said, “This is for everyone”. The use of digital products and services is something on which consumers are demanding movement, given that they observe a concentration of power over the internet in five companies globally, and have an increasing concern over the privacy of their data.
To give those consumers access to their personal data, as a starting point, is a way of giving more public reassurance about how their data are being collected and stored. It is also important in respect of innovation in the delivering of services. We have seen in public service delivery terms some of the innovation around the use of personal budgets. The ability to bring together services is an aspect that the use of personal budgets has demonstrated. That in turn can be significantly enabled by the use of personal data.
The register shows that I am the chair of the Tinder Foundation. It is nothing to do with the dating app, more to do with the organisation that runs all of the UK online centres. It is the main digital inclusion delivery organisation here in the UK. I am aware of the issues around exclusion by dint of access to technology and access to age; but I am also aware of some of the extraordinary stories of how people using data and using technology are able to join services together and improve their own personal outcomes.
I am also deputy chair of the Nominet Trust, which is a trust funded by Nominet, which registers domain names, to invest in social innovation, and I see some of the extraordinary innovation that is starting to come through from, largely, the voluntary sector, but also the private sector and just occasionally the public sector. It is that innovation that I am particularly keen to see. So I am delighted to see in this new schedule a section around access to information on public services.
If, for example, I had a chronic health condition and I went to see my GP, it would be great if the GP could say, “License to me just for five minutes, so I can put them through this digital tool, your shopping data from, say, Tesco, along with some of your health data, and some of your housing data”. The GP could see my lifestyle through the temporary licensing of personal data and then be able to give a much more accurate diagnosis of what was going on, how I might make some lifestyle changes and perhaps reduce my reliance on prescription drugs because some other behavioural changes can have a better outcome than use of those drugs. Similarly, I can see how advisers working for Jobcentre Plus could join up data on a temporary basis and provide a much more personalised service for people. Also, when I look at the GOV.UK site for its explanation of midata, it gives the important reason of improving buying choices for consumers as one of the reasons why it has set up midata.
This amendment is exceptionally modest in what it asks the Government to do. It is asking the Government merely to report. It is not really asking the Government to do very much except tell us what is going on. In that respect it is highly flexible; it accepts that there may implicitly be some burdens on small and medium-sized enterprises and that the Government will need to tell us which regulated persons should provide consumer data—so it is perfectly reasonable in the way that it has been drafted. It is the natural next step on from the Data Protection Act to the Enterprise and Regulatory Reform Act of last year that we should be pushing further on this. These digital services are moving extremely quickly, and it is important that this Parliament shows the same agility that is being shown in the outside world. I strongly support these amendments.
Baroness Wilcox (Con)
I found it quite frightening listening to what the noble Lord was saying there. That sounded like the beginning of a great fire that he was putting his foot into. I go to my doctor and give him permission to find out data from me: where I shop, where I do this, where I do that. It is a simple thing to say, but where does it move next? I go to my moneylender and he says, “Well, tell me about this, give me permission to see that”. This sounds terribly frightening to me.
Baroness Oppenheim-Barnes
On the same point, I am appalled at what is being proposed for doctors. As things are, they never look at their patients any more. They screw up their eyes and look at the screen; they cannot see the current condition of their patient. On a very good World Service programme a little while ago, three people were interviewed about the medical profession. One very prominent doctor in America, who had previously been in the deepest jungles, said that doctors in America could not compete with those in the jungles because they knew their patients and their patients’ background and did not sit staring at a screen instead of at the patient.
Lord Knight of Weymouth
The noble Baronesses articulate concerns that I know are active, and they do a great job in doing so. I am not suggesting that doctors should have rights to any of that data but that it would be up to the individual patient as to whether they temporarily license that data, to assist—
Baroness Wilcox
A patient who has gone to a doctor is more than likely not feeling well and is frightened and looking for any help they can get. It is so easy to say yes and to open up that can. It is such a dangerous subject to put in as a lightweight amendment to a Bill like this.
Lord Knight of Weymouth
My Lords, I was using an example that I thought was perfectly realistic. We have seen with the furore around how care data have been handled or mishandled by the Government that the subject of health data is very sensitive, so perhaps I should have used a different example. However, personally, I am of the view that there are times when I want people who are advising me and the professionals assisting me to have rich sources of information about me and my condition, and that is a decision that I can make.
We need all to ensure that we are properly informed as consumers—and this legislation is trying to do that. To me, data are not a scary thing as long as we have proper individual rights over them. What scares me is that I cannot see what data people have about me and I cannot see how other people are using them. I may have some rights through the Data Protection Act but that does not give me any rights to see digital data. It gives me rights to see things on paper. Tesco can come and deliver in a pantechnicon all the data that it has about me, but I cannot then manipulate the data, which is in the end what I would really like—the ability to see them, manipulate them and then decide what I want. There are examples where you might want to use some of your data and license them on a temporary basis to people who then advise you so that they can better personalise their services. But that is a debate that this House should and I am sure will have.
Baroness Jolly
My Lords, Amendment 50L, proposed by the noble Baroness, Lady Hayter, and the noble Lords, Lord Whitty and Lord Stevenson, and the accompanying schedule are about consumers having wider access to the data held on them. I make it clear that the Government support the principle that the public should have access to the data that is held on them; it is in line with our open data policies and activities and with the approach we are taking to the new European data protection regulations. We embrace the principle that, when social benefits can be obtained from anonymised datasets—so-called big data—that should also be supported. That is why, alongside the midata programme, which is concerned with commercially held data, we are also exploring how the data held on individuals by government departments might be made available to those individuals in a useful way. This work is in its early stages, but it is designed to ensure that individuals have access to the information that is held about them by the public sector. It is probably worth mentioning now that the Secretary of State for Health has committed that by 2015 we should all have access to our full health records. In parts of the country where this has been trialled, it has hugely empowered individuals.
I turn now to personal data held by companies and the midata programme. There have been two developments this year that are relevant to the debate. In the personal current account sector, we secured a commitment earlier this year from the big banks to provide consumers’ transaction records—their midata—as downloadable files with a consistent format. This work is progressing well and in June we were able to announce that the technical specification of the data fields to be made available has been agreed. This is no mean achievement. The work is on track to be completed by the end of March next year. This is something that Which? and the comparison sites have been calling for, and so it is very encouraging that the large majority of current account holders in the UK will soon have easy access to their midata files.
The second development is in the energy sector where the facility to download midata files has been available for some time. The Secretary of State for Energy and Climate Change and the Minister for Consumer Affairs held a round-table meeting in June to discuss how the user experience of comparing the market could be made easier using automation. The round table involved energy suppliers, comparison sites, app developers, consumer groups, the Connected Digital Economy Catapult and Ofgem. As a result, a working group comprised of representatives of all these stakeholders has been looking at the feasibility of providing third parties with automated access to consumers’ energy data at those consumers’ request and with their explicit consent. This will avoid the rather tedious process for many of looking for their energy consumption and manually filing it in an online form in order to get an accurate comparison.
The noble Lord, Lord Whitty, raised the issue of collective switching, which is becoming very popular and is reducing energy bills for those who engage. In 2013, DECC awarded 31 successful projects a share of a £5 million competition for collective energy purchasing. I am pleased to report that the work has gone well and that a second ministerial round table at the end of the month will discuss the rollout of this project. The Government hope that the facility for consumers to compare deals quickly and with accurate energy consumption will be available this winter. Again, this is something that has the support of consumer organisations as well as the comparison sites.
The noble Lord also raised the issue of the Consumer Focus Confidence Code. In energy, Ofgem has taken over the former consumer confidence code. Other regulators such as Ofcom and the FCA also oversee comparison sites. In July, the Minister for Consumer Affairs published the results of a review of the voluntary approach to the midata programme that has been followed so far. It addressed the issue of whether the Enterprise and Regulatory Reform Act 2013 powers that became available to us were needed to speed up implementation. The conclusion of the review, in the light of the good progress I have described, was that it is not useful to proceed with legislation at the moment, but that the situation would be kept under regular review. Similarly, where it may be useful to apply the powers to other sectors, the Government are open to this where there is a strong case that doing so would deliver tangible benefits that a voluntary programme could not. The amendment encourages us to go faster and to use the legislation to force the pace. This could disrupt the voluntary programme which has already achieved a great deal. While it is a useful challenge, we do not need new laws to do this, as I hope I have demonstrated; we are doing it already.
The amendment also proposes that the midata powers should be extended to all services provided by the public sector. I have referred to work that is under way to explore how data held on individuals by government departments may be made available to those individuals in a useful way. I have also explained the reasons why services not provided by a trader to a consumer under a contract are not covered by this Bill. The amendment proposes that the Bill should require a report on the information that is provided to consumers about the services they may be commissioning themselves. A good example of where this is already happening is in the provision of care and support under the Care Act 2014. The obligations of local authorities to provide the information people need in an appropriate way are set out in statutory guidance that was published last week. This is just one example of where I believe the Government are already delivering what is being asked for in this amendment.
Finally, the amendment asks for an annual report about the impact of government policies in these areas. I have already talked about the Open Public Services agenda, and the Cabinet Office publishes an annual report on its work on this agenda, which has as an explicit objective to give people the power of choice about what services they receive and the information and insight they need to support that choice.
This year’s report was published in March on the GOV.UK website. One example given is about supporting parental choice on education: the Department for Education’s school and college performance tables provide parents with detailed performance data on primary and secondary schools and providers of 16 to 18 education. The tables received 2.8 million unique visitors in 2013. They provide contextual information, including absence rates, workforce numbers and finance and school census data. The Ofsted School Data Dashboard, which has received 800,000 unique visitors since it was launched in February 2013, provides an analysis of school performance over a three-year period, adding further insight to support parents.
In the light of what I have said, I hope that the Committee is persuaded that the Government take the provision of information to consumers of both public and private services seriously and that good progress is being made. I therefore ask that the amendment be withdrawn.
Lord Whitty
My Lords, I am grateful to the Minister for outlining the developments that have taken place in midata and related projects in recent months. Clearly, the Government have in mind the need to address some of the problems that arise from this range of data and the opportunities that they give and the dangers that they present.
The exchanges between my noble friend Lord Knight and the noble Baronesses, Lady Oppenheim-Barnes and Lady Wilcox, indicate the difficult road that we have to travel on this because there are some serious potential public benefits from the use of aggregated data and their use in individual circumstances provided the individual understands and knows that that is what is being done to their own individual information and has clearly consented to that.
In many fields this is not yet an issue but it will become one in a range of fields, as was recognised when the midata project was first being discussed. I am grateful for the information on the progress that has been made in relation to current accounts, for example. The purport of my amendment is not to tell the Government where they are to draw the line or where the need to protect the consumer should prevent potentially beneficial use of the data, or vice versa—that is, where the rights of the consumer could be overridden by the use of public data—but to assess across the board where we are on all this.
We ask for a report within six months. That may be a bit fast given that one or two other things have to happen within the next six months. However, the Government should pull all this together within a reasonable period. This is not a prescriptive amendment; it would require an overall analysis by the Government. I still think that is necessary. Some big issues are involved here and there is great potential in both the public and private sectors but there are also issues around confidence, control and vulnerability on the part of individual consumers which also need to be addressed, and I do not think that an entirely sector by sector approach will be sufficient.
I hope that the Government will consider this again, perhaps over a slightly longer timescale than is prescribed in the amendment. We will have to return to this issue at some stage, not necessarily during the passage of the Bill, but within a relatively short period of time. In the mean time, I accept that I should withdraw the amendment.
Baroness Oppenheim-Barnes
“Display of information about rights under this Part
(1) Suppliers of goods and services to which this Part applies shall be required to display at the point of sale information in plain and intelligible language and in a reasonable format which explains to consumers the relevant rights of consumers under this Part.
(2) The “point of sale” in subsection (1) means—-
(a) the trader’s premises;(b) any other premises at which the contract is agreed;(c) if the contract is agreed via the trader’s website, that website.(3) If the contract is agreed via email, the requirement in subsection (1) is for the information to be given in the email offering or (as the case may be) accepting the contract.
(4) If the contract is agreed orally but outside premises as mentioned in subsection (2), the supplier must at the point the contract is agreed give to the consumer a written notice containing the information required by subsection (1).”
Baroness Oppenheim-Barnes
My Lords, I start by apologising if I repeat things that I said at Second Reading but I regard all three of my amendments that I have tabled as a dress rehearsal for Report. I am particularly grateful to have been joined in support for these amendments by two other former chairmen of the National Consumer Council: my noble friend Lady Wilcox and the noble Lord, Lord Whitty.
My first amendment, Amendment 51, is something that I feel deeply about and is important to any sort of success in the Bill. I think of all the years that I and others have spent introducing consumer legislation and sitting on Committees—Second Reading Committees and other Bill Committees. At the beginning the of the Bill’s Committee stage in the other place, witnesses were called from all three consumer bodies that are best known and have the most experience. The stunning information that they gave was that 75% of all consumers had no idea of their rights or obligations. Therefore, every piece of past consumer legislation that I and others have been involved in has proved to be fairly worthless. We now have this important Bill, which is very welcome and comprehensive, and on which the Government have spent time, involving witnesses and great expense. We should realise that without this amendment, we might all be wasting our time.
Not only do consumers want this legislation but businesses do, too. The British Retail Consortium said that it would be only too happy to join in this. The point of sale is the point at which the consumer decides to buy the goods or pay for services. It is essential that they know what their rights and obligations are at that stage. This is possibly the most crucial of all amendments because without it the Bill could simply go through, be welcomed by all who knew about it—certainly by most noble Lords here—and be worth nothing. This amendment, I hope, is the first crucial step in righting that wrong. It probably needs more detail by the time it comes to Report, and needs to provide precisely what information is required. I was very impressed by similar amendments tabled by my noble friend Lady Neville-Rolfe regarding goods bought online, which will be covered in this way.
This is a matter for which under no circumstances would I accept anything less than approval. It is fundamental; it says what it says quite clearly. I am grateful to the National Consumer Federation for helping me to draft these amendments and for its support. I hope that other Members of the Committee will also be in support.
Lord Blencathra
My Lords, I support my noble friend in this amendment, in particular subsection (4). I am glad that my noble friend used the word “obligations” because if I had looked at this earlier I would have wanted to move an amendment calling it “Display of information about rights and obligations”, because that can have a greater impact on the consumer. I support the amendment because I concluded, in the last few years that I was a Member of Parliament in another place, that some of the worst cases coming to my constituency surgeries were people who had been stitched up by the big utility companies and the mobile phone operators. In many cases there were only oral contracts. When they had a concern, they would get on to the helpline. As innocent constituents, they kept making the mistake of thinking that if they phoned and got through to the special helpline the problem would be solved. Of course, the people on the special helpline would say, “Yes, that’s fine, we’ll take your point into consideration and it will be amended”—but still the threatening letters and the bailiff’s letters came because, very often, the people running the helpline had no power to alter the computer accounts for the company.
A written statement is absolutely essential if there is an oral contract. As the noble Lord, Lord Harris of Haringey, pointed out that we seem to go by personal example. I shall cite one example of why I think the mobile telephone companies in particular are among the worst offenders. Some years ago, I took out a contract for a mobile phone. It was clear when I had the paperwork the first time that, if I cancelled the contract within two years, I would pay a heavy penalty. I was content with that and went blithely on my way. As it transpired, exactly 23 months later, I got a telephone call, “Hello Dave, it’s your mobile phone operator here—do you realise, Dave, that you can get a better tariff from us? We’ve looked at what you pay and you can reduce the Bill by about £2 a month, and you’ll get a free telephone upgrade”. I thought that was jolly good and asked what the catch was. “Oh, no catch, Dave, that’s it”. So I agreed to it. A few months later, when I fell out with that telephone company because I did not like the service and wanted to cancel, they said, “You can’t cancel, your contract’s only three months old”. I said, “No it’s not—it’s 27 months old”. “Oh,” they said, “that telephone call you had created a new contract”.
I appreciate that all of you here are commercially savvy and knew that, but in 2009 or 2010, I did not realise that. But then I found more and more constituents with the same problem. They were being sold things over the telephone, particularly electricity contracts from one particular supplier, and they never got the follow-up paperwork. It is absolutely essentially that when any contracts are made or revised orally, the consumer gets a written statement pointing out their rights and obligations. I hope that with changed or improved wording my noble friend the Minister will be able to accept the principle of this amendment.
Lord Harris of Haringey
My Lords, I should add that this is not simply about protecting the consumer—poor Dave, or whoever else it might be. It is also about protecting the legitimate businesses that are operating properly, because it makes it more difficult for those trying to pull a fast one on Dave or anybody else, because they will not get away with it. For that reason, to protect the consumer and legitimate businesses, I hope that we get some progress on this amendment.
Baroness Wilcox
I shall make only a brief comment because I want to hear what the Minister is going to say. It would be useful to reflect upon the fact that the National Consumer Federation is the only consumer organisation in the country that is not supplied with money from anyone other than its members. It is a small organisation that was set up originally by the National Consumer Council and Which? because they wanted a grassroots response rather than simply remain in their ivory towers writing their great papers. I was the chairman, then my noble friend Lady Oppenheim-Barnes, followed by the noble Lord, Lord Whitty, who took it to greater heights. For a small group like that to have got as many people into this Room as there are at this moment says good things about our country and about our consumer representation. There is always a place for a small group which can get someone like my noble friend Lady Oppenheim-Barnes to take it forward. I am very proud that she has done so.
Baroness King of Bow
My Lords, I support Amendment 51 tabled in the names of the noble Baroness, Lady Oppenheim-Barnes, and my noble friend Lord Whitty. My Amendments 48B and 50G were spoken to last Wednesday, but they were originally grouped with Amendment 51. I know that the Committee is pushed for time, so I will not repeat in detail the arguments that we had around point of sale. Suffice it to say that if consumers do not have clear and transparent information, their consumer rights are effectively undermined. That is the crux of the matter and it is the argument which has been made again now.
This is an amendment essentially to ban smoke and mirrors and to ensure that consumers actually get their rights in practice as well as in theory. The noble Baroness, Lady Oppenheim-Barnes, said how deeply held her feelings are on this matter, and she is quite right. We have to get the basics right. To my mind, this amendment will serve to do just that. Without the basics, consumers will not have their rights safeguarded. For those reasons, we are delighted to support this amendment.
Baroness Jolly
My Lords, as I said when we discussed point of sale information for goods and services in previous sessions, the Government believe that it is really important that consumers should feel confident about exercising their rights. Last Wednesday the noble Baroness, Lady King, reminded us that Martin Lewis from moneysavingexpert.com had stressed the importance of a simple and clear version of our consumer rights when he gave evidence to the BIS Select Committee on the Bill. We agree with him, which is why I am delighted that moneysavingexpert.com is one of the consumer organisations that is working with us on the high-level summary of consumer rights that the Minister and I have mentioned on a number of occasions. This summary covers our rights when we buy goods, services or digital content, and members of the implementation group are working to ensure that it is written in plain English.
In the debates relating to previous amendments concerning the requirement to provide consumer information at the point of sale or at the point of complaint, I set out the Government’s objections to requiring every single business providing goods, services and digital content to set out a consumer’s rights every time they make a purchase. Perhaps I may briefly reiterate. These were, first, that consumers are already faced with a lot of information at the point of sale, and I suspect that most of us are not going to take in information that is not immediately relevant to our purchase decision. Secondly, it is will be particularly irritating to be faced with an oral statement or handed a piece of paper setting out our rights every time we buy a newspaper in the corner shop or arrange by phone to have the dog walked—not to mention the burden this would place on the trader. Thirdly, it could cause significant confusion where the trader’s own policies were more generous than consumers’ statutory rights or where sectoral regulation of services requires specific remedies that the trader must offer.
My noble friend the Minister mentioned the concerns of a major retailer that a requirement to set out a consumer’s basic rights would completely undermine its core message. This was that a customer who is dissatisfied for any reason could bring the product back because it wanted to do what it and the customer thought was right in the circumstances, even if that went beyond what the law would require.
In answer to a point made by the noble Baroness, Lady Oppenheim-Barnes, the British Retail Consortium has said that it would happily join in providing information at the point of sale but does not support the mandatory provision of consumer information for reasons I have given. The BRC, the Federation of Small Businesses and the British Chambers of Commerce all oppose this too.
Fourthly, it would be perplexing for consumers to have to have their attention drawn to their full rights at every point in the complaints process even in circumstances where they have said what they want and the trader has immediately agreed.
On the point made by the noble Lord, Lord Blencathra, on consumers who are sold things over the telephone and have no written follow-up, the consumer has to be given a range of pre-contractual information under the Consumer Contracts Regulations 2013, so a situation in which a consumer does not know they are entering a contract should no longer arise, with effect from 2013. For all these reasons, we do not believe that requiring this information to be given to all consumers before they purchase goods or services or, indeed, afterwards, would achieve the best outcome for consumers or for businesses.
Lord Harris of Haringey
The noble Baroness gave the horrifying image of someone’s rights having to be read to them before they could buy a newspaper. Would her objection to this provision disappear if there were a de minimis element within it so that the transaction had to be worth more than £5 or £25, for example? It would be helpful to know that. Secondly, is the argument that consumers will be confused if they are told that they have more rights rather than less the best that the Minister can deploy, because that is essentially what she said? Given that the noble Baroness, Lady Oppenheim-Barnes, suggested that she might bring this amendment back on Report, it is important that the Minister who is to reply on that occasion deploys some rather better arguments.
Baroness Jolly
I can rely on the noble Lord, Lord Harris of Haringey, to put me on the spot. The de minimis element of £5 may be worth looking at but that sort of decision is considerably above my pay grade. Noble Lords should consider how irritating it is to listen to commercial adverts. The advert itself may be absolutely fine but then all the rights are read out so quickly that you cannot take them in, or at least I cannot do so.
We have strong backing from business organisations to promote the summary of consumer rights to their members on a voluntary basis. It will be a central tool that we provide to businesses in April. It will help them comply with the new obligations they will have and explain these rights to their customers, so avoiding costly shop-floor mistakes that undermine their reputation. We do not need every single retailer in the country to be obliged to display the summary of consumer rights to achieve our objective of increasing consumer knowledge and confidence but we will be looking for a significant take-up. We consider that this approach, supported by Which?, will be far more effective, and far less burdensome, than the mandatory approach proposed by these amendments. Therefore, I ask the noble Baroness, Lady Oppenheim-Barnes, and the noble Lord, Lord Whitty, to withdraw this amendment.
Baroness Oppenheim-Barnes
I am very disappointed because the response we have had sounds like a wonderfully constructed Civil Service briefing. There is a very simple definition of merchantable quality. When I was Minister of State for Consumer Affairs, I was already very concerned about people not being aware of their rights. I therefore introduced an education pack into schools. I introduced it in every type of school. First, the children—young men and women—concerned were very interested. They did not find any difficulty in defining merchantable quality. One, who was only 10 years old, said, “My mother just bought a knife that says it was extremely sharp. It doesn’t cut anything. Is that merchantable quality or not?” That is simple to answer. I am not suggesting the kind of information provided at the point of sale needs to be complicated; it is very important that it would be drafted in a way that was comprehensible to most people, not too long and not too detailed. If this amendment was finally passed I would want to have a great deal to say about a description of merchantable quality, both from experience and, believe it or not, from school children.
Baroness Oppenheim-Barnes
“Application of this Part to regulators
(1) This section applies to regulators which are involved in protecting consumers (“consumer regulators”).
(2) It shall be the duty of consumer regulators to promote the rights of consumers under this Part.
(3) In exercising their functions, consumer regulators shall have regard to the desirability of promoting—
(a) accurate, plain and intelligible information for consumers about goods and services;(b) fair and reasonable practices in the selling of goods and services;(c) fair and reasonable pricing of goods and services;(d) the inclusion of comprehensive information on goods and services in contracts;(e) quick and fair means for consumers to make complaints and have disputes resolved. (4) Any fines levied by a consumer regulator on a trader for breaches of rights under this Part shall, following deductions by the regulator for its reasonable administration costs, be used to compensate consumers for breaches of their rights under this Part.”
Baroness Oppenheim-Barnes
This amendment is also very important. It is common knowledge that not a great deal is known about the actual defined duties of the regulators. I remember when I received the first Monopolies Commission report in my department, to the effect that the nationalised electricity industry was of positive disadvantage to consumers for all sorts of reasons. At that point we were able to start looking at privatising the industry, because one of the most cogent parts of the report was that it was not operating either in the interests of its customers or of its employees, which was true. So we then started to embark on a long series of denationalisation and privatisation of the utilities. When we did so, it was implied that the regulators would be very important, they would have great powers, and that they would exercise those powers on a regular basis, and also investigate. There has been a feeling recently that the regulators are not necessarily asking all the right questions.
Once again, the National Consumer Federation has given a number of examples which refer to the actual requirements as far as these people are concerned. It is its job to identify risks, scan the horizon and use consumer insight, creating the right incentives for the market to work well for consumers, ensuring that the data is published, and working closely with other regulators. It does not give the impression of being in touch at all at the moment. It needs to involve consumers and their representatives, including consumer bodies, to have a regular dialogue. What is most important is to ensure compliance with licence conditions and other rules through investigations and effective enforcement as well as imposing penalties for firms which, as we know, often amount to many millions. Only recently one of these regulators has, for the very first time, insisted that in the case of that particular fine, a certain amount had to be paid in refunds to consumers as a result of the firm not doing what was necessary, or what the regulators required them to do.
The very important first move that I would like to see, as part of this amendment, would allow them to go a lot further than that. We hear about the multimillions that are paid in fines and we are not sure where it all goes, although we know that it goes to the office of the regulators. But there is no reason now why my proposal should not be a requirement on regulators, without any real change of law, when a really bad result, certainly as far as consumers are concerned, has led to a fine. This is another very important amendment, because it is very basic and deals with problems that a lot of people do not comprehend today. They see these big fines—they read about them in the newspaper—but do not actually see them directly benefiting them. They will do, but it is not all that clear.
As I said, this amendment is a quick and fair move for consumers to make complaints and involve themselves in disputes, and also proposes, in subsection (4), that these,
“fines levied by a consumer regulator on a trader for breaches of rights … shall, following deductions by the regulator for its reasonable administration costs, be used to compensate consumers”,
who have been put at a disadvantage. Again, this is not asking the Government to do anything but to define more clearly the role of the regulator: what it should be and how this should be carried out. I beg to move.
Baroness Maddock (LD)
My Lords, I support my noble friend on this, partly because during the passage of the Energy Bill—the noble Lord, Lord Whitty, was there when we did this—I managed to get the Government to accept my amendment to promote more accurate information on energy bills. In reading my noble friend’s amendment here, I would like the regulators—just as in my amendment that is now law—to “uphold” rather than “promote” in subsection (2). I would also want them to be “upholding” rather than “promoting” in subsection (3)(a), with reference to energy bills. That is something that they should make sure happens. It is part of the law. I strongly support my noble friend here. It would be very good if we could get this in other areas. We have something rather better in energy bills thanks to the Government accepting an amendment last year in the then Energy Bill.
Lord Berkeley (Lab)
My Lords, very briefly, I support this amendment. Subsection (2) says:
“It shall be the duty of consumer regulators to promote the rights of consumers”.
I have been looking at the duties of Ofwat, the water regulator. It says that,
“our primary duties are to: … protect the interests of consumers, wherever appropriate by promoting competition … ensure that the companies properly carry out their functions … ensure that the companies can finance their functions”,
and,
“ensure long-term resilience”.
In the case of Thames Water, which is the biggest water utility, the regulator over the past 10 years has allowed the company to reduce its asset base to about a quarter of what it was, so it cannot now finance the tunnel that it wants to built under the Thames—the Thames tideway tunnel—without going into a kind of complex financial structure involving a separate infrastructure provider. The relationship between the infrastructure provider and Thames Water is extremely unclear. Who is liable if something goes wrong? That is also unclear, but the Government have been very nice and given them a guarantee if they run into financial trouble, because the provider is Macquarie Bank—and we would not want it to get into financial trouble, would we?
The extraordinary thing is that the regulator seems to think that this does not need any questioning or that any information should be given to the 12 million customers of Thames Water who are going to have to pay. There is a debate about how much they are going to have to pay a year, but it will be somewhere between £60 and £80 extra. This is a sewage charge, but all the people living in Oxford, Witney, Newbury or anywhere which is part of the group, even though they are not going to benefit from the Thames tideway tunnel, will have to pay. I think the regulator has been asleep on the job.
This amendment should make things better, but Ofwat already has a primary duty to protect the interests of customers, and it is clearly not doing so. Therefore, this amendment, if it is accepted by the Government, should put more pressure on it and some of the other utilities to do what they should do: to look at the needs of the customers, see whether there is an alternative and keep customers informed about what is going on. It is a good amendment and it will be interesting to hear what the Minister says in response.
Baroness Wilcox
My Lords, as we know the regulators were set up at very different times and in very different ways. There is not one thing that all the regulators sign up to. They have all been established individually. This comes up again and again, and here it is again: who guards the guards? Who regulates the regulators? Last time round, the great argument was that we must be totally independent because then and only then can we serve the people we are supposed to serve well. I understand that, and I understand regulators wanting to keep their independence, because it is very important. However, the differences between the ways in which the regulators work and live keeps coming up, so I ask the Government: who is guarding the guards?
Lord Blencathra (Con)
My Lords, I support the thrust of this amendment. As my noble friend Lady Wilcox said, the regulators were all set up at different times and in different ways. I am not sure whether it is best to have an amendment in this Bill or to look at regulations applying to all the different regulators and toughen up their charters, so to speak. Perish the thought that I should disagree with the noble Lord, Lord Berkeley, but, leaving aside the London tideway tunnel, my experience of Ofwat was that it was slightly better than many of the other regulators because while the water and sewage industry needs billions of pounds’ worth of infrastructure development, at least Ofwat keeps a tight grip on many of the companies and guards consumers’ interests slightly better than some other regulators.
Leaving water aside, in my experience the worst regulator was Ofcom, which is utterly wet and useless in regulating telephone operators. Perhaps it is, understandably, too focused on radio and the independent television sector and on selling off 4G and things like that, but I do not feel it has been very effective in regulating mobile telephone companies.
I hope the Minister will accept the principle that regulators have to do more to protect consumers’ interests, tailor-made to their current legislation and the job they are doing in their own regulatory field. This Bill may not be the best vehicle for such legislation, but I hope the Minister will accept the principle that regulators have to do more to protect consumers’ interests.
Lord Whitty
My Lords, I, too, support the thrust of this amendment. As I said on an earlier amendment, the consumer interest has often been lost or redefined in the way in which regulators operate. They have often very effectively—I accept that some are more effective than others—looked at the outcome for consumers in terms of price and particular aspects of consumer service. This amendment requires them also to look at process—as to how customers are treated and informed and how prices are set and complaints are dealt with. It would probably be better if something relatively common appeared in the individual pieces of legislation for each regulator, but we have an opportunity in a general consumer Bill to set down the principle. I would hope that the Government could accept that the principle should be set down in something like the words here. The noble Baroness is probably pushing the boat a little far with subsection (4) in that no doubt somebody at the Treasury has already had a look at it and will be advising the Minister appropriately from that point of view. So while I support the principle, in reality the Minister will not be able to accept that—but I hope that she can accept the rest of it.
Baroness Hayter of Kentish Town
I was about to thank the noble Baroness, Lady Oppenheim-Barnes, for this amendment but, having seen all the troops she has on her side, it might be better for Labour to say, “We think this is dreadful”. It might make it easier for the Minister to accept it. However, I shall resist that temptation because I think that it is a brilliant amendment, and we are happy to support it. Earlier today we clearly failed to persuade the Government to embed the consumer voice right in the top echelons of regulators—that has been the tone of the debate—but this is another way to achieve the same end. The examples given by the noble Baroness, Lady Maddock, as well as those from the noble Lords, Lord Blencathra and Lord Whitty, about different regulators show how often, without that consumer voice, they fail to protect the consumer. The question from the noble Baroness, Lady Wilcox, about who regulates the regulators is very interesting because the answer ought to be, “the consumers”. The more that it is open to them, the better it will be.
The amendment is excellent. It would put in place the possibility of redress without consumers necessarily having to take their individual case to an ombudsman. It would ensure a proper complaints procedure for mistakes and poor service, falling short of a breach of rights, that nevertheless lead to substantial losses to the consumers. As has been said, it is extraordinary that regulators, which are supposedly in existence because a particular market has failed consumers, still often fail to put consumers first. They have allowed users to be muddled by confusing prices, ripped off by poor deals and ignored when making complaints. Consumers are often made to feel like the least important part of the food chain. As my noble friend Lord Berkeley says, it is often without their long-term interests being placed at the centre of regulators’ thoughts.
I look forward with interest to how the Minister is going to accept this amendment—because I am sure that she will.
Baroness Jolly
This has been a very interesting debate, interwoven with sorry tales about regulators. Of course, the noble Lord, Lord Blencathra, as an MP, regularly heard these tales from constituents coming into his constituency surgery. One of the regulator’s primary objectives is to take account of consumer interests. They must report annually on how they fulfil their functions, and they have done much good work for consumers. Water companies have agreed to return £1 billion to consumers after negotiating with Ofwat and the Consumer Council for Water. All but two water companies agreed in their plans to keep prices at inflation levels. Ofcom has capped second class mail prices, while Ofgem has made npower pay £55 million to consumers due to incorrect billing. However, it is also important to know that Citizens Advice does a lot of advice in this area.
I refer noble Lords back to my comments on Amendment 105A regarding the good work that Citizens Advice is doing. In addition to those comments, I shall expand on the benefits that that body provides to consumers. It promotes consumer rights and clear, intelligible information for consumers. Sixteen million people were helped through the Citizens Advice digital service, while 84% of clients said that their understanding of their rights had increased and 86% of clients reported a positive impact of advice on their lives. All this is a key port of call for consumers in the regulated sectors. I also mention that relevant consumer bodies play a vital role in this regard, especially in helping consumers on matters around redress, complaints and securing the best deals in issues such as utilities. The effect of this amendment would be to place extra requirements on regulators and increase bureaucracy when there is a drive to cut the costs of regulation and increase efficiency. The Government believe that in many cases it would also replicate protections that already exist and take away the discretion of regulators to decide what is appropriate in the circumstances.
On regulators levying fines for breach of any part of this amendment, the enhanced consumer measures set out in Clause 79 and Schedule 7 to the Bill would achieve a similar aim. In summary, there is a limited benefit in adding more duties on the regulators. Noble Lords can be reassured that much is being done for consumers by regulators, but of course we salute the wonderful work being done in the world of consumer rights as championed by my noble friend, and we will be happy to meet her to discuss the amendment. However, I ask her to withdraw it.
Baroness Oppenheim-Barnes
I thank my noble friend for that reply. She will not be surprised to hear that I am, shall we say, disappointed, but obviously I am not put off. I do not want to be accused of currying favour with the Opposition because that is not my primary objective, but nevertheless from time to time they do seem to have a closer grasp, although not as close as those of us who have been MPs and have held constituency surgeries where these things come up over and over again. There is a distinct division in your Lordships’ House between those of us who have such experience and those who do not. I think that this is one of the occasions when it shows. For the moment, I reluctantly withdraw the amendment.
Baroness Oppenheim-Barnes
“Obligations on suppliers of utilities
(1) This section applies to suppliers of electricity, gas, water, sewage systems, telephony (including mobile telephony), internet connections and analogous utilities (“utilities suppliers”) and consumers of those utilities.
(2) Utilities suppliers shall provide consumers with the options of receiving bills in paper or electronic format.
(3) Utilities suppliers may not levy a charge on consumers who opt to receive bills in paper format, and may not reduce prices for consumers who opt to receive bills electronically.
(4) Utilities suppliers shall provide consumers with the option of paying bills by cheque.
(5) Utilities suppliers may not levy a charge on consumers who opt to pay by cheque, and may not reduce prices for consumers who opt to pay by means other than a cheque.
(6) In this section “cheque” has the meaning given in the Bills of Exchange Act 1882.”
Baroness Oppenheim-Barnes
I know that this is also very popular with people throughout the country. Again, it deals with obligations on the suppliers of utilities and the way in which the regulators would actually set about ensuring that all the provisions set out in the proposed new clause are met. They define what the duties should be in relation to these utilities. Once again, I am grateful for the support I have been given by supporters of the Keep Me Posted campaign around the country in drafting the amendment.
The use of digital information is not just a matter for old crones who cannot actually operate the technology. Although I am one of them, I nevertheless realise that there are many who can but who have the same problems. I am hoping that all the various obligations that this amendment would put on the suppliers of utilities, being a little more prescriptive than the previous one, are acceptable. That applies absolutely more than ever to subsection (4) of the proposed new clause:
“Utilities suppliers shall provide consumers with the option of paying bills by cheque”,
as well as not levying a charge. I went into that part of the new clause in some depth recently when I looked up some old bills. I could see that in 2005, the postage cost 45 pence. It is now 52 pence, but the actual amount that you have to pay can be anything upwards from £6, although it is less than that for some of them. The postal costs of sending out those letters are 22p, not 45p or 52p. My noble friend Lady Neville-Rolfe said in reply to my noble friend Lord Hodgson’s good amendment on this point that it is not for the Government to tell companies how they should organise their costs. I entirely agree; it is for the regulators to do that. It is not a thing for Governments but the regulators.
Many people feel dismay when they receive these extra charges because some 7 million people do not have access to broadband. They are being fined for something they have no hold over whatever. Everyone objects to being charged for something that has been their right for many years. Suddenly they have to pay something extra, and it affects in particular the elderly and those who rely on carers. It is not only those people who are affected, although they are obviously the most important; it affects many people who do not have the computer skills they need because they say they cannot take anything in until they have typed it from the computer on to a piece of paper. That applies through all levels of education and age. I am not going to name names, but one of the most senior physicians in the country expressed exactly that view and said to me: “Can I write to someone about this? Who should I tell?”. I said: “You’ve told me”, and so have many other people.
It is a cruel policy to fine people in this way. It is a form of fine for being unable to do something digitally, perhaps due to other conditions. The subsections in the amendment deal particularly with each problem. It does not involve huge ramifications or costs for the Government. It does not even have marginally big costs for the industry; so, once again, I consider the amendment to be crucial. I am sorry to have to bring all of them out like this, one after another in a non-yielding way, which is not my normal way. I therefore hope that noble Lords will support me.
Lord Clarke of Hampstead (Lab)
Noble Lords will know that I am not a regular attender on the Bill but the amendment, once I had read it, sparked off all sorts of thoughts, particularly for those who I meet in branches of the Post Office and desperately want to use normal transaction methods. The terms of the amendment will be welcomed by countless customers who have not been, and perhaps do not want to be, involved in electronic transactions. It is a fact of life that many find the modern method of conducting exchanges with suppliers, especially of utilities, by electronic means a convenient way to settle their accounts or bills. It is also a fact that many do not want to avail themselves of this advantage of modern technology. They are quite happy writing out their cheques, sending off payment for their bills and getting a nice receipt back through the post. I must declare an interest as a former postman, so the idea that people might start using the post gives me a lot of satisfaction.
A particular point of the amendment which I am delighted to see is the safeguard against the form of financial punishment that comes in if people do not want to take up the advantages of getting 10 direct debits, paying three weeks in advance and all that nonsense. People who do not want to do it should not be made to pay for those people who do. If people are getting the advantage of these financial rebates or discounts, they are being paid for by somebody, and they are being paid for by the other people who are not involved in reductions in tariffs.
I came in tonight to say how pleased I am to see this amendment because it is what a lot of people want: straightforward exchange, paying bills, getting receipts and tucking them away in a drawer. If you ever have to tidy up people’s affairs after they have departed this earth, you will find that some people keep their bills for many years.
The debate on the previous amendment gives me the opportunity to talk about a particular regulator. The noble Baroness, Lady Oppenheim-Barnes, referred to the cost of postage, and I am delighted that she did because the regulator has not done much of a job on the question of payment to Royal Mail by its competitors. Are talks going on which will make it a bit fairer? The competitors of Royal Mail are dumping their post into the system and under the universal service obligation, Royal Mail has to deliver it, which is the expensive part. Are any discussions going on that will bring this downstream access, as it is called, under some control so that the competitors’ payments to Royal Mail bear some relation to the true cost? At the moment, to maintain the universal service obligation Royal Mail has to subsidise its competitors because there is a requirement they are all owed a margin of profit. The Government should be looking at that margin of profit with the regulator.
I am delighted with this amendment. I just hope that the people of this nation will be able to say that they can sleep in their bed at night not having to worry about www dot coms. My noble friend Lord Harris made me feel much more competent when he explained the difficulty he had dealing with a particular whatever they call these websites. That is me. It shows that I am not all that dim. I am fairly dim, but I am in good company with my noble friend Lord Harris.
Baroness Maddock
My Lords, not for the first time, I am supporting my noble friend Lady Oppenheim-Barnes on the thrust of this amendment. I declare an interest. As somebody approaching 70, I pay my bills by cheque and I do no money transactions, if I can possibly help it, online. That is how I like to do it. My mother died in the summer aged 95. In the end, I had to keep track of what was happening with her bills. It would have been very difficult if she and I had both being trying to do things online. It is not that I cannot use a computer, but I do not choose to do finance on one. It would have been extremely difficult. When I was sorting out her estate, I noticed that you are always paying in advance so they always have your money when you have not had the utility, whichever it is: gas, electricity or something. That is one of the reasons why I do not want to do it. I will pay for it when I have had it, thank you.
The issues that we are discussing here in one way amount to age discrimination because people like me, people who are older than me and people who are caring for people older than me find this extremely difficult. It is quite a serious thing. It may be that it will not matter to my grandchildren. We will all have died out and the utilities will not have to worry about these things, but for the moment it is quite a serious issue for people who are older, and particularly for their carers.
Lord Hodgson of Astley Abbotts
My Lords, I rise briefly to support my noble friend’s amendment. We had a preliminary canter over this ground when the Committee sat last week. I said then that I thought Amendment 53 was far more felicitously phrased than my amendment, and, indeed, it has so proved. The case is powerfully made. However, I take slight issue with the noble Baroness, Lady Maddock: this is not about age discrimination but about a consumer’s right to choose the way they receive bills and the way they wish to pay them. They should not face additional charges or discrimination in that sense. It does not matter whether they are 21, 81 or 101, that is the way it should be because that is the right the consumer should have. I support my noble friend’s amendment. I would like her to have thought of a way of ensuring that the banks do not charge for providing statements, which they are doing now increasingly, as statements are often important as a means of identification. Her amendment is much better than mine and I hope that the Government will be more sympathetic towards it than they were towards mine last week.
Lord Berkeley
My Lords, I, too, support this amendment. As the noble Lord just said, it does not apply just to old people like me but to many people who do not have access to the internet, or they or their carers are unable to use it, as other noble Lords have said.
I should point out one thing one has to watch if one is doing things electronically—that is, how do you file things? It is fine getting a bill on your mobile phone, but what do you do with it subsequently? How do you keep a record of it? There are many ways of doing it but it is not just a question of paying it directly through bank transfer, you have to keep a record and feel comfortable that it is secure. Security is becoming more and more difficult so these regulated monopolies, as many of them are, need to be aware of the importance of people getting paper bills if that is what they want.
When you read a meter you can put the reading on a postcard, if you want, or you can fill it in online. One of these days, I think that meters will be read down the phone line or the electricity line with no human input. They might get it right. If they do not, heaven help us. A friend bought a house from me and six months later he got a bill for £10,000 for water because there had been a leak. That had probably been happening since the war, about 50 years before, and it had soaked away into London gravel. You can imagine how you end up with a bill like that electronically but it was all quite difficult.
The other issue is paying by cheque. I tried to pay my EDF bill by direct debit this weekend and failed completely. My bill did not say how you could do direct debit, although there was lots of detailed stuff on the back of the paper bill. So I thought I would phone them up. I hung on for half an hour for a nice, friendly voice but got nothing at all, so in the end I went on the website. I found that EDF has a new website and you could do it on the web. But how many other people will think, “What do you do?”. You get a second reminder every two months. You put a cheque in the post or whatever you do but you cannot even talk to them down the phone. A friend of mine in the Isles of Scilly has four BT lines because they have four houses that they let out in the summer. This weekend, she told me she spent a total of six hours on the phone to BT. They have not had two of the lines working for a month. They tried dealing with this electronically and down the phone. Today they spoke to five different people at BT and still do not know if it is working. Before the utilities start charging people, they should get the service right. This is a very important amendment for both the paper/electronic debate and paying things by cheque. I strongly support it.
Baroness Wilcox
My Lords, the one thing we must not do is sound naïve. For all we would agree with this, and all the reasons we have heard, we should not penalise the energy companies for doing something that cuts the price for a lot of people by using a mechanism that makes things work better. If we need to be able to help a group of people who cannot yet benefit from that mechanism, then we are asking the utilities to subsidise them. I just want to be sure that we realise we are saying that. We should not be saying that we need to penalise utilities for doing what they are doing. Really, we are looking for there to be access or some other way to do this. Many hard-pressed households welcome the opportunity to save money this way, et cetera. I just put that point in.
Lord Berkeley
Is the noble Baroness straying into the territory of Animal Farm: four legs good, two legs better—or whichever way it is? Is not everybody equal?
Baroness Wilcox
Does the noble Lord mean equal opportunity? No, we are not born equal, that is for sure. Some people are tall, some fat and some short. We are not born equal but we should have equality of opportunity. That is what the noble Lord is arguing for.
Lord Harris of Haringey
My Lords, I think we are straying into unnecessary territory here—very philosophical points which are no doubt extremely interesting. I will not rehearse at length the argument I made when this Committee last discussed this matter. However, there is an obligation on government as far as this is concerned because government do not enable us to have some simple system of verifying who we are. When we need to verify our identity, we are required to turn up with a paper copy, sent to us via the post, of a utility bill. All my utilities are trying to move over to sending everything electronically but an electronic copy does not suffice for those purposes. Until such time as we have a system of identify verification, people will rely on receiving paper utility bills.
I have one other point why paper utility bills are important. We are encouraged by government to switch suppliers. This is part of the philosophy of improving competition. You switch suppliers. You move to another supplier. You have a new website to go into and a new password. All these passwords, I am sure, we do our best to remember and not write down somewhere. Of course, you can no longer access the website of your previous supplier because you are no longer their customer. If you need to check back on whether the prices are indeed comparable, that data are no longer available unless you, the customer, spend money on printing them out and keep a paper copy. Surely that is the wrong way round.
Lord Stoneham of Droxford (LD)
My Lords, I am slightly reluctant to speak against the experience of the noble Baroness, Lady Oppenheim-Barnes, and indeed that of my noble friend Lady Maddock, but, going against the grain of the debate, I think that I ought to do so. We have to say that the digital economy has provided huge savings and efficiencies in payment, booking and ticket systems, and the consumer should be allowed to benefit from that. We have to encourage these changes and simply to say that we are not going to do so is basically saying that the future is the past. I do not think we can ignore them.
I take the example of easyJet, an independent company away from the utilities. Are we saying that the equivalent of easyJet, which started competing against British Airways, would not have been allowed to discount its prices and reward customers who book online? I just do not think that that is the way forward. By all means say that we do not want extra charges put on people who are paying by cheque during the transition, but do not say, as it does in this amendment, that we should not offer a discount to those who are actually giving up their money more quickly by paying with a card or by direct debit. They are allowing the banks to release the money four days ahead, so why should they not get the benefit of that? It is a cheaper way of paying. It is wrong to say that this form of progress should be held up.
The other thing I would say is that I find it slightly patronising of older people. I chair a housing association for retired people. I was staggered when we did a survey for our annual conference, where the average age was the late 70s. We asked people whether they used IT to do a certain number of things. Some 80% said that they used the internet as a phone because they were using Skype, which is cheaper. Some 80% said that they bought tickets and booked their holidays on the internet because it is cheaper. What really shocked me as someone who worked in the newspaper industry and who thought that newspapers would always have a future because retired people would always want to read a newspaper was that 80% of them get their news from the internet. We cannot ignore these changes. What we should be concentrating on here is what the noble Lord, Lord Hodgson, was talking about in the debate last week. We want regular paper records to be sent to customers who are using the internet process as well as to people who pay by cheque. But please do not let us say that we are going to go back to the past by letting the banks hold on to our money for four days when we can pay directly and get a cheaper price by doing so. Retired people can get that benefit as well. We must not end that progress.
Lord Blencathra
My Lords, I strongly support almost all of this amendment except that I agree with the noble Lord, Lord Stoneham of Droxford, that we should not penalise those who pay by direct debit. I also agree that there should be incentives for people to pay by direct debit if they wish to do so. But the danger is that we are heading towards it becoming compulsory for all. Whether it is old people, young people or old gits like me, we have the right to get things on paper and not be cajoled, threatened and blackmailed by the utility companies and others into making all our transactions by direct debit.
Lord Stoneham of Droxford
Can I interrupt the noble Lord? Fifty years ago my father used to go to the retailers and pay every single bill in cash. Are we saying that progress should not have allowed him to pay by cheque?
Lord Blencathra
Of course not. The point I am making is that we should have the freedom to choose. I am one of those who for contrary and bloody-minded reasons goes to the Post Office in the Central Lobby to collect £145-worth of postal orders to pay my TV licence. I do that because I resent the fact that the Post Office is losing that business. It costs me an extra £10 or £12, but over the years I have despaired as all Governments have accidentally or deliberately driven business away from the Post Office and have moved more and more things on to direct debit. What would we have said 30 years ago if a Government had said, “We’re going to drive all those old age pensioners into getting their money in their bank accounts and they won’t be able to get it in cash”? We would have been appalled, but we are rapidly heading that way. All Governments are enthusiastically persuading pensioners to do that.
Lord Hodgson of Astley Abbotts
If my noble friend looks at his BT bill more closely, he will see on the right-hand side of the page in small print, “If you wish to avoid this charge you can do so by getting a direct debit or by calling this number”. It is a direct push to try to stop people getting paper bills and paying by cheque.
Lord Blencathra
I entirely agree with my noble friend. To be fair to my noble friend Lord Stoneham of Droxford, that is going further than providing an incentive. There is a threat involved there, and that is not right and not fair.
I am not careless with money, but I then checked other bills, which I had not bothered to do properly before to find other mistakes. When I get a paper bill, I see the level of my gas bill and I go around switching off the heating for a while. If it is being taken directly from your bank account and you have no bill, just some annual statement, you do not see what gas, electricity and utilities are costing. There is a saving to consumers if they can see their bill in paper format.
A further point: I believed when I was a boy and growing up that the decent thing to do was to pay one’s bills within 30 days. Now it seems to be down to about 21 days. However, the demands that one should pay everything by direct debit or only get 10 days to pay a telephone bill are obscene. It is wrong and we should have legislation that forces the utility companies not to charge extra for cheques and not to give an unfair disadvantage to cheque-payers. Finally, not that it concerns this House, there are votes for whichever party defends consumer interests on this issue. There are votes to be lost unless we let the dying minority of consumers pay by cheque.
Baroness Hayter of Kentish Town
I think we will just call the noble Lord, Lord Stoneham, a brave man. I would not take that lot on.
The noble Lord, Lord Hodgson, is right. We had a brief canter around this area last week on his amendments. I just want to thank the noble Baroness, Lady Oppenheim-Barnes, for focusing the Government’s attention on this. As I think the noble Lord, Lord Hodgson, said, this is a Consumer Rights Bill and this is a very basic right: to be able to have a choice about whether to have your bills on paper and to pay by cheque—without paying for the privilege.
We need to keep at the centre of our debates those customers who struggle to get paper bills, and easily accessible and understandable information. The figure of 7 million has been mentioned of people who do not have internet access. We have a lot of people who find that even reading is quite difficult, let alone trying to do it on a small handheld telephone. But as we mentioned last week, there are other people as well, not just those who do not have access to printers, but who, for example, need a domestic bill to prove their identity, as my noble friend Lord Harris of Haringey has said. But there are also carers and cared-for people, as the noble Baroness, Lady Maddock, has highlighted. There are also divorcing couples, which is the time when you have to start splitting bills; the self-employed who need to make claims; people who work away or are in hospital for a long time, who may not have access to their normal internet and can quickly lose track of what is happening.
I will take two minutes to tell you the very sad story of a friend of mine who was virtually battered to death. She was in hospital for a very long period after this. But the only way she was able to help the police find the culprit was when she woke up in hospital. The usual thing happened, her post came in. Her bills came in and she was able to see that a credit card had been used. The police could then go and see where that money had come from, and find a photograph of the culprit. I am glad to say that the attempted murderer is now well locked away. But there are all sorts of reasons why people feel secure when they are able to see that sort of data on paper.
That may be an extreme example, but people want to check on what bills have come; they want to check on who paid them; flat sharers want to be able to divvy them up; and people who have got any problems, particularly with paying bills, as we mentioned last time, where they have to work out which bill to pay when in order to make sure that nothing is cut off. They literally do this with paper. I sometimes think that those who run the utilities just do not understand how people live. Maybe they should spend a day with my noble friend Lord Clarke of Hampstead sitting in a post office and hearing about how people do things; they would learn a little more.
Finally, some companies take particular advantage of their poorer customers. On the wider issue of price, we know that energy suppliers target their lowest price at the big users and actually penalise their smaller customers for not using very much, and then go on to make it even worse by charging those very customers if they want their bills on paper.
It is great that some people can do all of this electronically, but they are likely to be younger, and more savvy. I wonder whether the utilities really have to make life difficult for the rest of us—who want paper bills and the use of cheques—to encourage others to take up the electronic option. People who choose to do it electronically do not do it to save £6; they do it because that fits in with their way of life. I doubt very much they need a £6 bribe, if you like, to go electronically. That may have been the case earlier on, but now it is not the reason. Rather it is an excuse for the utilities to get a bit of money out of people who want to pay by cheque rather than, any longer, acting as an incentive. I hope that the Minister hears the strength of feeling. She may recall when we had the debate in the Chamber that this was the feeling across the House, and there will be a lot of support. It would be advisable for the Government to take the initiative and do this rather than have the sort of defeats that we have seen tonight in the Chamber.
Baroness Oppenheim-Barnes
My Lords, I would like to make a point in the limited time remaining, which is that the companies that continue to give paper bills and continue to give the sort of services we have asked for are not losing anything, because of all the extra money they have earned from the vast majority of people who are paying online. So there is no financial loss to any of these companies, and particularly to BT.
Baroness Neville-Rolfe
My Lords, first, I thank my noble friend Lady Oppenheim-Barnes for her amendment, for her previous two amendments and for providing us with a useful and constructive discussion. She was not here for what I was going to describe as a gallop, but my noble friend Lord Hodgson rightly described as a canter, around this issue in our previous session. I shall not, in the interests of time, repeat everything I said on that occasion. For example, we had a good discussion about the point that the noble Lord, Lord Harris, made about ID. While I have the floor, I also pay tribute to everything that my noble friend Lady Oppenheim-Barnes has done for the consumer over many years. Things have improved as a result of things done recently, from domestic and EU sources. This Bill, if we can get it through, will make further improvements.
I was also glad to hear of my noble friend Lady Maddock’s experience, which I shall come back to in a minute. I am well aware of the Keep Me Posted campaign, which the noble Lord, Lord Harris, mentioned, and have indeed talked to some of the campaigners about their plans. It is good for the postal angle to have been articulated by the noble Lord, Lord Clarke of Hampstead, whom I thank. I also understand that this amendment is talking about the regulated areas, not everything in general; that point is well made.
We are returning to an issue that has been debated in the House on a number of occasions. It is very much a House of Lords issue and I therefore thank everyone for their thoughtful contributions. The amendment is addressed to utility suppliers but my noble friend Lord Hodgson mentioned banking, which is not in the amendment but, no doubt, similar considerations apply. All these sectors have regulators to ensure that consumers are treated fairly, in accordance with licensing rules and wider consumer protection law, including those intended to protect the more vulnerable in our society—a point that I am going to come back to.
Customers may take queries or complaints to the relevant regulator and receive some form of assurance on their position—for example, should a business seem to be charging excessively for supplying a paper statement or for processing a cheque payment. I believe that we have already established a consensus that some individuals value retaining the option of paper transactions. We are all clear that the terms of the contract must be set out at the outset, at the time of agreeing the contract, and that they must be clear and transparent. In particular, consumers need to be clear and agree if there is to be a change in the way in which they receive and pay their bills. In this way, the customer knows how bills and statements are to be provided and on what terms. As I mentioned in our previous debate, paper bills and cheque payments have never been free. The fee for processing them was always borne by the consumer but was tied up in the administrative costs of the utility, and the charge was spread across the customer base. Thankfully, today these charges are more transparent and linked to costs.
This amendment would be of particular disadvantage to online customers, for whom statements are readily available and can be printed if necessary, especially by the young but increasingly by our digitally aware “silver surfers”, because many people are embracing the internet at every age in a very surprising way. I welcome the opportunity to save money that paperless bills offer, and so do many people. Paying by direct debit, which was condemned by my noble friend Lord Blencathra, can also enable people—some of them vulnerable and elderly—to budget more effectively than being faced with quarterly or lump-sum bills. There can be some value there. For them, the proposed statutory requirement set out in these amendments adds little but the possibility of extra costs.
It is undoubtedly more expensive for a regulated business to print out and post bills to its customers than it is to deliver them electronically online. It is not for the Government to dictate that certain costs cannot be accounted for with the consequent burden instead being potentially passed on to all customers. It is surely reasonable to incentivise customers to use the cheapest processing mechanism by sharing savings with them. This amendment would outlaw that and almost certainly drive up the charges to online customers.
Baroness Maddock
When my mother died, the utilities were all very good. They have special sections to deal with this. I had thought that things would be terrible as I do not usually find them terribly helpful but actually most of them deal with these situations quite well. However, for me, having the paper copies was important as I could see what was going on. However, I cannot fault the utilities as they were very good.
Baroness Neville-Rolfe
It is always good to have that sort of good experience on the public record. I thank the noble Baroness for that intervention.
The noble Lord, Lord Clarke of Hampstead, asked whether there were any talks going on with the regulator to ensure that payments to Royal Mail are fairer. I will need to write a letter to the noble Lord on what is largely a Royal Mail competition issue, if I may. I was also pleased that the noble Lord, Lord Blencathra, shared his experiences, knowing that he comes from the north of England, even though I do not think that I agreed with him on every aspect. The noble Lords, Lord Hodgson and Lord Blencathra, talked about meters. The Government are working with industry on smart meters which will enable readings without a visit to a house and therefore make the cost of energy use more visible. That will be better for consumers.
In conclusion, this is a difficult area, as we do not want society to incur the costs of printing and sending off bills to everyone if that is not needed. The trouble is that if there is no cost to paper bills, people will just opt for paper anyway even if, like me, they can manage online. I think that that is a risk. I know that is not a popular thing to say but I hope that noble Lords will reflect on that aspect of things. There is already a range of billing, payment and statement options available on the market. We agree that it is important that the appropriate protections on access to paper bills are kept in place, and are doing that through our licensing regimes and specific regulatory and sector interventions and by driving quality, choice, fair prices and value for money for consumers through good competition and good consumer law.
We will of course reflect on what has been said in this lengthy and important debate, and see if anything can be done. However, in the light of what I have said, I ask my noble friend to withdraw her amendment.
Baroness Oppenheim-Barnes
I thank my noble friend for that very careful and detailed response, which was extremely interesting. She paid a lot of attention to what has been said. I am afraid that she will not change my mind but on this occasion I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“(2) References in this Part to treating a contract as at an end are to be read in accordance with section 19(13).”