19:26 - The House divided: - Ayes: 204 / Noes: 289 - Question accordingly negatived.
19:39 - The House divided: - Ayes: 290 / Noes: 203 - Question accordingly agreed to.
Jo Swinson
I am delighted to speak on the Bill for the first time—a Bill whose development and gestation took far longer than my pregnancy. Although the hon. Member for Walthamstow (Stella Creasy) says that I missed many a treat, she does not know that I did watch Second Reading on BBC Parliament during my maternity leave, although I had to use the pause function occasionally. It seemed to have a fairly soporific effect on my son. Perhaps that is a tip for all new parents—the delights of BBC Parliament.
The debate often seems polarised, with on the one hand the advocacy of very prescriptive primary legislation to deal with the issues, and on the other, the speeches of my hon. Friends the Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall), who argue that the free market is working perfectly and no intervention is required. I recognise that there are issues and difficulties. We have to find the best way forward to deal with those so that the interests of consumers are well looked after.
A careful balancing act is needed. We want to make sure that as many people as possible can access events, whatever their means. We want sports and entertainment in the UK to flourish. We have some of the best events and tournaments in the world, which bring in large numbers of international visitors and businesses. We also, of course, want to protect consumers and allow the ticket resale market to work as well as it can.
There has been an encouraging trend in recent years towards safer and more tailored online ticket marketplaces and away from the touts outside venues. These websites can offer much more consumer protection than was available before, often in excess of what the law requires. The sites have processes in place to try to prevent, discourage and punish fraud. Although no market is perfect, we know how much time, money and emotion fans invest in attending events, so we want fans, as consumers, to be able to operate safely in this market.
There are already protections in place for consumers. The consumer contracts regulations came into force just six months ago to ensure that consumers are fully informed before they buy from a trader. At the time, the Government announced guidance specifically on internet ticket sales to accompany those regulations, which build on existing law such as the Consumer Protection from Unfair Trading Regulations 2008, which protect consumers from being misled by practices such as claiming that a seat is on the front row when it patently is not.
The regulations complement the Fraud Act 2006 and the Computer Misuse Act 1998, which list a range of offences available to law enforcement to tackle the fraudulent sale of tickets and the criminal harvesting of tickets from online ticket sales. Botnets and hacking into sites have been mentioned, but these proposals would not only cover cases of hacking. Botnets could also be illegal if, for example, they were being used to gain unauthorised access to a website that clearly states that it deals with real individuals.
We are absolutely committed to ensuring that the law is properly enforced. We have a powerful economic crime command within the National Crime Agency to drive forward this work. We have invested about £86 million to build law enforcement capabilities to respond to cyber-crime, including online fraud. We have strengthened the reporting and intelligence arrangements for fraud. Action Fraud is now the single national reporting centre for fraud and financially motivated cyber-crime. Since 1 April last year, responsibility for Action Fraud rests with the City of London police, bringing it closer to the National Fraud Intelligence Bureau.
The City of London police are also working with the organisation behind the rugby world cup to exclude participants in the ticketing lottery who have links with previous reports of fraud. In October last year, the police reported that they had foiled “hundreds” of fraudulent attempts to gain tickets via the official ballot. The Competition and Markets Authority and trading standards bodies lead consumer law enforcement in this area. Through their hard work, trading standards officers have successfully enforced consumer law—for example, right here in Westminster in reducing the number of consumers being caught out by bogus theatre tickets.
My right hon. Friend the Member for Cardiff Central (Jenny Willott) and Baroness Neville-Rolfe have previously set out the Government’s position. We do not think that there are no problems in this market, but we have to find the best way to tackle them.
In that context, I will set out the difficulties involved in Lords amendment 12. Although it purports to add further transparency requirements to protect consumers, it could have the opposite effect. It would mean that all sellers, whether as a business or as one friend selling to another, would have to provide detailed information about themselves and the ticket they were selling, including the seat number and the booking reference number. That would enable the event organisers to cancel tickets put up for resale, as is intended by the amendment. That would mean that a fan with a spare ticket, perhaps because their friend is ill, could not resell it without risking having all their tickets cancelled. Someone who had bought a resold ticket could arrive at the venue only to be refused entry on that basis. That does not seem very fair or proportionate.
Stella Creasy
Will the Minister clarify two things? First, does she think that the amendment applies to individual-to-individual sales? It is actually aimed at the marketplace that secondary ticket sites create. Secondly, if she is worried about resales and tickets being cancelled, will she accept the amendment proposed by the all-party group, which would specifically deal with that to ensure that it does not happen?
Jo Swinson
I recognise the attempts made in that amendment, although they do not address all the difficulties that I have outlined. Many people who are unable to attend an event at short notice will find that they have another friend who is happy to go along to it with them, but others will not, so they will use online marketplaces, in which case these issues will apply.
One of the main difficulties with the Lords amendment is that it would require sellers to provide their name. That should raise concerns, because it would include private individuals who could be young people or vulnerable consumers. Perhaps a 14-year-old One Direction fan who is unable to attend the concert she has bought tickets for will want to resell them, and in doing so would have to provide her name online. This is a concern not about ticket sales but about things such as identity theft and the difficulties involved when private individuals have to place their names online. There were over 100,000 reports of ID fraud in 2013, and we do not want to support proposals that could—albeit inadvertently —push that number higher.
Mr Redwood
When I asked the hon. Member for Washington and Sunderland West (Mrs Hodgson) in what circumstances a ticket could be cancelled—a crucial point, because there might be legitimate circumstances but also circumstances where it would be unreasonable—I did not feel that I got a sensible answer. The Minister is right to be worried about that lack of precision.
Mrs Hodgson
This proposal is in no way about making 14-year-olds vulnerable online if they want to sell their ticket. On eBay, people who buy and sell have an identity: we know who we are buying from in the sense of whether they have sold one of something or 1,000 of something. All sorts of mechanisms could be in place to keep the person who is selling on the ticket safe. The Minister is wrong to suggest that this is about allowing event organisers to cancel tickets—that is not the intention at all. It is about transparency. Very few event organisers put “Not for resale” or “Non-transferable” on their tickets. The reason why some do is to try to protect the tickets, but they would not need to if we had this transparency.
Jo Swinson
I thank the hon. Lady for her intervention. I appreciate that her intention might not be to force people to use their names, but unfortunately that is what the Lords amendment says. Many organisations would wish to cancel tickets if they knew exactly which tickets were being resold, and that would not be in consumers’ interests.
The amendment could result in the cancelling of tickets and potential ID theft, which would have the common impact of incentivising the movement of sales to other, less secure websites, perhaps overseas, or to the street touts of whom people already have experience. Having more safety in online marketplaces that behave more responsibly has to be better than pushing things on to foreign, unregulated websites or insecure websites. We want to make sure that consumers are protected. The touts we see outside venues do not offer that protection—not even close to it.
Nick Smith
The Minister says that the amendment is too prescriptive. Does she not recognise that the internet spivs who use these botnets are rigging the market and putting up prices for consumers? What is she going to do about these internet spivs who are harvesting tickets against the interests of consumers?
Jo Swinson
I will come to enforcement, because I accept that there are issues that need to be looked at, but I want to complete my explanation of the difficulties with amendment 12.
There is a real risk that introducing these additional, more stringent information requirements would go beyond the provisions set out in the consumer rights directive, which EU law does not allow us to do. Compliance with EU law might be further harmed in relation to the technical standards and regulations directive. To comply with that directive, the amendment would have to be notified to the Commission at least three months before the Bill was due to finish its passage through Parliament, meaning that it remained in draft form during that standstill period. We have clearly run out of time for such steps to be taken now. The consequence, which I know the proposers of the amendment would not want, is that amendment 12 could end up being unenforceable if it were passed in its current form.
Stella Creasy
It is interesting that the Minister raises the EU directive, which talks about the importance of providing the characteristics of an item that is being sold. If the characteristics of a ticket are not to say where the event is, what time it is, and which seat it is, what does she think would be included under the directive?
Jo Swinson
Much of this information already has to be provided under the consumer contracts regulations, and that is absolutely fine. However, amendment 12 goes beyond that—for example, in requiring individuals to give their name. I do not think that people would wish to run the risk that it ended up being unenforceable, but unfortunately that is the legal situation.
The amendment tabled by the hon. Member for Washington and Sunderland West (Mrs Hodgson) talks about stating the face value on the ticket. I understand what she is getting at, but this is not a particularly helpful concept to use in legislation because the face value is not clearly defined. A ticket does not necessarily have just one value—there may be delivery and administration charges, and the seller might not know which of those needed to be included in the face value. If the fan selling the ticket got that wrong, the ticket could end up being cancelled without their knowledge. The value stated on the ticket might not be what the fan paid because of the fan club or early-purchase discounts that have been discussed. People would not want consumers to lose money when they cannot attend an event, and the face value would not always cover what the consumer had actually paid.
There is a more substantive issue of principle. Is it right for Government to tell consumers that they cannot sell items that they have bought second-hand at above the price that they paid for them? If I buy a book for £4.99 and then a very popular film is made of it and a friend offers me £10 for the book, why should the Government get involved and say that it cannot be sold on?
Perhaps unintentionally, the amendment suggests that it is acceptable for an event organiser to cancel tickets that have been sold for above face value. Many hon. Members have addressed the issue of terms and conditions, and some have said that organisations should be able to cancel such tickets, but that would not necessarily always be a fair term. Under the Unfair Terms in Consumer Contracts Regulations 1999, it would be up to a court to decide on a case-by-case basis, but it may not always be a fair term.
There are problems in the market—as is the case in any market—which is why we have listened and are taking action. We agree on many of the issues relating to consumer information, including consumers not knowing where to go to get redress when they have a problem with a resold ticket. Consumers sometimes raise concerns with event organisers when they should approach the online marketplace where they bought the tickets. Of course, that can be inconvenient and frustrating for both the organiser and the fans.
There is also a problem with bulk selling and the people who have been referred to as bedroom touts. Like the organisers, I am not comfortable that there are people who buy tickets as if they were real fans, but with the sole intention of reselling for a profit. I am, therefore, pleased to announce various actions that we have taken. We have been working closely with the secondary ticket marketplaces and continue to have constructive discussions with them and the event organisers.
The online ticket marketplaces have made a range of commitments, as outlined in the letters that have been placed in the Library of the House and are available from the Vote Office in the Lobby. They have committed to providing further information and transparency, to make sure that consumers have appropriate information. The commitment covers much of the information that Lords amendment 12 would require, but it will not breach EU rules, result in unintended consequences for privacy and fraud, or give event organisers the opportunity to cancel tickets put up for resale.
Secondly, the marketplaces have confirmed their commitment to consumer protection. When consumers have a problem with a ticket they have bought on an online marketplace, they should have access to redress. The marketplaces have set out the guarantees they provide to users and how they work to protect consumers. Thirdly, the marketplaces have committed to ensuring that consumers know where to go to get redress by providing the information prominently on their websites. Alongside those common commitments, they have committed to a range of different improvements specific to their individual sites. They are all welcome commitments.
In addition to the action taken by industry at a practical level, we want to ensure that the Government address the issues with an evidence-based approach. The Department for Culture, Media and Sport has today launched an independent review of the effectiveness of the current law—and, indeed, what can be done to improve it. The review will survey enforcement of the current consumer law as it applies to online marketplaces as facilitators of transactions in tickets, and it will assess the challenges of enforcement of that law. We invite the review to suggest how that enforcement could be improved. That will include looking at how to tackle bulk selling, which has been raised by many Members today, and how to effectively enforce the law against traders impersonating consumers in order to evade consumer law.
I have written to trading standards to gather evidence on what more can be done to enforce consumer law as it applies to buyers and sellers of tickets. That will complement the DCMS review. To respond to the hon. Member for Eltham (Clive Efford), I have not yet received a response from trading standards, but I will, of course, keep the House informed.
Given the ongoing commitments to tackle the genuine issues, I urge the House to reject Lords amendment 12 and the amendment to it, and to welcome the package of measures that I have announced.
Mrs Hodgson
We have had a wide-ranging debate. If we were to apply the law of averages to the question of which side of the argument the coin would fall, I think it would fall on the side of the Opposition and the hon. Member for Hove (Mike Weatherley) who tabled amendment (a). The debate has been strongly in favour of transparency, apart from the contributions of two hon. Gentleman in the back row—the hon. Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall) —who have been the only Members to put up any argument against that, albeit unconvincingly.
I have listened to what the Minister has had to say and I have seen the lobbying from the four secondary marketing companies. They have obviously spent a fortune on lobbying and I am sad to say that I heard a lot of their arguments in the Minister’s speech. From their point of view, all the money they have spent on lobbying has worked, but the House is not convinced.
There is demonstrable market failure. When the House, the Select Committee and the then Minister looked at the issue 10 years ago, they said we would need to see such failure before requiring legislation. We have now demonstrated that that market failure exists. I know that the Minister has written, very late in the day, to trading standards. I wrote to trading standards years ago and the response I received was that there was no evidence. Transparency would provide the evidence of what is happening.
The four letters from the secondary marketing companies say, at long last, that they will abide by the regulations that the Minister’s colleague, the right hon. Member for Cardiff Central (Jenny Willott), announced last year, but they have already had more than six months to abide by those regulations. I wrote to them to point out that the regulations are now on the statute book, but they have carried on regardless. I have no faith that they will do anything different. That is why we need to legislate. There is cross-party support for that and I hope that Members on both sides of the House will support us in the Lobby. I know that when the Bill goes back to the House of Lords our proposal will have cross-party support, ably led by Lord Moynihan, Lord Clement-Jones and Baroness Grey-Thompson, as well as our own Lord Stevenson. I will push the amendment to the vote.
Question put.
Madam Deputy Speaker (Dame Dawn Primarolo)
With this we may take Lords amendments 2 to 11 and 13 to 78.
Jo Swinson
I am delighted that we are bringing the Bill back to the House in such good shape. There was a good debate in the other place and a number of amendments build on and improve the Bill. We listened to concerns in both Houses about consumers being out of pocket if they have to pay to return rejected goods, and as a result we agree that it is sensible to make it clear in the Bill that the trader bears responsibility for the reasonable costs of returning goods that have been rejected by the consumer. That provides clarity and sets a sensible balance between the parties, without causing significant burden to business.
The Bill has always contained a provision that if a consumer exercises the final right to reject, the trader may reduce the refund to take account of the use that the consumer has had of the goods, unless the goods are rejected in the first six months, in which case the general rule is that no deduction may be applied. That is intended to balance the interests of consumers and traders, and for that reason the Bill provides a limited exception to the general six-month rule. However, we understand the concern that that exception could be interpreted too broadly, and in response we have narrowed the exception to address specifically the impact on the motor industry.
The particular nature of motor vehicles may affect the balance between traders’ and consumers’ interests because cars are high-cost items that lose value quickly. They are also complex, so it is more likely that a car will develop two faults in the first six months than, for example, a piece of furniture. The option to make a deduction for use in the first six months is therefore particularly significant for traders in motor vehicles.
The amendments include a power to increase the scope of the exception if appropriate in future. We think that is important, as it is not possible to predict the goods and technologies that may develop. We are conscious of the need to reflect the dynamic nature of digital content. Many forms of digital content are not static products and change over time with updates to software and apps. The Bill provides that the digital content must meet the quality rights—satisfactory quality, being fit for a particular purpose and as described—following an update. We listened to concerns raised in the other place that as originally drafted the requirement could prevent traders from improving digital content or offering flexible products. That outcome would not be good for consumers, so we have clarified that the requirement does not prevent traders from adding new features or enhancing existing features, as long as the original description is still met.
We have amended the provision on digital content that causes damage to a consumer’s device or other digital content. That will allow traders to exclude or restrict their liability under the Bill for damage to the consumer’s device or other digital content, to the extent that it would be fair under the unfair terms provisions in part 2 of the Bill. That provision will apply even to free digital content, specifically when it causes damage and the consumer can show that the trader failed to use reasonable care and skill to prevent the damage occurring. We have clarified the maximum fining penalty that the regulator of premium rate services can impose on non-compliant and rogue operators, and we are making clear that where appropriate and proportionate, the regulator can impose the maximum fine for each contravention of the code. That maximum is £250,000, so in the event of a company making two serious contraventions of the code, the regulator could impose a fine of up to £500,000 if that was considered appropriate and proportionate.
We are determined to tackle the minority of rogue letting agents who offer poor service, and in Committee we added provisions to ensure transparency of letting agent fees, to give consumers the information they want while supporting good letting agents. It is important that that requirement comes into effect as soon as possible to ensure that tenants have certainty over the payments that they make, and for that reason we are putting the enforcement details in the Bill. We are also applying the duty on letting agents to publicise fees in Wales as well as England. That was requested by the Welsh Government and has the added advantage of minimising any cross-border enforcement problems.
Existing legislation requires landlords and letting agents acting on their behalf to protect the tenant’s security deposit. That is the most significant money likely to be held by an agent, but they might hold other money on their client’s behalf, which is why the Government already encourage agents to join client money protection schemes. Public awareness of that is not as high as we would like, so we are also requiring agents to state whether they are a member of a client money protection scheme.
From 1 October last year all letting agents and property managers must belong to one of our three approved redress schemes that provide tenants with an effective way to address complaints. We will now require letting agents to publicise which redress scheme they have joined. Those changes will level the playing field for agents by raising awareness of what best practice looks like, put downward pressure on fees, and provide consumers with the information they need without introducing significant new costs to the sector.
As set out in our 2011 White Paper on higher education, we are providing all higher education students who receive public support with access to external dispute resolution. That reflects the fact that increasingly, new and different providers are offering higher education, not just the traditional university sector, yet only a handful of alternative providers—seven in total—have so far voluntarily joined the Office of the Independent Adjudicator’s complaints handling scheme. We are making it mandatory for alternative providers whose courses are designated for student support to join.
I convey my grateful thanks to the Delegated Powers and Regulatory Reform Committee. It published the outcome of its scrutiny on 11 July 2014, and I was delighted to accept its recommendations that the exercise of certain powers in the Bill be subject to the affirmative resolution procedure, as reflected in the amendments. We also addressed concerns that current provisions for the appointment of the Competition Appeal Tribunal—or CAT—effectively exclude judges from the Scottish Court of Session or the Northern Ireland High Court. We have now ensured that Lord Chief Justices of England, Wales and Northern Ireland, and the Lord President of the Court of Session, may nominate any suitably qualified individual who is already a judge sitting in a relevant court to be deployed as a CAT chair.
We have improved provision for private actions in competition law. First, we are allowing the Competition and Markets Authority—the CMA—to approve an outline of a voluntary redress scheme, and for the business to create a full scheme afterwards. That is part of a wider Government initiative to promote alternative dispute resolution, and it allows responsible businesses who wish to make redress to those they have wronged an avenue to do so. The amendment allows the CMA to impose conditions necessary to set up a full scheme. If those conditions are not complied with when the full scheme is set up, the CMA can withdraw approval or consider a revised scheme.
We are enabling provision to be made for claimants to incur costs if they apply to have the representative to the action removed but lose the application. That is in line with the wider “loser pays” principle that exists in domestic law, and should deter vexatious applications. The Government recognise that during collective proceedings, not all damages are claimed. Therefore the Bill makes provision that the CAT may award unclaimed damages from opt-out collective action proceedings to a prescribed charity—currently the Access to Justice Foundation. Although the body to receive unclaimed damages may be changed, we are ensuring that it must always be a charity.
The Bill consolidates and simplifies important provisions on investigatory powers of consumer law enforcers, and the Government greatly value the vital work that enforcers such as trading standards do in protecting consumers and legitimate businesses. We now require enforcers to give two days’ written notice for routine inspections, and we have set out clear exemptions to that. We are firmly underlining that provision by putting it beyond doubt that notice need be given only for routine inspections, which is when there is no reason to doubt that the business in question is operating properly without any significant breaches of legislation. We have committed to review the practical effect of the notice requirement within two years of the commencement of the Bill. As a result, we are confident that the powers and safeguards strike the right balance between protecting civil liberties, reducing business burdens, and ensuring effective enforcement, and I invite the House to agree with the amendments.
Stella Creasy
In the short time available let me say that I think we are looking at a form of alternative dispute resolution this evening, so let me first flag up the positive in terms of the customer service feedback we would like to give to the Government on these Lords amendments: we will be supporting all the Lords amendments. In particular, there are three that are worthy of consideration, following the rule about the six in 10 Britons who believe that politicians should do more in the coming years to help them stay out of financial difficulty.
Jo Swinson
I thank the hon. Lady for her comments. She had some well-crafted lines and I disagree with her final remarks, but she raises an important point about information for consumers whether in the public or private sector. My view is clear: passing the Bill to enshrine those rights is not in itself sufficient. It is vital that people know how to use these rights in a practical way. That is why the Department has been working with consumer information bodies such as Citizens Advice and Which?, and retailers and other groups, to try to ensure that there will be sound, straightforward and easy to understand information that will be readily available to consumers, whether at the point of sale or where they have a problem, through a variety of different methods, and whether online or through more traditional means. Consumer confidence, which will underline the improvements in the economy, is crucial and will ensure that this landmark legislation, which the hon. Lady rightly highlights as a once-in-a-generation opportunity, will truly deliver much more confident consumers who are able to enforce their rights. That will help to ensure that the economy benefits and is much stronger.