Consumer Rights Act 2015 (Consequential Amendments) Order 2015
Baroness Neville-Rolfe
That the Grand Committee do consider the Consumer Rights Act 2015 (Consequential Amendments) Order 2015.
Relevant document: 1st Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, I shall speak also to the Enterprise Act 2002 (Part 8 Domestic Infringements) Order 2015. These orders form part of the implementation of the Consumer Rights Act 2015 and, with the leave of the Committee, I will take them together. Most of the Act comes into force on 1 October.
Before turning to the orders, I thank noble Lords for their valuable contributions to our debates and to ensuring that the Act is in good shape. I am particularly grateful to the noble Baroness, Lady Jolly, who has just left us, for her help in steering the Act through the House, and to the noble Baroness, Lady Hayter, and, if I may say so, to the newly fashionably bearded noble Lord, Lord Stevenson, for their well-informed contributions to our lively debates.
The Act is part of a wider package of consumer law that will boost the economy by £4 billion over the next 10 years. It may be helpful if I remind your Lordships of what the Act does and if I say a little about what we are doing to ensure that consumers and businesses are aware of their rights and obligations under the Act.
The Consumer Rights Act is a major part of the reform and simplification of UK consumer law. It provides clear consumer remedies for goods, services and digital content so that consumers know what their rights are and what they are entitled to if something goes wrong. This will help increase consumer confidence so that people try new products and services and also shop around. It will also help businesses more readily to understand their responsibilities.
It is crucial that consumers and businesses know about their rights and obligations. We have therefore been working closely with trading standards to help businesses prepare for the changes, including the provision of clear guidance on the Act on its Business Companion website and the development of a consumer rights summary which businesses can voluntarily display in their shops at the point of sale. To help consumers better understand their rights, we have also been working closely with Citizens Advice, MoneySavingExpert and Which?. The consumer rights summary will be published on the TSI website before 1 October.
Alongside the Act, on 1 October, when the business information requirements of the Alternative Dispute Resolution for Consumer Disputes Regulations 2015 come into force, we will also complete implementation of the alternative dispute resolution directive. By ensuring that ADR is available in every sector, we will make it easier to resolve disputes between consumers and traders. This will help reduce costs for businesses by reducing the number of these disputes being brought before a court.
I would also like to update your Lordships on our review of product safety. In March this year, because of concerns about the effectiveness of consumer product recalls raised by the noble Baroness, Lady Hayter, and others during the passage of the Consumer Rights Bill in this House, the Government launched an independent review led by consumer campaigner Lynn Faulds Wood. This is looking at how we can make the product recall system more effective, with a proper understanding of what a good recall system looks like. A small stakeholder focus group met on 4 December to discuss 10 recommendations and we anticipate publishing the review’s findings later this year.
As a result of amendments made in this House, the Consumer Rights Act includes new rules on the regulation of the online secondary ticketing market, which came into force in May. The first order enables the enforcement bodies to share information and work together more effectively to complement the investigatory powers that came in in May. BIS and the DCMS are still committed to reviewing the secondary ticketing market and we anticipate announcing the chair very soon. Given the level of interest in this matter and the presence of my noble friend Lord Moynihan, I thought that I should make that clear. The launch of the review will follow shortly, along with an invitation for interested parties to provide evidence on the market and consumer protection measures.
As part of our productivity plan, the Government are reviewing trading standards to ensure that our consumer enforcement capability effectively supports competition and better regulation goals. We have, however, decided to delay the coming into force only of the services provisions of the Act in relation to mainline rail, aviation and maritime consumer services until 6 April 2016. The DfT is rightly concerned about the interplay between the new Act and specific provisions, such as the arrangements for a refund due to train delays. Therefore, we will be consulting with businesses and consumers shortly to determine whether the detailed sector-specific consumer remedies should be retained and how the new Act might apply. The other chapters of the Act, including provisions on competition, will come into effect for these sectors on 1 October.
I now turn to the two orders themselves. As I mentioned, these orders form part of the implementation of the Consumer Rights Act. They simply make consequential amendments to the existing legal framework. First, the draft Consumer Rights Act 2015 (Consequential Amendments) Order adds the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 to the list of legislation in Schedule 5 to the Act. This will mean that public enforcers of those regulations have access to the investigatory powers that they need.
The order also amends the Uniform Laws on International Sales Act 1967. That Act implemented the convention on international sale of goods, which enables parties from different countries to decide that the standard terms set out in the convention apply to their contract. This means that, where the contract is for the sale of goods to a consumer, provisions of the Consumer Rights Act, such as the right that goods must be fit for purpose, will be treated as mandatory elements of the contract.
The order also amends Schedules 14 and 15 to the Enterprise Act 2002 so that public bodies have the power to disclose and share information obtained through, or for the purposes of, enforcing the unfair terms and secondary ticketing provisions contained in the Consumer Rights Act, as I mentioned. Lastly, the order amends Schedule 3 to the Regulatory Enforcement and Sanctions Act 2008 to enable a local authority to be a “primary authority” and take a role in co-ordinating enforcement of provisions of the Act.
The second order, the draft Enterprise Act 2002 (Part 8 Domestic Infringements) Order, amends the Enterprise Act 2002. This enables enforcers, such as trading standards, to use civil enforcement powers for certain breaches of the Consumer Rights Act where such breaches affect the collective interests of consumers. For example, trading standards could seek an enforcement order when a business refuses to give refunds to a number of customers where faulty goods are supplied.
I commend the draft orders to the Committee.
Lord Moynihan (Con)
My Lords, I am grateful to the Minister for referring specifically to Chapter 5 of Part 3 of the Act and for the interest shown, both in Committee and in the House, in the subject of the secondary market for tickets. As I understand it, the powers that are proposed should be seen as complementary and, indeed, supplementary, because there will be greater information sharing as a result of the order, which is narrow in scope.
I would like to ask my noble friend whether the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 apply to the secondary ticketing market as well. If they do, they stand well alongside the proposals before the Committee and, indeed, the powers in the CRA 2015.
Before I may appear a little concerned about and critical of the pace at which a number of commitments that were given to the House seem to be progressing, I say straightaway that I could not be more grateful to the Minister personally for her commitment and the level of interest, time and diligence that she showed on this subject. However, as I hope she will be the first to agree, while investigative powers are clear, a prerequisite for those investigative powers to be effective is enforcement. If there is a lack of clarity over exactly what needs to be enforced, we have a problem. One reason why the review was due to be set up was to provide clarity over enforcement and how it would be implemented. As long ago as May, the Minister was hopeful that we would have that review. Many of us who are interested in the subject have waited with bated breath during the Summer Recess, week by week and month by month—May, June, July, August and now into September—and we are still hoping that the review will come very soon.
Under normal circumstances in Parliament, this might not be a major concern. The reason why it is such a concern is because this review was placed in the Act and was time-limited to a year. It concerns me that we are now into September and we do not have a chair for the review or terms of reference for it, nor do we have details of the expert committee that would support that review. All that is absolutely essential. One reason why the measure was pressed so rapidly and given such importance and prominence in Parliament was that having a chair in place to see exactly how the ticket-touting market or secondary ticket market worked during the Rugby World Cup was clearly going to be advantageous. It was going to be able to help that committee to assess the effectiveness or otherwise of the legislation that had been passed in Parliament, and it was also going to provide a good deal of detailed information so that recommendations could be made in the light of direct hands-on involvement with those organising the Rugby World Cup, which already, as we have read in the papers only in the last week, is a matter of great concern to the consumers, many of whom feel that they are being fleeced. In addition to that, we were looking for a strategy for monitoring compliance. The Competition and Markets Authority is clearly important in that context, but we have heard nothing. There is no information on how best to provide requirements for sellers, advice to buyers or recourse to consumers. I understand that the police numbers specifically to tackle touting and associated criminality are very low.
Many rugby fans feel that they are currently being fleeced for tickets, which is a result of the lack of enforcement. The position that they face today is bleak, to say the least. I hope that my noble friend the Minister will be able to give us a little more clarity on when this review is going to be established. I hope that there will be an announcement very soon of a chair for the review; it is imperative that that is done and that the review is set up as a matter of urgency. At the Rugby World Cup, so many fans have been unable to get tickets because those who have managed to sweep the market have immediately put those tickets back on at a massive multiple of their face value. When that is directly in contravention to the regulations and rules stated by the organisers of the Rugby World Cup, we have a serious problem, compounded when Parliament has spoken about this issue and when the Government came back with amendments to lead on this issue so that we could protect consumers and not see sports fans fleeced.
Lord Stevenson of Balmacara (Lab)
My Lords, it was very good of the Minister to pay tribute to my hirsute appearance. I like to bask in the idea that I am fashionable at all, let alone fashionably bearded. Of course, it is entirely a summer beard, one of those that grow simply because one is too bored and lazy to take the trouble to shave it off. In my case I had an ulterior motive—I am sorry to bore the Committee in this way—because my son has just reached the age of 20 and fancies himself as a bit of a lad around town, and felt that it would enhance his appearance and approach to the wider world if he was to grow a beard, and we agreed to do it together. I shall not say who has won yet, but it is a fine bonding environment. Also it proves that you do not have to be a former Labour leader or indeed standing to be a Labour leader to wear a beard of some distinction. I hope that does not get too widely circulated by Hansard.
I thank the Minister for giving us a very interesting overview of where things stand with the Bill. For those of us who sweated through the long stages of this issue, it is nice to be refreshed again as to where we have got to on some of these key issues—not least the digital area, which is my particular responsibility, but also in the wider context on which my noble friend Lady Hayter led for us with great skill and expertise. It is her birthday today, and perhaps the Minister might in a spirited moment refer to that.
I have three points. I was intrigued by the announcement that there was to be a review of trading standards. I had not noticed that in earlier statements. When the Minister comes to respond, perhaps she could give us a little more on that. We made a point throughout discussions on the Bill that, while we admired the way in which the Bill set out to draw together and reshape our overall consumer protection, it was heavily dependent on the ability to police and exercise the powers that were being given. There were some doubts expressed by those who spoke in Committee and on Report who had knowledge and expertise in these areas of the difficulties being caused in local government as a result of cuts and changes there. I am interested in the broader approach taken by the review, in particular whether it will deal with the difficulties that have been caused by the reductions in manning levels and resources available, and by changes in local government, which are very complicated. That might take time to get together, but it would repay considerably on the success of the Bill.
Lord Taylor of Warwick (Non-Afl)
My Lords, I thank the Minister for her opening remarks and continuing work on this matter.
I appreciate that the Act to which the orders relate is a consolidation Act designed to simplify, and obviously I support that. There are challenges ahead and I hope that the Government will focus on them, in particular the internet. We know that the online retail market is the fastest-growing sale sector. It is now worth well over £100 billion.
The expansion of click-and-collect services and mobile-phone commerce has played a large role in this. Only last night a lady from America sent an e-mail to my website, wanting to know what my opening hours are, because she wanted to buy some clothes. She confused me with Lord & Taylor, the clothing department store in the USA. She was quite happy, however, that I was not in fact Lord & Taylor. This just goes to show that many consumers now are dealing with companies that are outside the jurisdiction and that in many ways the Government are playing catch-up with the internet. They still have to wage the battle against that.
Paragraph 7 of the guidance notes states that the Government consulted extensively on reforming consumer law, and that this was based on broad support for reforms from business and consumer stakeholders. But for many start-up firms the owner is also the person who makes the tea and puts out the rubbish. Keeping abreast of changes in consumer law is a challenge too far. I still feel that there is too big a gap between small business and government, and indeed between consumer and government.
One must look at what the consumer can do when things go wrong. I appreciate that this was in essence a consolidation Bill, but the Government have to be a champion of the consumer. Some argue for a consumer ombudsman, just one person. I do not share that view, but I feel that companies owe more of a duty of care to consumers to advise them on what to do when things go wrong. Caveat emptor, or buyer beware—there is still consumer law, but it is the new language of the internet, not Latin, that is fast taking over. So the Government must take into account that that changes, almost by the minute, the way in which we buy and sell goods.
Baroness Hayter of Kentish Town (Lab)
Well, we are back again. I thank the Minister for not just introducing the draft orders, but for the update on progress on the product safety review, which is of particular interest to me. We had not formally seen it but I had obviously heard about it. The decision that she or whoever made it to appoint Lynn Faulds Wood to chair the review was a brave one, as she is very much her own lady. I have worked with her before, on bowel cancer, which was rather different, but I know that she will take no prisoners. We look forward to that report and trust that it will be out this year.
The EU directive on alternative dispute resolution in a way touches on the area, just raised by the noble Lord, Lord Taylor of Warwick, about whether there should be a consumer ombudsman. In principle, I am more or less with him on that. If you have an ombudsman it is compulsory for the industry covered to allow a consumer to take its complaint there. The problem that we have with the ADR directive, to which the Government signed up in only the most minimalist way, is that there will be alternative dispute resolution organisations in existence. For example, if you were John and Taylor—a wonderful firm, I am sure—but it was in Warwick and you were selling clothes there, you would in future have to say that the clothes-selling ADR provider is that well-known company, Stevenson and Hayter. However, we will not necessarily accept that a consumer should take their complaint there. So we have a very odd situation now which falls short of what the noble Lord would want: basically, anyone can set up an ADR and, as long as it is approved by the trading standards people, it exists but consumers cannot necessarily take their complaints there.
When she replies, perhaps the Minister will confirm when the full implementation of the ADR directive, although it is very minimalist, will take place. I know that it is later than was originally intended, but I missed the date. How many of those ADR schemes have been approved and what proportion of the consumer market does she now consider is covered by some sort of ADR scheme?
I turn to another issue on which the Minister helpfully updated us, which was the announcement made by the Minister in the other place on 29 July—which was, strangely enough, just when we were all going off on holiday and had packed our buckets and spades—of the six-month delay in the services provision of Chapter 4 of the CRA for the rail, aviation and maritime services. It may be that the Government had foreknowledge of what was going to happen at Calais over the holiday and were absolutely sure that they did not want consumers to be able to use their new rights under the Act. I hope that that was not the case.
What concerned me, not in what the Minister said today, but in the letter of 29 July from the Minister in the other House, was the suggestion that the passenger transport sector might be exempted permanently from the Act in certain respects. We would have very serious questions about any suggestion of completely removing the rail sector from the Act. The existing consumer protections under the national rail conditions of carriage are much narrower than those introduced in the new Consumer Rights Act. They basically cover only delays and cancellations, not quality of service, passenger assistance, on-board wi-fi, which gets more and more important, and cleanliness. In fact, they do not cover what the Minister referred to in the rest of the Act: whether the service could be said to be fit for purpose.
Although there are some improvements under the national rail conditions of carriage regulations, in that there is now provision for cash compensation rather than just a rail voucher—which is no use at all if you do not want to go back to where you have been—that compensation is still essentially limited to delays, not those wider issues. We obviously want the Consumer Rights Act to apply to passengers.
The Government had initially reassured the Committee in the Commons that the national rail conditions would be excluded only when they offer equivalent protection to that in the Bill—which is not currently the case. At that point, we were reassured that there was to be no undercutting of what is now the Act. However, the letter from the Minister in the Commons worries us slightly. We know that even with the present level of protection, which is not as good as the CRA, the Office of the Rail Regulator found that more than three-quarters of rail passengers know not very much or nothing at all about their rights to a refund or compensation when trains are delayed or cancelled.
We believe it is vital that the travelling public get the full rights under the Act. Given that the Conservative manifesto pledged,
“to improve compensation arrangements for passengers”,
will the Minister confirm that there is no intention to provide lesser rights for passengers than those in the Bill to which I think she can quite proudly put her name? Will she also undertake that in that six-month pause Transport Focus and other consumer groups are fully consulted and that it will not be just the industry deciding what rights it will deign to give its customers?
Baroness Neville-Rolfe
I thank my noble friends Lord Moynihan and Lord Taylor, the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, for their intelligent contributions to today’s debate. On the subject of beards, two of my sons have grown beards this summer. Of course, I congratulate the noble Baroness, Lady Hayter, on her birthday. We will not sing “Happy Birthday” to her because I think it would be against the rules of this distinguished place. I also thank her for her kind words about the product safety work that we are doing and about the chair. I will of course pass on her comments.
I shall start with transport. I reassure the noble Baroness and the noble Lord that there was no conspiracy in relation to the transport provisions. Our concern is about the interaction between the existing provisions, to which the noble Baroness referred, and the new provisions in the Act. The delay in the order until April next year will allow us to consult widely and we feel that it would be wrong to pre-empt that consultation. The scope of any exemption will be limited and will relate only to the ability to limit liability to less than the ticket price. All other protections under the Act will apply. The consultation will involve both business and consumer groups. Of course I undertake to pass on the points that the noble Baroness has made during this debate to ensure that my colleagues doing this work in the Department for Transport are well aware of noble Lords’ concerns.
As my noble friend Lord Moynihan helpfully said, the provisions are complementary and supplementary to what we did in the Act and to the investigation powers that are already in place. I think that his question was, “Do both orders affect secondary ticketing?”. My answer to that is yes, so, as he says, that is helpful. However, I emphasise that the main provisions have already come in, including those relating to the investigatory powers. We remain committed to these and to the review, whose object is to make sure that the market works properly. The terms of reference have still to be finalised once the chair can confirm that the ideas that have been put forward are in the right place. I hope that that gives some reassurance. On enforcement, in the mean time consumers who have problems should contact Citizens Advice, which will pass information to trading standards for enforcement. Individuals can also challenge in court terms that they believe to be unfair. Therefore, the provisions are fully in force and there is no reason for anyone in the market not to comply with them. Doing so could attract a financial penalty.
Baroness Hayter of Kentish Town
It would be interesting to know who has been consulted on the terms of reference. Certainly we have not seen any draft terms of reference. Again, I trust that it is not just the secondary ticketing people who have been consulted.
Baroness Neville-Rolfe
I am grateful to the noble Baroness for that intervention. I think that before the election we sent an outline to some of the noble Lords who have been involved in the debate. If those did not come their way, I will make sure that they do. As I am sure noble Lords agree, it will be important that the chair looks at the terms of reference, but a working document was prepared and I can certainly arrange for your Lordships to receive it. We have been making progress in establishing the terms of reference so that we are ready to roll.
I am sure that noble Lords will agree that it has been important to find an appropriately skilled chair and, obviously, the necessary support, on which I think there is more detail to follow. I can confirm that the review will report to both Secretaries of State. As I said, we expect an announcement soon. The review will take evidence from the Rugby World Cup, as it should do, and we remain confident—this is perhaps the most important point—that it will report on time. As my noble friend explained, there is a time-limited window. We have legislated already and we will be responding to the concerns that have been expressed particularly vociferously in this House and elsewhere.
On the CMA, the noble Lord, Lord Stevenson, said that this was history. However, the CMA, which is an independent organisation, will be contributing to the expert group, will provide evidence for the review, and consider its conclusions alongside the Government and other enforcers when considering action in this sector.
Lord Moynihan
I am grateful to my noble friend for that comment because that is the first time we have heard formally that there will be an expert group supporting the chair of the review. Can she take on board—I do not expect her to respond today—and come back later to confirm that the expert group reflects the key interested parties? That means that the arts promoters and event promoters, who have been particularly concerned for many years about abuse within the secondary market, as well as the leading spectator sports that are keenly interested in this issue, will be represented on the expert group.
Lord Stevenson of Balmacara
To continue that point, it would be helpful to know how this is to be shaped and organised. I agree that there is a lot of expertise out there but it has not always been brought in. It would be useful if we could be reassured that the range of representation on the expert group will be sufficient to make sure that all the points are picked up.
I am grateful to the Minister for what she has said about the CMA. It is perfectly appropriate for it to carry on its work independently. However, it is the lack of transparency about where it is in the game that causes us the most concern. We were completely unaware that negotiations were taking place between the CMA, or its predecessor body—probably the OFT—and the secondary ticket market. That meant that everything we thought we were hearing needed to be refocused because it was untrammelled by other people’s considerations. The point that I was trying to make was, without in any sense trespassing on the independence of the CMA, it would have been helpful to know whether a programme of work was going on at the same time. The fact that the CMA will be an adviser to the expert group, which presumably will report to the Secretary of State, will make matters a lot easier. I suspect that that is where the matter should lie but I should like confirmation from the Minister.
Baroness Neville-Rolfe
I am grateful for those helpful interventions. We are nearly there. I will reflect on the point about lack of transparency and pass it on to the CMA. I will take away the points that noble Lords have made about the expert group. There is not a lot extra that I can say today but we will make an announcement soon and bear in mind the helpful contributions that have been made.
I shall move on to trading standards. The noble Lord, Lord Stevenson, asked about the review. It was announced as part of the productivity plan published by the Chancellor and the Secretary of State for Business, Innovation and Skills in July. Noble Lords will remember that the plan called for more open and fair markets. Following the Raine review, we have said that we are reviewing trading standards’ ability to deliver the Government’s aims. We aim to make recommendations for a more efficient and effective trading standards service, which will ensure suitable consumer protection in an efficient and financially sustainable way so that business has confidence to invest and grow. That is the link with the productivity envelope and the context in which the review was published. We will not be carrying out a formal consultation but would welcome views from public bodies that rely on trading standards to deliver enforcement, as well as from consumer and business representatives, and local service providers in England, Wales, Scotland and Northern Ireland, to inform our review. The review will report in the autumn, working alongside the LGA.
The noble Baroness, Lady Hayter, asked supplementary questions about the ADR directive, in particular about when it will fully be in force and how much of the consumer market will be covered. The ADR will be fully implemented on 1 October as a result of these various provisions.
Baroness Neville-Rolfe
I agree with him. The answer is that we do not believe that that is the right approach because there are lots of existing ombudsmen who are experts in their area.
Lord Taylor of Warwick
The problem is that there are several ombudsmen and they all have different procedures.
Baroness Neville-Rolfe
That is a fair point, which we ought to reflect on. We have been impressed by the way that the private sector has responded to the ADR directive. An increasing number of ADR providers are entering the market, which will be good for business and for consumers. That will increase choice and drive down the costs of ADR.
Baroness Hayter of Kentish Town
It will increase choice only for the provider. The consumer will not be able to choose which ADR provider to go to.
Baroness Neville-Rolfe
I thank the noble Baroness for making that point. I will reflect on it and come back to her, and to my noble friend Lord Taylor on the general point on ADR. He made a point about how we can align processes so that it is easier for the consumer, a point that I note.
We have had an interesting and helpful debate. I conclude by commending the two orders to the Committee.