Consumer Rights Bill

Debate between Baroness Crawley and Baroness Hayter of Kentish Town

Wednesday 29th October 2014 Grand Committee

[Baroness Crawley (Lab)]

My Lords, I thank the noble Baroness for her interesting description of going out with local authority officers. I would recommend that experience, as I am sure she would, to all Members of the Committee. Environmental health officers do an extraordinary job, given the scale of the work they are involved in and the scarcity of the resources they have to work with.

The amendments in the names of the noble Lords, Lord Clement-Jones and Lord Stoneham, and the noble Baroness, Lady Bakewell of Hardington Mandeville, are to be welcomed—I think. I am sure they are a sincere attempt to bridge the gap between the Government’s stance on enforcement and the rather more clear-cut and preferable amendment of the noble Lord, Lord Best, which we will discuss in a few moments. However, I am not yet persuaded that these amendments best the amendment of the noble Lord, Lord Best, on the same subject of trading standards officers conducting inspections on business premises. I am sure it was not at all the intention but these amendments might unfortunately bring about increased barriers to enforcement for officers conducting inspections. For me, the jury is still out on these amendments.

[Baroness Hayter of Kentish Town]

I am slightly confused by this. If I am completely honest, among friends and just within these four walls, I think our Lib Dem colleagues would very much like to support the amendment of the noble Lord, Lord Best, but are not allowed to. They do not want to confront the Government, so they are trying to find a weasel way of not quite confronting them while almost writing down exactly the same words but making it very complicated. They are not going the whole way but saying, “Well, in certain circumstances other than those already allowed for in the Bill, the 48 hours would not have to be given; that is, when a trading standards officer shows his or her credentials and they are going to see whether an offence has taken place”.

I am sure that the noble Baroness, Lady Bakewell, knows that trading standards do not go around in policemen’s big boots unless they think some offence is being committed. They do not have the time or inclination—why on earth would they? They always show their bona fides anyway. This basically seems to be saying, “We don’t like what the Government are suggesting but can we find a way of saying that round the back?”. I could be quite wrong—and look forward to being corrected—but I have my suspicions.

Of course, the problem with these amendments is that they have all the disadvantages of the Government’s own clause; that is, the uncertainty. The same people do food as do electricity safety, counterfeit booze or whatever else one is looking for. The amendments would still introduce two systems for when somebody could go in to do an inspection. It leaves all that complication and uncertainty of having to checklist things first but with no added advantage. That seems a convoluted way of saying that they do not like the present clause.

There seem to be two things going on here. First, in moving the amendment, the noble Baroness, Lady Bakewell, said very strongly that she supports unannounced inspections—which is exactly what is said in the amendment of the noble Lord, Lord Best. Secondly, she raised the interesting point about costs in civil courts, which we will come on to. I look forward to her support for that amendment when we get there. My concern about these amendments is not that they would not move a little way towards making life easier but that they are actually a rather weak way of telling the Government, “We don’t like your clause”.

Consumer Rights Bill

Debate between Baroness Crawley and Baroness Hayter of Kentish Town

Wednesday 15th October 2014 Grand Committee

[Baroness Crawley (Lab)]

My Lords, I, too, support the amendment in the name of the noble Baroness, Lady Howe of Idlicote, and, in doing so, refer noble Lords to my consumer interests in the register.

As we know, the alternative dispute resolution directive requires the existence of simple, efficient, fast and low-cost ways of resolving domestic and cross-border consumer complaints—without the need to go to court, as my noble friend Lady Drake just said. It also assists business, as the noble Baroness said. ADR should have expertise; it should be independent; it should be impartial. The process should be transparent, effective, fair and legal. Member states are required, as the noble Baroness, Lady Howe, said, to identify competent authorities to ensure that ADR entities are competent to deliver the directive’s requirements. That process is ongoing.

The important point to keep in front of us today is the need to keep the environment as simple and as accessible as possible for the consumer. Although there is a need for sectoral expertise in transposing the directive, it is also important to have a low number of brands involved and a common front end or entry point, as both noble Baronesses have referred to, for the consumer to access a resolution to their complaint, be it a low-level complaint or a highly complex one.

The amendment in the name of the noble Baroness, Lady Howe, backed as it is by respected consumer bodies, will give consumers the confidence of legislative heft when it comes to this important new aspect of justice for consumers, which has attached to it a date of spring 2015.

Accepting the noble Baroness’s amendment is not gold-plating in any way; it is ensuring that the Government’s implementation of the ADR directive is a feasible process in the first place. I hope that he ramendment is given the serious consideration that it deserves.

[Baroness Hayter of Kentish Town]

My Lords, as has been clearly stated, the proposed new clause addresses what my noble friend Lady Drake says is the extraordinary absence from the Bill of any mention of the EU directive on ADR, the absence of any right to go to independent redress, and indeed the absence of any reference to what has just been mentioned—the competent authority to be set up to approve such schemes according to the EU directive.

The amendment would also add a very welcome missing element from the directive: the right for a consumer to have their complaint heard by such an alternative dispute scheme. Without such a scheme, we wonder what will happen to consumers when they cannot agree on the remedies set out in the Bill. Elsewhere, the Government have said, “They should go to Citizens Advice”, which I hope will be well funded to do all this. However, even if they do so, Citizens Advice cannot adjudicate; nor can it enforce any remedy. As has been said, the only alternative then is for the consumer to go to court for damages, and the reality is that that will not happen. At the moment, legal and financial clients, social housing tenants and patients can all go to an ombudsman; there are statutory ombudsmen for all those. The Government are in due course going to implement the directive, so they agree with us that consumers should have access to ombudsmen across the whole market.

The BIS Select Committee asked the Government why on earth the EU directive had not been included in the Bill. Which? regretted that it was omitted, and the OFT, as it was at the time, asked for the incorporation of the directive into the Bill. Two really quite good things are happening. I know that I am not allowed to say that the Government are doing good things—but they are with the Bill. Some people would not like me to say that the EU was doing good things, but I am happy to say that it is with its directive. So we have two good initiatives coming along, but would you know it? They are being handled in different ways with different legislative processes and on different timing.

It is not as if this is a difficult issue. The British Retail Consortium and the Federation of Small Businesses welcome the alternative dispute approach to dealing with problems, rather than going to court. As Martin Lewis commented when he was giving oral evidence to the Public Bill Committee, unless the Bill and the directive are joined up,

“you are going to have a wonderful Bill that gives people many new rights”—

he went further than I would about the Bill—

“that they are never going to be able to use”,—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 55.]

because they will be without redress. The Government have assured us that the new directive will be implemented by spring. However, we still await their response to the submissions that BIS got to its consultation, which I think finished five months ago. The clock may be slow in this Room today, but it is ticking. We may have no chance to debate BIS’s response to the consultation because it may not be dealt with in primary legislation, which also seems a shame.

Most importantly, the two items are two sides of the same coin, so we hope very much that the noble Baroness the Minister will accept the amendment today. Whether or not the exact words please her we understand, but if she could accept that there should be reference to and embedding of the ADR in the Bill, that would be to the credit of the Government. We will then try to seek credit for it, but we will give it to the noble Baroness, Lady Howe, instead. It would be a wise Government who did this and took the full credit for it.

Consumer Rights Bill

Debate between Baroness Crawley and Baroness Hayter of Kentish Town

Monday 13th October 2014 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, maybe I could just take the opportunity of welcoming everyone back after the summer. In particular, I welcome the noble Baroness, Lady Wilcox, who first announced that the Bill would happen—it is all down to her, perhaps, that we are here. In his absence, I thank the noble Viscount, Lord Younger of Leckie, for having got us through the Second Reading, and I have great pleasure in welcoming the noble Baroness, Lady Neville-Rolfe, in her new and elevated role. As with her predecessors, she has already shown her willingness to meet with us and to understand our point of view, even if either she or those around or above her do not always agree with it. We look forward to working with her as the winter nights draw in.

Amendment 1, which stands in the names of my noble friend Lord Stevenson and myself, is really about what we can do to help small businesses, three quarters of which are one-man bands—or occasionally one-woman bands—be they hairdressers, builders, plumbers, farmers, publicans or web designers. Such small businesses really have very little bargaining power because they are not making large-scale purchases. They do not have any more time or specialist knowledge than any of us as individual consumers have to do any shopping around; they do not have in-house legal advice or a specialist procurement function.

Amendment 1 tries to give such micro-businesses the protections that are being introduced in the Bill. Without the amendment, they will not have the right to refunds, repairs or replacements for faulty goods or products or services simply because they are a business. For example, we might expect a small hairdresser to know what they are doing when they are purchasing shampoo or hair-dryers, but they are not in any stronger position than any other individual consumer when they are getting a window cleaner in or buying a type of floor cleaner or purchasing electricity. Similarly, a small café that happens to offer wi-fi to its customers may be as vulnerable as the rest of us to poor service or being fobbed off by a wi-fi supplier. Similarly, small landlords may let out perhaps only one or two properties but some of those landlords will be classed as business and will not be able to enforce their rights when they are dealing with utility suppliers, or indeed the Post Office or anyone else, that they may deal with as a business.

Along with Citizens Advice and others, we are keen that the protections in the Bill, which we welcome, should be afforded to smaller businesses. We also know, from the work for Consumer Futures on The Experience of Small Businesses as Consumers in Regulated Markets, that such businesses are often dissatisfied with their suppliers and with how their complaints are dealt with. Four in 10 businesses that have complained to their water or gas supplier are unhappy with the way that their complaint is dealt with. About one-third feel similarly in dealing with a telecom service. So we want these very small businesses to be able to have these rights.

It is not that unusual a thing to ask. A number of regulators already treat micro-businesses as consumers. The legal services and financial services ombudsmen will both treat micro-businesses as consumers for their complaint handling. Ofcom extends consumer protection to micro-businesses and requires providers to apply an alternative dispute resolution scheme for dealing with unresolved complaints from domestic and small business customers. The Communications Act 2003 specifies that small businesses should be classified with domestic consumers, as long as they do not employ more than 10 people or trade in the telecom sector. The Federation of Small Businesses has reminded us that small businesses also count as consumers in respect of breaches of competition law, and the FSB can act as a super-complainant in that. Small businesses will also be covered under Clause 80 of this Bill with regard to redress under competition law, where the opt-out provisions will cover small businesses and the FSB can be a party to that. So what we are asking is not that unusual.

I know that the Government do not accept this amendment, allegedly because it is not what business wants. In the other place there were quotes from the 2008 and 2012 consultations giving the views of the British Retail Consortium and the CBI, but of course they mostly represent big businesses that maybe do not want their micro-business customers to have these rights. Rather as micro-businesses cannot spend time researching tariff options, I am afraid they also do not have time to respond to government consultations, so the responses may be rather more from big business than from small businesses. The most important point is probably that the Federation of Small Businesses is the voice of micro-businesses, and it supports the appropriate widening of the definition of “consumer” to encompass micro-businesses so that they can benefit from similar protections as consumers when they are buying goods and services that are not related to their core commercial activity. Again, it understands that hairdressers should know about hair-dryers but not about other products.

I know that the Government have said, “Well, these businesses are already covered by the Sale of Goods Act, which says that goods must be of satisfactory quality and fit for purpose”—so, if a greengrocer buys a kettle, they would be covered under that Act. However, when this Bill is quite rightly aiming for clarity, it seems to be a bit of a nonsense, both for retailers and for everyone else, if two different bits of legislation are relied on when someone goes to buy a kettle from a shop.

The Government have also said in the other place that our amendment would undermine the clarity that the Bill seeks to achieve, as the consumer rights directive uses a common definition of “consumer” and there would be a difference if our amendment were accepted. However, our amendment would not change the definition of “consumer”; it would simply apply the Bill’s provisions to micro-businesses. It should perhaps be noted that the EU directive certainly would not make it difficult because regulations in Germany, Austria, France and Sweden have all included small businesses as consumers within their domestic legislation.

In its pre-legislative scrutiny, the Commons Select Committee recommended that the Government consider the case for small businesses to be treated as consumers. The then Minister in the Commons said that her department was happy to commit to actively considering the treatment of smaller businesses when developing consumer law in future. It is a wasted opportunity not to do that now. At the very least, therefore, perhaps the Government would be wise to build in an enabling power to extend the Bill to micro-businesses so that, should they conclude at some time in future that this is a sensible way to promote small businesses, which I know they are committed to doing, then an order could make that happen. I beg to move.

[Baroness Crawley (Lab)]

My Lords, I simply wish to add my support to my noble friend’s amendment. We know that there are more than 4 million small businesses in the UK today. I am sure that we would all agree that they are the lifeblood of the economy. They account for well over 90% of all enterprises and employ up to 14 million people. We know that we live in very difficult economic times; that is the case for millions of our fellow country men and women. We also know that the vast majority of people who move from unemployment into employment go through the private sector and the small business sector.

This amendment put forward by my noble friend gives us an opportunity to assist those smallest micro-businesses in these difficult times to avail themselves of all the rights and protections that are, rightly, in the Bill. Such a move on the part of government, should it look sympathetically on this amendment, would help to sustain small businesses, as my noble friend put it, through the often complex minefield of business-to-business relationships, where the micro-business is very much the junior player and is often open to manipulation and resource-draining tactics by more powerful players.

When it comes to negotiating business contracts, the Federation of Small Businesses has identified four areas that add up to real detriment for those businesses. It talks about a “lack of expertise” in purchasing policy, high opportunity costs of time spent making those purchasing decisions, low benefits, and little bargaining power, which I have attempted to outline.

As my noble friend said, small businesses are already treated as consumers in many parts of the European Union and in many of the regulatory areas in our own country. I simply quote the complaints handling process for the legal services and financial ombudsman—and my noble friend quoted many more areas. Therefore the Minister—whom I, too, welcome to her new post—would not be going where angels fear to tread if she was to look sympathetically on this amendment.