Consumer Rights Bill
Debate between Baroness Drake and Baroness Hayter of Kentish Town
Baroness Drake (Lab)
My Lords, in moving Amendment 63AB I shall also speak to Amendment 63AC. The Government seek to ensure that markets function well by increasing the range of measures available to enforcers under the civil law enforcement regime, which is an initiative to be welcomed. Of course, good business needs safeguards as to how these powers will be used, and Schedule 7 sets out the conditions that enforcement bodies have to meet. However, if those safeguards are so extensive that they act as a deterrent to private enforcement bodies to use the enhanced enforcement measures, much of the value of the new powers will be lost.
Subsections (9) and (10) of proposed new Section 219C, which my amendment would delete, in Schedule 7, set a requirement that a private enforcement body, taking enforcement action, must act consistently with any advice or guidance that the relevant trading standards primary authority has given. Of course private enforcers should consult public enforcement bodies and take into account their views—that is not disputed—but in practice the unintended consequences of proposed new subsections (9) and (10) could mean that a private enforcer would be prevented or deterred from taking civil action that is inconsistent with advice that had been received by the defendant company from its primary authority. This greatly increases the risks involved in taking civil action, particularly on exposure to costs, and makes it much less likely that private enforcers will use the enhanced consumer measures.
If the defendant can satisfy the court that the private enforcer is acting inconsistently with primary authority guidance, the enforcer will automatically lose the action and be liable to pay the defendant’s legal costs. It will be simply irrelevant that the action would otherwise be correct as a matter of law and/or have considerable merit. This exposure to costs in these circumstances will act as a deterrent. No doubt the Government will argue that private enforcers can mitigate that risk by consulting the primary authority in advance of any action. However, that is easier said than done. For example, the primary authority may not have accurate records of all the advice and guidance that it has provided. It may be formal advice, written, oral, or the records may not be reliable. This may be particularly true in respect of any so-called informal assistance or oral advice. When the primary authority has changed, when a company switches authorities or when a company merges or is acquired, the relevant records may be confusing, imprecise or not readily identify all relevant guidance. The private enforcer may proceed in good faith on the basis that there is no advice, but if then later during proceedings information about advice comes to light, the case may be thrown out, whatever its merits, and costs awarded.
The claim may not align precisely with the scope of the subject matter covered by the advice from the primary authority. That may lead to legal arguments as to whether the private enforcer’s case is inconsistent with the authority’s guidance or whether it is elaborating on that guidance, thereby making its action permissible under Schedule 7. Win or lose, the private enforcer’s costs will go up. The court may give a very broad interpretation to the advice that a defendant company receives from the primary authority. This may be particularly so if the records of the authority are imprecise or inadequate. In such a situation, the private enforcer would lose the action and be exposed to costs, even if its arguments on consumer detriment had considerable merit. If a private enforcer seeks to identify such potential inconsistencies in pre-action discussions, the uncertainties created by the proposed safeguard as drafted may still deter it and inhibit effective consumer protection, which these extended civil powers were intended to provide.
If private enforcers are prevented or deterred from taking action that is seen as inconsistent with the advice given to a defendant company by its primary authority, this places a huge burden on that authority to get its advice, and the record of its advice, right. Why? Because it creates what I term a double lock: locking private enforcers out of taking action against the company but locking them into the advice already given. Yet the primary authority may not fully appreciate the implications of a company’s commercial practice over time, and it may not be apparent how a trading standards official could have reasonably reached the view that informed the guidance given to a company. Given that companies can take comfort from and rely heavily on assurances received from trading standards, and given the absolute protection afforded companies by the proposed safeguard, they would have a very strong incentive to argue for the broadest application of any primary authority guidance in their favour, so ensuring that the primary authority advice acts as a deterrent to the private enforcers actually using their civil powers. In her reply, could the Minister explain a little more about how the trading standards bodies will operate in the new civil enforcement regime, particularly given my understanding that the primary authority will be largely focused on criminal activity?
I believe that the safeguards in proposed new Section 219C(9) and (10) are unnecessary. Under the Enterprise Act 2002, private enforcers are already required to consult the Competition and Markets Authority before taking enforcement action, to ensure that their proposed action is neither duplicative nor detrimental to action being taken by others. Furthermore, if the Regulators’ Code is applicable to private enforcement bodies, as is intended under the Bill, any enforcement policy that a private enforcer develops under the code will include a requirement for it to consult other enforcement bodies—most notably the relevant primary authority—prior to taking enforcement action. This amendment would not prevent a private enforcer’s action from failing if the court is persuaded that it is inconsistent with previous advice from trading standards, but it would remove an automatic ruling against the private enforcer on such grounds and the exposure to consequential costs.
As drafted, proposed new subsections (9) and (10) pose a real risk that private enforcement bodies will be deterred from using the extended range of civil measures available to them because of the level of exposure to the risk of costs that the drafting of the schedule on safeguards gives rise to. My amendments on private enforcers, and that of the noble Lord, Lord Best, on public enforcers, raise real issues as to whether these civil enforcement powers are usable, or will indeed be used in practice, because of the way in which they will operate. Given the long lead-in to these civil enforcement powers being implemented, it would be helpful if the Minister, in her reply, could elaborate on the timetable for extending these powers to both public and private enforcers.
Amendment 63AB is a probing amendment to try to clarify how appropriately the Regulators’ Code will be applied to private enforcement bodies. Schedule 7 would make any use of the enhanced consumer measures by a private enforcer a relevant regulatory activity covered by the code. I understand that any regulator or enforcer needs to have an enforcement policy governing its enforcement activities, and that policy must adhere to the principles of the code. However, I am also aware that under the Legislative and Regulatory Reform Act 2006, the duties on any person exercising a relevant function are pretty extensive.
The code was introduced to govern the relationship between business and full-time regulators. It will now apply to private enforcers such as Which?—for whom the majority of its activity is not of a regulated nature, but rather involves campaigning, researching, and all the other things that we are all aware that it does. The issue here is that there is a rationale for the application of the code as regards the exercise of a private enforcer’s statutory functions, but it would not be at all desirable if the application of that code was then extended to enable the wider activities of the private enforcer to be challenged. To use Which? again as an example, if it were to name a poor-performing company in its magazine research, how could the Government give reassurances that this Bill will not allow the code to be used to challenge the publication of the findings of such research?
The language of the code is not always appropriate for private enforcers, and some duties are not limited to regulatory activity—for example, the general duty to support economic growth. I cannot believe that the Government are arguing that one can give a private consumer campaigning body a general duty to support economic growth. If one did, how would one interpret it? If a private enforcer took action against a company, the consequence of which was to reduce the company’s business, would it have failed in its duty or would it have supported economic growth because it had contributed to securing more functional markets? It would be helpful if the Minister could give assurances on how the code will apply in practice to private enforcement bodies.
Baroness Hayter of Kentish Town (Lab)
My Lords, Amendment 63B in this group is in the name of the noble Lord, Lord Best, and of myself, and I will speak mostly to that amendment.
Amendment 63B is key to the implementation of many of the powers that we much welcome in the Bill. The problem is that without this amendment, trading standards will think twice—or three or four times—before using the Government’s suggested route of taking civil rather than criminal action following infringements. At present, where criminal action is taken—which of course does not allow for redress for consumers—trading standards does not risk having to pay defence costs. However, should it use the new civil enforcement measures, which we welcome, it would then risk expensive legal costs, which will automatically make local authorities very risk averse. Indeed, a large case could cost as much as £250,000, which is a massive chunk of the annual budget of many local authorities’ trading standards services.
Trading standards, of course, have always had the option of injunctions, but that only puts an end to whatever sharp practice was going on—it neither penalises the trader nor compensates the customer. We therefore support the advances in the Bill, because they take that further. However, without this amendment, we fear that the risk of cost—as it would be a civil action—will undermine the new, enhanced measures in the Bill. If the Government prefer these to the criminal route, which is what we understand, they will have to reduce the disincentive which this threat of civil costs poses.
We realise that it is possible to apply to the courts for a protective costs order to limit the exposure if the case has been brought forward by a trading standards officer in the public interest. However, that is a pretty rarefied procedure, and it is much more likely that, in those circumstances, the case will be taken through the criminal courts—of course at considerable expense to the taxpayer—or else it may not be pursued at all.
Which? has strongly supported Amendment 63B, as has the Trading Standards Institute. I know that Which? wrote to the Minister in August—I think that it was to the Minister in this House but it could have been to the Minister in the other place—saying that the Bill should be amended to limit significantly the risk that enforcers taking action under Part 8 of the Enterprise Act 2002 would be liable for the defendant’s legal costs in the event that the action was unsuccessful. It is felt by them and by us that they should be liable only where the enforcer has acted unreasonably. Therefore, Which? feels that this amendment will be key to ensuring that the enhanced consumer measures are used in the way that the Bill intends. It is particularly important for trading standards, which will have to get a lot of sign-off from many committees before it takes civil action, and those requirements will be much higher with that risk of paying the defendant company’s costs, which has not been before it when it has taken criminal action.
Consumer Rights Bill
Debate between Baroness Drake and Baroness Hayter of Kentish Town(10 years, 1 month ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Hayter of Kentish Town (Lab)
My Lords, in moving Amendment 55A, which is in the name of my noble friend Lord Stevenson and myself, I shall also speak to Amendments 56FA and 56FB in this group.
Clause 62(2) states:
“An unfair consumer notice is not binding on the consumer”.
We concur with that, but we are concerned that the consumer notice should clearly include any promotions that are designed specifically to catch the shopper’s eye. We are also clear that in assessing whether something is unfair, the CMA should be able to include some elements of price where those have been hidden from plain sight—that is, if the consumers do not appreciate their significance at the point of purchase.
To some extent this amendment and those in the next group are part of our attempt to ensure that consumers should not fall victim to hidden traps in the traded standard terms and conditions, and that while some core terms and some charges are immune from any fairness assessment, that should not be the case where such terms or charges may influence behaviour or where they are not fully understood at the point of sale. The Unfair Terms in Consumer Contracts Regulations put the terms into two categories: those that a consumer will or can be expected to properly take into account when deciding to enter the contract; and those that he or she will not or cannot. It is the latter that can be assessed for fairness.
The Consumer Rights Bill narrows the scope of the price exemption following the somewhat unwelcome 2010 Supreme Court decision on bank charges, but still assumes that the consumer will behave like a rational economic person and take account of all prominent information. However, behavioural studies tell us that people are often far more influenced by presentation than by the information itself, or put more emphasis on salient rather than actually useful information. As such, even when a price or term is disclosed, consumers do not always factor that into their purchasing decision. They also tend to overvalue a benefit received now and underestimate the impact of deferred costs, which leads to an excessive willingness to pay at the point of purchase while underestimating the future use of the product, which may lead to future costs. Earlier in Committee we talked about a future fee, which a shopper may not consider relevant to them as they do not appreciate the likelihood of it affecting them.
Similarly, we know that consumers are influenced in their buying choices by a wide range of factors, which is what Amendment 55A seeks to cover. Indeed, it is interesting to note that one of the leading university departments specialising in behavioural economics—how consumers actually make decisions—the University of Warwick Business School, wrote to the Minister in the Commons on 7 October, saying that,
“simply providing consumers with information about a charge does not absolve the seller from the responsibility for ensuring the charge is fair and reasonable”.
The business school therefore asked that terms that are effectively “hidden in plain sight” should be assessable for fairness, but its wise words pertain also to other issues that might have been included in information put to shoppers with exactly the aim of tempting them into the purchase.
One example of this, which we know influences behaviour, is the choice of price times; in other words, when you find out about them. Research done in 2010 by the OFT shows that consumers make more mistakes and poorer purchasing decisions under what is known as “drip-pricing”, a form of partitioned pricing, where consumers see only part of the full price upfront and price increments then drip through the buying process. This can cause the most consumer detriment.
We all tell stories in this Committee. I was on the point of buying a walking jacket the other day because it was reduced to only £15. But as you get into it, you choose the colour, the size and whether or not you want a hood, and then you get insurance added on. The jacket was only £15 but the postage and packing was 1p short of £4. That is a very large amount to add on to the price but by that stage you have chosen the size, you have chosen the colour—it is a very clever way of selling. However, drip-pricing has a very negative effect on behaviour because we start our purchasing process before we see the whole price. Other offers, such as “take home today”, “easy to assemble”—I have fallen for that one—and “money-back guarantee”, are the ones that influence the buying process. We are not saying that they should be outlawed but they should be looked at for fairness.
Amendments 56FA and 56FB would amend the terms that cannot be assessed for fairness and replace them with,
“only where the price payable does not relate to future variable fees”.
Normally, price is absolutely not assessable for fairness, because it is assumed to be clear to the purchaser. It is up to them to decide whether to accept it and then it is part of the contract. However, future and unknown prices within a contract need to be assessable for fairness, as the consumer is not in a position to judge them and evaluate their worth at the point of purchase. I beg to move.
Baroness Drake (Lab)
My Lords, I support Amendments 56FA and 56FB. These amendments are not about extending consumer rights, so that more contract terms can be deemed unfair; they are about enabling more matters to be assessed for fairness. The problem arises because of the interplay of two provisions. The court may assess a contract term for unfairness unless it falls into a certain exempt category; and core terms in a contract are exempt from assessment for fairness by the courts if they are prominent and transparent.
Through this Bill the Government are clearly seeking to address the problem thrown up by the 2009 Supreme Court decision in the case of the OFT v Abbey National that held, as my noble friend has said, that charges for unauthorised overdrafts were exempt for assessment for fairness. This gave rise to uncertainty about whether ancillary charges could be assessed for unfairness. To use the Government’s own words, this created a situation whereby:
“Some protection in law is necessary because consumers often cannot, or do not wish to, investigate the detail of every contract term before they sign up to an agreement”.
This Bill provides for the “prominence” test for core terms in a contract to be exempt from assessment for fairness by the courts, but this raises other concerns. Prominence is very important and welcome, but its efficiency in providing a remedy both for unfairness and for a weak and ineffective market depends on how the consumer’s attention is drawn to a term and their understanding of its significance. As the OFT commented:
“Transparency alone cannot turn a substantially unfair term into a fair one”.
As the BIS Select Committee commented, bringing something to the consumer’s attention is not the same as a consumer appreciating its significance.
Prominence should not be operationalised in a way that gives too great a protection to traders in exempting contract terms for assessment for unfairness and too weak a defence to the behavioural bias that consumers demonstrate, so unfairly restricting their access to the courts for assessing the fairness of the term of a contract.
These amendments are clearly seeking to mitigate that risk by limiting the wide range of price terms that are immune from a fairness assessment. Consumer markets and products are becoming more complex, increasing the risk that consumers do not understand the significance of certain information. We have behavioural bias. We have asymmetries of knowledge and understanding between the trader and consumer that can actually create incentives for the trader to frame information in certain ways—a problem which the noble Lord, Lord Taverne, illustrated has not been remedied in 400 years.
The Bill may narrow the scope of the price exemption following the Supreme Court’s decision, but it does so on the assumption that consumers will take into account all information that is provided prominently. However, we know that that is so very often not the case. Consumer behavioural bias is very powerful. If the most important goal is buying a house or a holiday, people will focus less on the detail of the associated insurance policies. The closer that the consumer gets to signing something, the less likely they are to walk away or assimilate the detail. As my noble friend Lady Hayter has spelled out, the behavioural biases that consumers exhibit are very significant. At risk of repetition, I shall restate some of them. People are more influenced by presentation than the information. They overvalue a benefit that is received now. They underestimate the impact of any deferred cost. They underestimate future use. They are prone to optimism bias. Volume information means that they reach saturation point. Excessive or complex product information can freeze their decision-making. That is probably one-fifth of the list that one could enunciate if one was going through a study of the literature.
The one thing that behavioural science shows us is that if consumers are not factoring certain prices into their decision, those prices will not be subject to competitive forces, so the markets cannot work effectively. In effect, the Government will not secure the functioning markets they are quite rightly so keen to secure unless there is some limit on the wide range of price terms which are now immune or could be immune to fairness assessment.
By way of illustration, perhaps I may refer to the letter dated 27 October from the noble Baroness, Lady Neville-Rolfe, to my noble friend Lady Hayter on mortgage contracts. To me, the contents raise more concerns than they settle. On the issue of “mortgage prisoners”, the letter makes a reference to the FCA’s concerns that some firms do not seem to be applying its transitional arrangements in the spirit in which they were intended. That is very politely and gently stated, but it is quite clearly yet another example of the failure of rule compliance and is hardly an expression of confidence that Clause 64 of the Bill will work effectively. In her letter the noble Baroness also refers to a number of things that the FCA is doing to address the concerns raised by my noble friend, but of course these apply to regulated products. They cannot deal with unregulated products, which include the Bank of Ireland example cited by my noble friend. For these unregulated products we must rely on the unfair contract terms, the problems with which my noble friend and I have, I hope, gone through in some detail.
Other non-financial sectors will exhibit similar problems with unregulated products, especially where switching is difficult because of the length of the contract wrapped around the product. Examples of these would be products bought in the ICT and telecoms sectors or longer term courses in higher education. When one takes into account the extent of the behavioural bias which consumers bring to the market and how that creates incentives for traders to frame information, the fact is that if consumers are not factoring these prices into their decisions, it means that competition and functioning markets cannot be operating. There really is a compelling case for amendments that would constrain terms that are not assessable for unfairness.
Consumer Rights Bill
Debate between Baroness Drake and Baroness Hayter of Kentish Town(10 years, 1 month ago)
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Baroness Hayter of Kentish Town
I was just checking that the Chair is awake. I rise to move Amendment 46A in my name and that of my noble friend, Lord Stevenson. We have given him the day off today, so I fear that you are going to hear rather a lot of my voice.
Amendment 46A is, of course, of central importance to users of services, as it would ensure that they have access to the remedies laid out in the Bill, should a service fail to deliver on the promised or anticipated outcome. The amendment would bring the regime for services into line with that for goods and digital content. That is important for the clarity of the Bill, but it would also ensure that the Bill lives up to what customers expect, which is that a service should do what it is supposed to do, rather than being measured simply on whether the service provider used “reasonable care and skill”.
The amendment would also do what the BIS Select Committee in another place recommended, which is that the Bill should apply an outcomes-based standard to how we measure services. Thus, whether a service has been satisfactorily delivered should be measured against what it was meant to do, not the attributes of the provider.
We might note that the Solicitors Regulation Authority has moved to outcomes-based regulation. It places the emphasis not simply on compliance with rules, but on achieving the required outcome for clients. Many of the excuses given for the Bill not adopting this outcomes-based standard have cited lawyers, but they are the very people who have accepted that standard. Given that we have these very welcome statutory remedies in the Bill for substandard services, we fear that they will not properly protect consumers if they only test whether the trader exercised reasonable care and skill, with no consideration of the outcome.
Let us take the example of a householder getting their windows cleaned. Were the windows cleaned properly? No, but the company said it used reasonable care and skill, so the customer may have no remedy for the late arrival of the window-cleaner, one window overlooked or a few smears left on the door. They would have no chance of a price reduction, or even a rewash, as the firm used skilled window-cleaners who said that they took reasonable care.
With many services, particularly those provided by the professions, it would be difficult, if not impossible, for a client to prove that the service had not been performed with reasonable care and skill, even when it is very obvious that the result is unsatisfactory. Furthermore, I understand that there is no general definition of “reasonable care and skill”, so we will have to await case law in due course to set out what will be taken into consideration when judging whether a service has met the required standard. It will be hard for the consumer to know, therefore, whether they have the right to a remedy if they are not satisfied with a job. By contrast, a professional trader or service provider is far more likely to know, and therefore be able to advise in advance, what outcome can be anticipated. It is, after all, the outcome that matters to the customer.
The organisation Which? told us that the majority of complaints it sees are about services, particularly about broadband, mobile phones and energy. Its research showed that consumers do not feel well protected when they are buying services and they are not confident that they will be treated fairly. Indeed, one-third of the consumers who failed to complain even when unsatisfied did not bother to do so because they simply did not believe that anything would be done. They have no knowledge of how a satisfactory service is to be measured at the moment, nor would they under the Bill.
Amendment 46A would also address the problem that, without it, the Bill sets two different standards for goods and services—that goods must be “of satisfactory quality” whereas services need be delivered only with “reasonable care and skill”. Perhaps we can revert to a discussion that we had earlier in Committee of the sort of transactions in which both those elements are involved. For example, our kitchen is purchased as a good, but its installation is a service. Surely, it would be to the advantage of both the consumer and the trader if the definition of what is satisfactory was the same for both. Also earlier in Committee we discussed botched plumbing and the problems of divvying up the elements of the contract. That would be made even worse if different standards applied to the different parts of the final service. So, just as we may not know whether the flooding of the kitchen has been caused by a faulty sink or by poor installation, it will be even harder if the test on the reasonable outcome, if there was a leak, is different for the two elements of goods and service.
In another place, the Government claimed that Clause 50 requires traders to comply with any information that they have given before the contract started and that, therefore, the concept of outcome is embedded in the legislation. However, that contract may well not specify outcomes in the terms of, “Well, we’ll install a bath and taps such that water flows into the bath rather than down the side of the bath and on to the floor”. No consumer is going to check whether the pre-work contract specifies such expectations, which they rather take for granted. They may read very carefully, for example, whether the old bath is to be taken away, but they will hardly check that the plumbing and the electrics will work and that the place will be left clean and tidy afterwards. Yet these are reasonable expectations to have of a service.
Amendment 46A places the consumer’s experience of the service—that is, its outcome—as a part of the definition of satisfaction rather than its simply being a matter of the provider’s claim to have used skill and care. I beg to move.
Baroness Drake (Lab)
My Lords, I support Amendment 46A, which covers a matter that I raised in Second Reading. The Government’s reasoning in strengthening consumer law through this Bill is that empowered consumers will make markets work more effectively and drive economic growth. However, I fear that the failure in this Bill to align the statutory rights of the consumer as between the sale of goods and the sale of services will weaken the protection of the consumer and result in less efficient markets in the provision of services.
As we know, goods supplied must be “of satisfactory quality” whereas services have to meet only a requirement of being provided with “reasonable care and skill”. In effect, the standard for services is based on fault rather than on satisfactory quality, as my noble friend Lady Hayter said, which is an outcome measure. It may prove more difficult for consumers to prove that a service has not been provided with reasonable care and skill because the focus is on the way in which the service was carried out rather than the quality of the end product. So there will still be many circumstances in which the consumer has not received what they paid for but will not be entitled to a remedy because the trader has exercised “reasonable care and skill”, because that measure focuses on compliance rather than on outcomes. That is a two-tiered standard of approach to consumer protection, and this amendment goes some way towards trying to address that problem.
In certain sectors and markets, the asymmetry of knowledge and understanding between trader and consumer is extensive—we know that. It should be remembered that the scale number of complaints come from consumers in sectors such as energy, broadband, mobile phones and—a sector close to my heart—financial services. Furthermore, the challenge of inertia and consumer behavioural bias, with which we are all familiar, can be used quite systematically by some service providers to deliver a poorer service or sustain profitable inefficiencies. That strengthens the need for consumer protection. However, I feel that in this Bill there is a lost opportunity by constraining to “reasonable care and skill” the statutory standard in respect of the provision of services.
Baroness Hayter of Kentish Town
Before the Deputy Chairman arrived, I warned the Committee that it was going to hear an awful lot of my voice today. I have apologised to the rest but maybe I could extend that apology.
Amendment 49B, which is also in the name of my noble friend Lord Stevenson, would ensure that consumers pay only,
“a reasonable price for the service, and no more”,
where the contract does not expressly fix a price,
“for all elements of the service”,
and where consumers subsequently find themselves facing “ongoing costs and charges”. The original clause covers situations such as those where you engage a plumber at short notice, without agreeing a price. It is intended to stop him charging £10,000, or whatever, for a 10-minute job. Our amendment would broaden the idea of a reasonable price to include later prices, when you are already tied into the contract.
I am not going to go to see Paul Simon—I forget what else is happening—but my noble friend Lord Stevenson, who is not in his place, has just flown by Ryanair, which gives me the example I want to give. Ryanair charges customers £20 for each boarding pass printed at the airport. However, if a particular customer, who will be nameless, buys a ticket—often several tickets—he believes that he has accounted for everything. He has paid for the extra luggage and for rapid boarding—I do not know what else one can pay for—then he goes off to have his holiday. He arrives at his holiday accommodation and discovers that there is no access to a printer in the hotel, so he cannot print the return boarding pass to be able to come back home. We think that the boarding card is an intrinsic part of the service and the contract—you cannot get on the flight without one—yet Ryanair exploits the position. Customers must have it and are charged what we would say is an unreasonable fee: it is about £20, so £100 for a family of five. I do not know how many children my noble friend, who went through this, has. He may have many children: it may have been £1,000. However, this is a cost that would not have been anticipated for 30 seconds’ work and a few pieces of paper. It is part of the contract, yet suddenly one has to pay it.
A longer-term issue is where consumers buy financial products and do not have clarity on what they are being charged for the longer-term administration. Sometimes their pension or annuity provider is eating up most of their savings. It is essential that the consumer should know about future costs and be able to decide whether it is a fair price. They need to know what they are paying for, not so much for Ryanair, but especially for services where customers will be for a very long time.
If I read it correctly, the Minister in the Commons agreed with this basic point, but felt that it would be covered by the Consumer Contract Regulations. However, as we have recently heard, they do not seem to have done the job. They make it clear that traders must disclose all costs, which the Government seem to think means unavoidable future costs that the trader could reasonably foresee before the consumer enters the contract. However, as one of the aims of the Bill is to provide consumers and traders with greater clarity on their rights and obligations—preferably all in one place—I urge the Minister to take the opportunity to make those rights clearer by accepting this very small amendment. I beg to move.
Baroness Drake
My Lords, I support Amendment 49B. Information and transparency, although not sufficient, are essential ingredients for empowering consumers. Providing good-quality, transparent and clear information to consumers enables them to make good choices and therefore make markets more efficient. This is particularly so, as my noble friend Lady Hayter has pointed out, with services contracts that do not expressly fix a price, where there are many elements to the service provided and where the contract is ongoing over an extended period with ongoing charges being incurred.
The consumer needs the necessary information to enable them to assess whether they are being charged a fair or reasonable price for a particular service, particularly given the issue of ongoing fees and charges. We all know that consumers can suffer from information overload and behavioural bias. Differences of knowledge and understanding between the consumer and trader can be commonplace. This gives rise to particular though not exclusive requirements—that clear information should be provided for all elements of the service contract and over time for ongoing costs and charges and that the prices for all those elements must be reasonable. This amendment would lock in all elements of the service provided into the reasonable price requirement.
Welfare Reform Bill
Debate between Baroness Drake and Baroness Hayter of Kentish Town(13 years, 1 month ago)
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Baroness Hayter of Kentish Town
You are not allowed to demonstrate things in the House, but I now have to tear up my speech. I have never been so pleased to do so, I have to say. We should thank the Minister both for what he said and for coming in so early to make those comments. I really am going to tear it up and only add two things. One is to reconfirm what has been said. What he is looking at is undoubtedly in the best interests of the children and of the state, because it is a good investment for the future. As the Minister recognised, we are often talking about older children—I think that children over 12 make up a higher proportion of those in kinship care than those in the wider population, so perhaps we are talking about a different group here.
The only other thing I will add is that he talked about discussing this with others. My noble friend Lady Drake spoke about talking to BIS—an elegant name—about the rights-at-work issue. However, the DWP policy on kinship care is a bit out of kilter with that of the Department for Education, with the latter promoting family-and-friends care as a first option for children needing alternative care. It would therefore be useful—I am sure that the Minister has it already in mind—to talk to the DfE about these proposals. Given the involvement of local authority social work staff, who are often the brokers in setting up an arrangement that can lead to a child being taken into care, tying them in as well would be useful. Therefore, it means including the DCLG as well as the other departments to get a joined-up approach to this.
I think that the Minister used the word “clarity”. Whether kinship carers know the situation before they take the momentous decision to take in a child will be key. That probably means statutory provision rather than just guidance, to give that security to someone taking on what is often a lifetime commitment. As all noble Lords who are parents know, children do not even grow up at 18. Even 30 year-olds have not grown up. It is a lifetime commitment. We very much welcome the comments that have been made.
Baroness Drake
First, I will respond to the comments made by the Minister. I fully recognise that he has shown a real interest in this community of family-and-friend carers; and that his interest was shown before any prompting by this amendment. It seeks to ensure that his resolve stays firm and to push him firmly into including something in the Bill to address this community. I welcome his positive response this evening.
Guidance does not do it; it will not be acceptable. It may be imposed, but that is not where I, or those who are interested in this issue, want to be. Nor do we want case-by-case consideration. It does not give the clarity of treatment, the confidence, or the protection that this community should have when they take on children. I agree with my noble friend Lady Lister that if something firm could come from the Government on this before the Bill leaves the House, it would be warmly welcomed. I wish to push the Minister, between now and the appropriate stage of the Bill, to reflect on something firm that could be placed on the record.
In response to my noble friend Lady Sherlock’s point, I must be honest and say that in drafting the amendment I was conscious of balancing the needs of a community with people’s concerns about more informal arrangements for the care of the child. This amendment specifically addresses a community of carers where there is a legal order.
My noble friend is right that, particularly if parents are, for instance, taken to prison, there could be an immediate effect of children needing to be looked after, even if subsequently there is a legal process to follow. Perhaps the Minister could reflect on the weakness of my amendment, which I will address at a later stage.