Consumer Rights Bill

Baroness Neville-Rolfe Excerpts

Wednesday 15th October 2014 Grand Committee

[Baroness Oppenheim-Barnes (Con)]

Could I just highlight one of the main points? The noble Baroness mentioned the AER. One of the directives that she has mentioned as dealing with the way in which payday loan information is given by the providers is that it is still given in the old form, with the AER only, with no written amount. The noble Baroness might recall that we had an amendment to the Financial Services Act, during which we were told that the Government at that time—this is some time ago—were busily discussing that directive and would be wanting to implement it as soon as possible. It seems to me that the request from the EU about AER was a very small, perfectly justified and overdue one, and it is particularly disappointing if the Bill becomes law before that amendment has been made by the Government.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)]

My Lords, I thank the noble Baroness, Lady Howe, for raising this very important issue. Her interest and expertise in consumer problems was demonstrated at Second Reading, which I missed, so it is very good to have her engaged on this important subject. The noble Baroness, Lady Drake, also rightly underlined the value and importance of ADR and of ombudsmen and ombudswomen.

I want to make it clear that the Government are very supportive of alternative dispute resolution, which provides a more accessible route than the courts for consumers to obtain redress. Accessibility was a point well made and emphasised by the noble Baroness, Lady Crawley, and, as the noble Baroness, Lady Howe, said, it is also good for business. The noble Baroness, Lady Hayter, described the advantage of wider ADR and talked—rightly, I think—of the benefits of both this Bill and the ADR directive, so I thank her for that.

Before I address the specific amendment, I shall take a moment to reflect on what the Bill seeks to achieve. The Consumer Rights Bill sets out a simple and modern framework of consumer rights and, where appropriate, enhances measures to protect consumers. Clearer rights and remedies mean that both consumers and businesses will be better equipped to resolve any issues at an early stage. Having said that, we recognise that there will be occasions when problems arise that cannot be so easily resolved between the parties. In these instances, access to alternative dispute resolution can prove invaluable.

I am glad to say that the Government will be strengthening the framework for alternative dispute resolution when it implements the European directive on ADR in July 2015, to which I think all the noble Baronesses referred. Currently there are well established mandatory ADR schemes in sectors with a high risk of consumer detriment. It is worth remembering that. One example is financial services, and I was interested to read that the largest ADR provider in Europe is the UK’s financial ombudsman, and that last year it resolved 500,000 cases. Another example is energy, but in other sectors access to ADR is limited. The directive requires us to address these gaps and ensure that ADR is widely available.

We recently undertook a consultation exercise, which has been referred to, on the best way to implement the ADR directive. Stakeholders were asked for their views on the issues covered in this amendment, and we addressed several other issues in our consultation. We proposed that the compulsory use of ADR should continue to be targeted at sectors where consumers most need it. We said that our preferred option was not to gold-plate the directive by introducing a blanket compulsory requirement for all businesses to use ADR; that would come at significant cost to businesses, which pay for the provision of ADR through a mixture of annual fees and case fees. However, we expect the directive’s requirement for businesses to inform consumers with complaints about ADR and to encourage much greater participation in ADR schemes. We will very shortly be publishing our consultation response document, which will outline the Government’s proposals for implementing the ADR directive and improving and simplifying access to redress for consumers, a point raised by the noble Baroness, Lady Crawley.

[Baroness Hayter of Kentish Town]

Can the noble Baroness tell us when the consultation will be published?

[Baroness Neville-Rolfe]

All I can say is that the consultation will be published shortly. I confirmed that the implementation date for the directive is 2015. The noble Baroness anticipates what I was going to say at the end, which I will say now. I assure your Lordships that our implementation plans for the Bill, which we discussed on Monday, will also advise businesses of their forthcoming responsibilities under the ADR regulations. Similarly, information to consumers will be available in one place—to meet the point that we will be joined up.

If I may elaborate, our response will explain how we intend to make ADR widely available and accessible for consumer disputes and our plans for competent authorities to monitor the provision of ADR. I hope that noble Lords will understand that I cannot set out the full detail of the Government’s response before publication. We consulted on whether a consumer complaint helpdesk would be useful to help consumers and business to access ADR, which was a point made by the noble Baroness, Lady Drake.

We will publish our intentions in our consultation response document. Once we have published our response, we will work with partner bodies to prepare for implementation. We will then publish draft regulations to transpose the ADR directive by spring 2015.

I would not want to affect the ongoing work to implement the ADR directive in regulations by amending the Bill. The noble Baroness, Lady Howe, said that her amendments would achieve consistency and simplification. However, the ADR directive contains many provisions, several of which are linked. That is why we feel that it is far better and more straightforward for businesses to implement the ADR directive in one package. Our consultation response document will set out our plans for doing so. We certainly want to avoid any unhelpful confusion that could be caused by implementing the directive partly through the Bill and partly through regulation.

The noble Baroness, Lady Drake, raised an important point about the need for the implementation of the ADR directive to complement consumer rights. I am glad to say that the changes that we will make to implement the ADR directive will complement the reforms in the Bill and improve access to and awareness of the ADR. We want to take the same comprehensive approach to ensure that we deliver the best possible ADR framework. Our plans for implementation allow us to do so. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Oppenheim-Barnes]

Before my noble friend sits down, can she tell the Committee what AER stands for?

[Baroness Neville-Rolfe]

ADR stands for alternative dispute resolution. I thank the noble Baroness for her intervention, which I did not think called for comment but I am happy to discuss it with her on another occasion.

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[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I support this amendment and I thank the noble Baroness, Lady Hayter, for her example of Mr Benjamin, as it saves me the trouble of giving that same very tragic example. It seems not unreasonable for the trader to record the consumer’s details at the point of sale and return the guarantee card to the manufacturer. This would seem a more efficient way of dealing with it than the present, somewhat haphazard system of leaving it to the consumer to fill in and return the guarantee—a document which is often at the bottom of the packaging and sometimes overlooked. If such a system were in existence, it would be much simpler to compile a register of consumers and contact them individually when and if a product recall is necessary. This would ensure that all those affected by product recalls were aware, rather than some being left in the dark about the risks they run by continuing to use the product.

Consumers, once they are aware of a product recall, are generally assiduous in returning their products to the relevant trader for repair or replacement. This is particularly important, as we have heard, where the product has an electrical fault which could lead to damaging and life-threatening domestic fires. The fire service, as we also heard, is able to produce quite frightening statistics on domestic fires caused by electrical faults, some of which tragically involve death. It is really important that we do all we can to protect consumers from this fate and I am pleased to support this amendment.

[Baroness Neville-Rolfe]

My Lords, there is already robust legislation on product safety that is based in large part on an EU-wide regime. I have listened to the debate and I would like to address the general, because I think the amendment is a general one, and then look at the electrical issues that have been raised.

The General Product Safety Regulations 2005 place strict duties on producers and distributors to ensure that only safe products are supplied. Importantly, these duties are backed by criminal penalties. However, there will unfortunately be occasions when things go wrong and a product needs to be recalled. I very much share the concerns of the noble Baroness, Lady Hayter, about accidents, especially fatal accidents. We need to learn all the time from such experiences. When a recall is necessary, producers and distributors are legally obliged to notify and collaborate with trading standards to ensure that all reasonable measures are taken so that unsafe products are swiftly removed from the market and the risks to consumers are addressed.

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[Baroness Crawley]

The Minister has reiterated a number of times the role of trading standards in crucial product recalls. However, does she agree that the serious cuts to the trading standards departments across the country and throughout local government over the last number of years have impaired the effectiveness that she talks about?

[Baroness Neville-Rolfe]

My Lords, I am grateful to the noble Baroness for giving me the opportunity to say what a good job I think trading standards do in many of those very difficult cases, having worked with them for many years. It is true that many government services have suffered from cuts as a result of the need to get the economy back on track and deal with the deficit problems that we inherited.

As noble Lords know, spending and resourcing decisions about local trading standards are made by the individual local authorities. They, rather than central government, are best placed to make decisions about the enforcement needs of their local communities. However, I have talked to them about how you can focus and get local authorities to focus on the real areas of importance, and they are trying to do that in often deeply difficult circumstances. BIS greatly values their work protecting consumers from everything from rogue traders to scammers and so on. That is one of the reasons why we have set up the National Trading Standards Board and work with the Local Government Association on trying to improve enforcement in local authority areas in important areas. Of course, product safety and risk of death always come very high on their agenda.

[Baroness Hayter of Kentish Town]

My Lords, I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for her support for this amendment.

The Minister’s response will be deeply disappointing to the fire officers and Electrical Safety First, who worked on this and who have earned this amendment. They are the stakeholders who are referred to, and they do not feel that what the Government are doing is enough, which is why they have called for this amendment. The Minister said that the legislation is robust, but it is not working. We are having a death a week because of faulty appliances, so that is not working. I do not ask for the information now, but it would be helpful if she could write and say how many prosecutions there were in the last five years of companies for not having reported and taken necessary action.

However, my noble friend Lady Crawley raised an extraordinarily important point. It is also a surprise to find that this Government are saying that on this issue they want the public sector—that is, trading standards—to deal with it, rather than the people who done wrong—the manufacturers—who acted unwittingly to begin with, but who made a faulty product that is leading to carbon monoxide poisoning, electrocution, or death by fire. It is interesting that the Minister wants not to absolve them of that but to say that the major responsibility is to tell trading standards—that is, the public sector—which will do something about it. Other things that come from the Government are all about the public sector doing less and all of us, whether it is the big society or manufacturers, doing more. Therefore I am surprised but also disappointed that the Minister does not want to put more of an obligation on to the manufacturers who have made these fire traps. However, she will understand from what I am saying that we feel very strongly about this, and we will come back to it. It certainly does not seem to be good consumer protection when once a week somebody dies when they do not have to. However, for the moment I beg leave to withdraw the amendment.

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On transparency, the recognised providers already provide the face value of the ticket and the location of the seat when it is known and available, as well as information on any restrictions. If we start asking for more information, that might become disproportionate and it runs the risk of driving the fraudulent market overseas, which would be more difficult to control. There are a number of issues that have to be taken into account in considering this amendment before we can give it support.

[Baroness Neville-Rolfe]

My Lords, we have heard a range of detailed and informed comments during this debate and I thank all noble Lords for their contributions, to which I have listened very carefully; it was good to have a variety of points made, and I am grateful to all noble Lords who have spoken. I am also grateful to the various sports, music and ticketing businesses that have spent time briefing me and the Government on these issues. In fact I should probably declare an interest as a big sports fan and a mother of cricketers.

Given the breadth of this issue and the different angles that people are coming from, I will divide my response into the two main types of sales in this market: sales from a trader to a consumer, and sales between consumers. I will then touch on the issue in Amendment 30 concerning refunds and compensation.

Before I do that, I shall briefly address the philosophical question posed by the noble Lord, Lord Stevenson, of whether a ticket—because it is either a goods item or an intangible legal right—is even capable of being sold on or transferred. The answer is that it is possible for a ticket to be defined either way. However, I am advised that this is ultimately a matter for judicial consideration, so it is not appropriate to attempt a determination in this Bill, or indeed for the Government to state publicly how we think a court would or should determine that question.

I turn to Amendments 26, 28 and 29 on business-to-consumer sales. I reassure the Committee that when traders sell to consumers there are already rules in place to ensure that consumers are aware who they are buying from and what they are buying. My noble friend Lord Clement-Jones said that the market was not subject to the same rules on transparency as other sectors, but this is simply not the case. The ticketing market is subject to consumer laws, including information requirements, to the same extent as any other retail sector.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, to which my noble friend Lady Heyhoe Flint referred, set out clearly in list form what information must be provided. For distance and online sales, such as ticket sales, that includes the price, the identity of the trader, contact details for the trader and the main characteristics of the ticket. In fact, there are no fewer than 24 information requirements on that list covering all the information that the consumer needs to make an informed decision.

In guidance on the regulations, we have included a specific paragraph on how the information requirements apply to tickets. I can quote directly from the guidance to reassure your Lordships that much of the information listed in the amendment is already required. The guidance states:

“Information on the main characteristics of the tickets and their total price (including delivery costs and other charges) must be given to the consumer in a clear and comprehensible way before the consumer purchases the ticket … For a ticket associated with a particular reserved seat (e.g. Seat 1, Row A) the seat number is a main characteristic”.

The regulations build on existing consumer law. The Consumer Protection from Unfair Trading Regulations 2008 protect consumers from being misled into a purchase by a trader.

The noble Lord, Lord Clement-Jones, asked about the October regulations. They are the Consumer Protection (Amendment) Regulations 2014; is that right?

[Lord Clement-Jones]

I did, but before my noble friend moves on to that, I quoted from the guidance and pointed out that, effectively, this is voluntary. The guidance states:

“Main characteristics include (if known to you)”.

I directly quoted from the regulations, as well. My noble friend has cited other parts of the guidance, but that is the crucial part.

[Baroness Neville-Rolfe]

I thank the noble Lord for that clarification. Perhaps I can continue to address the trader side. Where a consumer is sold a ticket that is claimed to be on the front row, for example, which turns out to be on the back row, that would breach the 2008 regulations. Advertising for sale a ticket that a trader is not in a position to sell because the ticket is either not available through the primary outlet yet or because the trader is awaiting the outcome of a ballot would also be a breach of the regulations, as well as a potential Fraud Act offence. Criminal penalties reinforce the legislation. A trader or a marketplace can be subject to a fine or even imprisonment if these regulations are breached. In conclusion, we believe that there is already sufficient law in place to ensure that consumers have all the information they need about what they are buying before they buy from a trader.

The noble Lord, Lord Stevenson, asked about botnets. A range of offences is available to law enforcement to tackle the fraudulent sale of tickets and the criminal harvesting of tickets from online ticket sales. The Computer Misuse Act 1990 sets out the framework of offences associated with interfering with a computer, including the criminal use of tools or articles to commit a computer misuse offence, such as a botnet. It was good to hear from my noble friend Lord Borwick that he believes that we are on the way to solving the botnet problem.

The noble Lord, Lord Stevenson, also asserted that there is evidence of large-scale criminal activity. We disagree. Europe Economics found that 90% of sales are by consumers such as you or me. There is already a strong framework to deal with criminality, such as fraud and money-laundering laws, which the noble Lord mentioned, that might take place in a market. Additional legislation for ticket marketing would not address such criminal activity. Obviously it is important to work with the police and other enforcement authorities, and we will review the data that the noble Lord asked for to see what up-to-date data we have. I will write to him on that point.

My noble friend Lady Heyhoe Flint said, “Will the Minister look at the websites?”. I will, but the enforcement of the law is for the CMA and trading standards. We have done some research. These sites already require key information to be given. All these sites have money-back guarantees. Most ticket transactions pass without problem—it is over 90%—so I think progress has been made there.

My noble friend Lord Moynihan gave us a very interesting summary of his experience with the Olympics—that wonderful summer which we all enjoyed in the brilliant sunshine, and the success of the Games. Indeed, as he described, it was very successful in terms of ticket sales, although of course there were some gaps in the audience, which was a sadness for consumers who would have liked to have been sitting in those seats. A ticket resale regime was a condition for hosting the Olympic Games. We brought that in and said at the time that such cases have to be considered on a case-by-case basis. I do not think that my noble friend was suggesting that this should be extended widely but he was asking us to consider that issue.

My noble friend Lord Moynihan also asserted that other countries had found a good way to regulate ticket sales. Our finding is that the evidence is mixed. New South Wales has a draft Fair Trading Amendment (Ticket Reselling) Bill restricting ticket resales, and we do not yet know its impact. As we understand it, these new restrictions are not the same as those in one of the amendments under discussion today. We have also seen press reports arguing that Queensland’s anti-scalping laws, as I think they call them, have had little effect. However, obviously we will keep those under review.

I have tried to talk about traders. I should now like to turn to the subject of Amendments 26, 28 and 29, which is consumer-to-consumer sales. We want consumers to be active and empowered in the market as buyers and sellers. It is a fact of life that sometimes consumers have a ticket that they cannot use. At this time of year I might buy tickets for my husband, a son and myself for a classical concert in the Royal Parks next summer. If my husband is taken ill six months later and cannot attend, I need to resell the ticket. That means that I can get my money back and it gives other consumers the chance to attend the sold-out event. We see no need to restrict this. Consumers should be able to freely and easily resell in this way tickets that they cannot use; my noble friend Lord Borwick made this point very well. The OFT has said that secondary agents can,

“provide a useful function for consumers who need tickets for events and are willing and able to pay premium prices”.

My noble friend Lady Heyhoe Flint asked about the impact of her amendment and how to build on the 2013 regulations. I shall try to answer. We know that over 70% of consumers think that they should be able to resell their tickets. Not only is it the right thing to do to allow this market to operate, but that statistic also indicates that if we restricted the legitimate resale market, consumers would find other ways to sell on the black or grey markets. We also know that consumers care about protecting their data and identity online. The Communications Consumer Panel reports that nearly two-thirds of social network users said that they had a high level of concern about the use of information from profiles by companies. In that same survey, the largest top-of-mind concern related to the safety of personal details or ID theft, with just over one-quarter of internet users spontaneously mentioning it.

Most consumers would not be comfortable having their contact details prominently displayed on a website. I am not sure I would like that—but I am sure I am not the only one who already receives too much junk mail. Consumers want to sell online and to protect their personal data. The current regulatory system allows that, while protecting consumers when they buy from traders.

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Amendments 27 to 31 not moved.

[Baroness Neville-Rolfe]

My Lords, this may be a convenient moment for the Committee to adjourn.

[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

The Committee stands adjourned.