Consumer Rights Bill

Debate between Lord Clement-Jones and Lord Stoneham of Droxford

Wednesday 26th November 2014 Lords Chamber

[Lord Clement-Jones (LD)]

This amendment, which was Amendment 103 in Grand Committee, received solid support from both sides of the House. Like the previous amendment I moved relating to Ofcom’s powers, it needs and deserves a better answer. To that extent it is a probing amendment, but I hope that I shall be using a fairly sharp stick to probe with.

The DCMS seems utterly determined not to give Ofcom any Christmas presents this year. The amendment addresses one of the fundamental rights of consumers—the ability to switch suppliers. It would introduce gaining provider-led switching across the communications sector. This is an opportunity to act in the interests of consumers and competition. Not only is this the Government’s own policy, as set out in Connectivity, Content and Consumers—a document issued last July—but it is supported by every party in this House.

Legislative change is also supported by Ofcom. In a letter written on 13 November to my noble friend Lady Jolly, Ed Richards, the chief executive, made it clear that without the support of legislation it would be difficult, if not impossible, to drive through this vital consumer change. The current evidence threshold to make the case is high and inevitably leads to expensive litigation. The amendment would enable Ofcom to address switching issues more quickly and directly.

In the light of the replies in Grand Committee to my noble friend Lord Stoneham, who ably put forward the argument there, I have retabled the amendment to give the Government a second opportunity to demonstrate that they stand firmly behind consumers and against vested interests and proponents of anti-competitive practices. Whoever replies to the amendment on behalf of the Government will need to address the issues raised so ably by my noble friend Lord Stoneham, such as the consumer harm created by the current complicated regime—witness the 1.2 million mobile customers who are double-billed or experience a total loss of service—and the hassle and confusion for consumers, which ultimately deter them from switching provider. The car insurance market, for instance, has a switching level of 38%, compared with 9% in the mobile and broadband market, and just 3% in digital television. There are also the poor retention practices caused by the current system, which forces customers to contact their original supplier and often leads providers to operate barriers to switching.

The Consumer Rights Bill offers a window to act in the interest of consumers, especially the vulnerable and those who do not know how to game the system. As discussed in Grand Committee, this would bring mobile communications in line with banking and introduce GPL systems across the sector, not only making switching easier for the consumer, but ensuring a more competitive market that works to drive down prices. My noble friend Lady Jolly insisted in Grand Committee that more work needs to be done to consult before the Government could accept a change to Ofcom’s duties such as this, but surely the need for change could not be plainer. That has been evident since 2007.

This is supported further by the recent evidence given to the House of Lords Communications Committee by Ed Richards, the CEO of Ofcom. He said:

“We have to pursue the consumer interest, but if we believe that the consumer interest lies in moving to gaining provider led, we have to demonstrate that at every level. If we had legislation that said Ofcom should start with the presumption that gaining provider led is the right answer, that changes the onus of responsibility quite significantly. In the litigation and the appeals, and the process of stopping us moving in that direction, which people will understandably enter into, that would make, in my judgment, quite a significant difference. If you start by making the case and bringing the evidence to bear with a presumption from Parliament that easy switching based on gaining provider led is where we are guided to begin, then I think the burden of responsibility on us to demonstrate that it is in the consumer interest is significantly easier”.

I thought, as did many of us, that Mr Richards made a very strong case before the committee. The amendment is also supported by the leading consumer rights group Which?. In its A Government for All Consumers, it rates simpler switching as the key policy priority for telecoms. In the Government’s previous response to this amendment it was stated that the Connected Continent package being discussed by the EU may deliver reform. However, Ed Richards’ letter to my noble friend has confirmed that progress is unlikely any time soon in that respect. What is the alternative—years of litigation on every change to GPL switching? It seems extraordinary that the basic case is that we have to wait until the whole EU does anything under the Connected Continent package before acting ourselves in the UK. I beg to move.

[Lord Stoneham of Droxford]

My Lords, I shall speak briefly in support of my noble friend Lord Clement-Jones. As I said in Committee, this is a very important change which is needed in this sector and follows what has already been done in banking and utilities. The current practice is anti-competitive because it reserves competitive offers for new and switching customers at the expense of existing customers. I accept that there are problems about how we can actually make the change. Ofcom clearly wants to do it. The complication arises because, as we know, the landline and broadband change applying to BT Openreach, which also affects Sky, TalkTalk, Post Office and EE broadband, is already in place, and now we want the final stage so that all the mobile operators are covered. There is also the issue of bundling as regards the connection with TV, satellite and so on. Ofcom is currently carrying out a consultation on that. We need to hear from the Government when that consultation is likely to be concluded, whether the Government fully support Ofcom in pushing that forward and whether Ofcom now has the power, in the Government’s view, to initiate it once the consultation is over.