Digital Markets, Competition and Consumers Bill (Twelfth sitting)

Debate between Seema Malhotra and Neil Coyle

Committee stage
Tuesday 4th July 2023 Public Bill Committees

[Neil Coyle]

Maybe it is still in the internal post. I thank the Minister for the letter; it would be nice to know what it says. The point is that the Bill does not make clear how customers will secure redress. It presents a convoluted route of multiple agencies and potential court action that people simply will not want to take.

My amendment does not go as far as some have suggested. It is a moderate suggestion. There have been suggestions that there is full and shared liability for platforms for any product sold and that some of the measures should be retrospectively implemented so that there should be penalties on those who have sold goods that they know to be counterfeit or dangerous going back for years. I hope that amendment 121 in particular, but also other amendments in this group, are useful to the Government in delivering their aims and defending customers and businesses.

The wording of amendment 124 is crucial; I hope that the Minister will come back to this when he responds to the debate. It would “require the removal”. It is not a request to remove a product; it is a requirement to remove a product. It could be put in the hands of all the bodies in clause 143, with penalties and timely action to prevent a fatality if this is not done quickly enough. The use of the word “require” is deliberate, because the power to request is in other legislation. For example, the police can request the removal of video footage from YouTube that is incitement to violence or hatred, is homophobic or is incitement to violence between gangs. One meeting I had with the Met revealed that more than 300 requests to take down videos had been ignored by YouTube. They included calling for revenge and the murder of specific individuals in revenge attacks between gangs in London. The police should have a stronger power than that, but as with this legislation, the power to request that something is removed is insufficient; it must be the power to compel the removal, similar to—for those familiar with local authority powers—a cease and desist order by a planning body. That would be a comparable power if the Government are keen to have something stronger than that offered in the current legislation.

I hope that amendment 124 helps British businesses, jobs, standards and customers and helps the Government —that is why I am here today. Ministers claim that they want to make the UK the “safest” place in the world to be online, and here are the means to deliver that laudable aim.

[Seema Malhotra]

I congratulate my hon. Friend on his tour de force in going through his amendments and the reasons for tabling them. We can all agree that as a package, the amendments move us further forward in ensuring that there is adequate regulation of products sold in online marketplaces. My hon. Friend also made reference to the work of Electrical Safety First and its research. Having met the organisation, spoken at its event in Parliament and seen the important work it does through the all-party parliamentary group on online and home electrical safety, I think I can say that we all recognise that we must ensure the steps taken in the Bill will be adequate to deal with the challenges we know consumers face and which can put families, lives and businesses at risk.

My hon. Friend spoke to his amendments. Amendment 118 makes someone marketing goods online a trader. Amendment 119 makes it an unfair commercial practice to sell goods online unless the specified safety requirements have been complied with. Amendment 124 provides for a takedown power, about which the Minister has made some positive comments. We believe very strongly that that is needed, and I hope that he will give a commitment today about how we can take it forward, and whether the Government will accept the amendments tabled by my hon. Friend the Member for Bermondsey and Old Southwark, which we support, or introduce their own during the course of the Bill.

--- Later in debate ---

[Seema Malhotra]

It is a pleasure to speak to amendment 127, tabled by my hon. Friend the Member for Pontypridd, and to make some remarks about amendment 126, tabled by my hon. Friend the Member for Bermondsey and Old Southwark.

Amendment 127 would add whether a third-party seller on an online marketplace is a trader or a consumer to the list of omissions of material information in an invitation to purchase. We have already raised concerns about the safety of products sold in online marketplaces, specifically through third-party sellers, and these concerns are accentuated by the inexplicable delay—it has been over a year since its publication was first promised, as we have discussed—of the product safety review into precisely this issue. In the meantime, the amendment would provide an extra safeguard for the consumer by making it mandatory for them to be informed about the status of a seller when they purchase a product online. That is particularly important in an increasingly digital economy, in which almost every individual or business can sell but consumers are unaware that they have different rights and forms of redress, depending on the status of the seller.

Consumer rights groups regularly conduct studies of products sold by third-party sellers on online marketplaces to test whether they comply with UK safety requirements. For example, in February this year, Which? sent 10 plug-in mini-heaters bought from online marketplaces such as Amazon and eBay to be tested at its product safety lab. All of them failed and were illegal to sell in the UK. That is especially dangerous for consumers in the light of the Conservatives’ cost of living crisis, which is resulting in people being pushed to buy cheaper, less reliable products.

Although only comprehensive Government action on this front will lead to the issue being properly tackled, the amendment would go part of the way towards providing the consumer with more power in online marketplaces, by informing them of the status of a seller and that their rights of redress when purchasing some products will vary from the rights they have when buying from the high street. It is a common-sense amendment that will help inform consumers in our digital economy and subsequently reduce the risks they face when buying from online marketplaces, and I look forward to the Minister’s response.

Amendment 126 would expand the definition of an “invitation to purchase” to cases where the information provided to the consumer covers the characteristics of a product but not its price. My hon. Friend the Member for Bermondsey and Old Southwark will speak to the amendment, which raises important questions for the Government. Removing the price from the definition of an “invitation to purchase” would ensure that many rogue traders, and the services they offer, were in scope of the definition.

As the Chartered Trading Standards Institute has pointed out, many rogue traders who target vulnerable consumers do not give a price when offering to do work. This means that it would automatically not be considered an “invitation to purchase”, and the regulations in clause 222 would not apply. By removing the reference to “price” in the definition of an “invitation to purchase”, the amendment would ensure that more rogue traders fall under the definition and can be caught by the legislation. The Minister may have his own views on the amendment. This is a really important issue, so I would welcome his response on the effectiveness of the amendment in addressing the issue and on the impact it could have.

[Neil Coyle]

I have a few brief supplementary comments, further to the excellent speech of my hon. Friend the Member for Feltham and Heston. I just want to point out an anomaly and the problematic nature of the wording of the Bill, which I hope the Government will re-examine before they go further.

Amendment 126 would expand the definition of “invitation to purchase” to cases in which the information provided to a consumer covers the characteristics of a product, but not its price. That might sound counterintuitive, as it did to me when I first went through this with organisations, but it would expand the goods and services covered by the legislation. That is important, because the use of “price” in the wording of the Bill could prohibit action against a rogue trader. The existing wording might stop the Government meeting the aims that they are setting out to achieve.

The suggestion is that the specific requirement that the price be covered, if that is not the price paid, will potentially prevent action from being taken against a trader who deliberately advertises a price, but then changes it. An example might be where someone arranges for a person to come and fix a car part, a boiler or a pipe leak, and that person then arrives and says, “The product you’ve looked at online is not compatible with your boiler,”—or their fittings, their car or whatever it might be—“but guess what: I’ve got a different one in the van that’s a bit cheaper,” or a bit more expensive, “but will do the job better for you.”

By making a slight change to the wording of the Bill to remove the words “and its price” on page 150, amendment 126 would deal with that kind of rogue practice, which is out there and which has been raised by trading standards. The fear among the bodies that are trying to secure greater action against rogue traders is that the existing wording of the Bill allows wiggle room and will let the dodgy practices continue. I hope that airing that specific, possibly niche concern today will give us greater time to capture it and ensure that the Bill does not preclude action against rogue traders where specific prices are agreed up front but that is not the deal that takes place, because someone pays for a cheaper or even a more expensive alternative that does the same job.

Having flagged that concern, I hope that the Government will look again at the wording and at how they will meet their overall aim, which I support.

[Kevin Hollinrake]

It is an interesting point. We took the decision to strengthen the existing provisions in the Consumer Protection from Unfair Trading Regulations 2008 in relation to invitations to purchase by removing the need for enforcers to prove that the transactional decision test has been met. This significantly increases the criminal liability of unscrupulous traders.

Amendment 126 would expand the definition of an invitation to purchase still further to cases in which information about products is presented to consumers without a price shown. We are concerned that that would expand the definition too far. Moreover, other provisions in chapter 1 of the Bill will achieve a similar aim: they will prohibit traders from making misleading statements or omissions in respect of all commercial practices. We feel that that covers this issue. However, I am happy to have further conversations with the hon. Member for Bermondsey and Old Southwark, certainly based on the evidence he has received, which I am happy to look at.

Amendment 127 would require that information as to whether a third-party seller or online marketplace is a trader or a consumer be added to the list of material information in an invitation to purchase. We have the same aim. Clause 222(2)(c) will require

“the identity of the trader and the identity of any other person on whose behalf the trader is acting”

to be disclosed. Moreover, subsections (2)(d) and (e) will require a range of contact details to be provided to consumers about who they may be buying from.

Accordingly, I hope that hon. Members will not press their amendments.

[Seema Malhotra]

I thank the Minister for his comments. We still take the view that this needs to be tighter. In the light of his intentions, which we understand, we will take it away and look at it again. I do not want to lose our amendment, but we will not press it to a vote today. Perhaps we can come back to it at a future stage of the Bill.

[Neil Coyle]

I am grateful to the Minister for saying that he will look at the evidence. I am happy not to press amendment 126.

[Seema Malhotra]

I beg to ask leave to withdraw amendment 127.

Amendment, by leave, withdrawn.

Clause 222 ordered to stand part of the Bill.

Clause 223

Public enforcement

Question proposed, That the clause stand part of the Bill.

Digital Markets, Competition and Consumers Bill (Thirteenth sitting)

Debate between Seema Malhotra and Neil Coyle

Committee stage
Tuesday 4th July 2023 Public Bill Committees

[Neil Coyle]

I have a couple of points; I will try to keep them brief. The clause fundamentally rejects where the Government suggest the responsibility for oversight of a savings scheme should sit. I was just listening to the Minister, and it is probably worth flagging up the message from the Chartered Trading Standards Institute on this. The Government say that they have assessed where this should sit; they say that they have worked with partners and consulted, but that does not seem to be the feeling of the chartered institute covering the sector, whose language is interesting:

“These brand new provisions have been inappropriately dumped on local authority trading standards to deal with, but it would be much better placed to give the Financial Conduct Authority the responsibility to regulate new provisions on savings schemes which are similar in nature to banking and other financial matters already regulated by the FCA. Saving schemes are often national schemes”—

such as Farepak, which Members will be familiar with. No individual local authority could have prevented what happened with Farepak; I think that is the point it is making. I will come back to its direct comments—

“and therefore should be in the remit of a national regulator with the experience and resources to deal with financial matters. CTSI would like to see all references to local authorities removed in these provisions and to pass on responsibility.”

The Minister says that the FCA is not the right vehicle or body. Perhaps there is space and time to examine what that body should be. The point made by trading standards is that they do not have the skillset to oversee financial services in the way that the Government are demanding. They do not have the resources—that is the point made in our evidence sessions. This follows 13 years of cuts to weights and measures—to trading standards—which we have seen across the country; there has been a 50% cut in their capacity to do the job. Again, this is the Government trying to insist that local government take on greater responsibility after cuts to their own resources.

Southwark is a case in point. We have seen similar cuts to trading standards, but also to the overall council’s budget. The Government reduce the responsibilities of central Government Departments, such as the Home Office, and pass on additional costs running into the millions for things such as emergency children’s services with no recourse to public funds, without giving additional resources to councils to do so. This is another case in point where the Government are trying to push a new power and demand on to an already overstretched and under-resourced arena.

New clause 7 would have made the FCA the relevant body, rather than local authorities, but the point of the new clause is that trading standards should not be made responsible for something when they do not have the expertise or resource to be effective. If the Government do not think it should be the FCA, it is up to the Government to come back and find the right body. It is the Government’s legislation; they want it to be effective, and for these saving schemes to not collapse and leave people without, so it is incumbent on the Government to come up with either the resources and skills—training, whatever it might take—for trading standards to do this, or an alternative body to oversee these specific saving schemes. It is important at this stage to flag that concern, because there is a deep resentment, almost, from the sector over the Government’s suggestion that trading standards take this on, yet the Government still insist that it is the appropriate vehicle.

I hope there is still time to review which alternative body might be able to take on this task. This feels like something that a national body should deal with, and it should not sit with local authorities as operators and rogue traders may cover whole regions of the country, not one single local authority. I did listen to the Minister, and take onboard his suggestion that the FCA is not necessarily the right vehicle, therefore I am prepared to withdraw this amendment, as drafted, but I would like to see a commitment to reconsider where this responsibility sits.

[Seema Malhotra]

Clause 274 introduces the definition of a “consumer savings scheme contact” for the purposes of this chapter. Specifically, the clause defines it as a contract under which the consumer makes payments to a trader,

“the trader credits those payments to an account that is held by the trader for the consumer…and the payments credited to the consumer’s account provide a fund for the consumer to redeem as goods, services or digital content”.

The definition forms part of new provisions introduced by this chapter which are important for protecting consumers who use consumer savings schemes, and we welcome this. Clause 275 defines other terms used in this chapter—and in clause 274—and we welcome the further clarity this brings.

Clause 276 introduces schedule 21, which sets out arrangements that are excluded from the scope of a consumer savings scheme contract. It includes regulated financial services activities, arrangements for the supply of utilities, a contract between a consumer and a trader where the trader’s turnover is less than £1 million per year, childcare voucher schemes, and package holidays .

We welcome that exclusions might be necessary in cases where it is impractical for these regulations to apply. However, I would welcome some further clarification on paragraph 3 of the schedule to set out how contracts offered by small businesses are exempt. Is that in relation to wanting to have the right balance between smaller businesses and consumers? We obviously want to ensure that the consumer is as protected as possible in these contracts, so I would be grateful for a response from the Minister on that.

Clause 277—“insolvency protection requirement”—introduces provisions regarding the event of a trader’s insolvency and covering the costs of returning to the consumer any protected payments at the time of the insolvency. We do welcome that, and it is important in the context of record levels of insolvencies. It is a particularly unstable period, and it is important for consumers to have protections.

Clause 278 sets out what is understood to be an “appropriate policy” in the instance of a trader complying with the provisions in clause 277 by taking out an insurance policy. Under the Bill, an appropriate policy is one in which consumers are insured with cover for the refunding of prepayments held in the consumer’s account that have not been redeemed at the time of insolvency. The insurer must also be authorised by UK authorities. We welcome this clause, though I ask the Minister to expand on subsection (3), which requires the trader to

“meet the costs of arranging and maintaining an appropriate policy”

and explicitly inhibits traders passing that cost on to consumers.

I would be grateful for two things. First, will the Minister explain how we can be confident that the trader will not find a way to pass on this additional cost to the consumer? Secondly, will the Minister confirm how quickly, in the event of insolvency, consumers can expect to have their prepayment refunded? It would be helpful if he could clarify that. Does he feel that provision is tight enough in the Bill?

Clause 279 applies in circumstances where a trader complies with the insolvency protection requirements in clause 277 by using a trust arrangement. It sets out how it must ensure consumer prepayments are held in a trust located in the UK. The consumer’s prepayments must also be held in a trust until either the funds have been redeemed or the payments have been returned to the consumer. Similarly to clause 278, the Opposition welcome this clause as providing greater protections under consumer savings schemes in circumstances where the trader becomes insolvent.

I refer the Minister to subsection (7), which requires the cost of administering the trust to be paid for by the trader. Again, how will the Minister be able to safeguard against the trader passing this additional cost on to the consumer?

Clause 280 sets out the information requirements attached to this chapter. Specifically, it sets out that, within 30 working days of the consumer’s first payment into the savings scheme, the trader must provide:

“the name, address, telephone number and email address of the insurer or trustees responsible for protecting the consumer’s payments;

where insurance arrangements are in place, the policy number for the policy under which the consumer’s payments are protected;

where trust arrangements are in place, a copy of the trust deed under which the consumer’s payments are held.”

It is a welcome provision, but will the Minister expand on the 30-day time period? On what basis does the Minister believe that the trader would need 30 days to put these arrangements in place? Would these arrangements not happen automatically as soon as the consumer enters the scheme? That is an important question for ensuring that the consumer is informed of their protections.

Clause 281 would add chapter 3 of part 4 of the Bill to the list of enactments in schedule 3 of the Regulatory Enforcement and Sanctions Act 2008. We welcome the clause.

Clause 282 introduces definitions for the purposes of this chapter. Similarly, we welcome the clause in providing the transparency, consistency and clarity needed.