Consumer Rights Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Wednesday 19th November 2014 Lords Chamber

[Viscount Younger of Leckie]

My Lords, I rise to speak to Amendment 28 and I emerge once again from my long and deep perusal of Hansard, having not been present in Committee. I want to focus on the important matter that has been raised by my noble friend Lady Oppenheim-Barnes on the question of displaying rights at the point of sale.

I have read the amendment carefully, but I want to focus initially on a couple of issues. The amendment states:

“Suppliers of goods and services to which this Part applies shall be required to display at the point of sale essential information in plain and intelligible language and in a reasonable format which explains to customers the relevant rights and responsibilities of consumers under this Part”.

How does one define “essential information”? I note proposed new subsection (3), which states:

“The detail shall be developed by the British Standards Institution”,

but I would like to point out that in proposed new subsection (2), which states that the,

“information shall be proportionate to the transaction”,

two issues arise. I would argue that it is very broad and not clear enough, as with proposed new subsection (1), to be on the face of the Bill. When one is talking about being “proportionate to the transaction”, one has to bear in mind that sales take the form of so many different types of products. There could be a very high volume of low-priced products, so there would be an immediate issue of how to tackle it.

I digress slightly and want to go back to the Committee stage, as I took a keen interest in the speech given by the noble Baroness, Lady Hayter. I am interested and glad to see that she has stepped back from promoting the idea of consumers’ statutory rights being read to them, or given to them at the point of sale. Perish the thought that this might happen and that on a busy Saturday long queues form at petrol stations while cashiers struggle to meet legal requirements in reading customer rights when selling non-petrol or non-food goods. I am sure that the noble Baroness did not necessarily think about that aspect, and she may well have thought at that stage that such information could be placed on a receipt. Then there was the matter of gaining consistency in this aspect of the law in tandem with effecting adequate training for cashiers and sales staff. I feel that, inadvertently, we may have prevented a gain in incidents on the shop floor as a result of consumers becoming somewhat impatient while waiting to be served.

The important point was made in Committee that communicating consumer rights is relevant for each product sold and could be open to confusion when a trader’s policies and terms exceed the statutory rights. There is a danger that reading out rights might act as a negative or chilling factor by implying, perhaps tenuously, that the product might just be defective.

I wanted to put this amendment in context because I am pleased at least that my noble friend Lady Oppenheim-Barnes has reduced that position in her amendment so that information on consumer rights should be displayed but only at the point of sale. However, as she might expect, I am not in favour of this being set in law either. I believe that it is proportionate to set firm guidelines, which came out of the implementation group, and to go for a voluntary approach.

I believe that this particular departure will undertake a number of key points. First, it will lead to a behavioural change for businesses to display information on the rights of consumers. Secondly, it will be pour encourager les autres; in other words, other businesses will do the same. Thirdly, consumers will become more attuned and astute, so that where businesses are not voluntarily displaying high-level information on their rights, they will be pulled up. There is a caveat that after a while consumers will tire of seeing the same old notices being displayed and looking even more tired than themselves.

For all those reasons, I do not agree with the idea that this amendment should be set in law, so it should not go forward.

[Baroness Hayter of Kentish Town]

If I have understood the noble Baroness, Lady Oppenheim-Barnes, correctly, it was probably the noble Viscount who, on 13 June, signed into law those rights. I congratulate him on that and on writing into law that all these rights should be made available. That is very welcome and I thank him on behalf of consumers that he does want them in law, although, at the moment, I think he is saying that he does not. Anyway, we congratulate him on what he did on 13 June.

The noble Baroness, Lady Oppenheim-Barnes, is absolutely right that this amendment is crucial to whether the Bill will work. It will not work if consumers do not know their rights. The little placard that is often next to the till which says, “This does not affect your statutory rights” is completely meaningless. We know from work by BIS that two-thirds of consumers do not know that if a major appliance breaks down 18 months after purchase they still have a right to have it repaired or replaced, even though they did not purchase an extended warranty. So we know that people do not know their existing rights.

The difference is that we agree with Citizens Advice that these rights can be set out briefly and simply. You do not even need to say, “Under the Consumer Rights Act”, although it is very nice to give credit to those who put it through. You can simply say, “You have 30 days to return this item if it is faulty”. That does not seem very difficult. I think people can understand it. I think it is all right if it is on the bottom of their till receipt rather than by the side of it. These things can be done quite easily.

There is a political difference here; it is a difference within the implementation group. The consumer groups want this information clearly written and available so that consumers keep on seeing it. Businesses do not want it. The Government are saying, “Let’s listen to business. They don’t want to do it”. I think if we listen to consumers, they would want to do it. The ongoing champion of consumers is right. Let us get this in the Bill and let consumers know what their rights are.

Consumer Rights Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Tuesday 1st July 2014 Lords Chamber

[Viscount Younger of Leckie]

I am very happy indeed to write to the noble Lord to provide some precise timetable information on that point. We would wish for this to be taken forward as soon as possible as well, but I will furnish him with some more information. There are regulations in place that offer protection for consumers. I would very much encourage consumers to report such calls to the relevant regulator so that action can be taken.

At this point I would like to address a point raised by the noble Baroness, Lady Hayter, on energy bills. We know that rising energy prices are hitting many households hard at a difficult time. We expect energy companies to justify commercial decisions on price changes openly and transparently. We have delivered a £50 reduction in energy bills by driving down the cost of the green levies on consumer bills. We are reforming the retail energy market by making it simpler for consumers to understand. We are ensuring that everyone is on the cheapest tariff their supplier offers that meets their preference. Our policies are keeping bills lower—by an average of £65 for a typical household—than if we did nothing.

The noble Baroness, together with the noble Lord, Lord Stevenson, and the noble Baroness, Lady Drake, asked why the Bill does not contain an outcome-focused test for services. We are strengthening consumer rights for consumers of services where a trader promises something about the service. If the consumer relies on that promise they can hold that trader to account; if not, they are entitled to statutory remedies, which are also introduced for the first time in the Bill.

My noble friend Lord Stoneham and the noble Lords, Lord Whitty and Lord Alton, raised the issue of the alternative dispute resolution, as did the noble Baroness, Lady Hayter. As the noble Baroness knows, the consultation seeking evidence about whether any kind of simplification of the ADR landscape is necessary or viable in the future recently closed. Although it focused on immediate action to implement the ADR directive, we understand that stakeholders from many quarters have views on how the current ADR landscape might be improved. Some have suggested creating a consumer ombudsman. We have therefore used the consultation as a call for evidence about whether any kind of simplification of the ADR landscape is necessary or viable in the future.

The noble Baroness, Lady Hayter, asked about giving consumer rights to small businesses, and particularly to the smallest micro-businesses. The Government are committed to helping SMEs, of which there are 4.9 million in this country, to grow. However, we are not convinced that it is in the best interests of small or micro-businesses to be defined as consumers in the Bill. To take a step back, the Bill is about consumers. As soon as we start including rights for other parties in the Bill, we believe that that core purpose will be diluted and we will risk losing valuable clarity.

[Baroness Hayter of Kentish Town]

The Commons made a welcome amendment to the Bill to make letting agents put up their table of fees. Those fees will apply also to landlords, and landlords are a business. Does the Minister mean that landlords do not also have the right to see those fees displayed simply because they are a business?

[Viscount Younger of Leckie]

We still want to make a distinction between consumers and businesses. We think that if we were to cherry pick and bring certain groups in to allow businesses to be included as consumers, that would cause confusion. However, I am very happy to talk to the noble Baroness again about letting agents and the specific point, as I know that she is much exercised by the issue.

The noble Baronesses, Lady Hayter and Lady Howe, my noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the important issue of the effect that advertising has on children as regards payday loans. First, let me be very clear that consumers will be far better protected under the new FCA regime. Logbook loan providers and other high-risk lenders are required to meet the standards that the FCA expects of them, including making affordability checks. The FCA rules are binding on lenders and the FCA has a wide enforcement tool-kit to take action.

My noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the issue of advertisements. The FCA will not hesitate to ban irresponsible adverts, and it has a strong record of doing so. The Broadcast Committee of Advertising Practice is reviewing the extent to which payday loan adverts feature on children’s TV. Separately, the Financial Conduct Authority has set out new rules for consumer credit adverts and it has powers to ban misleading adverts which breach its rules.

The noble Lord, Lord Wills, asked about payday loan firms and cold calling. The FCA is committed to ensuring that cold calling by phone or e-mail makes clear the identity of the firm and the purpose of the communication so that the consumer can decide whether to proceed.

I thank my noble friend Lord Borwick, who raised an important point about consumers being made aware of the country in which a seller is based. Under the consumer contracts regulations 2013, traders in distance contracts, such as online sales, must make available information on their geographical address before a consumer buys from them. I have been in correspondence with my noble friend concerning his recent purchases with Amazon. I cannot comment on the experience of the particular transaction that has been raised but I can confirm that obligation, which I hope goes some way to answering his questions.

My noble friend Lord Clement-Jones asked about exempting intellectual property contracts from the Unfair Contract Terms Act 1977. I sympathise with the situation in which some creators find themselves, but we have not yet seen evidence that amending that Act would address the issue. First, we would need substantial quantitative evidence of a problem and, secondly, we would need to be sure that any such amendment would solve that problem without unintended negative consequences.

My noble friend Lord Clement-Jones also asked about brand owners protecting themselves against misleading look-alike packaging—an issue that I know we have spoken about in the past—on the grounds of intellectual property infringement and the common law tort of passing off. As he will be aware, my department, BIS, is reviewing the case for granting brand owners a civil right of action against copycat packaging and it is aiming to report in the autumn.

There has been some discussion today about the vital role that trading standards officers have in protecting the public. Issues were raised in this respect by the noble Lord, Lord Whitty, and the noble Baroness, Lady King. The Government strongly support the work that trading standards does to protect consumers from rogue traders and scammers. We have better equipped trading standards to take greater responsibility for consumer law enforcement by transferring central government funding to the National Trading Standards Board and Trading Standards in Scotland. Last year, we invested £14.5 million in these bodies to fund co-ordinated enforcement action across the UK.

We also want to develop a better understanding of the impact that trading standards services have on our economy at both the local and national level. Therefore, in partnership with the Trading Standards Institute, we have commissioned a group of academics at the Institute of Local Government Studies in Birmingham to undertake a piece of research on which to build an evidence base on the economic, social and environmental impact of trading standards work, the impact that budget cuts have had on enforcement activity, and the efficiency of trading standards services across England, Scotland and Wales. The project will conclude in the autumn and the outputs will inform future policy considerations.

The noble Baroness, Lady Crawley, raised the question of trading standards publishing data. Trading standards will be able to name and shame a business, giving consumers more information to make better purchasing decisions. That is a key element of the new enhanced measures.

The requirement in the Bill for trading standards to provide 48 hours’ notice of a routine inspection was raised by the noble Baronesses, Lady Hayter and Lady Crawley, among others. I emphasise that this is about routine inspections; it is not about situations where there is any concern or suspicion that a trader is breaking the law. Other powers in the Bill can be used to check letting agents’ compliance with the duty to display fees. I also want to reassure the House that the powers and safeguards are designed to strike a balance—and it is a balance—between protecting civil liberties, reducing burdens on business and enabling enforcers to tackle rogue traders. Businesses, and particularly small businesses, welcome the requirement for notice. The Federation of Small Businesses has said that,

“booking inspections in advance … will allow the business to make the necessary arrangements … so that everyone gets the most possible from the inspection”.

However, I underline again that we have no intention of weakening the powers of consumer law enforcers to investigate rogue activities. That is why the Bill contains a number of clear exemptions from giving notice, such as where doing so would defeat the purpose of the visit—for example, when investigating the sale of illegal tobacco or the production or transit of fake food. Consumer law enforcers will still have more powers to enter premises than the police.

I turn now to an issue I know exercises a number of noble Lords, which is the right to receive bills in paper format. It has been raised today by the noble Baroness, Lady Hayter, and I know it certainly exercises my noble friend Lady Oppenheim-Barnes. I have heard the views expressed in this debate, and empowering consumers is a key objective of the Bill. My department is in the process of commissioning research regarding the issues that help and hinder the empowerment of consumers. We aim to use this research to identify the key target groups of consumers in need of greater assistance and the best ways to reach out to them. I can reassure the House that we will consider the comments made today alongside the conclusions from the research and act accordingly if this suggests the need for further thinking. Let me make one thing clear. There is no penalty for choosing paper—instead, people simply do not receive a discount. Choosing paper bills retains an additional service for those who wish not to take a paperless bill discount.

Consumer Interests: World Consumer Rights Day

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Monday 17th March 2014 Lords Chamber

[Baroness Hayter of Kentish Town]

To ask Her Majesty’s Government what steps they are taking to promote consumer interests in the United Kingdom to mark World Consumer Rights Day on 15 March.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

The Government are tackling the issues that consumers care most about head on. We are bringing in strong reforms through the Consumer Rights Bill to give greater clarity to goods, services and, for the first time, digital content. On World Consumer Rights Day, my department, Citizens Advice and Ofcom highlighted issues around mobile phones. We received excellent press coverage, which helped to increase awareness and to inform people where to go to get help.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, it was 52 years ago that President Kennedy said that every consumer should be protected against misleading adverts and unsafe and worthless products, and that consumers should be told how much interest they are being charged. Given that payday loan companies continue to charge excessive interest rates and that the Government have abolished the National Consumer Council, have allowed living standards to fall and have introduced a Consumer Rights Bill which, despite what the Minister says, consolidates rather than adds rights, what are the Government going to do to honour President Kennedy’s ambition?

[Viscount Younger of Leckie]

My Lords, well informed, confident consumers are vital to building a stronger economy. Our plans will mean that consumers can be confident of their rights in everyday situations and that businesses will spend less time working out their legal obligations when they get complaints from customers. Since 2011, we have streamlined and brought coherence to a landscape that was previously confusing and therefore inefficient for consumers.

Legislative and Regulatory Reform (Regulatory Functions) (Amendment) Order 2014

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Tuesday 11th March 2014 Grand Committee

[Viscount Younger of Leckie]

My Lords, I thank the noble Lord, Lord Curry, and the noble Baroness, Lady Hayter, for their comments and, if I read it correctly, their broad support for this order. It is particularly nice to have good support from the noble Lord, Lord Curry, in the light of his current role.

At the beginning of her speech, the noble Baroness, Lady Hayter, quoted some interesting comments from President Kennedy back in 1962, which I thought was really rather nice. It shows that this is something that goes back decades, and not just in this country. Consumer interests and consumer-facing issues are matters that cross boundaries and continents and remain, as we know particularly in this country, quite a live issue. Following that, the noble Baroness raised the issue of proper protection for the consumer. The Regulators’ Code promotes proportionate, consistent and targeted regulatory activity in relation to consumer regulation and other protections. We believe it takes appropriate action when non-compliance is identified. The noble Baroness also raised the issue of letting agents. She is well aware that there have been debates recently—indeed there is one this very day—in the other place on the Consumer Rights Bill. I know she is definitely well up on that particular issue and indeed takes a lead in debating it.

The noble Baroness asked a substantive question about the consultation, and I will spend a little time explaining the length and depth of the consultation. As I said earlier, the public consultation lasted eight weeks. It opened on 8 March 2013 and closed on 3 May 2013, with 95 responses received from a variety of organisations. There were 14 responses from national regulators, 37 from local authorities, 20 from business and trade associations, and 17 from professional bodies. To give a general overview, business respondents were generally supportive of the draft revised code and the provisions contained within it. They highlighted the shorter, clearer nature of the revised code, which would make it easier to know what they can expect from regulators. The substantive responses included the following: businesses welcomed the focus on the need for regulators to provide advice and guidance. They suggested that publication of service standards would lead to increased transparency and accountability, but felt there was a need for greater clarity around the notion of growth. This was also raised by the noble Lord, Lord Curry. They were also concerned that the revised draft code did not have sufficient strength and that regulators would not fully comply with the provisions.

Local authorities were generally supportive of the principles but expressed concerns that the detailed provisions were too prescriptive and would therefore impose additional burdens. The authorities stressed the fact that the revised code put too much emphasis on requirements for regulators and not enough on recognising the responsibilities of businesses. They were also concerned about the potential use of the code as a mechanism for challenge and the cost considerations of additional appeals procedures.

National regulators held rather more mixed views. Some felt that the provisions were too burdensome and were concerned about possible legal challenges, while others were positive about the opportunity to engage with the business community. National regulators commented on the need for any measurement and process to be proportionate to regulatory activity. Finally, they argued that culture change was important—I add my own strong support for that—to embed the code’s principles, and that training and leadership can assist with this. I could go on but I hope that gives a substantive and full overview of the response. I will be more than happy to write to the noble Baroness should she wish for more substantive detail.

[Baroness Hayter of Kentish Town]

Will the Minister confirm that no views were sought or received from consumer representatives?

[Viscount Younger of Leckie]

There are no consumer representatives mentioned in my brief. However, in addition to the ones I have mentioned, 20 business and trade associations responded to the consultation and there were meetings with the National Consumer Federation. I am more than happy to write to the noble Baroness to clarify the relationships and contacts we have had on this with consumer representatives.

Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Tuesday 11th March 2014 Lords Chamber

[Viscount Younger of Leckie]

I will write to the noble Lord. The noble Baroness, Lady Hayter, suggests that the provisions in the order do not provide adequate parliamentary or ministerial accountability. However, I dispute that, as the noble Baroness will know. In making an order under the Public Bodies Act, a Minister must have regard to a number of tests, including the requirement to secure appropriate accountability to Ministers. The Secondary Legislation Scrutiny Committee considers compliance with all these tests. I remind the noble Baroness that in the case of this order the committee concluded that it was content to apply the 40-day affirmative procedure rather than the more stringent 60-day process. However, I will again set out the measures that we have put in place to ensure clear lines of accountability, and I will do that in a separate letter on grounds of time.

I conclude by addressing the comments made by the noble Baroness, Lady Hayter, and the noble Lord, Lord Whitty, at the beginning concerning quango-cutting. On the one hand, we are being accused of having too many bodies; on the other hand, we are accused of being forced by the Cabinet Office to cull quangos. We think that our redesign of the consumer landscape strikes the right balance, including representation across all parts of the UK. The changes brought about by this order will deliver more effective consumer advocacy and more joined-up supervision of the estate agency regime.

[Baroness Hayter of Kentish Town]

First, I thank the Minister for doing as good a job as he could with the material at hand. I think that we know that he is batting on a sticky wicket but he did his best. I also thank the noble Baroness, Lady Oppenheim-Barnes, the noble Lord, Lord Berkeley, and my noble friends Lord Borrie, Lord Whitty and Lord Harris for their contributions to my regret Motion. I particularly thank the noble Baroness, Lady Oppenheim-Barnes. She called herself the “great-grandmother”. I think I would have to say “godmother”, because it sprinkles a bit of gold dust whence it goes. Consumers have an awful lot to thank her for.

I also express thanks to my noble friend Lord Stevenson, who, as we have been going along, has managed to find for me the debates that the noble Baroness referred to concerning her attempts to halt the merger. I am afraid that my memory is perhaps not as acute as it should be but we have looked quite carefully at them and it looks as though we were trying—maybe we took the wrong call—to improve what was being proposed. With our Amendment 24ZB, which I have just looked up, and another amendment, we were trying to get the CMA to take on and strengthen the consumer protection, enforcement and guidance role. We noted the comment that the noble Baroness made at that time about the possible lack of independence brought about by bringing the two organisations together. That is slightly different from our amendment but the call that we took was to try to improve what we thought was going to happen. However, looking through the speeches, it appears that we were on the same page for quite a lot of the time.

I shall try to be brief because it is now time to draw this to a close. There are questions remaining. We get a letter saying that Anglesey has no role; now we find, if I have understood it correctly, that someone is going to be put into Powys to sit there and do the job, but that person will presumably be answerable to employers in Anglesey. We need some clarity on this. We are told that elected councillors will have no role but it is their staff to whom they have a duty of care and other employment responsibilities. It would be extraordinary if elected councillors had no say on what was going on in their premises. Nor have we had a serious answer to why we are not using the same mechanism to approve redress schemes. I did not say “the same redress schemes”; we were talking about the same mechanism to approve them.

Contrary to what the noble Viscount said, I think that this is about getting rid of quangos. This happened under the Public Bodies Act and that was referred to in the coalition agreement. My noble friend Lord Harris of Haringey is right: this is not about improving the consumer offer, much as I would have liked it to be. I remain doubtful about whether delivering national functions via local trading standards is the most effective way of promoting consumer interests.

I also still have some concerns about the independence of Citizens Advice. I gather that there are still some discussions about whether it is going to be a public body, with all that that means with regard to procurement and the organisation’s way of working. Some clarification on that is necessary. I have no doubt about the role that Citizens Advice has in helping consumers who have detriment today. We have never questioned that. Our concern is about whether influencing today’s providers, regulators, the Government and Europe can be done by the same body which, every day, answers phone calls and e-mails and has visits from hard-pressed consumers.

I should say that I am known now as Lady Hayter of Kentish Town. I was, until my last relative died there, going to be Lady Hayter of Ystradgynlais. However, I thought that it would be a bit too much of a challenge to Hansard writers—hence Kentish Town. I also lived in Bodedern in Anglesey. Therefore, I am aware of the strength of those bodies but whether they are the rights ones to take this on, I remain doubtful.

Having said all that, we can only wish all these new organisations well for the sake of consumers, for the sake of the people whom the noble Baroness has looked after for so many years and for the sake of people whom my noble friends Lord Borrie, Lord Harris and Lord Whitty have done so much for. We can only wish them well. I know that what they need at the moment is speed. For those reasons, I beg leave to withdraw my amendment.

Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Monday 24th February 2014 Grand Committee

[Viscount Younger of Leckie]

Absolutely. I was going to say that I will be more than happy to write to the noble Lord to confirm the precise figures. I reiterate that it is not our intent to cut the funding. The funding to the service to deliver advocacy on energy and postal matters will be maintained as currently allocated to Consumer Futures, at £8.7 million, with an additional £220,000 allocated to the general Consumer Council for Northern Ireland to deliver postal advocacy. This funding will be recouped via the levy from the energy and postal industries.

The noble Lord, Lord Whitty, also asked whether I would ensure that the lead local authority is properly resourced to undertake this work. This is to do with the estate agency functions. The baseline costs of policing the UK estate agency market will transfer, as he knows, from the OFT into the NTSB’s enforcement grant. This amount will be ring-fenced from the main portion of the grant to ensure that the full funding will be used for the purpose intended.

The noble Lord, Lord Harris, spent some time speaking about Powys and the transfer of the OFT estate agency function. In thanking him for his support, I want to clarify—perhaps for the noble Baroness, Lady Hayter—that we believe that the role of Powys is very important within the new national enforcement regime, and I re-emphasise the national element of that for the avoidance of doubt. The noble Lord and the noble Baroness asked why the Government were not harmonising letting agencies in addition to the changes that we are making to estate agents. The noble Baroness will be aware that letting agents are already subject to consumer protection legislation. The Government do not believe in excessive regulation. The amendment of the Estate Agents Act to include letting agents would lead to overregulation of the market, which would run a real risk of reducing supply in the rented sector, which in turn would drive up rents and reduce the choice for hard-working tenants.

[Baroness Hayter of Kentish Town]

I am sorry that I was not clear. I absolutely understand that—I may not go along with it but I completely understand it. I asked about a different issue. At the moment, a redress scheme for estate agents has been approved by the OFT. Approval for that redress scheme will now go to Powys. I understand that. There will then be redress schemes for letting agents—I think they will be the same schemes, but that is neither here nor there. In order for a letting agent to be approved by the redress scheme, they will not be able to go to Powys to get a tick; I understand that they will have to go through the DCLG. That is the same issue mentioned earlier by my noble friend about two departments not quite co-operating. My question is not about the letting agents themselves but the approval of a redress scheme for letting agents. It is extraordinary that it is not being done in the same way as for estate agents.

[Viscount Younger of Leckie]

I have listened carefully to the noble Baroness, and I believe that she is correct. She mentioned the DCLG, and I can say that the reforms will create a new requirement for letting agents to join an approved redress scheme. It will be implemented through the Enterprise and Regulatory Reform Act 2013, which she was very much a part of, with my good self. The order simply transfers existing enforcement arrangements from one body to another rather than creating a new redress scheme. I do not know whether that answers the noble Baroness’s question.

[Baroness Hayter of Kentish Town]

We will exchange letters.

[Viscount Younger of Leckie]

Indeed, a further exchange of letters would certainly clarify the matter.

The noble Baroness raised an important point about Citizens Advice being able to answer only about 45% of calls—to paraphrase her question. I am not clear where those figures come from because Citizens Advice is now reporting very high levels of satisfaction on the use of its national call line. Perhaps the noble Baroness can advise me on where she got those figures. They may, dare I say, be slightly outdated, but I would be very pleased to speak to her offline, as it were, about that.

The noble Baroness also raised the important issue of accountability relating to Powys County Council. She said that it is convoluted and unclear, but we believe that that is not true. Ultimately Powys County Council will be accountable to BIS, as I explained in my opening speech. As she knows, Powys will report to the National Trading Standards Board in its role as co-ordinator, and the NTSB is accountable to BIS. I am not entirely sure why she is concerned about that because we believe that there is actually quite a short direct reporting line to BIS. Again, I am extremely happy to speak to her outside this Room to clarify what I mean by that. At the same time, the noble Baroness raised the issue of Anglesey. I can confirm that Anglesey’s licensing committee will play no role in appeals against Powys’s warning and prohibition orders. These will be made first to the First-tier Tribunal.

The noble Baroness also asked how the Government will ensure that Citizens Advice will deliver on the work that it has been given and how its work will be monitored. We will hold annual performance reviews with the Citizens Advice service to ensure that the new arrangements are effective and that the successor bodies are delivering on behalf of consumers. We will also make a review of the full suite of statutory provisions within five years of the order coming into force.

The noble Baroness also raised the question of whether Section 24—in other words, the information-gathering powers—would be underused. I reassure her that Citizens Advice will have full access to these powers should it require them. She also asked when Powys and HMRC would receive the list of estate agents from the OFT. HMRC is already in an information-sharing agreement with the OFT as a supervisor under the Money Laundering Regulations 2007. The order provides an information-sharing gateway for Powys that will come into force as soon as the order is made.

The noble Baroness also asked how the consumer will be represented in Europe. The CMA will be responsible for acting as the UK’s single liaison officer in ensuring compliance with the consumer protection co-operation regulation. It will forward individual enforcement actions to the NTSB unless they relate to problems where it takes the lead. However, Citizens Advice will continue to work closely with its European counterparts, as Consumer Focus does now.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. I hope that I have answered all the questions that were raised. If I have not—there were quite a few questions—I will be more than delighted to expand the letters that I have already committed to writing to the noble Baroness, Lady Hayter, and any other Peer. The Government conclude that the order meets the requirements of the Act, and I commend it to the Committee.

Consumers: Paper Billing

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Monday 25th November 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)]

My Lords, I first extend my gratitude to my noble friend Lady Oppenheim-Barnes for securing this debate. As my noble friend Lady Maddock has mentioned, I am aware that my noble friend Lady Oppenheim-Barnes asked a supplementary question in this Chamber on a similar subject during an Oral PQ raised initially by the noble Baroness, Lady Deech. My response to her question, and my response to some other questions, clearly did not strike a chord in this House. I recognise this and have had a few weeks to reflect on the subject further.

In replying, I congratulate the noble and learned Lord, Lord Judge on his maiden speech, on sharing his passion for this issue with the House today and on speaking up for those who are concerned about the advances of the digital age and the so-called generational issue.

I say at the outset that I fully recognise and understand that there are those in this House and elsewhere in the country who, as individuals or for business purposes, may wish to continue to receive statements, bills and other documents through the post. I also recognise that some people may never wish to go online, nor indeed even use a computer, let alone other modern gadgets such as iPads or smartphones. The noble Lord, Lord Lipsey, and the noble Baroness, Lady Hayter, both made the good point that some people cannot afford a computer. Again, I respect this. However, noble Lords cannot fail to notice that, whether we like it or not, the movement towards a fast-paced and rapidly changing digital age is inexorable; indeed, my noble friend Lady Oppenheim-Barnes alluded to this very fact. For example, some 60% of the UK population now have a smartphone, and we are responding to the huge demand for a comprehensive rollout of broadband.

The backdrop to this debate is therefore rather complex. The pace of change is fast. If we press the rewind button—if I may be allowed to use that term—e-mail only really became widespread during the late 1990s. Some noble Lords may recall the first cordless phones, as big as a brick and almost as heavy. Now we manage our lives using mobile phones, and even more, from having health gadgets on our wrists to writing e-mails using voice recognition. Doing all sorts of things on the move, be it checking on the weather or traffic, paying bills, even finding places and locating friends using satellite tracking, is becoming the norm. I hasten to add that I need to be brought up to date with all these gadgets myself.

The focus of the debate today is on how we help those facing difficulties or charges when wishing to retain the option of receiving traditional bills and statements through the post. I am the first to say that I have some sympathy with the traditional approach, but if I tried to hold back the tide of change I could on the other hand be accused of being a latter-day King Canute. The sons, daughters and grandchildren of many noble Lords here today do not feel the same need for paper. In exactly one month’s time, many will be sending Christmas e-cards to friends and relatives. Some people lack the space or inclination to store reams of bills. They want information at their digital fingertips, not buried somewhere in a pile on the coffee table. I recognise some of the statistics that have been adduced this evening about people being less efficient if they receive bills online.

The challenge to service providers is therefore to cater for the full spectrum of their customers, providing options and reassurance on billing and prices for the digital and non-digitally minded alike. The questions before us are, first, whether there should be an ongoing, default right to receive documentation through the post by request; secondly, if so, who should foot the cost; and, finally, how it might be underpinned by legislation. I reassure noble Lords that there are already several protections in place for the vulnerable, including the elderly. The Equality and Human Rights Act ensures that the rights of those physically unable to access material online are protected. More generally, the Consumer Rights (Payment Surcharges) Regulations 2012 prohibit excessive charges being applied to specific ways of paying, such as paying over the counter at the Post Office. Regulators such as Ofwat and Ofcom ensure that protections are in place, in their sectors, for the most vulnerable. As was mentioned by the noble Lord, Lord Lipsey, blind or visually impaired people can get their bills in an accessible format such as Braille. In the energy sector, for example, suppliers are not able to levy an additional charge for sending paper bills, but they may still offer a discount to those paying online. In so doing, I make it clear that they are not penalising the paper bill recipient but sharing genuine cost savings with the online customer.

Business is responding. For example, special tariffs for telephones, such as BT Basic, are available to those on low incomes, providing paper bills at no additional charge. In banking, thanks to the Parliamentary Commission on Banking Standards, access to transactional accounts is being broadened so that more people can use electronic payments.

I hope that this provides some reassurance but, as I said before, the digital age is moving rapidly upon us and much of it is driven by demand for efficiency and savings. According to the Digital Efficiency Report in 2011, the cost of an online transaction is 20 times lower than a phone one, and 30 times lower than a postal one. Companies cannot ignore such figures and the Government also need to consider savings.

However, there are wider drivers for change facing all of us that I might also mention. I mentioned earlier that it was a complex picture. Banks, councils and utilities, and the Government too, know that there is an increasing demand from their customers or citizens to go green and cut paper. People want to receive bills, receipts and statements online, reducing their impact on the use of natural resources. One can understand why. I might ask how many of your Lordships—I might ask myself this question—spend the weekend sorting through the post and seeking the right recycling bin to throw out those statements, receipts and circulars which you judge you will never read again. While doing so, you may well also wonder at the number of trees cut down to create all that paper. As a result, the specific question for us here is whether government should focus its efforts on controlling how business responds to customers—reflecting nominal and justifiable charges to certain bills—or on making markets more competitive to the benefit of all customers. Our stance remains to leave operational decisions to companies to act within the commercial spirit while putting in place the appropriate regime to ensure competition and protect the most vulnerable in our society.

It may be that in 20 years’ time, when I am approaching my eighties, this will be a largely paperless world. However, as the Government have committed, those not online will not be left behind. The Government’s approach to assisted digital exemplifies best practice in helping people access digital services and the benefits that going online can bring. Business should be looking to provide similar assistance. This House may recognise that, with advancing technology, the number of people feeling disfranchised by online billing is likely to diminish over time. That does not mean that we ignore the needs of the older generation. Options are there for those who wish to choose paper, but businesses should continue to meet the needs of their customers, both young and old.

In the time available I will address a number of questions that were raised.

[Baroness Hayter of Kentish Town]

Before the noble Viscount does so, let us be absolutely clear. Is he saying that the Government will do nothing about the issues that have been raised, or did I misunderstand him?

[Viscount Younger of Leckie]

I can reassure the noble Baroness that that is not the case. We are encouraging businesses to bring in processes that will help more the vulnerable—I have already spelt out what we are doing. The Government, of course, provide the framework, but we believe that it is very much for companies to decide to put themselves in a position to help people in this respect.

Consumer Protection

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Monday 11th November 2013 Lords Chamber

[Viscount Younger of Leckie]

My noble friend may be aware that there is a Bill going through Parliament at the moment and I am at the Dispatch Box later.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, it is not just consumers of the big six who are taken advantage of by their providers; many vulnerable customers will have to pay more in rent than they should, are taken advantage of by the banks and are unable to shop around. Will the noble Viscount tell us whether the Government are really on the side of consumers and, if so, why they wound up Consumer Focus, whose report he has just quoted? If they are on the side of consumers, what will the Government do to strengthen the power and remit of ombudsmen so that people can get redress for poor service?

Consumers: Vulnerable Consumers

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Tuesday 29th October 2013 Lords Chamber

[Baroness Hayter of Kentish Town (Lab)]

My Lords, does the Minister acknowledge that there is nothing in the so-called consumer rights Bill that the Government will be imposing shortly to deal with such issues? Will he therefore open discussions with representatives of consumer organisations and the Opposition to make sure that the Bill will increase rights and not just codify them?

[Viscount Younger of Leckie]

We are not planning to include anything specific but the consumer rights directive is being implemented as part of the programme. This will mean that suppliers should obtain consumers’ express consent to any extra charges. They should not use a tick-box approach that requires consumers to untick boxes in order to avoid charges.

Supermarkets: Pricing

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Monday 14th October 2013 Lords Chamber

[Viscount Younger of Leckie]

Indeed, although I have not yet seen the details of that particular Bill. Much is being done with the OFT, which is working with the supermarkets to develop a set of principles to address the concerns over special offers and promotions for food and drink. For example, the principles state that pre-printed value claims on packs, such as “Bigger pack, better value”, must be true.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, given the cost of living crisis, will the noble Viscount apologise to consumers for doing nothing about price increases, particularly the latest energy price rise? Will he tell the House why, for the first time since the war, he thinks that the Red Cross has had to launch an emergency food aid plan for our own hungry, asking volunteers in supermarkets to get shoppers to donate goods?

[Viscount Younger of Leckie]

I have no intention of apologising but I have recognised that there is a bite on household expenditure. I point out to the noble Baroness that the biggest drivers of UK food price inflation are global commodity prices, exchange rates and oil prices. As regards energy pricing, the Energy Bill, which is being led by the Department of Energy and Climate Change, will ensure that all households get the best deal for their gas and electricity by giving legislative backing to Ofgem’s retail market review.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Monday 22nd April 2013 Lords Chamber

[Viscount Younger of Leckie]

My Lords, on Report we debated the amendment in the name of the noble Baroness, Lady Hayter, on letting and managing agents. I made it clear then that the Government could not accept her amendment but that we were giving most serious consideration to the issue of redress. The noble Baroness confirmed that it was a redress mechanism that she was seeking in her amendment.

The Government have given serious consideration to these issues. We have considered reports by the Office of Fair Trading, Which?, the Royal Institution of Chartered Surveyors and others, and we have listened carefully to the debate here and indeed in the other place. The Government recognise that the fact that not all agents belong to a redress scheme has been an issue of growing concern. We are satisfied that making this a requirement would provide both the means of addressing complaints when things go wrong and a means to improve service quality across these important parts of the housing sector.

Providing access to redress would deal with many of the failings that people are concerned about in their day to day dealings with letting and managing agents. At the same time, the existing consumer protection and leasehold legislation remains in place and is already available, and is indeed used for the more serious matters.

Having listened to the concerns raised most specifically in this House by the noble Baroness, Lady Hayter, and others, including my noble friend Lady Gardner, the Government have introduced in the other place an amendment in lieu of the amendment tabled by the noble Baroness, Lady Hayter. The government amendment gives powers to require letting and managing agents of privately rented and residential leasehold homes to belong to a redress scheme. It gets to the heart of what the noble Baroness, Lady Hayter, was seeking, but without subjecting letting and managing agents to the additional layers of regulation that are in the Estate Agents Act and on which her amendment was based.

I am pleased to say that, while clearly some would have liked the Government to have gone further than redress, this amendment has been warmly welcomed and was approved without Division in the other place. Indeed, the honourable Member for Streatham, shadow Business Secretary Chuka Umunna, described it as,

“a victory for tenants and landlords””.—[Official Report, Commons, 16/4/13; col. 229.]

The Government’s approach has also been welcomed by key organisations. For example, the National Approved Letting Scheme welcomed it as a common-sense approach to improving the consumer experience of renting and letting and a sensible alternative to the heavy-handed bureaucracy of a formal regulatory regime. Similarly, the National Landlords Association has endorsed the Government’s approach of meeting the challenge of regulating letting agents head on, rather than simply applying the standards of estate agency to a distinct sector with its own significant risks.

If these clauses are enacted, the next steps will be for the Department for Communities and Local Government to consult on the details of the measures and to go through the formal scrutiny processes so that the necessary orders can be brought forward for approval in both Houses. We would expect consultation to be under way by the summer.

In their consultations, the Government will wish to take account of a number of the points that have been raised in the other place, for example on how existing codes of practice will be reflected in the redress schemes. There were also questions in the other place about the residential leasehold sector, generally echoing concerns that have been raised by my noble friend Lady Gardner of Parkes. The Department for Communities and Local Government is taking forward work on these issues, following its recent round table meeting, which my noble friend attended. I know that it will continue to involve my noble friend and a broad range of other interested parties on these matters.

My honourable friend in the other place, the Housing Minister, Mark Prisk, has spoken to the honourable Member for Worthing West about the points that he raised on the Leasehold Advisory Service and has now written to him.

The Government consider that this amendment can make a real improvement to the operation of letting and property management agents, for a very modest and proportionate regulatory burden. I am grateful to bodies such as the Office of Fair Trading and Which? for rightly bringing attention to these issues, and to noble Lords who have worked hard to bring these measures within the current Bill, in particular the noble Baroness, Lady Hayter, and my noble friend Lady Gardner. I also acknowledge my honourable friend in the other place, the Housing Minister Mark Prisk, who has a long-standing interest in this issue and has worked hard to deliver a workable redress mechanism within the current Bill.

I therefore ask that noble Lords do not insist on their amendment and instead agree with the other place on its amendments in lieu. I beg to move.

[Baroness Hayter of Kentish Town]

My Lords, I welcome and support Motion E. I pay tribute to a number of key players who have brought us to this happy position. First, there is the coalition of those interested in the well-being of tenants and landlords, as the Minister has mentioned, such as Which?, Shelter and RICS, which have given me a lot of help not only in drafting but in the persuasion, if I may say, of this House and then the Government, who perhaps were a little reluctant to start with but have made a very large step forward. The coalition that came together included representatives of tenants and landlords, as has been mentioned, but also the British Property Federation, the Mayor of London and various London councils, as well as the professional organisations to which some of these bodies belong.

The amendments in lieu are not exactly the whole of what the House asked for in passing my original amendment, in that they do not include a role for the OFT in debarring agents who go seriously astray. However, I am confident that with the build-up of intelligence by the various redress schemes, evidence will come to light on which the OFT or Trading Standards will be able to take action.

Furthermore, as happened with estate agents and as has been suggested in the consultation, ombudsmen will develop codes of conduct for letting and managing agents—based, no doubt, on the professional codes that they have in place now—to give member agents guidance as to how an ombudsman will decide a case. That is perhaps a backdoor way to the adoption of a code, but is very welcome for all that.

In due course, I and consumer groups will no doubt be asking for further regulation of letting and management agents if this measure proves insufficient to protect landlords and tenants, and I have a feeling that the noble Baroness, Lady Gardner, is not about to let this wider issue drop.

For the moment, I conclude by thanking our Lords PLP staff, Beth Gardiner-Smith, Sophie Davis and Ian Parker, for their help, and saying a very genuine thank you to both the Ministers who are with us this evening. They took a lot of trouble to listen to our concerns very carefully and—I am sure at some personal risk to themselves—battled with their colleagues at the other end to win through. This House has brought some good home sense to an issue that is of great importance to thousands of our fellow citizens.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Wednesday 6th March 2013 Lords Chamber

[Viscount Younger of Leckie]

My noble friend makes a very good point. I can reassure him that the Select Committee report is due out very soon. It is likely to be in May; it may even be as early as April. That is not a guarantee, but I hope that it gives a helpful indication as to what the timing might be.

None the less, I recognise that the issue of a lack of redress is a serious one, and I know that my honourable friend in the other place, the Housing Minister Mark Prisk, considers this a serious issue, too, and is giving it the most serious consideration. We will reflect very carefully on this and other recent debates, and I am sure that the Housing Minister will keep in touch with Peers who have spoken today.

I shall turn as fast as I can to Amendment 82. I thank the noble Lord, Lord Campbell-Savours, for having brought this issue to my attention and to that of the House. I have considered carefully the amendment and the arguments for introducing it. The Government are of course concerned to hear that buyers may be experiencing difficulties when trying to purchase a property at auction, especially if it involves first-time buyers. I am pleased to say that there is already legislation in place designed to address just this sort of unfair practice. Therefore, new legislation will not change the position regarding consumer protection in such matters. I will explain why.

Under the Consumer Protection from Unfair Trading Regulations 2008, auctioneers, like traders in all sectors of the economy, are required in their dealings with consumers to treat them fairly and not mislead them. Under the CPRs, there are also a number of business practices that are considered unfair in all circumstances and are prohibited. When marketing a property, it is prohibited to use bait tactics such as luring bidders to auctions using pricing techniques, which the noble Lord raised as an example. OFT guidance on the CPRs published last September, of which the industry should be fully aware, gives the specific example of guide prices not being distorted to attract potential buyers.

Where traders treat consumers unfairly, they may face criminal or civil enforcement action. Enforcement of the CPRs is by the OFT and local authority trading standards services. We are, of course, in the process of better equipping trading standards to take greater responsibility for consumer law enforcement, and will be transferring central government funding for national leadership and co-ordination of enforcement activity from the OFT to the National Trading Standards Board. In addition, the new Competition and Markets Authority will have consumer enforcement powers to address business practices that distort competition or impact on consumer choice in otherwise competitive markets.

Furthermore, I understand that the industry encourages fair practice in this area and offers guidance and training. For example, the Royal Institution of Chartered Surveyors provides best practice guidance for auctioneers selling real estate. Such guidance addresses price guides and states that these guides must not be misleading, advising that a price guide that is clearly below the figure that the seller will accept is misleading. As best practice it also says that auctioneers should clearly indicate in the catalogue that price guides may be subject to amendment during the period leading up to the day and time of the auction sale.

In the light of the consumer protection legislation already in place, and as we have not seen any evidence on which a change of legislation could be justified, we do not feel the necessity to change legislation in this area. The noble Lord may wish to write to the OFT, providing evidence of the experiences and findings in this matter that are causing him concern. I hope that he is reassured by my answer and that he will therefore not press his amendment. I note that this is a new issue that was not raised in Committee and I acknowledge his apology. However, I believe that he raised some interesting points that we will keep in our sights. I also ask the noble Baroness, Lady Hayter, to withdraw her amendment.

[Baroness Hayter of Kentish Town]

My Lords, this amendment simply asks that letting agents should have to sign up to a redress scheme. We have checked it with the lawyers, and it does not apply to development land or anything else. If that was the case, and if the noble Lord had said he that accepted the need for redress, that it was just the wording that needed changing and that it was coming back at Third Reading, I would be happy to withdraw. Sadly, that is not what the Government have said.

The unfair trading regulations do not work. You cannot go to trading standards; it does not give redress. The Government have given no answers other than self-regulation or, “Wait for another committee”. Consumers want this; Mark Prisk wanted this in 2007; Lib Dem policy is in favour; landlords and tenants want it; the OFT wants it; and so does the industry, despite the costs. I thank noble Lords who have all spoken in support—there has been nothing but support from all around this House. I believe that, in addition to that list, the House will support the amendment. I beg leave to test the opinion of the House.

--- Later in debate ---

[Baroness Hayter of Kentish Town]

My Lords, not surprisingly we support these amendments. I have been working with ARMA on trying to get some of this done. There will be a voluntary scheme, but only the good ones will join. The advantage of these amendments is that they will make sure that everyone, not only the good, will have to meet those standards.

[Viscount Younger of Leckie]

My Lords, I am grateful to my noble friend Lady Gardner for the thought and effort that she has put into the preparation of the five amendments we are now considering. Her ideas and broad experience of the housing sector are an invaluable resource to this House. Her amendments, like those of the noble Baroness, Lady Hayter, address the private rented and residential leasehold sectors. I will not repeat what I have already said about those areas.

I have carefully considered my noble friend’s Amendment 81B on the ability of freeholders to recover their legal costs from leaseholders and I take her concerns very seriously. This amendment aims to limit the circumstances in which costs of proceedings incurred by a landlord or other party with an interest in the property at a leasehold valuation tribunal could be charged back to leaseholders. I should point out that where a freeholder is able to recover costs in connection with proceedings from the leaseholders, this is contractual matter between them and will be set out in the lease. I am aware that leaseholders are increasingly concerned about the recovery of such costs as administration charges where the lease permits this and I understand that my honourable friend Mark Prisk is thinking about this issue. I am concerned that my noble friend’s amendment would not achieve her goals and would not in fact provide any greater protection for leaseholders than already exists.

I know that my noble friend, as she said, recently took part in a high-level round-table discussion on residential leasehold issues. I understand that a number of practical ideas for improving awareness of leaseholders’ rights emerged from that event and that the Department for Communities and Local Government is committed to working with the Ministry of Justice and others to take those ideas forward. The issue of recovery of legal costs as an administration charge, rather than a service charge, requires detailed consideration. For this reason, I believe that the current Bill is not the best place to consider this complex issue.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Thursday 31st January 2013 Grand Committee

[Viscount Younger of Leckie]

The noble Lord, Lord Whitty, makes an interesting point. I will need to double check and revert to him to clarify his point.

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for his reply. I am particularly reassured by the ongoing discussions with consumer groups. Perhaps it was not clear in what he said—I did not quite hear it—but it seemed to me that he said that no extra resources would be made available to the Information Commissioner. If that is not the case, perhaps that could be clarified.

--- Later in debate ---

[Baroness Hayter of Kentish Town]

My Lords, we very much welcome the amendments tabled by the noble Lord, Lord Razzall, and the noble Baroness, particularly their intention to clarify investors’ fiduciary duty. The amendments, as have been suggested, would clarify that institutional investors are not legally obliged to maximise short-term profits at any cost but “may”—that word was emphasised—take into account wider factors, such as the long-term sustainability of returns. This is modelled on Section 172 of the Companies Act 2006, which similarly clarified that company directors may take account of longer-term and wider factors, such as their impact on communities or the environment.

We on this side tabled remarkably similar amendments to the Financial Services Bill last year. We remain of the view that the position of those who hold money or assets on behalf of others, and who take decisions about those assets, should have their real owners’ or beneficiaries’ interests centre stage. The Kay Review of UK Equity Markets of July 2012 acknowledged a problem with misinterpretations of fiduciary duties, based on what he said was,

“a narrow interpretation of the interests of … beneficiaries which focused on maximising financial returns over a short timescale and prevented the consideration of longer term factors which might impact on company performance, including questions of sustainability or … social impact”.

This can lead to unhelpful short-term behaviour by investors and is a barrier to the adoption of the stewardship approach. The Kay report concluded that,

“there is a need to clarify how these duties should be applied in the context of investment, given the widespread concerns about how these standards are interpreted”.

The Bill in front of us is about enterprise and long-term growth. The Government are giving shareholders additional rights, which we welcome, but these must be balanced with duties to the underlying beneficiaries, who may have wider interests than just immediate returns. These amendments propose that there should be no legal barriers to consideration of those beneficiaries’ interests. They do not mandate anything but they clarify the law. The amendments are, we would say, permissive rather than prescriptive, and would ensure that the law does not prevent trustees from taking a broader approach. The provision does not mandate them to do so; in fact, it restores the primacy of trustees’ discretion in deciding how best to serve their beneficiaries, as opposed to assuming that the law restricts them to taking a particular approach.

The amendments make it clear that the duty of fiduciary investors is solely to their beneficiaries, and that the interests of beneficiaries must be the basis for all decisions. They clarify that this need not always mean maximising short-term profits: if trustees believe that their beneficiaries’ interests will be better served by taking into account wider factors, they will be empowered to do so. Indeed, where trustees choose to take account of purely non-financial factors—such as beneficiaries’ ethical views or implications for their quality of life—the amendments specify that this must not be to the detriment of beneficiaries’ long-term financial interests.

Perhaps I may give one example to show why this amendment is so needed. A large pension fund, which I fear does not wish to be named in this debate, received legal advice to the effect that its policy on shareholder engagement and responsible investment might be unlawful. Its policy stated that the fund would seek to exercise voting rights in listed companies in which it held shares, and that it would take into account environmental, social and governance issues with the potential to affect the long-term value for the fund’s beneficiaries. This position is firmly grounded in the financial interests of beneficiaries, and is widely accepted as best practice within the industry. The Government endorsed such an approach by promoting the stewardship code, through its package of enhanced shareholder rights on executive pay, and, in the Commons, where Pensions Minister Steve Webb said that,

“the coalition Government fully support the highest standards of corporate governance and ethical behaviour. We agree that a socially responsible investment strategy is a sound choice for pension schemes”.—[Official Report, Commons, 20/1/12; col. 1044.]

Despite this, the advice from a large and reputable law firm took an extremely narrow view of beneficiaries’ best interests, and suggested that the costs involved in exercising voting rights might render the policy unlawful unless the firm could demonstrate that such stewardship brought monetised benefits to the individual fund. The opinion cast doubt on whether such benefits could be demonstrated. This illustrates why the Government’s approach to responsible capitalism, which has focused on giving shareholders more rights, needs to be complemented by measures to remove any perceived legal barriers to the responsible exercise of these rights.

For long-term, sustainable growth and returns, we want responsible shareholder engagement with listed companies. The Kay review recommended, and the Government agreed, that the Law Commission be asked to review the question of fiduciary duty, with Kay himself indicating that statutory clarification may be necessary to resolve this. We would therefore ask Minister to confirm today that, if the Law Commission thereby recommends such statutory underpinning, the Government will take action.

[Viscount Younger of Leckie]

My Lords, these amendments would introduce a statutory requirement for institutional investors to act in the best interests of their clients and beneficiaries. They seek to clarify that these investors are not legally obliged to maximise short-term financial returns, but may take into account longer-term considerations, including the social and environmental impact of the companies in which they invest.

I am grateful to my noble friend Lord Razzall, supported in name by my noble friend Lady Brinton, for giving us the opportunity to debate the vital issue of fiduciary standards in the investment industry. As noble Lords may be aware, the duties of investment intermediaries were considered by Professor John Kay in his 2012 independent review of equity markets and long-term decision-making. The noble Baroness, Lady Hayter, mentioned this in her speech. The Government have broadly accepted the recommendations of the Kay report in this area. Specifically, they have made clear their support for the view expressed by Professor Kay, and echoed in Amendment 58F, that institutional investors should not automatically assume that maximising short-term returns is sufficient to serve the interests of their clients or beneficiaries. Instead they should take into account long-term factors relevant to their clients’ interests over the time horizon of the investment. However, the Kay report also found that there was no clear agreement on what the law currently requires of those investing on others’ behalf, and recommended that the matter be referred to the Law Commission.

The Government have therefore asked the Law Commission to undertake a review of the legal obligations arising from fiduciary duties that dictate what considerations are appropriate for trustees and other intermediaries acting in the best interests of their clients and beneficiaries. The Government also support Professor Kay’s view that there should be a common minimum standard of behaviour required of all investment intermediaries. While I therefore have great sympathy with the spirit of my noble friends’ intentions, I do not believe that the approach taken in these amendments would achieve this. The amendments attempt to enshrine aspects of the common-law concept of fiduciary duties in statute, and to apply these to certain institutional investors in all circumstances. This includes applying them to certain FSA-authorised firms without due regard to the FSA’s existing regulatory requirements. This approach would add to confusion and uncertainty about the meaning of the word “fiduciary”, the circumstances in which a fiduciary relationship already arises and the standards already expected of investors in regulation.

The government response to the Kay report is very clear in setting out the principle that all investment intermediaries should act in the best interests of their clients or beneficiaries in line with generally prevailing standards of decent behaviour. In order to embed this principle effectively, the Government have asked the FSA, and its successor organisation, the FCA, to consider to what extent current regulatory rules in this area align with this principle and to determine what action might be desirable. This includes, if necessary, changes to regulatory requirements at EU level.

With these reassurances, I hope that my noble friends will feel able to withdraw their amendment.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Wednesday 16th January 2013 Grand Committee

[Viscount Younger of Leckie]

Not only will I be very pleased indeed to reply to a letter that I might receive but I would be delighted to meet to discuss these matters fairly and fully.

[Baroness Hayter of Kentish Town]

The Minister will not be surprised to know that the lady is not reassured. I thank the noble Lords who have spoken for their support, not only the noble Lord, Lord Lucas, but also the noble Lord, Lord Sharkey, the noble Baroness, Lady Brinton and the noble Lord, Lord Deben, whose ministerial experience I am very grateful for, as well as the noble Baronesses, Lady Gardner and Lady Howe.

The problem with the voluntary scheme is that only the good agents belong. They are the members of the Association of Residential Letting Agents, which does not just get you in there—it educates you, awards certificates and does training. Very interestingly, ARLA also gets feedback from the ombudsman scheme to know what is going wrong and help them maintain their standards. The problem with the idea of using unfair contract terms is first that the consumer—whether it is a landlord or a tenant—simply does not know to go to them. Secondly, if an individual trading officer deals with something they will probably just deal with that one letting agent and there will be no feedback or ongoing case. I do not agree that this cost is disproportionate. The noble Baroness, Lady Gardner of Parkes, gave the figure of £150 to belong to a scheme: this is not going to put any letting agents out of business. The Minister also seemed to suggest that if any letting agents did go out of business—and they will only go out if they are bad and run off with clients’ money—this would somehow lead to less property. It will not: they will just go to a decent agency. It does not affect the number of properties on offer to tenants.

Enterprise and Regulatory Reform Bill

Debate between Viscount Younger of Leckie and Baroness Hayter of Kentish Town

Wednesday 12th December 2012 Grand Committee

[Viscount Younger of Leckie]

My Lords, I thank the noble Baroness, Lady Hayter, for this amendment, which seeks to establish a CMA consumer panel, and I note her very considerable experience in chairing consumer panels over many years.

Close co-operation between the CMA and consumer organisations will be essential to ensure that the CMA is well informed on issues that cause consumer detriment, and that it takes action in the right areas. Competition authorities are well used to taking account of consumer welfare in their activities and this will be the case for the CMA in particular, given its objective to promote competition in the interest of consumers. This is why we have established SIPEP, a new strategic intelligence, prevention and enforcement partnership, which will bring together key consumer bodies, including Citizens Advice and representatives from Scotland and Northern Ireland, to work together to identify those issues that impact on consumers and collectively agree priorities for enforcement, information and education. These will assist in guiding the CMA’s policies and priorities.

In addition to this, the Bill already has extensive provisions on transparency and consultation with consumers and other bodies. The CMA must consult stakeholders, including consumer representative bodies and the general public, on a range of issues that guide its policy. For example, paragraph 12 of Schedule 4 to the Bill provides that as part of its annual plan, the CMA must consult on its main objectives for the year and the relative priorities of each of those objectives. The CMA must also consult on statutory and non-statutory guidance which sets out much of the CMA’s policy and processes. The super-complaint process, in which the OFT is required to provide a fast-track response to certain consumer bodies, will also be retained for the CMA.

Given the consultation requirements, the new approach to enhanced working between the CMA and bodies across the consumer landscape, and the super-complaint process, I hope that the noble Baroness will consider that the arrangements for consulting consumers are already sufficient and will agree to withdraw this amendment.

[Baroness Hayter of Kentish Town]

I thank the Minister for that response and my noble friend Lord Borrie and the noble Lord, Lord Skelmersdale, for their comments. As usual, my noble friend Lord Borrie goes straight to the point that the name is wrong. Maybe we can negotiate on “consumer forum” or “consumer round table”. However, right as he is on that, wrong are the Government in their response.

Before I turn to the Minister’s comments, perhaps I may say that the comment made by the noble Lord, Lord Skelmersdale, was interesting. It is about whether one person on a board is sufficient to represent all consumers, an issue which the consumer movement has discussed a great deal. It is like being the only woman in a committee and people assuming that you can speak on behalf of all women. When the noble Baroness, Lady Oppenheim-Barnes, was first at meetings—I hope she does not take this badly—she was very often probably the only woman present. Even women of my age are still experiencing that situation now. As the one woman, it was somehow expected that you would speak for all women. It can be the same with consumers. However, as I found on panels, there were BME consumers, rural consumers, old consumers and young consumers, and you need a broad panel, if you like, to reach in, understand and get to a hearing in that way. A middle-class woman such as myself as a consumer rep does not do it, but a much broader-based panel does.

I hope the noble Lord, Lord Skelmersdale, understands that it makes it easier for one consumer representative on a board if there are mechanisms for a much broader consultation.

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[Baroness Hayter of Kentish Town]

My Lords, the noble Lord has raised some really important issues. Certainly we would like to hear from the Minister why the Government have chosen this particular set-up, which is an argument that we have just been having in relation to the Financial Services Bill. The question remains as to why any panels under this Bill are not hearing cases completely independently of the CMA board.

I am sorry that I went on earlier about my consumer panel experience but I also have to say that I was a member of the determinations panel of the Pensions Regulator. We were completely independent of the Pensions Regulator. We were appointed by it to ensure that we knew something about pensions but that was about it. Other than that, we were completely independent. We did not work there and we did not know the staff, other than bumping into them in the loo and so on, but we were very independent of them. It was therefore more than a Chinese wall—it amounted to a gap of a good few miles.

Similarly, in our discussions on the Financial Services Bill, we have been trying to ensure that the Regulatory Decisions Committee of the FSA is equally independent of and separate from the FSA. That is partly to do with independence but also because it seems that we should look at whether there is a difference between the two roles of serving on the CMA board and doing hearings and taking decisions. The role of serving on the board is really about setting strategy and policy, whereas the work of the panels is often quite different and calls on a slightly different skill set. Therefore, we are interested in knowing why the Government have not made sure that the investigators are separate from the decision-makers and that their roles are not blurred— I think that was the word used earlier by the noble Baroness, Lady Oppenheim-Barnes, in quoting a former chair of the monopolies commission.

I assume that we all want a strong firewall between investigations and decision-making, so perhaps it is better to make them absolutely separate from the start, rather than going through convoluted ways of achieving that end.

[Viscount Younger of Leckie]

My Lords, these amendments affect the provisions that provide for a partial overlap of the CMA board, which is responsible for the CMA overall and phase 1 decisions in mergers and markets in particular, and the CMA panel, whose members are responsible for phase 2 decisions in mergers and markets and regulatory appeals. The governance and decision-making arrangements in Schedule 4 are designed to establish a single, coherent competition authority while retaining the separation of decision-making between phase 1 and phase 2; in particular, merger and markets cases.

Paragraph 1 of Schedule 4 provides that at least one person be appointed to both the board and the panel. In the Government’s response to the competition reform consultation, we said that we intend to appoint two or three such people to the board and the panel. The membership provisions being debated here are designed to ensure that the board includes members with experience of the phase 2 processes, and so to address any reluctance of the board to have a matter referred to a group of independent panellists whose decisions are, under paragraph 49, to be taken independently of it and over which it will have no direct control. Ensuring that there is a steady flow of appropriate market investigation is one of the key intended benefits of the creation of the CMA, so the provisions will play an important role.

I believe that the provisions in the amendment in the name of the noble Baroness, Lady Hayter, will undermine the separation of decision-making by allowing board members to take phase 2 decisions. I assure her that the Government would also be concerned about the risks resulting from some of the same people involved in a decision to make a referral also being involved in final decisions at phase 2. It is for this reason that paragraph 33 prevents this from happening.

Paragraph 33 works prospectively, so that where the board will be considering whether a matter should be referred to the chair of the CMA for the constitution of a group of panellists who will be responsible for a phase 2 inquiry, the chair must first determine whether a member of the board might be expected to be appointed to a resulting group. In these circumstances, the person so identified must not participate in the board’s consideration of the referral.

Finally, because the Government intend to appoint two or three people who will be board members and panellists, even where one board member is excluded from considering a referral, other panellists—who will not be involved in the group taking on an inquiry if the matter is referred—will still be able to participate in the board discussion. This provision therefore protects independence of decision-making, while also ensuring that the board includes members with responsibilities across the CMA’s range of functions, and is therefore able to act, at a strategic level, as a coherent body. I therefore ask my noble friend to withdraw his amendment.

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[Baroness Hayter of Kentish Town]

My Lords, the good news for the Committee is that this is the last it will hear from me for a bit. I will hand over to my noble friend Lord Mitchell, whose great success in the Financial Services Bill will, I hope, make the Minister quake as he receives my noble friend’s amendments.

The first of the two amendments in this group, which I move on behalf of my noble friend Lord Whitty and me, concerns the make up of the CMA board, and ensures that, as has already been mentioned, at least one of its members has expertise in representing the interests of consumers. There is a large pool on which to draw for this. For example, they may be former employees or board members of ombudsman schemes or consumer bodies or panels, or else active in the wider consumer movement. I know from the testimony of the financial industry and not just the consumer movement how well received Mick McAteer’s appointment has been, in his work at both the Financial Reporting Council and now the Financial Services Authority. He was formerly with Which?, has been a consumer advocate with long experience of representing consumers at both UK and EU levels, and has brought realism grounded in consumer experience, expertise and a clear consumer focus to the FSA for the past three years—to widespread acclaim. Earlier, a former chair of the National Consumer Council—not one of the two with us today—proved herself to be so invaluable to the FSA that it promoted her to become its vice-chair. Other examples abound.

Our proposal is modest. It is for just one such person, but having that in the Bill also reinforces the fact that the CMA is all about consumer interests and that consumers’ voices must be heard at the highest level. As I said previously in response to a question by the noble Lord, Lord Skelmersdale, this is not instead of a consumer panel. No one person can represent all consumer interests. What is interesting is that that person can be a channel and focus, albeit that they take the full corporate responsibility for the whole board.

The second amendment in the group, Amendment 24BK, is based on the assumption, which we do not necessarily share, about the proposed panels and the tiers mechanism in the new architecture. We have argued that that might not be for the best. For the moment, accepting that that structure is there, our proposal is again to emphasise the need for consumer and competition experts on CMA panels to avoid the risk of making their deliberations insufficiently consumer focused. That would make sure that the CMA and its decision-making panels represented the interests of consumers throughout their work. I beg to move.

[Viscount Younger of Leckie]

My Lords, Amendment 24BA adds a requirement to appoint at least one person with consumer representative expertise to the CMA board. A similar amendment was proposed by the Opposition in Committee in another place. We share the concern of noble Lords opposite that the reforms promote consumer interests, as mentioned in an earlier debate today. Consumer interests will be at the heart of the CMA. Given this, the amendment is not necessary. It could also undermine the perceived fairness of the CMA. We agree with the point made in the previous Government’s 2001 White Paper on a world-class competition regime that decisions should be made independently on the basis of sound economic analysis of the effects on competition. Independence of government and between the phases enables better decisions, greater certainty for business and more clarity in the regime.

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[Baroness Hayter of Kentish Town]

My Lords, these amendments speak for themselves, so I hope that I can be brief. They are to remind the CMA, and to be certain that it includes in its reports, that it must set out the consumer benefit to be achieved and then monitor and evaluate it in its objectives and priorities. That will make its accountability for achieving this easier to ensure and will enable Parliament, the public, consumer groups and others to have clear evidence on which to assess progress.

Amendment 24BE means checking that the staff are up to the task set for them and that the resources are properly allocated to meet key objectives. Amendment 24BF is to allow Parliament and others to evaluate the cost of this merger into a single body, not just in money, important though that is, but on whether competition is healthier and that cases are being heard more quickly. We all, I assume, support post-legislative scrutiny. This amendment would produce the evidence on which to base that work. I beg to move.

[Viscount Younger of Leckie]

I am grateful once again to the noble Baroness, Lady Hayter, for the suggested amendments. Amendment 24BD would impose a requirement on the CMA that its annual plan for a forthcoming financial year should contain the consumer benefit that will be achieved as a result of the CMA’s main objectives for the year, and the prioritisation of those objectives.

Under the OFT spending review settlement, the OFT is currently required to provide an estimate of direct savings to consumers from its activities and to assess the associated benefit cost ratio against the current target of 5:1. In 2011 this figure was exceeded to deliver a benefit to cost ratio of 7:1. For the OFT, such a requirement serves to encourage it to maximise benefits to consumers in deciding what work to take forward. By comparison, however, a requirement for the CMA to assess the impact of its future work would be considerably less precise. As well as difficulties in assessing the future benefits of particular cases, the CMA’s caseload itself is not predictable. This amendment could therefore incentivise the CMA to underestimate and underachieve and could also potentially leave the CMA at risk of judicial review if forecasted consumer benefits were not realised.

Amendment 24BE seeks to provide a statutory requirement for the CMA to report in its annual performance report on the skills of its staff and to estimate the resources needed to perform its functions in the following two financial years. As drafted, the Bill provides a statutory requirement for the CMA to produce an annual plan and performance report in which it must set out its objectives for the coming year and the relative priorities, and how it has delivered against these. In addition, both the OFT and the Competition Commission already publish information relating to their staff, such as the development, diversity and engagement of their staff. We expect the same of the CMA. While it is imperative that the CMA has a skilled workforce to carry out its functions, to report on the skills of its workforce on an annual basis will be unnecessarily burdensome to the CMA, we believe.

Finally, Amendment 24BF proposes that the CMA’s first performance report provides an assessment of the transition costs and the impact of reforms on the speed of referrals. Evaluating whether the policy delivers the objectives is essential to ensuring that the CMA is getting it right, as is an assessment of the transitional costs against benefits. However, such an evaluation must provide an assessment of the costs against benefits over an appropriate time period: to do otherwise would not provide an accurate picture of the impact of the policy. A requirement to assess the costs and benefits to the competition regime within the first financial year of the reforms would be far too soon for a realistic assessment of the transition costs and benefits in either financial or competition terms. The Government’s impact assessment of the proposed reforms to the UK competition regime, which includes the transition to the CMA, commits government to a review of the policy in 2018. That is an appropriate point at which to consider the impact of the transition to the CMA in both financial and competition terms. For this reason, we do not consider that it is right for there to be a statutory requirement for the CMA to include within its first annual performance report an assessment of transition costs in both financial and competition terms.

While I welcome the intention behind these amendments, their practical impact could serve to hinder the efficient and smooth working of the CMA as a high-performance organisation. I therefore request that the noble Baroness withdraw these amendments.

[Baroness Hayter of Kentish Town]

I thank the Minister for that. I assume from what he just said that the requirement on the OFT to measure the balance of its saving to consumers will continue into the CMA.

[Viscount Younger of Leckie]

Yes.

[Baroness Hayter of Kentish Town]

In case Hansard did not record that, the answer was a very welcome “yes”, for which I thank him.

The Minister talked about the requirement for reporting on diversity of staff. Needless to say, we welcome that, but it seems to me that if you set up an organisation to do a job, making sure that it has the appropriate staff is central. Its human resources department will know if it is not got enough IT people, it will know if it is short of various staff. All we are asking is that it should share that knowledge with us. For those who say that this is extra work, I believe that a well run organisation knows about staff turnover, who it is recruiting and who it cannot recruit.

Finally, I welcome the fact that there will be a review in 2018. Of course, it is a bit late by then to do anything about it if the Government have made a mistake in doing this. I suppose that it is better late than never, but I hope that the Ministers at the time will at least be asking those questions, even if it is not a statutory requirement. I beg leave to withdraw the amendment.

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[Baroness Hayter of Kentish Town]

My Lords, despite the financial sector nominally being competitive—in that there is a choice of banks—we have seen a real lack of satisfaction with banks among consumers.

We do not need to rehearse the mis-selling scandals, with unwitting customers, including small businesses, being sold—as a nice little earner—products that they do not need. We have a reminder of the banks’ record in the newspapers today. Furthermore, we know how hard it has been for people to switch bank accounts— a case made very strongly by the noble Lord, Lord Flight, who is not in his place now, during the discussions on the Financial Services Bill. We know that banks have been unbelievably slow to react to complaints about bank charges—in fact, without the OFT a number of malpractices would still be going on—and that they remain resistant to transparency on fees and charges. Indeed, what I find odd is that no other supplier of a service can simply remove money from one’s bank account without first submitting an invoice or agreeing the amount with the customer.

Banks are slow to deal with complaints, they are resistant to the ombudsman’s activity, and it sometimes feels as though they exist for their staff and their bonuses, rather than to serve the consumer. This smacks of a failing market. Therefore, Amendment 24BH seeks to test that allegation by asking the CMA not to rely on a collection of anecdotes—which does not evidence make—but to undertake some serious consumer research into this market, and to present that, together with any recommendations flowing from it, to the Secretary of State, who should then report back to Parliament.

The other evidence of the lack of a functioning competitive market is the virtual seizing up of finance for small and medium-sized enterprises, and indeed for high-growth businesses, as set out earlier by my noble friend Lord Mitchell. Yet we know that our economic regeneration, and our future, rest on their shoulders. Something is amiss.

This does not feel like a competitive industry when customers cannot get what they want: money for investment. Thus Amendment 24BJ seeks to force the CMA to undertake some serious research on competition in the financial services sector. When we discussed these issues during our debates on the Financial Services Bill, we were told that the CMA would be the lead regulator on competition—the FCA’s role being to promote competition, it seems, rather than deal with its absence—so now we ask the CMA to do just that. I beg to move.

[Viscount Younger of Leckie]

I thank the noble Baroness, Lady Hayter, for these amendments.

To be effective, the CMA needs to be able to independently determine its own priorities, but its ability to do this would be undermined by the obligation under Amendment 24BH to undertake regular reviews of one particular sector. As we have discussed, the Government are of course determined to improve financial regulation. Markets and market regulation evolve and, by requiring the CMA to carry out studies every two years, this amendment might have the effect of limiting the ability of the CMA to carry out higher-priority work.

The CMA also needs to be able to choose which tool to deploy. During the course of a targeted investigation, Amendment 24BH could require the CMA to produce a general report on the financial sector. In these circumstances, the reporting requirement could waste resources, interfere with an investigation or even act as a disincentive to initiate a separate investigation in the first place.

Finally, while the CMA will be the central competition authority, the FCA will be the lead regulator in the financial services sector, funded by an industry levy. It would be duplicative for the CMA to be required to carry out detailed scrutiny of conduct in the financial services sector at taxpayers’ expense, as required by Amendment 24BH. The OFT and the Competition Commission’s scrutiny powers will be transferred to the CMA by order, under this Bill. New arrangements for co-operation between the CMA and the Financial Conduct Authority will ensure that the two bodies work well together. They will both, of course, have the power to carry out research and publish reports, as envisaged by these amendments. I therefore ask the noble Baroness to withdraw her amendment.

[Baroness Hayter of Kentish Town]

I thank the Minister for that. There is one bit of that which I can accept—that it may not be necessary to do this every two years. But there is a major problem in this sector of financial services, and it is time that the Government accepted that. In the Financial Services Bill they are rejigging the architecture, a bit like this, taking the FSA and splitting it in two, sending one bit to Threadneedle Street and letting the other bit stay in Canary Wharf. None of that will seize the problem of the banking industry. I wonder whether the Government are ever going to do it. This was another way to say that this is an industry, and a market, that needs looking at. If it is not going to be done by the FCA, which is not going to have the same powers, surely it should be done by the CMA—if not every two years, even as a one-off now—to see whether we can sort this industry.

This is something that we will certainly need to come back to. The Minister referred to arrangements between the CMA and FCA, but so far the Government have absolutely refused even to accept the obligation to have an MoU between those two. We will come back to that in this Bill. There is something fundamentally wrong in this enormously important sector, which is failing to serve consumers and industry, small companies in particular, and no one seems willing to do anything about it. We will come back to this, maybe without the reference to “two years”. For the moment, I withdraw the amendment.