Domestic Building Works (Consumer Protection) Bill

Anthony Mangnall Excerpts

Friday 19th November 2021 Commons Chamber

[Mark Garnier]

My right hon. and learned Friend is absolutely right. The implications of cowboy or rogue builders who do not build to standard are unbelievably widespread—indeed, that opens another interesting debate about inspections by local councils in terms of the amount of work done, and there is a completely different debate about that to ensure that building standards have been maintained. Sometimes there are questions about whether some councils examine building standards properly, and my right hon. and learned Friend raises an important point.

How does the victim of the rogue builder seek redress? The answer, as it turns out, is not simple. In the first instance they could go to trading standards, but with a rogue builder being, by definition, a rogue, the sanctions available are weak at best. Ultimately, the home or small business owner who has found themselves the victim of a rogue builder has no other recourse than the courts.

This is the point at which it is really important that I declare my interest. There has been much debate of late about Members’ experiences—I think you were in the Chair, Madam Deputy Speaker, when we discussed the Domestic Abuse Bill, and we heard a stunning speech from the hon. Member for Canterbury (Rosie Duffield) about her experience, which was very valuable. When someone finds themself the victim of a rogue builder, they suddenly discover that they are in an extraordinary Kafkaesque world of misery, and trying to deal with legal practitioners, professionals and all the rest of it. I was going to speak at length about my first-hand experience but, frankly, it is important to move along in the interest of the next debate. Suffice it to say that, apart from anything else, as Members of Parliament we find ourselves subject to blackmail, threats to break into our property to recover items that we have already paid for and multiple final bills—in my case multiple fictitious final bills. The list goes on and on, and it becomes unbelievably depressing and wearing, as we find ourselves having to deal with the problem and, ultimately, there is no justice.

The fundamental fault with the whole system is that contract law simply does not work for people with problems bigger than the small claims court, which is fine, but below a value of £1 million. The reality of the situation is that anyone can make up a fictitious account that they want us to pay and we have to negotiate. In addition, if we want to get redress against a builder, we have to go to court and seek legal action. It works both ways. It is not just about bad building standards; it is also about builders’ bad business practices and vexatious bills.

To challenge or defend this type of bill requires a commitment of between £100,000 and £200,000 in legal fees, court fees and professional fees to demonstrate the loss and to provide the evidence. I have spoken to any number of friends and colleagues with very senior legal experience—this place is stuffed to the rafters with lawyers and barristers—and they all say that the type of problem I am facing, and that hundreds of thousands of people face, has nothing to do with justice and everything to do with trying to achieve a negotiated settlement.

[Anthony Mangnall (Totnes) (Con)]

My hon. Friend is making an extraordinarily important point. Many of my constituents have had to deal with rogue builders, and I am sorry for what he has had to go through. Could we improve the civil litigation process rather than creating an ombudsman under this Bill?

[Mark Garnier]

I have privately asked all sorts of senior people and, weirdly, they just roll their eyes and say, “It is what it is.” Perhaps we could, but I am certainly not qualified. I was an investment banker rather than a lawyer, so I approach this from a slightly different direction.

One of our colleagues pointed out that the process of negotiated settlement is like being mugged and then being charged for the mugger’s knife, and it has the backing of the law. The consumer of repair, maintenance and improvement building services has no consumer protection at all. There is absolutely no practical protection for consumers that avoids the highly risky, unbelievably expensive and emotionally draining prospect of prosecuting contract law. Indeed, the subcontractors working on our home were victims of the same rogue builder. They were eventually paid, but they were not paid initially.

While we were going through this nightmare, an unrelated subcontractor came to me with a complaint that he had not been paid by the firm with which we were in litigation. The builder’s manager even boasted to our subcontractor that he usually had five legal cases on the go at any given time, playing the system to get more money. This is not just an accident; it is a deliberate action by these builders.

It is extraordinary that consumers are completely unprotected. When we think about the whole building process, it is even more astonishing. The proud homeowner who is seeking to improve their home will go to an architect, who will be regulated by the Architects Registration Board. They might contract a quantity surveyor, who will be regulated by the Royal Institution of Chartered Surveyors. They will probably need to borrow money, so they might approach a mortgage broker who is regulated by the Financial Conduct Authority. The mortgage broker will help with the mortgage, which will be provided by a lender, again regulated by the FCA and possibly by the Prudential Regulation Authority, with advice from a solicitor regulated by the Solicitors Regulation Authority. The money will then be deposited in a bank, regulated again by the FCA and the PRA. The whole process is laden with consumer protection and regulation, right up to the point at which the money is handed over to someone with no regulation—and possibly no qualifications—and with no protection mechanisms for the consumer in any way, shape or form.

Unbelievably, the problem gets worse. The victim may well prosecute the court and win—possibly both damages and costs—but at that point the rogue builder goes bust with no assets and starts a new business the following day to continue the process of ripping off consumers. Meanwhile, the costs to the victim, running into hundreds of thousands of pounds, are unpaid. The reality is that there is absolutely no disincentive for the cowboy builder to present fictitious bills or to do shoddy and appalling work. While the consumer must engage in a risky legal process to seek redress or protection, the rogue builder can game the system with no jeopardy whatsoever.

What is the solution? How do we protect honest builders and subcontractors, builders’ merchants and, importantly, consumers? I repeat that most people in the trade are very honest people who also need to be protected from the activities of rogue builders. How do we redress the balance of risk away from favouring the rogue builder to giving equal weight to both consumer and builder? We must remember that the builder is not always in the wrong, so we need to ensure that the solution is balanced. The answer must lie in a regulation and licensing scheme.

My Bill asks the Government to come up with a scheme of compulsory licensing for SME building firms working in the RM&I space. While it does not set down the specific framework for a licensing scheme with associated regulations—it would be wrong for a Back Bencher to try to undertake that work, because it is complicated—I will suggest my vision of how it would work. My experience, which informs how I look at it, is with financial services and banking regulation—back in the 2010 Parliament, we were heavily involved in changing financial services regulation—and while I do not propose anything remotely as complex as the FCA or PRA, there are some important carry-acrosses from financial regulation.

First, any regulatory scheme must not be a financial burden on the wider taxpayer. A licensing scheme for builders must be self-financed through licence fees. Rules for having a licence must be straightforward; they cannot be complicated. Importantly, no firm can be allowed to offer services direct to customers without a licence. That in itself would result in the wider industry policing the market. For example, mortgage lenders would require evidence that money would be spent on a licensed firm, while architects and surveyors acting as project managers would need to see a licence to engage a building firm, ensuring that builders were licensed. The consumer could check the builder on the regulator’s website, just as can be done with the FCA. The regulator should probably be TrustMark, which currently operates a voluntary scheme. There should be rules regarding code of conduct, honesty, safety and quality of work. Those failing to comply should face a series of sanctions resulting in the ultimate sanction of the loss of licence and, therefore, the loss of the ability to work in that industry.