Competition and Markets Authority: Legislative and Institutional Reforms

Baroness Altmann Excerpts

Wednesday 8th May 2019 Lords Chamber

[Baroness Altmann (Con)]

It is a pleasure to follow the noble Baroness, Lady Crawley. I thank the noble Baroness, Lady Hayter, for securing this important debate on an issue in which I have always taken great interest. The UK has one of the strongest consumer rights frameworks in the world but, as consumer group Which?, with its extensive experience of campaigning on behalf of consumers for many years, has highlighted, inadequate enforcement systems are too often preventing those rights from being enjoyed. The asymmetry of information between customers and businesses is well documented, especially in areas that I am most familiar with: financial products and services. I refer noble Lords to my registered interests.

I agree with the noble Baroness, Lady Hayter, that there are many instances of important one-off purchases, and the power of consumers is too often worryingly weak. At a time when trust in institutions, big business and the political establishment seems to have fallen dramatically and public dissatisfaction is rising, it seems more important than ever that the Government and the business community ensure that consumers have confidence that their rights will be enforced in practice, and that they will be effectively recompensed if things go wrong. The rise in populism, with people feeling that the system is stacked against them, can be aggravated by failures in consumer protection, or by claims that they are being protected that turn out not to be effective in practice. I applaud the Government for their Modernising Consumer Markets Green Paper, and welcome the recognition that this issue requires reform. I also welcome the work of the noble Lord, Lord Tyrie, for the Competition and Markets Authority, proposing important reforms to legislation and consumer protection.

I hope the Minister can give us further information on the Government’s intentions to act quickly; to improve the powers of the CMA to both gather and demand information; to require companies to co-operate with their investigations; and to enforce consumer protections and levy adequate deterrent fines, as so rightly pointed out in the letter from the noble Lord, Lord Tyrie. Can the Minister assure the House that the department agrees with the CMA proposals that the consumer interest is vital and needs to be at the heart of its work?

Unfortunately, the current system relies on local authorities’ trading standards services, which, according to Which?, account for 75% of public enforcement responsibilities, whether that be for scams, product safety or food labelling. Given the budget constraints of councils, which are already struggling with social care costs, local authorities are often inadequately equipped to cope with such responsibilities. Could the Minister explain to us how the work that the newly established Office for Product Safety and Standards within his department, which is most welcome, will support local authorities?

Indeed, it would be excellent to build on this initiative by having a consumer-focused body concerned with product standards to ensure that they are fit for purpose and not harmful to the public. I absolutely believe that a strong public enforcement regime that protects consumers and provides adequate deterrence to poor practice is needed, along with proper alternative dispute resolution services that consumers can turn to if they need to pursue claims against a business. This could have a central portal, which would really help the public to easily find a place to make their complaint. Currently they are too often passed from pillar to post, and it is just too confusing. If they have a full-time job, for example, they usually do not have the time to do this and will just give up, feeling that the system is against them.

Of course most businesses operate fairly and strive to provide good-value products or services, not least to attract future business. But I have seen first-hand how confusing it can be for consumers to find out the appropriate place to complain to when they have suffered detriment. Most business does not require recompense; it operates well. However, the ombudsman system can be bewilderingly confusing, with different bodies covering different types of complaint. It is important to make it easier for consumers to feel that they are being listened to when things go wrong, which is, as I stress, in the minority of cases, and to see that the Government are taking their treatment seriously.

The Conservatives have always been the party of business, and business is vital for successful economies. I agree with my noble friend Lady Neville-Rolfe that competition is a vital element of successful capitalist economies and of driving better consumer outcomes. But we must also care about how business treats its customers and ensure that it is fair. It is important that consumers’ economic interests and protection from detriment are taken seriously and that earlier, more robust intervention is introduced when it is needed to reassure the public that they will have proper rights of redress.

The letter from the noble Lord, Lord Tyrie, outlines that the CMA’s current statutory duty is,

“to promote competition, both within and outside the UK, for the benefit of consumers”,

which is subtly different from putting consumer interests at the heart of what it does. Currently, it can take more than three years for the CMA to issue binding remedies. It does not have sufficient power to fine firms for failure to comply with its findings. It would also be a good step forward, as the letter says, if the CMA could liaise more directly with business and obtain commitments for improved practice without lengthy investigations on a more formal basis. I believe that most businesses would want to comply.

The CMA has weak enforcement powers. Therefore, it can offer only weak deterrents. It has to take a business to court if it thinks practices are illegal and even if it wins it cannot issue fines. Of course there is always a difficult balancing act between the rights of business to make good profits and the rights of consumers to be treated fairly, with adequate recompense when their rights are violated. The CMA is right to suggest that it should be able to ban directors for breaches of consumer law, for example, not just of competition law. I agree that it is really important to ensure that whistleblowers are compensated and protected properly whenever possible, with anonymity. I hope that my noble friend the Minister will reassure the House how seriously the Government take this issue and offer their response to the letter from the noble Lord, Lord Tyrie.