Consumer Rights Bill

Baroness Crawley Excerpts

Monday 3rd November 2014 Grand Committee

There is also, as suggested by my noble friend, the issue that there may be times when the primary authority gave its guidance some time ago. More may now be known. The company’s personnel may have changed. Public attitudes may have changed. It is quite worrying that advice which is some years old would seem to be set in stone and still able to prevent a private enforcer from taking action. We look forward to reassurance on these points but we think it is particularly important to remove this risk of costs against trading standards, should it use the civil powers which would in future be at its disposal.

[Baroness Crawley (Lab)]

My Lords, I remind noble Lords of my trading standards entry in the register of interests. I support the amendment proposed by my noble friend Lady Drake and I shall speak in particular to Amendment 63B in the name of my noble friend Lady Hayter and the noble Lord, Lord Best.

This amendment would amend the Enterprise Act 2002 so that an enforcer would be the subject of an order to pay the costs of and incidental to enforcement proceedings only if they had acted improperly, unreasonably or negligently. In the criminal courts, trading standards officers or enforcers can be liable for the defendant’s costs only in limited circumstances. However, in the civil courts, under the Enterprise Act, the loser generally pays the winner’s costs. As my noble friend said, this could act as a disincentive for enforcers such as trading standards who are acting in the public interest.

Amendment 63B would ensure that protections for enforcers in civil courts were equal to those in criminal courts. Unless such protections are in place, there will be a significant disincentive for enforcers to use the new legislation. As we all know, local government has very little spare cash these days to pay out for court costs, and trading standards officers will be hesitant, as my noble friend said, to bring important cases to court under the Bill in case things go against them and their authority is left with a hefty bill to pay.

While trading standards very much supports the new provisions in the Bill to give consumers redress and to help them make better choices, there is genuine concern among the enforcement community that there will be little take-up of such provision due to the complexity of the process—as set out by my noble friend—the costs and the risks to the enforcer.

There is also concern that the legislation places the onus on the enforcer in proving that the costs of redress measures do not exceed the cost of the harm. This adds an area of potential challenge and uncertainty, and could encourage enforcers to use the more reliable criminal route instead of the Enterprise Act. Enforcers would prefer a more balanced approach whereby the businesses bringing the case propose a package of measures to the enforcer or to the court, with this being negotiated as necessary. I call on the Minister to look favourably on these amendments.

[Baroness Jolly (LD)]

My Lords, our debate on enhanced consumer measures has been really interesting. As noble Lords have said, the measures are limited to public enforcers only. The Government have included a power in the Bill to enable private enforcers such as Which?—which at the moment is the only private enforcer—to use the measures subject to certain safeguards. These safeguards are extremely important and it is two of them that the first two of these amendments seek to remove.

Amendment 63AB would remove the requirement for the Government to ensure that the private enforcer is subject to the Regulators’ Code. The code ensures targeted, transparent enforcement that is based on risk. It encourages regulators to carry out their activities in a way that supports business to comply and grow.

On Amendment 63AC, the primary authority scheme delivers assured advice to businesses, thereby delivering better regulation. Amendment 63AC would remove the requirement for the private enforcer to act consistently with advice or guidance given by a primary authority to a business. This safeguard ensures that we do not end up in a situation where a business is subject to the measures even though it has been advised by its primary authority that it is compliant with consumer law.

The Government’s Better Regulation Delivery Office administers both the Regulators’ Code and the primary authority scheme. The noble Baroness, Lady Hayter, asked what would happen if a private enforcer disagreed with advice issued by a primary authority but wished to enforce anyway. The scheme has been in operation since 2009 and the process has never been used. Disputes have been resolved informally through negotiation. But if a private enforcer wished to take enforcement action that was inconsistent with primary authority advice, they should discuss that with the primary authority. It will be a matter for the consultation as to whether a formal dispute resolution process would be suitable as a last resort measure in the event that a private enforcer disagreed with advice from a primary authority.

The Better Regulation Delivery Office has already opened a dialogue with Which? on these matters to reassure it that these safeguards will not prevent it from using the new measures. It has agreed to provide written reassurance to Which? that adherence to the Regulators’ Code will not impact on its non-statutory functions. In addition, it has agreed to provide practical support to Which? to enable it to access primary authority advice.

The noble Baroness, Lady Drake, asked when the use of the measures would be reviewed. The Government will review the use of the measures three to five years after they come into force. If we are presented with evidence that the measures are not being used or that consumers are not receiving redress, we will look at whether it is necessary to extend the use of the measures. In addition—to answer the query about advice received from the primary authority—before the power in the Bill is used, there will have to be a consultation. It will be during this consultation that the Government can ensure that there is a robust mechanism in place to enable the private enforcer to access primary authority advice.

Turning to the amendment in the name of the noble Lord, Lord Best, we want to encourage enforcers to take action where appropriate, but we do not believe that it is right to alter the costs rules in the way that is proposed in the amendment. As we have already heard in Committee, it is a fundamental principle of civil litigation that one side is generally at risk of having to pay the other side’s costs if they lose. This deters unmeritorious, weak and poorly prepared cases, and ensures that the winning party is not unfairly affected by the case.

Amendment 63B breaches that principle, shifting costs on to businesses even when they have been found to have done nothing wrong. Those legal costs can be significant. In some circumstances they could be thousands of pounds—enough to put a small firm out of business. The risk of not being able to recover its own costs could lead to a business choosing not to fight a case, even if it honestly believed that it had acted within the law.

Finally, it is important to note that the risk of adverse costs being awarded against an enforcer actually exists now. This has not stopped trading standards from using civil enforcement around 180 times every year. With these explanations, I hope the noble Baroness feels able to withdraw her amendment.

--- Later in debate ---

[Baroness Crawley]

My Lords, I, too, support the amendments in this group. This is a vital issue for us all. The language of children’s protection has to be modernised. We rightly rail against pornography and violence and the abusive exposure of young children to those things, but the insidious manipulation of children when it comes to the payday lending industry can no longer be overlooked or seen as a lesser evil. Those puppets are built like children’s grandmothers and grandfathers. They are authority figures that kids look up to—certainly the ones I have seen. We all know that the misuse of money, as the noble Baroness has said, can lead to terrible family misery, and we harm children—often for the rest of their lives, as noble Lords have said—if we make popular for them the notion that money can be procured cheaply, and dress it up to sound like fun or a solution to their family’s pain.

The Advertising Standards Authority, speaking about advertising rules on this subject, states that:

“The protection of young people is at the heart of the rules”.

It goes on to say that advertising “must be socially responsible”. I fail to see what could be socially responsible when it comes to payday loan advertising at usurious rates, as the most reverend Primate the Archbishop of Canterbury put it. Member states of the European Community—which I believe we still are at present—are urged by Article 27 of the audiovisual media services directive to,

“take appropriate measures to ensure that television broadcasts by broadcasters under their jurisdiction do not include any programmes which might seriously impair the physical, mental or moral development of minors”.

I suggest to the Minister that the Bill’s inclusion of this group of amendments would be an appropriate measure.

In conclusion, I read recently that the world’s top 10 PR companies, including UK companies, have said that they will not represent clients that deny climate change. What a powerful signal it would be if those PR firms and their advertisers took a similar course of action when it came to their industry being approached to procure payday loan advertisements. I urge the noble Baroness to use the opportunity of the Bill to stop this practice.

[Lord Harris of Haringey]

My Lords, I rise briefly to support Amendment 105B, and perhaps I may tender some advice to the Minister. I suspect that this is one of those issues that, were it to be put to a vote in the House at Report stage, it would not be a happy moment for the Government, who would oppose it. However, I am sure that the Minister supports the objectives here.

We are all clear about how wrong it is for companies to be targeting advertising material at children and to rely on pester power to deliver what they want. My reason for speaking is because I agree with everything that has been said in this debate bar about two sentences. Those two sentences were spoken by my noble friend Lord Mitchell. Although he did not mean it, he gave the impression that somehow the cuddly illegal money lender, the loan shark operating in the pub who threatens to kneecap you if you do not pay up, is somehow preferable. I do not regard the payday loans companies as necessarily preferable, but we have to be conscious that one of the consequences of tightening up on the payday loan market will be that more people will seek recourse to illegal money lenders.

I chair the National Trading Standards Board, and one of the things we fund is the Illegal Money Lending Team for England and the Illegal Money Lending Team for Wales. Those teams are only scratching the surface of the problems that exist around illegal money lenders. They are very nasty individuals who are quite happy to squeeze money out of individuals in perhaps the same way as these corporate entities do—except that they do so using violence and all sorts of intimidation. Some of the cases that have been pursued by the illegal money lending teams are horrifying. Illegal money lenders use their power and strength to intimidate vulnerable people and families, including rape of the women concerned, beatings and other attacks. These are organised criminals who sometimes operate in small groups and sometimes as part of bigger networks. We have to be extremely cautious. When the Government accept these amendments or something similar to them either now or at the Report stage, I hope that they will look at what else needs to be done to protect the public from illegal operators as opposed to the legal ones we are talking about in this group of amendments.