Consumer Rights Bill

Baroness Drake Excerpts

Wednesday 15th October 2014 Grand Committee

[Baroness Howe of Idlicote (CB)]

My Lords, the Bill offers an excellent opportunity to simplify and improve the consumer rights and redress landscape across the UK. Much of the Bill is certainly to be welcomed, consolidating and simplifying the existing landscape surrounding consumer redress as it does. However, it is notable that reference to alternative dispute resolution —ADR—as provided by ombudsman schemes and strongly backed by Which?, is absent from the Bill.

ADR provides benefits to both customers and businesses. For consumers, it offers free, fast and effective redress when things go wrong. For businesses, it provides a cost-effective way of improving the trust in and performance of their organisation. However, the current landscape surrounding ADR is complex and confused. ADR is available in some sectors but not others. In some sectors, ADR schemes cover only part of the market; in others, multiple ombudsman schemes exist. This patchwork of provision means that consumers face a complicated and confusing landscape and are often unaware of what support is available to them. I believe that my amendment would help to improve the situation.

In keeping with the ethos of the Bill, the amendment would simplify the ADR landscape and, importantly, strengthen access to redress for consumers across all sectors. Importantly, too, the new clause would formally set out the existing rights to redress that consumers have and ensure that all ADR schemes are consistent in standards and quality of services, improving the support and protection available to consumers. It would also ensure that the Bill complements work currently being undertaken as part of the transposition of the EU directive on ADR. The directive, to be transposed by spring 2015, requires businesses across all sectors to offer redress via an ADR scheme, either as a specific scheme or as part of a wider residual scheme. Lastly, and equally importantly, it would provide for a single point of contact for consumers, who could then be directed to the relevant ADR scheme depending on the nature of their problem.

The amendment would materially benefit consumers across all sectors by formally establishing the right to redress through ADR, paving the way for wider coverage of ADR schemes and achieving simplification in the system. I beg to move, and would welcome the views of the Government and others on the amendment.

[Baroness Drake (Lab)]

I support the noble Baroness, Lady Howe, on Amendment 23. At the moment, in so many areas of retail, the primary route to a remedy if there is a dispute is to go to the courts, but going to a court is far too daunting and complicated for many people. The paperwork may well put them off. The court fees may act as a disincentive, especially if the goods purchased are modest in monetary value. Even if a consumer wishes to begin by going to the small claims court, if a case is considered complex by the judge, it may be transferred to the normal county court list, which would definitely deter and daunt most people.

I realise that mediation has been introduced in small claims cases, but the psychological impact of going to court—its legalistic aura, the language of the courts and dealing with the necessary paperwork—can all still be off-putting and a deterrent. The behavioural response of consumers to alternative dispute resolution and the courts is very different. The court system is not really fit for purpose for many ordinary consumers, certainly in respect of smaller consumer rights claims. As the noble Baroness put it so compellingly, alternative dispute resolution is essential, otherwise consumers will have their rights enshrined in a new Bill but many will be deterred from exercising them. Consumer inertia in pursuing rights and securing remedies will remain strong—an assumption, unfortunately, that some traders build into their responses and their market behaviour.

Consumer rights and access to an effective means of enforcing them need to be inseparable. You can give consumers all the rights in the world, but if they are deterred from exercising them because the process is off-putting, complicated, disparate or whatever, as was clearly set out by the noble Baroness, their rights will not be effective and the market will remain dysfunctional in part.

The Bill has several clauses that relate to redress, but it does not lock into an alternative dispute resolution scheme. It seems extraordinary that a Bill so focused on securing and improving the position of consumer rights does not seize the opportunity to lock into ADR. I know that the Government are consulting on the details of such a scheme in the light of the EU directive, but that in itself is not a reason for missing the opportunity to use the Bill to place a duty on the Secretary of State to implement such an alternative dispute resolution scheme. As the noble Baroness pointed out, a key purpose of the Bill is to consolidate, simplify and strengthen consumer law.

The Government agree—it was confirmed by the Minister, Jenny Willott—that if we are to have a consumer rights system that works, ombudsmen and alternative dispute resolution will be critical parts of it. Having conceded that fundamental analysis and intellectual point, we have this big omission in the Bill. Although the Government are working on implementing the EU directive and looking at the different options, the amendment does not inhibit or undermine that detailed work. It does not prescribe exactly how the directive will be implemented; rather, it makes clear in the Bill that the right to redress for consumers must include access to an effective, independent alternative dispute resolution regime and that the duty is on the Secretary of State to ensure that that happens. The amendment would not prejudice the outcome of the consultation on the implementation of the ADR directive but would clearly place the duty on the Secretary of State. Having followed the debate on this in the Commons, it would appear that the only argument mobilised by the Government is that somehow it would prejudice the outcome of consultation. I do not think that it does, because it enshrines a fundamental principle which the Government concede is essential to an effective system of consumer rights. The detail of implementing that principle can be left to the outcome of consultation and subsequent regulation.