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

Baroness Hayter of Kentish Town Excerpts

Tuesday 11th March 2014 Grand Committee

[Lord Curry of Kirkharle (CB)]

My Lords, I support this change. I need to declare an interest. I chair the Better Regulation Executive and work very closely with the Better Regulation Delivery Office. I am tempted to say that I regularly meet the regulators, both individually and collectively. I have created a forum, the better regulatory outcomes group, where we meet regulators on a three or four-monthly basis. It was at such a meeting that we floated the concept of revising the code in the first instance. The regulators were very supportive of this, in that many of them are already adopting the principle of the code, as the Minister has said—but it was inconsistent. They recognise that, today, with better regulation being a high priority for government and the encouragement of economic growth being of paramount importance for the economy, for regulators to be seen to be supporting growth and encouraging companies to grow is of higher priority than it was when the original codes were introduced. I therefore commend this change to the Committee and firmly support it.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I thank the Minister for introducing the draft order and the code, and particularly for the extension in scope to the other regulators. It is perhaps worth the Committee remembering, as it is perhaps not evident from the code or from what has been said, that the main purpose of regulation is to promote and protect the interests of consumers, particularly in sectors where market forces alone would not deliver the best outcome or where consumers cannot effectively alter service delivery. That is what regulators are all about: in a way, they are standing in the shoes of users or consumers to make sure that they get a fair deal.

Just 52 years ago this month, on 15 March 1962—which is why we will have World Consumer Rights Day this weekend—in a special message to Congress on protecting consumer interests, President Kennedy wrote that all of us deserve to be protected against fraudulent or misleading advertisements, of the right to be protected against unsafe or worthless products, and of the right to choose from a variety of products at competitive prices. He went on to outline the steps taken in America to increase the inspection of foods and improve safety on the highways, and to cut back on deceptive trade practices and high utility bills—it all sounds familiar, does it not?—while recommending,

“a law to require consumers to know how much they are being charged in interest”,

plus,

“laws to tighten safeguards against monopolies and mergers which injure the consumer interest”.

Some of those measures are not caught by what we are looking at today, but it is interesting that he described them as being,

“immensely important to the well-being of every American family”.

That is what we should concentrate on today because similar things are of interest to every British family. Therefore, it is worth looking at whether the code measures up to what is demanded of it.

As has been suggested, there is much in the code to be applauded. It calls for clarity of language, clear expectations, reduction of unnecessary bureaucracy and petty rules, and less duplication of information requests, which is clearly very important. These things are vital for the effective working of any regulator. However, I wonder whether the Government have looked at the code as it applies to themselves, given the incredible red tape they introduced under the transparency Act that was imposed on trade unions and charities where no mischief had been identified. It would be interesting to know whether the Better Regulation Task Force could look at the Government to see whether they had measured up to their expectations of the code.

Perhaps the concern of any consumer representative is that this code seems to be all about working with the regulated community. We should remember that on the whole we are talking about industries which, for whatever reason, cannot be trusted to treat the customer fairly without a regulator, or to be responsive to the needs of users. However, there is nothing in anything we have heard or read about the regulator listening to or consulting those whose interests the regulators are meant to promote. This is very different from the position of the two other main regulators for financial services and legal services respectively, where consumer panels are required by statute to ensure that the end user’s view is fed into the regulators’ work. There are also, quite rightly, practitioner panels because obviously we want regulation, as far as possible, to work with the grain, to be practical, and to encourage the provider to do the right thing without the regulator having to come knocking on their door.

However, consumers also have a role to play. Without an input from consumers and their representatives, we would not have achieved redress for tenants and landlords who use letting agents, or for complaints against CMCs. What was not being done by the regulator of CMCs is now covered, fortunately, by this code. We know that the regulation of letting agents and CMCs was inadequate. The regulators had not addressed consumer needs adequately, as evidenced by the amount of complaints and consumer detriment which built up. Therefore, I worry about whether we are listening only to providers and not to the people affected by them.

It is the case that regulators need real teeth to be effective. It was, of course, your Lordships’ House which managed to convince the Government to give the Groceries Code Adjudicator proper teeth from day one. That success improved the legislation, so having real teeth matters in order to protect consumers. It is our contention that regulators and those who oversee them should feel the need to hear from and represent the consumer interest. Under the Legal Services Act 2007, the regulator’s objectives include,

“protecting and promoting the public interest”,

and “the interests of consumers” as well as “promoting competition”. The Act requires the Lord Chancellor, when appointing the LSB board members, to have regard to the desirability of appointing people with experience or knowledge of consumer affairs, the handling of complaints, and the differing needs of consumers.

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[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.