Baroness Hayter of Kentish Town
Main Page: Baroness Hayter of Kentish Town (Labour - Life peer)Consumer Rights Bill
Baroness Hayter of Kentish Town Excerpts
Baroness Jolly
My noble friend makes a very good point. I have extensive speaking notes on that part and we will come to it later in the afternoon.
Baroness Hayter of Kentish Town (Lab)
I thank the Minister for that. Perhaps it would be helpful if I put on the record what our questions are. I take very much the offer that she has made to withdraw and not move these amendments so that we can come back to them; with them being tabled at this stage, we obviously have not had all the time that we need. Neither have they been scrutinised by the BIS Select Committee or in the Public Bill Committee in the other place. That would give us a little more time and we are grateful for that.
The real question, which the Minister helpfully set out, is whether it is reasonable for a consumer to reject every part of what they think was bought under a single sales contract or only the faulty parts. With the example given, it may be that an entire bathroom suite has been ordered—all in the same pale blue or whatever one wants for a bathroom suite—but if the sink is faulty, that may have implications on the bundle and on whether the quality of the whole is affected by one part.
Though hearing and understanding the intention, we are worried that this proposal could have consequences for big, very expensive items, particularly whether the amendments would create an incentive for traders to supply related goods under separate orders or contracts to try to make the contract more severable. That could apply to a whole furniture suite, a music centre, a matching table, chairs and cupboards, and so on where the householder thinks that they are buying a complete look. Rather like the Minister, I have focused on kitchen equipment and those sorts of things. However, telecoms and media bundles, which can include phone, broadband and television, are increasingly purchased by consumers. Such purchases raise the same issues as to whether they are a single contract or severable.
I should like to lay two further issues on the table because we will, with the Minister’s generous offer, come back to this. Thinking of the whole area, it will at least be possible for the installer or the retailer to take out insurance against the whole or the parts, whereas an individual consumer cannot at the point of installation. The Minister has kindly offered further discussions on the point at which one pays and whether one simply pays at the end of a contract. If it is for something fairly small, that may be simple, but when I have had building work done, money quite rightly has been wanted up front to buy components. We have tended to pay in bits, which makes it sound as if each bit is separate, although it was really just to help a small trader. Again, we would like the time to look at that. If this amendment really is to clarify current law, we would have fewer worries. For the moment, we are grateful for the time and hope that we will be able to sort this out.
Baroness Jolly
I thank the noble Baroness for her comments and appreciate that she needs more time to consider the amendments more fully in the light of remarks on this issue. I am happy therefore to withdraw the amendment with a view to revisiting it on Report.
Lord Clement-Jones (LD)
My Lords, I will briefly support the amendment in the name of the noble Lord, Lord Hodgson. He has made an even better case than the one that was presented to him in the first case. It struck me that in principle, if we set our minds to it, we could probably find quite a number of other areas apart from double-glazing, which was the example that the noble Lord gave, where goods are manufactured, bespoke, to a customer’s requirements. This particular case is very strong because of the construction work that is required to be done, which you cannot undo without serious damage to a property. I therefore hope that the Minister can give either clarification or assurance that something in the Bill deals with these kinds of made-to-measure products. A very valid point has been raised, and the noble Lord, Lord Hodgson, has put the case extremely well.
Baroness Hayter of Kentish Town
My Lords, the amendment as it is written, not necessarily as it is intended, is what concerns us. As written, it would undermine the right to reject. We do not see why a consumer should have any less of a remedy when something has been made to their specification than anything else. In fact, very often if it is made to their specification it may be particularly valuable, desired and even expensive. They certainly should not lose their rights just because of that. To some extent their rights should be stronger. because they have negotiated and explained exactly what it is that they want. As I was saying to the Minister earlier, I am wearing a made-to-measure garment.
Baroness Hayter of Kentish Town
For readers of Hansard, you would love my crimson chiffon, off-the-shoulder, diamante-encrusted gown. However, at that level, yes, I have made-to-measure clothes, but my grandchildren, called Poppy and Isaac, have “Poppy” and “Isaac” embroidered all over their swimming towels and things like that. I had a very nice hand-painted plate made for my godchild’s wedding. What I would not like to see is that, as a consumer of those made-to-measure or personalised goods, I would lose my rights to reject if they were faulty. If they are for a wedding I am afraid that a replacement probably would not arrive in time. I am not convinced that personalised, made-to-measure things should lose their rights. If it is bespoke it is probably something that has been made fairly specifically.
I understand that the wording used has probably been carried across from the distance contracts rules, where if one orders a personalised product then one obviously cannot reject it simply because one has changed one’s mind, because there is nothing else the supplier can do. We understand that completely, but that is obviously not the same as where a personalised product is faulty. Our worry is that the amendment from the noble Lord, Lord Hodgson, as worded would undermine the rights that a personalised order should have.
If we have read this correctly, the amendment would be not a clarification, but a change in the current law. Our understanding is that the current law has not produced any problems in the past. We have certainly heard no catalogue of complaints, although the Minister might know more than we do about that. Our worry therefore is, whether it is simply my dress or a tailor-made kitchen, that we would want consumers to retain their rights if such a kitchen was full of faults or badly installed. It is a bit like what my noble friend Lord Stevenson said on the previous amendment: I do not think good traders have anything to worry about, but it is the others that we are worried about, who would be the ones most likely to misuse something such as this. Many personalised goods are expensive and very much thought about. If they are in one’s own house it is not that easy to keep having them changed: one has to take more days off work to have that done. This is one’s home we are talking about.
We hope that the Government are not going to accept this amendment, which I am sure is well intentioned but perhaps unnecessary.
Baroness Jolly
I thank my noble friend Lord Hodgson of Astley Abbotts for the reasoning behind his amendment. I also welcome his general support for the principle of the Bill. My noble friend Lord Clement-Jones is absolutely correct in pointing out that the amendment’s application would be wider than double-glazing: spectacles are another really good example of something that is personalised. I am grateful to have the support of the noble Baroness opposite.
The Government disagree with the approach that the amendment takes. The rights to reject in the Bill—both the short-term and final right to reject—represent fundamental protections for consumers where goods do not meet the consumer’s rights under the Bill.
“(a) do so as soon as reasonably practicable and in any event within 14 days, unless the consumer expressly agrees otherwise;(aa) do so without significant inconvenience to the consumer; and”
Baroness Hayter of Kentish Town
Amendment 20, which stands in my name and that of my noble friend Lord Stevenson, aims to provide greater clarity on how long a repair should take and, therefore, how long a consumer must wait before they may be entitled to a refund or a price reduction. At Second Reading, the whole House was very supportive of the aim of the Bill to increase clarity. Under current law, and under the Bill, where a consumer asks for a faulty good to be repaired, the trader has to do so within a “reasonable time”. However, “reasonable” is not specified, which causes uncertainty for the consumer but probably for businesses as well.
We are very keen that the Government’s new remedies should work but they will do so only if customers feel confident about their rights, particularly about when they can exercise those rights. As we have just been discussing, elsewhere in the Bill there is a significant change that we welcome, where the 30 days replaces the reasonable period to reject. The Minister has just emphasised the clarity of that. Our concern is that in this area the word “reasonable” remains as regards how long it takes to complete a repair. Clearly, the range of goods covered goes from yo-yos to the double glazing referred to by the noble Lord, Lord Hodgson. It would apply to an enormous range of goods and therefore it is difficult to have a precise time for all repairs.
Amendment 20 therefore proposes a longstop, coupled with an obligation for traders to effect the repair sooner if possible. For most repairs, 14 days would be absolutely adequate, even if spare parts had to be sourced from overseas. But the amendment also would provide flexibility where the consumer could agree to a longer period where they are happy to do so. This may be in cases such as those raised by the Glass and Glazing Federation where on-site visits will have to take place before any repair could be ordered, let alone fitted. That flexibility obviously would be possible. For other goods, there is no reason why they should not be repaired in less than 14 days. In a Which? survey, more than half of the respondents said that traders should not have more than 14 days to effect a repair. After all, that would leave a customer without the goods for quite a long time.
The clarity that this amendment seeks is to empower consumers to exercise their rights. In other words, they will know that they can ask for a repair to be done in that time. We think that it will reduce unnecessary disputes as to what is reasonable because both sides will know what to expect. It will also deter poor practice. The problem that the consumer has is that, while they are awaiting a repair, they are caught: they do not have the good; they do not have the money, so they cannot replace it at another shop; and they cannot have it repaired by another trader because they would have to pay for it. At that time, they would be very vulnerable. We hope that this amendment will facilitate the clarity that the Government seek in this Bill. I beg to move.
Baroness Jolly
My Lords, first, I acknowledge that a minority of consumers may be frustrated by lengthy waiting times when they have asked for a repair or a replacement. We have found little evidence that the time taken for repairs is a common problem. The Consumer Engagement And Detriment Survey 2014 found that of those consumers who had experienced a problem with goods and services, only 5% had a problem with a failed or delayed repair and, of this group, delayed repair is likely to be a smaller problem.
BIS has considered a time limit with regard to repairs and replacements. There was a consultation in 2012 and we discussed the issue further with stakeholders, consumer organisations and traders. On the basis of that consultation and those discussions, we concluded that the best approach is a simple limit of one repair or replacement of goods that must be provided within a reasonable time and without significant inconvenience to the consumer. I am concerned that setting a longstop date for repairs or replacements lacks the necessary flexibility to deal with all types of goods in all circumstances. Attempting to apply such a broad rule would at the least be burdensome to some businesses, but may also lead to unwanted consequences.
The Bill provides flexibility because the time needed to carry out a repair will depend on the goods and the circumstances. In most cases of repairs there are a number of factors beyond the control of the trader, so a backstop period may impose a burden. If goods are faulty and the consumer wishes to reject them under the short-term right to reject, this is a simple process. The consumer need only notify the trader that they wish to do so. On the other hand, repair or replacement of goods is a more involved process which will vary according to the goods in question and the type of fault. The application of a specific time period for repair work cannot effectively take account of all the relevant factors that affect the trader’s ability to provide a repair or replacement.
Repairs are often not carried out by the trader themselves, so the goods may need to be transported to and from the repairer. Further time is added if parts need to be ordered. For complex goods, time-consuming processes of diagnosing the fault and testing the repair may also be needed. The amount of control that the trader has over those factors is proportionate to the size of the trader. Small businesses have relatively little or no control over their suppliers and so would bear a larger burden. The British Retail Consortium gave the following evidence when this issue was discussed in the other place. It said that for small and medium businesses, setting a deadline for repairs is,
“more difficult … because they cannot have control over third parties that are perhaps coming in to do the repair … If that was regulated, clearly that would be one-size-fits-all, and would, I fear, penalise small, medium-sized and micro-businesses”.—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 33.]
The amendment would enable the consumer to agree to an alternative timescale. While this goes some way to providing flexibility we do not believe that it does enough, for two reasons. First, it opens up the possibility of the consumer simply refusing to agree an alternative timescale where it is impossible for the trader to provide a repair or replacement within 14 days. This creates an opportunity for the consumer to circumvent the first-tier remedies altogether, to the cost of the trader. Secondly, the amendment suggests that the alternative timescale should be agreed in advance. In many cases it will only become clear in the course of carrying out the repair that a longer period is necessary. If a repair takes a long time, of course, the consumer may well suffer inconvenience from being without the goods. The Bill already allows the consumer to move to the second-tier remedy if that happens. That protects the consumer, while still allowing the flexibility needed for the rules to work for different goods and circumstances.
The second main concern we have about this amendment is the risk of unwanted consequences. I underline the fact that we believe that repair is a vital remedy; it provides the trader with the opportunity to put right what has gone wrong, while enabling the consumer to have the goods they wanted. If done properly, it meets the needs of the consumer while reducing the burden on the trader and is more environmentally friendly as it is less wasteful than rejection. We are therefore concerned about any amendment, such as this one, that could shift the balance and lead to more rejections over repairs.
Imposing a backstop date may lead to a reduction in the quality of repairs. The trader may feel pressured to do a “rush job” to get it back in time rather than having the time needed to get it right. If consumers begin to lose faith in repairs, this could lead to an increase in rejected goods, which would be wasteful and costly. This is not just limited to repairs. Flexibility is also needed where a trader is to provide a replacement, as the necessary time will depend on factors such as stock, their source, and whether the goods were bespoke. Bespoke goods are a good example of where the amendment could be problematic. Many bespoke goods will take longer than 14 days to make, in the case of a replacement, or to repair.
Creating a backstop 14-day period, and requiring the consumer’s agreement for a longer period, means that the consumer would always have an automatic right to veto the repair or replacement and move directly to rejection or money off for these types of goods. This would be hugely detrimental to the whole industry, which is especially concerning when you consider that many of the businesses offering bespoke goods are small, specialist traders that would be hit hard by these costs. I therefore ask the noble Baroness to withdraw the amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that thoughtful reply. Maybe we should revert to day one of Committee, though: if the Minister is going to help micro-businesses, we should make them consumers under the Bill. However, we decided that on an earlier day. I want to put on record that we welcome the main point about having one repair before rejection; we do not in any way question that.
I have only one comment. Which?, representing consumers, is very much in favour of this, and although I said its research showed that half its respondents said that 14 days was the right limit, one in five of them actually said that it ought to be seven days. I did not use that figure before. It is interesting that that group of consumers want quick repairs whereas the Minister quoted the British Retail Consortium, which clearly represents a different interest, and to some extent this is a balance between the two. I thank her for her comments and beg leave to withdraw the amendment.
Lord Clement-Jones
My Lords, I shall speak also to Amendment 20B. I am afraid that I am going to do exactly what the noble Baroness, Lady Hayter, did not want to do, which is to question the “one repair” point. I return to some of the concerns of the motor industry. The Society of Motor Manufacturers and Traders and the National Franchised Dealers Association have raised significant concerns over the wording of Clause 24 regarding “one repair” and the right to reject the product and demand a refund. These concerns are centred not on the principle of the right to repair or replacement itself but rather specifically on what “one repair” entails. This issue is of course particularly pertinent to the final right to reject in Clause 24.
At present the Bill does not specify what “one repair” would entail but the draft guidance states that one repair means a single attempt at repair and that the trader can offer further repairs and replacements, but only if the consumer agrees. Members of the motor industry and the trade seek clarity over the definition of “one repair”, and do not accept that the current status of the draft guidance provides a fair interpretation of what is really needed to give clarity. They point out that the notion of a single attempt at repair, as set out in the draft guidance, is problematic for highly complex consumer goods such as motor vehicles. They say that these complex products may show a fault that requires more than one repair, involving a series of visits to the garage so that the fault can be diagnosed and tested, and have causes ruled out. In addition, a repair may appear complete but the fault may reappear, as can be the case with electrical faults, and a second or subsequent repair may fix the problem. These issues are likely to become increasingly apparent as motor vehicles become even more technologically complex, as they have done over the past few years.
The amendment seeks to include a definition of “one repair” to permit a process of repair and provide traders and dealers with a fair opportunity to fix these complex goods. It is worth noting that the consumer will still be fully protected by the right to repair or replacement under the amendment, as the process of repair would still need to be completed within a reasonable time and without significant inconvenience to the consumer. I hope that at least meets the interest of my noble friend, as this is a matter of considerable concern. On the previous amendment to which I spoke while seeking further clarification on the guidance, I note that my noble friend answered the second point about the CCA but not the first: what clarification the guidance would give for minor defects. Perhaps my noble friend can write to me on that matter. In the mean time, I beg to move.
Baroness Hayter of Kentish Town
We think that the noble Lord has brought an interesting issue to the Committee; I do not know whether the Government find it such. However, we are unconvinced that this needs to be detailed in the Bill as suggested. The Bill simply states that repair means making the goods conform to the contract, which means making them deliver what was promised. I do not think that it says “at one go”. Obviously, we look forward to hearing what the Minister will say on that.
However, the Committee will not be surprised that our worry is that the danger of the new wording is to allow a trader to make more than one repair and then claim that it was simply different stages of the same job, whereas actually they may have tried this, that and then something else—and want another go if they did not do it at first. I recognise that that is not what the noble Lord, Lord Clement-Jones, is aiming at, but the wording might allow for that. It is exactly to avoid such situations where consumers are fobbed off by a number of unsuccessful repairs before they can move to the next stage that we like the clarity of the Bill and would not want it jeopardised by these amendments, no matter how well-intentioned they might be.
As we are into personal stories, such as my clothes, let us take my new car. Of course, it got a great big problem and I took it back to Nick but rather than opening the bonnet all he did was to put a computer on top of the car, which seemed to tell him what was wrong. I do not know how that worked but 55 minutes later it was completely mended. Cars, which I no longer understand even if I once did, may be more complex but one does not want to have to keep going back to the trader. We worry that the amendment would lose the clarity that there is in the Bill.
Lord Borwick (Con)
My Lords, Clauses 23 and 24 as they stand seem to state that a consumer can have their money back if one repair does not fix the problem. That is reasonable for a product such as a television but it may cause problems where the fault is less obvious. Some products are incredibly complex; just as complex as consumers.
While we are telling personal histories, from my time in the London taxi industry I know that the clause would cause huge problems for car repairs. We had a customer bring in a taxi for repairs to his rear axle. My mechanics could not find anything wrong with it, and they therefore stupidly said that they had mended any problem that existed. However, the customer brought the car back, insisting that he was hearing dreadful noises from the back of the car. It turned out that the customer had spanners stored in the boot of his taxi that were slipping around. He removed them to bring the car to the garage, which is why no fault could be found. He then put the items back into the boot and so began hearing strange noises again as things slipped around, so he brought the taxi back in. Would the clause as drafted mean that we would have had to refund him because we did not fix the problem the first time around? You can have two problems—one masking the other—and you may need a process, as suggested in the amendment, to resolve some problems.
Baroness Hayter of Kentish Town
My Lords, we now move to a tricky and, from our point of view, rather serious amendment. The other amendments have been serious, but this is a significant amendment that we wish now to move. Amendment 21 stands in my name and that of my noble friend. I shall speak also to Amendment 22.
Clause 24 deals with the right of the consumer to receive a refund for faulty goods. It allows the seller to make a deduction from that refund to reflect the use that the consumer has had of the goods if it has been over some time. For example, if a sofa falls apart after a year—and, no, I do not have such a sofa—the seller can deduct a proportion of the price which reflects the use that has been made of it at that time. However, if the refund is sought within six months, there should be a full refund with no deduction for use.
However, the Bill creates an exception to that full refund within six months for items that it describes as having an “active second-hand market”. Our fear is that this could undermine the otherwise clear and final right to reject. Our amendment would remove that exception and retain the principle of a full refund in the first six months for all goods.
Our understanding of the background to the introduction of the “active second-hand market” let-out is that it addresses the particular issues of new cars, which it is estimated lose 40% of their value in their first year, about 10% in their first couple of yards as they are driven off the forecourt and up to 20% in the first 30 days. The argument is that a car dealer should not be required to provide a full refund in the first six months when, simply because of the way the car market works, the car has lost a significant amount of its value.
However, it seems to us that if the consumer, wanting a new car, has bought a faulty one, they should get a full refund. Otherwise they cannot replace what they thought they were buying—a new car—with another new car, because there will have been this deduction in value. They will not be put back in the position where they can buy a car and be the first registered owner, which is what makes it especially expensive to be the first owner of a car. The sums involved are quite considerable. I have it on good advice—since I have not bought a new car but, rather, have a newly bought car—that a new car could cost £35,000 but, if it was faulty, the dealer could reduce what they got back by £5,000. That leaves the consumer without a new car but with only £30,000 instead of £35,000 in their bank, and perhaps only 500 miles on the clock.
The other issue about the drafting of this clause is that it does not restrict the exemption from the deduction for use only to cars but covers every other sale of goods where the trader can demonstrate that there is an active second-hand market. The Government have argued that they have carefully drafted to cover only second-hand markets for sale “by traders to consumers”, to exclude the general eBay type of second-hand markets of individuals selling to individuals. There are a lot of other second-hand markets of traders to consumers, both online and on the high street, of furniture, second-hand clothing, vintage jewellery and—as I know better—bicycles, and so on, but if you buy a new one and that turns out to be faulty, you want the money back to buy another new product.
We are therefore worried that consumers will be denied a full refund for new furniture that collapses, clothing that is so damaged that you cannot even wear it, or broken jewellery, simply because there is an “active second-hand market” for these and the trader says, “I’ll deduct it for use because you had some use of it”, even if they could not wear it or carry it, or whatever the case may be. Another problem is that, as the clause currently stands, the seller determines how much should be deducted for use; it is not a negotiable price. That creates quite an escape clause for dodgy traders, who have the freedom to set that reduction-for-use amount without it being reviewable as an unfair term because it would count as priced.
The then Office of Fair Trading and the Law Commission have both opposed this exception. The OFT thought that the drafting on “trader to consumer” did not exclude eBay-type comparisons, as many traders operate on eBay. The Law Commission opposed the deduction for use for the first six months and has urged us in Parliament to consider removing it, citing how much ill-feeling was caused by such deductions. As it said:
“Consumers felt that where they had paid for new goods, they wanted new goods. If the first goods were faulty, they wanted to be able to start again, with enough money to buy other new goods, not second hand ones”.
Which? worries that the let-out,
“could leave consumers out of pocket”,
and,
“does not give consumers the certainty and protection they need”.
I understand that the Government have been focused on this let-out being for these very high-value goods, which lose their value very rapidly. The Minister in the other House said that the drafting had followed the recommendations of the BIS Select Committee. However, the Select Committee was critical of the drafting, pointing out that the lack of a definition of an “active second hand market” had been criticised in many submissions that it received. It also said that it would apply to most goods, which rather contradicts what the Government said about there “normally” being no deduction for use. The committee felt that the drafting would cover a lot of goods, and pointed again to the advice of the Law Commission that the deduction for use was “inflammatory” for consumers. According to the Select Committee, the Law Commission also said that it was rarely employed, so it may be an unnecessary complication.
The Select Committee concluded that,
“neither the policy … nor the drafting … on deduction for use is clear”.
It did not believe that the exemption from the six-month refund rule was workable, and recommended the deduction-for-use clause. It said that, should the provision be retained, the reference to a second-hand market comparison should be removed, with any deduction for use being based on the lifespan of the goods. In the case of the car I assume that this means that, if you had it for five months, the deduction would be based on five months’ use rather than on whether you could actually buy a five month-old car.
The clause may again be well intentioned and aimed at a particular problem with a particular product, but the catch-all is so wide now that it is probably misguided. It certainly seems unworkable, could be unfair and could undermine consumers’ rights on a much wider range of goods.
The British Vehicle Rental and Leasing Association supports our amendment. It pointed out that in certain industries, particularly electric cars, there has not yet been enough time to develop a second-hand market, which might make it less likely that people would buy a new type of car. They would know that if anything went wrong with it they might lose their rights and be less likely to get their money back, the second-hand market not being a deep one.
I urge the Government to rethink the clause. If it really is simply cars that they have in mind, it might be better to deal with them in a different way rather than risk a much wider range of goods being caught by this provision. I beg to move.
Baroness Jolly
I thank the noble Baroness for outlining the reasoning behind her amendments, and will look first at Amendment 21. The principle of deduction for use is fair. Where the consumer has enjoyed uninterrupted use of the goods, the consumer should be accountable for that use. For example, if a consumer has been driving a car around for three years of normal use and then a fault manifests, the trader should be able to reduce the refund to take account of those three years of unaffected use. Of course it is right that consumers should be able to exit the contract at that point, but it is unfair to require the trader to bear the costs of that use.
When the Government consulted on the issue, only a very small minority of respondents to BIS’s consultation favoured scrapping the deduction for use, and two-thirds of online respondents agreed that it was right to allow a deduction to be applied in some instances. However, it is frustrating for consumers to get a partial refund even though they have had little use of the goods. The irritation of having to deal with a fault often eclipses what little enjoyment the consumer may have had from the goods, so the Bill includes a new protection that prevents, in most cases, a deduction from being applied within the first six months. There is a limited exception to this rule and it is this exception that Amendment 21 would remove.
Baroness Hayter of Kentish Town
I thank the Minister for that. Unfortunately what she said—that this is aimed at complex and high-value goods, which I absolutely understand—is not stated in the Bill, so it will not just cover those goods. It will cover things where there is a make and model, but that does not necessarily make them complex or high-value. We can perhaps come on to whether or not it affects cars, but we have a real concern that this will go far further than complex and high-value goods: it may cover yachts, helicopters, jets, planes and cars, but it will include anything else where a make and model can be covered. We continue to have worries on that. This will therefore be something we will need to come back to, but for the moment I beg leave to withdraw the amendment.
Baroness Crawley (Lab)
My Lords, I, too, support the amendment in the name of the noble Baroness, Lady Howe of Idlicote, and, in doing so, refer noble Lords to my consumer interests in the register.
As we know, the alternative dispute resolution directive requires the existence of simple, efficient, fast and low-cost ways of resolving domestic and cross-border consumer complaints—without the need to go to court, as my noble friend Lady Drake just said. It also assists business, as the noble Baroness said. ADR should have expertise; it should be independent; it should be impartial. The process should be transparent, effective, fair and legal. Member states are required, as the noble Baroness, Lady Howe, said, to identify competent authorities to ensure that ADR entities are competent to deliver the directive’s requirements. That process is ongoing.
The important point to keep in front of us today is the need to keep the environment as simple and as accessible as possible for the consumer. Although there is a need for sectoral expertise in transposing the directive, it is also important to have a low number of brands involved and a common front end or entry point, as both noble Baronesses have referred to, for the consumer to access a resolution to their complaint, be it a low-level complaint or a highly complex one.
The amendment in the name of the noble Baroness, Lady Howe, backed as it is by respected consumer bodies, will give consumers the confidence of legislative heft when it comes to this important new aspect of justice for consumers, which has attached to it a date of spring 2015.
Accepting the noble Baroness’s amendment is not gold-plating in any way; it is ensuring that the Government’s implementation of the ADR directive is a feasible process in the first place. I hope that he ramendment is given the serious consideration that it deserves.
Baroness Hayter of Kentish Town
My Lords, as has been clearly stated, the proposed new clause addresses what my noble friend Lady Drake says is the extraordinary absence from the Bill of any mention of the EU directive on ADR, the absence of any right to go to independent redress, and indeed the absence of any reference to what has just been mentioned—the competent authority to be set up to approve such schemes according to the EU directive.
The amendment would also add a very welcome missing element from the directive: the right for a consumer to have their complaint heard by such an alternative dispute scheme. Without such a scheme, we wonder what will happen to consumers when they cannot agree on the remedies set out in the Bill. Elsewhere, the Government have said, “They should go to Citizens Advice”, which I hope will be well funded to do all this. However, even if they do so, Citizens Advice cannot adjudicate; nor can it enforce any remedy. As has been said, the only alternative then is for the consumer to go to court for damages, and the reality is that that will not happen. At the moment, legal and financial clients, social housing tenants and patients can all go to an ombudsman; there are statutory ombudsmen for all those. The Government are in due course going to implement the directive, so they agree with us that consumers should have access to ombudsmen across the whole market.
The BIS Select Committee asked the Government why on earth the EU directive had not been included in the Bill. Which? regretted that it was omitted, and the OFT, as it was at the time, asked for the incorporation of the directive into the Bill. Two really quite good things are happening. I know that I am not allowed to say that the Government are doing good things—but they are with the Bill. Some people would not like me to say that the EU was doing good things, but I am happy to say that it is with its directive. So we have two good initiatives coming along, but would you know it? They are being handled in different ways with different legislative processes and on different timing.
It is not as if this is a difficult issue. The British Retail Consortium and the Federation of Small Businesses welcome the alternative dispute approach to dealing with problems, rather than going to court. As Martin Lewis commented when he was giving oral evidence to the Public Bill Committee, unless the Bill and the directive are joined up,
“you are going to have a wonderful Bill that gives people many new rights”—
he went further than I would about the Bill—
“that they are never going to be able to use”,—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 55.]
because they will be without redress. The Government have assured us that the new directive will be implemented by spring. However, we still await their response to the submissions that BIS got to its consultation, which I think finished five months ago. The clock may be slow in this Room today, but it is ticking. We may have no chance to debate BIS’s response to the consultation because it may not be dealt with in primary legislation, which also seems a shame.
Most importantly, the two items are two sides of the same coin, so we hope very much that the noble Baroness the Minister will accept the amendment today. Whether or not the exact words please her we understand, but if she could accept that there should be reference to and embedding of the ADR in the Bill, that would be to the credit of the Government. We will then try to seek credit for it, but we will give it to the noble Baroness, Lady Howe, instead. It would be a wise Government who did this and took the full credit for it.
Baroness Oppenheim-Barnes (Con)
Could I just highlight one of the main points? The noble Baroness mentioned the AER. One of the directives that she has mentioned as dealing with the way in which payday loan information is given by the providers is that it is still given in the old form, with the AER only, with no written amount. The noble Baroness might recall that we had an amendment to the Financial Services Act, during which we were told that the Government at that time—this is some time ago—were busily discussing that directive and would be wanting to implement it as soon as possible. It seems to me that the request from the EU about AER was a very small, perfectly justified and overdue one, and it is particularly disappointing if the Bill becomes law before that amendment has been made by the Government.
Baroness Hayter of Kentish Town
Can the noble Baroness tell us when the consultation will be published?
Baroness Neville-Rolfe
All I can say is that the consultation will be published shortly. I confirmed that the implementation date for the directive is 2015. The noble Baroness anticipates what I was going to say at the end, which I will say now. I assure your Lordships that our implementation plans for the Bill, which we discussed on Monday, will also advise businesses of their forthcoming responsibilities under the ADR regulations. Similarly, information to consumers will be available in one place—to meet the point that we will be joined up.
If I may elaborate, our response will explain how we intend to make ADR widely available and accessible for consumer disputes and our plans for competent authorities to monitor the provision of ADR. I hope that noble Lords will understand that I cannot set out the full detail of the Government’s response before publication. We consulted on whether a consumer complaint helpdesk would be useful to help consumers and business to access ADR, which was a point made by the noble Baroness, Lady Drake.
We will publish our intentions in our consultation response document. Once we have published our response, we will work with partner bodies to prepare for implementation. We will then publish draft regulations to transpose the ADR directive by spring 2015.
I would not want to affect the ongoing work to implement the ADR directive in regulations by amending the Bill. The noble Baroness, Lady Howe, said that her amendments would achieve consistency and simplification. However, the ADR directive contains many provisions, several of which are linked. That is why we feel that it is far better and more straightforward for businesses to implement the ADR directive in one package. Our consultation response document will set out our plans for doing so. We certainly want to avoid any unhelpful confusion that could be caused by implementing the directive partly through the Bill and partly through regulation.
The noble Baroness, Lady Drake, raised an important point about the need for the implementation of the ADR directive to complement consumer rights. I am glad to say that the changes that we will make to implement the ADR directive will complement the reforms in the Bill and improve access to and awareness of the ADR. We want to take the same comprehensive approach to ensure that we deliver the best possible ADR framework. Our plans for implementation allow us to do so. I therefore ask the noble Baroness to withdraw her amendment.
“Product safety and recall
(1) The General Product Safety Regulations 2005 (SI 2005/1803) are amended as specified in the following subsections.
(2) In regulation 9 (obligations of producers and distributors), after paragraph (3)(d) insert—
“(e) a summary of what the producer or distributor suspects, or has reasonable grounds to suspect, is the number of consumers affected and the type of personal injuries and property damage which the risk associated to the product has caused”.(3) In regulation 32 (reports), after paragraph (5), insert—
“(6) Before completing any report under this regulation, the Secretary of State shall consult the enforcement authorities, such bodies representative of producers and distributors, such bodies representative of consumers and such other persons as he thinks fit.”
(4) In regulation 33(3) (duty to notify Secretary of State and Commission)—
(a) after “specifying the reason for taking it” insert “, and shall publish such measure, and the reasons for taking it, on his department’s website”,(b) after “of any modification or lifting of such a measure” insert “and shall publish any such modification or lifting immediately on his department’s website”.(5) In regulation 33(5)—
(a) after “the Secretary of State shall immediately” insert “publish such measure or action on his department’s website and”,(b) after “of any modification or withdrawal of any such measure or action” insert “and shall publish any such modification or withdrawal immediately on his department’s website”.(6) In regulation 39 (information)—
(a) in paragraph (1), for “shall in general make available to the public such information as is available to it on the following matters relating to the risks to consumer health and safety posed by a product” substitute “which has received a notification under regulation 9(1) shall immediately publish on its website in respect of the product”.(b) after paragraph (1)(b), insert—“(c) a summary of the number of people reasonably suspected of being affected, and the type of personal injuries and property damage reasonably suspected of being caused by the risk”. (c) in paragraph (1), for “and the measures taken” substitute “and the measures or action taken, whether on a compulsory or voluntary basis,”.”
Baroness Hayter of Kentish Town
My Lords, Amendment 24, which stands in my name and that of my noble friend Lord Stevenson, addresses a very serious and sometimes fatal weakness in consumer protection for electricity safety: when there is a generic and dangerous fault in a particular model of electrical goods. There is no adequate mechanism whereby other owners of the same make and model are notified of the need to stop using it and exchange it.
The amendment therefore requires manufacturers to inform enforcement agencies of the number of consumers affected, and of the extent and type of damage and injuries that have been caused. It also requires the Secretary of State to publish information on dangerous products and to consult consumer groups when publishing their five-yearly report on consumer protection regulations.
This is an issue of great sadness, because it is very much about deaths and injuries. There are probably 40 or 45 deaths a year in domestic fires that have been caused by faulty appliances. Although there is a system for manufacturers to recall faulty products, it is very flawed because of the difficulties of alerting customers who have unwittingly bought such faulty products. It has also been undermined by unjustifiable delays on the part of some manufacturers in recalling products, even once they know them to be unsafe. Such cases relate to potentially fatal faults, such as risks of fire, electrocution or carbon monoxide poisoning.
It has been estimated that there are up to 2 million unsafe products in people’s homes. Manufacturers currently have no obligation to declare how many of those dangerous appliances are in circulation. Once manufacturers become aware of faults in their goods there is no specific timeframe in which they have to take action. In several instances, manufacturers have taken years to take action after a fatal accident caused by one of their appliances. Current BIS guidelines say that a recall is expected,
“as soon as the manufacturer becomes aware of a problem”.
That is not specific—more than that, it is not mandatory.
The Government do not feel that this should be mandatory; they want to continue with the voluntary approach. In the Commons, the Minister said that most—I emphasise, most—businesses take their customers’ safety seriously. I do not think that is good enough: “most industries” is not “all industries”. We have to safeguard consumers not from the good businesses but from those which do not take safety seriously.
Electrical Safety First detailed a particularly sad case of a preventable death that happened because of failures in the recall system—I am sure other noble Lords have received the same information. Mr Santosh Benjamin-Muthiah, a 36 year-old father of two, died in 2010 because of a fire in his home caused by a recalled fridge-freezer. The manufacturer had been aware of a fault with the defrost timer on that defective fridge-freezer three years before 2010, but did not issue a safety notice until 2011, by which time as many as half a million had been sold. In 2013—two years after the recall had started—the manufacturer estimated that, although 190,000 had been repaired and 186,000 were scrapped, about 114,000 were still unidentified and still in someone’s home. The coroner at the quite recent inquest on Mr Benjamin will, I think, have written to the Chief Coroner rather than to the Government. However, he has written through his official channels calling for the creation of a simple, easy-to-use and government-funded all-national website where all products can be registered and accessed by consumers and retailers. He also called for increasing fines for manufacturers who fail to notify and for the creation of a code of practice on product recalls. The Chief Fire Officers Association has also called for manufacturers to take legal responsibility for eradicating risks caused by faulty appliances. Peter Dartford of the Chief Fire Officers Association has said:
“The reality is that it is the manufacturers who have created these risks and it is their moral and legal responsibility to ensure that these risks are eradicated from homes”.
Our amendment would strengthen consumer protection in line with the coroner’s recommendation and the fire officers’ views. Perhaps even more importantly, our amendment is in line with the views of the families, who have been quite needlessly bereaved of their loved ones. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I support this amendment and I thank the noble Baroness, Lady Hayter, for her example of Mr Benjamin, as it saves me the trouble of giving that same very tragic example. It seems not unreasonable for the trader to record the consumer’s details at the point of sale and return the guarantee card to the manufacturer. This would seem a more efficient way of dealing with it than the present, somewhat haphazard system of leaving it to the consumer to fill in and return the guarantee—a document which is often at the bottom of the packaging and sometimes overlooked. If such a system were in existence, it would be much simpler to compile a register of consumers and contact them individually when and if a product recall is necessary. This would ensure that all those affected by product recalls were aware, rather than some being left in the dark about the risks they run by continuing to use the product.
Consumers, once they are aware of a product recall, are generally assiduous in returning their products to the relevant trader for repair or replacement. This is particularly important, as we have heard, where the product has an electrical fault which could lead to damaging and life-threatening domestic fires. The fire service, as we also heard, is able to produce quite frightening statistics on domestic fires caused by electrical faults, some of which tragically involve death. It is really important that we do all we can to protect consumers from this fate and I am pleased to support this amendment.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Baroness for giving me the opportunity to say what a good job I think trading standards do in many of those very difficult cases, having worked with them for many years. It is true that many government services have suffered from cuts as a result of the need to get the economy back on track and deal with the deficit problems that we inherited.
As noble Lords know, spending and resourcing decisions about local trading standards are made by the individual local authorities. They, rather than central government, are best placed to make decisions about the enforcement needs of their local communities. However, I have talked to them about how you can focus and get local authorities to focus on the real areas of importance, and they are trying to do that in often deeply difficult circumstances. BIS greatly values their work protecting consumers from everything from rogue traders to scammers and so on. That is one of the reasons why we have set up the National Trading Standards Board and work with the Local Government Association on trying to improve enforcement in local authority areas in important areas. Of course, product safety and risk of death always come very high on their agenda.
Baroness Hayter of Kentish Town
My Lords, I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for her support for this amendment.
The Minister’s response will be deeply disappointing to the fire officers and Electrical Safety First, who worked on this and who have earned this amendment. They are the stakeholders who are referred to, and they do not feel that what the Government are doing is enough, which is why they have called for this amendment. The Minister said that the legislation is robust, but it is not working. We are having a death a week because of faulty appliances, so that is not working. I do not ask for the information now, but it would be helpful if she could write and say how many prosecutions there were in the last five years of companies for not having reported and taken necessary action.
However, my noble friend Lady Crawley raised an extraordinarily important point. It is also a surprise to find that this Government are saying that on this issue they want the public sector—that is, trading standards—to deal with it, rather than the people who done wrong—the manufacturers—who acted unwittingly to begin with, but who made a faulty product that is leading to carbon monoxide poisoning, electrocution, or death by fire. It is interesting that the Minister wants not to absolve them of that but to say that the major responsibility is to tell trading standards—that is, the public sector—which will do something about it. Other things that come from the Government are all about the public sector doing less and all of us, whether it is the big society or manufacturers, doing more. Therefore I am surprised but also disappointed that the Minister does not want to put more of an obligation on to the manufacturers who have made these fire traps. However, she will understand from what I am saying that we feel very strongly about this, and we will come back to it. It certainly does not seem to be good consumer protection when once a week somebody dies when they do not have to. However, for the moment I beg leave to withdraw the amendment.