Baroness Hayter of Kentish Town
Main Page: Baroness Hayter of Kentish Town (Labour - Life peer)Consumer Rights Bill
Baroness Hayter of Kentish Town Excerpts(9 years, 6 months ago)
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“Service contracts relating to students: complaints
In cases where there is a contract under Chapter 4 of Part 1 to supply a service between a student (as the consumer) and an institution (as the trader), the following are qualifying institutions for the purposes of Part 2 of the Higher Education Act 2004, insofar as any complaint under the provisions of the 2004 Act relates to that service contract—(a) an institution granted specific course designation by the Secretary of State pursuant to regulation 5 of the Education (Student Support) Regulations 2011 (SI 2011/1986) and section 22(1) of the Teaching and Higher Education Act 1998; and(b) an institution granted degree awarding powers under section 76 of the Further and Higher Education Act 1992.”
Baroness Hayter of Kentish Town (Lab)
My Lords, Amendment 105, in my name and that of my noble friend Lord Stevenson of Balmacara, would widen the scope of the Office of the Independent Adjudicator so that it can include students at alternative providers. This would extend existing rights of redress and review to students who are publicly funded but are at non-university higher education colleges.
The Office of the Independent Adjudicator, which reviews student complaints, was designated under the Higher Education Act 2004. Membership of the scheme is compulsory for qualifying institutions, which basically means universities and their constituent colleges. However, it does not include all higher education institutions receiving public funding, whether from HEFCE or via their students from the Student Loans Company. Because of recent changes to the higher education funding system, student loans are now available for far more students; it is a route for public subsidy of higher education on a much wider basis than was the case when the 2004 Act was passed.
Some non-university private providers of higher education therefore now get public money via students through the Student Loans Company. However, although these private higher education institutions can join the Office of the Independent Adjudicator voluntarily, they do not have to and many do not. Their students are therefore excluded from being able to take their complaints to the adjudicator. We probably all agree that effective complaint-handling is an important part of safeguarding the quality and reputation of the student experience. Happily, the vast majority of students never need to bring a complaint, but the system needs to be accessible to those who feel that they have been let down by their institution.
Part of the success of the OIA is that it provides a single, consistent and independent point of last-resort adjudication for students in higher education. It has considered about 10,000 complaints and appeals since it was set up, with about one-quarter being found justified or partly justified or being in some way settled. This demonstrates the demand for an independent complaints scheme, because, despite the best endeavours of universities, things occasionally go wrong.
Without this amendment, many students would have nowhere to take their cases, such as the following, which the OIA had to find ineligible as their colleges did not happen to belong to the scheme: a student seeking a refund of fees after their course was cancelled; a student complaining that the institution had not followed the UK visa and immigration requirements properly so that he could not follow the course that he had paid for; and the student who complained about timetabling and support on an undergraduate course. These are examples of the sort of situations where, if the higher education institution is not a member, the OIA cannot hear a claim.
Universities UK supports Amendment 105. The Government’s 2011 White Paper, Students at the Heart of the System, included a commitment to bringing these private and alternative providers into the OIA scheme. That welcome commitment would, as they and we both want, create a level playing field between public and private institutions, in addition to extending this right of access to a redress scheme—it is a consumer right, after all—to all higher education students who are in some way in receipt of public money. The Government said that they intended to bring forward legislation to make that change, but they have failed to do so. The Bill therefore provides the opportunity for them to make good their promise. I beg to move.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, higher education in this country rightly enjoys an excellent reputation, and we want to continue to ensure that all higher education students enjoy a high-quality experience. The vast majority of students report that they do: the 2014 National Student Survey shows that 86% of students are satisfied with their course, which is up on 85% last year. Statistics support the points that the noble Baroness made.
I, too, think that it is important that effective arrangements are in place for students to raise concerns and formal complaints in the relatively small number of cases that go wrong. Of course, it is absolutely right that responsibility for handling student complaints rests, in the first instance, with the autonomous and independent institutions that deliver education. I reassure the Committee that we have taken steps to ensure that all providers of higher education, including alternative providers, have a complaints policy. This is one of the expectations of the course designation process which permits students to access student support.
Institutions will want to respond to feedback from their students, including complaints. This enables the speediest resolution of issues and helps the institution to improve quality generally—feedback is very important. Where complaints remain unresolved, a good, well established service is offered by the Office of the Independent Adjudicator for Higher Education, to which the noble Baroness referred.
These arrangements were put in place in 2004 and in my view have served the sector very well. They provide students at universities in England and Wales with access to a dispute service and so to an alternative to the courts. However, as the noble Baroness rightly points out with her telling examples, they do not apply to the newer providers now offering education courses. I will reflect on the views expressed today and think very carefully about the arguments that have been put forward. In the mean time, I ask the noble Baroness to withdraw her amendment.
Baroness Hayter of Kentish Town
I hope that those words are as warm as my colleague is suggesting they are. We were, I think, hoping that the Government were going to go a little further and ask us to withdraw so that they could bring forward their own alternative. The numbers of students who would have been caught by this in the year after 2004, when it was brought in, was just over 3,000; it has now gone up to 12,000, so it has become a big issue. Can the Minister perhaps go a little further than she indicated?
Baroness Neville-Rolfe
I confirm to the noble Baroness that my words are extremely warm. We will obviously return to this issue and, if need be, have a discussion with her, but I would be grateful if she would withdraw the amendment on that warm basis.
Baroness Hayter of Kentish Town
I think that I will take my jacket off because of the heat in here. With those words of reassurance, I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, most of the other amendments in this group are in my name and that of my noble friend Lord Stevenson, and I would like to speak to them. Obviously I endorse the first amendment, but I would perhaps widen it to all nuisance calls. Basically, I feel that enough is enough. I am sorry if we made excuses when we were in government; we have to put a stop to it now.
I do not know how many instances we need before we do something. The right reverend Prelate the Bishop of Truro has indicated the size and effect of the calls about payday loans—but, as the noble Lord, Lord Deben, said, there are also claims management companies talking about non-existent car crashes, or missold PPI or some other dubious sale on the phone at all hours, to such an extent that some people do not even answer their phone any more; we know of elderly people who do not. I have seen someone in this House phone for three rings, put the phone down, phone again for three rings and put it down again. I wondered what they were doing, and it was because their parent would not answer the phone until that code had happened. I think that that reflects a real breach of consumer law.
We know that the Information Commissioner’s Office has received 160,000 complaints about unsolicited calls and texts. MPs tell us that it fills their postbag. Ofcom says that it is its number one complaint, averaging over 3,000 a month. Given that most of us would never think to complain to Ofcom, that must be the tiniest tip of the iceberg. Indeed, it is very hard to know where to take a complaint. I looked at my phone bill and on the back, 60 lines down in immensely small print—my noble friend reckons that it is 8-point—there is a heading, “Commitment to our customers”. You then have to work out that that is what complaints come under. It says that you should complain to the provider, BT, and that if you are still unhappy you can go to the ombudsman service. Another 10 lines down it gives the address of Ofcom, though not its phone number, but without saying that you could take the complaint there. So if Ofcom is getting 3,000 complaints a month, that must be a tiny proportion of those who would like to complain.
What is more, Ofcom research shows that it is vulnerable people who are especially at risk, as we have heard, with one-quarter of customers getting at least 10 calls a week. My fear is that there are more than that—but, even worse, some people do not realise that these are scam calls; if anyone says that they have not had a call, I really worry about their likelihood of falling for one. A BT survey found that nuisance calls ranked above queue jumpers, noisy neighbours and rude commuters as the most irritating aspect of their daily life. About half the respondents found these calls so intrusive that they raised their stress levels. About seven in 10 landline calls receive live marketing calls, and that adds up to 7.8 billion a year.
Furthermore, three-quarters of the landlines are registered with the telephone preference service, which shows that that system is not working. Indeed, those on the telephone preference service list still get about 10 nuisance calls a month—my own experience is that it is probably higher than that—and we know that over half the people on the list are not satisfied with what it does. However, for some reason or other, telephone companies remain reluctant to act, despite the fact that we continue to have to pay them to have our phone line, even when we are unwilling to answer a call from it in case it is not from a friend or family.
So we have had reports, recommendations and complaints but no action. The Commons Culture, Media and Sport Committee reported on nuisance calls and recommended legislation to proscribe the unfair process of personal contact data, including telephone numbers, and asked the Information Commissioner to act against companies that call people who have signed up to telephone preference. The All-Party Parliamentary Group on Nuisance Calls, whose work on this I commend, called for a lower threshold for Information Commissioner action, which is particularly relevant after the commissioner lost a case because the appeal tribunal did not consider that substantial distress had been caused.
The Government have said that they will take action, but they seem to be taking their time. In March, the DCMS nuisance calls action plan set out plans to consult on lowering the threshold before the Information Commissioner can act. It took seven months—that is, until last week—for the consultation to be launched, and even then it was only about lowering the threshold from “substantially distressing” to “annoyance, inconvenience or anxiety”. We should remove not only the threshold but the need to show repeated annoyance to allow the Information Commissioner at least to proceed to take a judgment on the issue.
The Government should also ask the telephone providers to play their part. It is a bit like what we have just heard about the internet: the Government seem reluctant to say to the people who could do something, “Do it”. What we are asking for would put an onus on the telephone companies to do something. I was recently contacted by Ian Moss, who told me that for a year after she had a car accident, his wife was getting five to 10 telephone calls a day about it. Nevertheless, even if the threshold is lowered, he would still have to prove that the caller deliberately or negligently breached the Data Protection Act for the ICO to act.
We want to get rid of the threshold and let the Information Commissioner decide on a case-by-case basis. That is what Amendment 105H would do. However, as I said, we should not just leave it to the Information Commissioner, who was set up to do quite a different job. Increasingly, calls come from machines that dial every available number, so it is not even a matter of selling on information collected for some other purpose. We need to look at who is doing the calling, rather than ask some other intermediary to act. We should make it illegal for them to try to sell to people who have not given them permission to phone.
As a first stage, we should ensure that people know who is calling them. Partly, that helps them to know whether to lift the phone at all, but it is also important for stamping out the practice, as it would reveal who is calling, so complaints could be made. Amendment 105G would mandate caller line identification—in other words, knowing who is calling—for non-domestic callers doing any sort of marketing. We also ask that telephone operators make the facility to be able to read the number available free to subscribers. That does not seem much to ask.
When I was young, or even when I was middle-aged, we had to buy a telephone answering machine to add to our phone; now it comes automatically in the phone. So should this; it is what telephone providers should do. It is, after all, the telephone line which is being misused, so providers must stop avoiding their responsibility, take action against those who misuse the lines and help innocent customers avoid those calls.
At the moment, according to trueCall Research, 44% of nuisance calls arrive without caller line identification, so it is impossible even to make complaints about them. Although a quarter of them may be from abroad, even showing that they are from abroad—unless you have a student child roaming the world and wanting money from time to time—you will know that if it is an international number it is probably not for you. Others simply show up as number withheld—and it is that, with a few exceptions, we would outlaw.
The Culture, Media and Sport Select Committee supported proscribing withheld caller identifications, as did the all-party group. Alun Cairns put it so well in moving his 10-minute rule Bill last year in the other place. He said that nuisance calls,
“could be compared to someone knocking at the door wearing a mask or a balaclava. Would we answer the door to such an unknown caller? Of course we would not. Why, then, do we allow the same thing to happen over the telephone?”.—[Official Report, Commons, 28/2/13; cols. 158WH.]
Finally, as we have seen from the numbers I have given, the telephone preference service, which acts on an opt-out basis, clearly is not working. Amendment 105F would make it an opt-in system, so that consumers who want to receive calls should opt in to receive them. Jo Connell, chair of the Communications Consumer Panel, strongly supports the amendment calling for this opt-in for consent to direct marketing, as well as mandating caller line identification and the provision of that facility for free, as it is a service provided by the telephone companies but paid for by consumers that is being abused. Indeed, the panel was surprised and concerned that that was not already the case. As she has said, caller line identification can help report nuisance calls to regulators, as well as enable people to block and filter certain calls.
Ofcom welcomes Amendment 105H, as it would make it easier for the Information Commissioner to take enforcement action, and Amendment 105G, which would make caller line identification mandatory for non-domestic callers. I hope that the amendment in the name of the right reverend Prelate will be accepted, but I hope in due course ours also might be.
Baroness Neville-Rolfe
My Lords, I am very glad that we have been joined by the right reverend Prelate the Bishop of Truro. I will, rather rudely, come to his amendment at the end, because there are some general points that are relevant to that amendment.
Nuisance calls are an important issue; I want to make it very clear that the Government take it seriously. The calls are a scourge to consumers and I think everyone in this room has been troubled by them. We have therefore been working closely with regulators, consumer groups, parliamentarians and industry to take action. Our wide-ranging approach was set out in the Nuisance Calls Action Plan, published in March by my honourable friend Ed Vaizey, the Minister for Culture and the Digital Economy. I can circulate copies if noble Lords have not seen it, because it represented a major step forward.
Amendment 105F would require consumers to opt in to receiving marketing calls, rather than, as under the current system, being required to opt out by registering with the Telephone Preference Service. I am sure that many noble Lords have done that. While nuisance calls are certainly a problem that needs to be addressed, we also need to consider the benefits that can accrue to consumers and to balance the right of business to conduct legitimate direct marketing. Marketing calls can prove to be financially beneficial for many consumers; for example, calls on improved deals or tariffs can potentially save them money. The direct marketing industry provides employment opportunities, particularly in the regions and in support of our economy. The Direct Marketing Association estimates that its industry supports 530,000 jobs, so it is a significant economic operator. Equally important, it enables charities and voluntary organisations to generate essential funding.
Which?, which has contributed a great deal to the work on nuisance calls, agrees with our view that an opt-in system should not be sought, not least because there are many legitimate reasons why such calls might be made. They might be made, for example, by the emergency services, medical practitioners, or companies with whom the recipient has a genuine relationship. If an opt-in system were introduced, it is likely that calls of this nature might not be permissible.
The National Autistic Society, in its response to the CMS Committee, said that the telephone is,
“the single most successful way that—as a charity reliant on public donations—we raise money from individuals”.
Baroness Hayter of Kentish Town
I ask the Minister to check that quote. I checked with the chair of that organisation, which did not expect it to be used in this way.
Baroness Neville-Rolfe
I thank the noble Baroness and, of course, we will check on it. I suppose that the general point is that phone marketing is more successful than street, doorstep, direct mail, and so on. Changing an opt-in system can diminish a charity’s income, and that is our concern. Charities are subject to the same rules as those applying to marketing companies. That point may be of concern to my noble friend Lord Deben, who spoke with such energy on this subject.
Calls to consumers who are registered with the Telephone Preference Service, provided they have not given explicit consent to receive such calls, are already outlawed under the Privacy and Electronic Communications Regulations. The Government’s view is that those breaking the law by calling consumers registered with the Telephone Preference Service are just as likely to ignore any new law that is introduced, regardless of whether the system is opt-in or opt-out. Tackling marketing calls would, in our view, be better addressed in focusing on better enforcement, and we are taking action in this area. We have ensured that the monetary penalties, which the Information Commissioner’s Office and Ofcom can use, have been increased and issued more frequently to those breaking the regulations. Since January 2012, more than £2 million in monetary penalties has been issued by both regulators.
We have also made it clear that regulators need to continue to take strong action to send a signal that those who flout the rules will be caught and punished. Persistent offending companies are now named and shamed on the Information Commissioner’s Office website, so that those who make those marketing calls are made known to the public. Informed consumers are safer consumers.
The noble Baroness, Lady Hayter, said that it was very hard to know how to complain. Ofcom’s website, as she may know, has been revamped to provide comprehensive information for consumers on where to go about nuisance calls. I have talked to Ed Richards about this because he realises how important it is. Ofcom has found that most people go to their service provider in the first instance, which in turn passes them on to Ofcom. There is now much more collaboration between regulators sharing their knowledge and expertise to improve compliance.
Changes have been happening as the Bill has progressed. I mentioned the action plan, and on 25 October Ed Vaizey launched a consultation on lowering or removing the legal threshold for fining firms who make unsolicited marketing calls. The efforts of the Information Commissioner’s Office to impose penalties are currently frustrated by the legal requirement to demonstrate that nuisance calls cause substantial damage or substantial distress—especially given the volume of calls, mentioned by the noble Baroness, Lady Hayter. I am slightly surprised by her comments because, while there are two options in the consultation, which we have to take into account before making a final decision, the Government’s preference is to remove the threshold and give the commissioner the greatest scope to take action. This will help to solve the commissioner’s current frustrations. The consultation ends on 6 December and we expect the secondary legislation to implement the resulting changes to come into force in February—a more rapid avenue than in this Bill.
Amendment 105G would require businesses and other persons making unsolicited calls for direct marketing purposes to provide caller line identification. We are sympathetic to this amendment, as the noble Baroness knows, because we have discussed it, and agree that the current situation can be very frustrating when callers deliberately fail to provide their CLI. Unfortunately, however, mandatory CLI is not permissible under EU law. The EU privacy directive provides that callers, both individuals and businesses, must be allowed to withhold CLI. The directive allows for limited exceptions for the specific purpose of tracing calls, but that would not apply to this amendment, which covers all businesses and individuals making unsolicited calls for direct marketing purposes.
Baroness Hayter of Kentish Town
While we are talking of trying to find reasons not to take action about victims of domestic violence, the Minister will notice that in our amendment we allowed for Ofcom to be able to look at categories, either individual domestic callers or groups of them, that could be exempt, exactly in order to cover women’s refuges and things like that—if we are talking about grabbing excuses. The important issue, though, is that our understanding of the European directive on privacy was that it was about individual privacy, not about corporations, and that the individual within a company or an individual subscriber could be protected. I would be happy if the Minister could clarify that in writing.
The other issue is that no one tells you to go to the Ofcom site, which is not advertised, so there really is no way of being able to complain, particularly if you do not have the caller’s identification number. I ask the Minister to spell out for us why it is not reasonable to ask for all non-domestic callers making marketing calls to have to identify their number. I do not think that she has actually answered that.
Baroness Neville-Rolfe
Perhaps I could try harder; we will have to return to it if I cannot persuade the noble Baroness. The difficulty is that if, for example, someone rings up a domestic violence helpline and that number is public, it will then appear on the bill, so other members of the household will then know that people in their household have been ringing that number. This sounds like a detailed issue, although I think that our hearts are in the same place. My understanding is that this was debated at great length in Brussels at the time of this directive, and that these were the problems that came up. I thought that it was right to share that background with the Committee. I will go away to see whether the point that the noble Baroness has made about individual versus corporate stands; I think it is a legal point that I would need to take advice on. That is the difficulty; it was a combination of behavioural and legal points that reflected the concerns the EU had when it was talking about this, when obviously it was trying to do the right thing.
I turn to Amendment 105C. The Government share the concern of the right reverend Prelate and the Children’s Society about payday lenders using unsolicited calls to market inappropriate products to vulnerable consumers. Indeed, we had a long debate earlier in this Committee on the whole issue of payday loans. Such practices must not be allowed to occur, as the noble Lord, Lord Deben, said. I reiterate that the tough measures that I outlined as part of the nuisance calls action plan will capture the practices of payday firms, among other industries. Such firms will no longer be able to target consumers as they have previously been able to.
The right reverend Prelate asked why, as mortgage calls were banned, payday lenders’ calls could not be banned. I am afraid I must take that question away; I was not aware of the ban on mortgage calls, and I will investigate and write to the right reverend Prelate to see if that provides some new avenue into the debate.
To conclude, the Government take the issue of nuisance calls very seriously, and I have set out a number of ways in which we are tackling the problem and the way in which we have speeded up. The Government will continue to work with consumer groups, regulators and of course industry, which need to make changes to find effective solutions. The work outlined in our action plan is under way—new things are happening all the time—and this will help to contribute towards achieving more long-term solutions to deal with nuisance calls. I have outlined a couple of points of follow-up, which we will pursue before we get to the next stage of the Bill, but in the mean time, I ask the right reverend Prelate to withdraw his amendment.
“Practices of rent-to-own companies
(1) This section applies to credit agreements and consumer hire agreements taken out in respect of household goods specified in rules by the Financial Conduct Authority.
(2) The rules under subsection (1) shall—
(a) include a requirement on lenders to include in pre-contractual information adequate explanations and information allowing prospective customers to compare both the cash price of goods and the total cost of the credit agreement to a representative retail price for those goods;(b) prohibit lenders from requiring customers to take out insurance sold or brokered by the lender as a condition of obtaining credit;(c) set out specific steps lenders must take before taking action to enforce the agreement or recover possession of goods; and(d) set out the steps lenders should take to check that the agreement is affordable and suitable for prospective consumers.”
Baroness Hayter of Kentish Town
My Lords, this House has done much important work in tackling high cost and exploitative credit, thanks largely to the most reverend Primate the Archbishop of Canterbury and my noble friends Lord Mitchell, Lord Stevenson and Lord Kennedy of Southwark.
Amendment 105L concerns a new, unregulated and somewhat exploitative form of loan that has sprung up in the high street—along with other high-cost credit, mostly in low-income or deprived areas. It is known as rent to own: one well known example being BrightHouse. It works by having consumers rent products, which can be from household essentials, such as washing machines and beds, to games consoles, with the rent being eventually used to pay for the product. However, because it is deemed to be rent, there are none of the safeguards that would cover a loan to buy the product—for example, hire purchase or a straight bank loan. There are no checks on the ability to repay. There are no rights over the property. There are no safeguards against the property being repossessed because, until the final payment is made, it is only being rented, not owned by the people in the house. So, although the consumer is theoretically renting the product—in their minds, they are of course in the process of buying it—any failure to meet a payment can lead to it being immediately repossessed. There is evidence that such stores show little forbearance over mispayment and are unwilling to accept a breathing space or to negotiate payments where personal circumstances change. That is despite the fact that the consumer may have already paid well over the true value of the goods—sometimes, several times over.
There also appears to be a degree of heavy-handedness when it comes to repossession, with customers rarely informed of their rights and, in some cases, intimidated. There is no protection for the consumer, who is legally neither the owner of the product nor a borrower of a loan, so none of the normal protections associated with hire purchase apply. Protections apart, let us look at the prices. They far exceed the normal purchase price, even including any interest from a bank, which, if one were buying it with a bank loan, would then be added on to the price. The products include a washing machine. If you bought a washing machine from BrightHouse, a not unrepresentative example would leave you paying £1,404 for the machine, which could be bought somewhere else for £535.70—by monthly instalments in both cases, so I am comparing like with like. That means you are paying almost three times the price. However, if you get the games console rather than the washing machine, you end up paying more than three times the initial price. Buying an Xbox console bundle—I admit that I do not know what that is but I am assured that people buy them—elsewhere would cost you about £400. At BrightHouse it is £1,500 over a 130-week period. The APRs are between 60% and 90%. These are not my calculations; they are from BrightHouse’s own catalogue, where buying an HP Platinum Pavilion touch screen laptop would cost you £1,560, paying an APR of 94.7%. So adding up these so-called rents amounts to far more than the full list price, even adding on the interest if you bought it with a bank loan.
Furthermore, the company—I mention this one because it is the only one that I have found time to go and visit—often stocks absolutely top-of-the-range products, despite its shops being in deprived areas and its business model being aimed at those who want to pay weekly. On top of that, BrightHouse adds in compulsory and expensive insurance, even though the goods still belong to the company as they are being rented, so insurance is probably not needed. Then, just to add insult to injury, the marketing of the goods uses every trick of behavioural economics to tempt in the buyer, highlighting the price per week rather than the total cost or the length of repayment. The laptop that I just mentioned costs £15 per week but the catalogue does not tell you how many weeks you will need to pay off the price of £1,560. As we discussed in Committee last week, this is “drip pricing”, where the first number you see—in this case, the weekly amount—gives little indication of the full price. We know from research that consumers tend to overvalue a benefit that they will receive now, which in this case is a small weekly payment and immediate possession, while underestimating the impact of deferred costs.
Amendment 105L would require such a company to include information about the price of the good; an indication of the price the customer might pay elsewhere; the cost of the credit agreement, which should be in money terms, not percentage terms; and clarity about possible repossession, including any allowance for a breathing space or renegotiation of payment. It would ban making insurance compulsory, as I am sure the insurance itself adds more in cost than it does in value, and you have to pay the interest on it because it is part of the weekly charge. The amendment would also require the lender to check on the consumer’s ability to pay the full price.
This is not an attack on any weekly payments system, which can help those on lower incomes with their household budgeting. However, the business model used by companies like BrightHouse is so stacked against the customer that it is little short of exploitation. I therefore hope that the Government will accept this measured approach, which does not ban this form of credit but introduces greater transparency alongside adequate safeguards. I beg to move.
Baroness Jolly
My Lords, I hope that I shall be able to shed some light on this. Again, we share the noble Baroness’s concern about the risk of consumer detriment in the hire purchase credit market. The rules for the consumer credit market, put in place by the FCA from 1 April this year, were made with the stated aims of, first, ensuring that firms lend only to borrowers who can afford it; secondly, increasing borrowers’ awareness of the costs and the risks of borrowing unaffordably; and, thirdly, ensuring that consumers have access to support if they have financial difficulties.
The noble Baroness suggests that some organisations show little forbearance and are heavy-handed. The FCA specifically requires firms to adhere to debt collection rules, including in treating customers in default or arrears difficulties with forbearance and due consideration; provide pre-contractual explanations and information in line with European requirements, including the total amount payable; assess creditworthiness and affordability, including the potential to impact adversely on the consumer’s financial situation and their ability to make repayments as they fall due; and, where firms sell insurance products, do so in line with the FCA’s requirements around assessing consumers’ eligibility to claim on a product, and the high-level principle of “treating customers fairly”.
The Government believe that the tough and decisive action being taken by the FCA, following its detailed rule-making process, will ensure that consumers are far better protected under the new regime. The Government also recognise the importance of affordable credit, which is why they are supporting the credit union movement, including through investing £38 million through the expansion project. Given the new regime, I wonder whether the noble Baroness would feel her way to withdrawing the amendment.
Baroness Hayter of Kentish Town
I think that the Minister has completely misunderstood. This is not about a loan—this is about credit, not debt. The proposal is completely outwith that regime because it is not a loan. It does not come under the FCA, it is rent. These people are renting the television—if they rent it for three years, they will then be given it and own it. It is not covered by the affordability test, by forbearance or by anything that she is talking about.
Baroness Jolly
I apologise for the misunderstanding. I think that we will probably need to have a conversation fairly urgently.
Baroness Hayter of Kentish Town
That will be helpful. It is called “rent to buy”. You rent the item and own it only at the end, when it is given to you. You are renting it, and there is absolutely no hire purchase agreement or anything like that. In the light of that, and assuming that it will be possible to discuss this to clarify the issue, I beg leave to withdraw this amendment.
“Protection of tenants against retaliatory eviction
In section 21 of the Housing Act 1988 (recovery of possession on expiry or termination of assured shorthold tenancy), after subsection (7) insert—“(8) The Secretary of State must issue guidance on how tenants can be protected from retaliatory eviction through the service of a notice under this section.
(9) For the purposes of this section, “retaliatory eviction” is defined as when a landlord unreasonably issues a notice under this section as a result of the tenant seeking protection of their rights under this Act.””
Baroness Hayter of Kentish Town
My Lords, Amendment 105S, which stands in my name and that of my noble friend Lord Stevenson, seeks to protect tenants who, having made a complaint about their landlord, face being evicted by a Section 21 notice, effectively deterring any tenant from tackling their landlord over any bad practice. We seek not to outlaw the practice of evictions altogether but to require the Secretary of State to issue guidance on how tenants can be protected from the use of Section 21 notices for retaliatory evictions. Sadly, representatives of Citizens Advice and of tenants cite too many examples of threats of retaliatory evictions for this to be a rare occurrence. Indeed, some 200,000 renters have been evicted or served notice because they complained to their local council or to their landlord about a problem. Certain groups are more likely to suffer retaliatory eviction: those in high-demand areas; up to 14% of families in London; and 10% of BME families.
In preparing its report, Creating a Better Private Rented Sector, the relevant all-party group heard witnesses’ fears about this, which inhibited tenants from expressing their concerns. Indeed, one in eight renters failed to ask their landlord to make repairs because of their fear of being evicted. The particular worry for tenants about any complaint leading to eviction is the fact that it is not illegal. Ministers have given this matter their attention, following the report of an industry-wide group in connection with the introduction of the minimum energy efficiency standard, which was causing some of the same issues, and the right to request energy-efficient improvements.
The all-party parliamentary group’s report asked that Ministers keep the operation of Section 21 notices under review. We would like the Government to go one step further and issue guidance to help tenants avoid this disreputable practice. We know that the Government want to take action in this area. After all, they have given their backing in principle to a Private Member’s Bill in the other place to stop the minority of rogue landlords who, rather than meet their legal duty to keep their properties to a reasonable standard and remove health and safety hazards, instead evict tenants simply for asking for essential repairs. Shelter, from the evidence of those it helps, has campaigned on revenge evictions, which the Government undertook to outlaw, ensuring that tenants do not face the prospect of losing their homes simply because they have asked for such essential repairs.
In committing the Government to support the Private Member’s Bill, Communities Minister Stephen Williams said that there were a minority of spiteful landlords, and that he wanted to ensure that hard-working tenants were not afraid to ask for better standards in their homes. If the Government want to see progress, our amendment offers them a useful first step. I beg to move.
Baroness Neville-Rolfe
The noble Baroness’s amendment seeks to deal with the problem of retaliatory eviction. This occurs when a tenant is evicted by the landlord when they report problems with the property. Landlords may then use Section 21 of the Housing Act 1988, otherwise known as a no-fault eviction. The latest evidence suggests that retaliatory eviction affects about 2% of all tenants, so it is a big figure. That figure rises significantly for some groups, with 10% of black and minority ethnicity households and 14% of London families affected by retaliatory eviction.
We have been proactive in this area. In February this year we published a discussion paper on improving property conditions in the private rented sector. We specifically sought views on how to tackle retaliatory eviction and remove the fear that many tenants have about making a legitimate complaint. The Government announced on 11 September their support in principle for the Tenancies (Reform) Bill, a Private Member’s Bill designed to outlaw retaliatory eviction. This Bill will have its Second Reading in the other place on 28 November.
We do not think that more guidance, as proposed in this amendment, is the right solution as we do not believe that the existing law provides tenants with sufficient protection. Our How to Rent guide, which was published in June this year, makes it clear to tenants that if a property is in an unsafe condition and the landlord will not repair it, they should contact their local authority, which can make the landlord deal with serious health and safety hazards. In addition, the industry-led voluntary code of practice, which was published on 11 September, makes it absolutely clear that the sector itself recognises that the practice of retaliatory eviction is unacceptable.
We therefore agree with the need to tackle the problem of retaliatory eviction. We believe that the Tenancies (Reform) Bill will provide the solution, and I ask the noble Baroness to kindly withdraw her amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that response. It seems rather disappointing, perhaps, that something could not be put into the Consumer Rights Bill. Part of the problem with what is happening at the moment is that we are still not sure that tenants know about or are helped in avoiding those evictions. As we said before, this is the Consumer Rights Bill, so it seems a shame that the right for tenants not to be evicted for exercising their own right to ask for repairs is not embedded in a Consumer Rights Bill. We nevertheless welcome the Government’s support for the Tenancies (Reform) Bill and hope that they will push it along rapidly. We will have to see whether we still feel that some reference should be made in this Bill but, for the moment, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
My Lords, as this Committee draws to a close, I will move some technical amendments, beginning with Amendment 106. I start by expressing my gratitude to the Delegated Powers and Regulatory Reform Committee, which scrutinised the Bill earlier this year and which does such a good job for us in this House. Amendments 106 and 107 give effect to one of its recommendations. Amendments 108 to 111 are technical amendments. Between them, they support the implementation of the Bill and are necessary to reflect earlier amendments regarding lettings.
As I may not speak again, I take the opportunity to thank our various Chairmen, the Members of the Committee, the doorkeepers and the Bill team for all their hard work and participation. This has been my first Committee as a Minister and I have been struck by the quality of the debate. It has been wonderful to have both very experienced noble Lords—some of whom are not here with us now—and newer noble Lords, who bring expertise from elsewhere. I have really enjoyed the examples: the beautiful made to measure suit of the noble Baroness, Lady Hayter, the bathrooms, the kitchens and the digital games. Even today there were the graphic examples of nuisance calls and of allergic reactions—very important issues.
I am very pleased with the progress we have made and obviously look forward to further debate on Report. In the mean time, I beg to move Amendment 106.
Baroness Hayter of Kentish Town
My Lords, the Minister says these amendments are technical. I have 74 questions here about them which I would just like to go through if the Committee could hold on. In fact, we are very content with these amendments—that was just my excuse to join the thanks to the Bill team and, indeed, to the Ministers, who have been very willing during this process to meet with us and discuss the Bill. I also want to thank noble friends who have been a tremendous assistance, particularly my noble friends Lord Stevenson, Lady King and Lord Mendelsohn from the Front Bench, as well as my noble friends Lord Harris and Lady Crawley, who have done sterling work. I will just take a moment to talk to them directly—it ain’t finished yet.