Consumer Rights Act 2015 (Consequential Amendments) Order 2015

Baroness Hayter of Kentish Town Excerpts

Monday 7th September 2015 Grand Committee

[Lord Taylor of Warwick (Non-Afl)]

My Lords, I thank the Minister for her opening remarks and continuing work on this matter.

I appreciate that the Act to which the orders relate is a consolidation Act designed to simplify, and obviously I support that. There are challenges ahead and I hope that the Government will focus on them, in particular the internet. We know that the online retail market is the fastest-growing sale sector. It is now worth well over £100 billion.

The expansion of click-and-collect services and mobile-phone commerce has played a large role in this. Only last night a lady from America sent an e-mail to my website, wanting to know what my opening hours are, because she wanted to buy some clothes. She confused me with Lord & Taylor, the clothing department store in the USA. She was quite happy, however, that I was not in fact Lord & Taylor. This just goes to show that many consumers now are dealing with companies that are outside the jurisdiction and that in many ways the Government are playing catch-up with the internet. They still have to wage the battle against that.

Paragraph 7 of the guidance notes states that the Government consulted extensively on reforming consumer law, and that this was based on broad support for reforms from business and consumer stakeholders. But for many start-up firms the owner is also the person who makes the tea and puts out the rubbish. Keeping abreast of changes in consumer law is a challenge too far. I still feel that there is too big a gap between small business and government, and indeed between consumer and government.

One must look at what the consumer can do when things go wrong. I appreciate that this was in essence a consolidation Bill, but the Government have to be a champion of the consumer. Some argue for a consumer ombudsman, just one person. I do not share that view, but I feel that companies owe more of a duty of care to consumers to advise them on what to do when things go wrong. Caveat emptor, or buyer beware—there is still consumer law, but it is the new language of the internet, not Latin, that is fast taking over. So the Government must take into account that that changes, almost by the minute, the way in which we buy and sell goods.

[Baroness Hayter of Kentish Town (Lab)]

Well, we are back again. I thank the Minister for not just introducing the draft orders, but for the update on progress on the product safety review, which is of particular interest to me. We had not formally seen it but I had obviously heard about it. The decision that she or whoever made it to appoint Lynn Faulds Wood to chair the review was a brave one, as she is very much her own lady. I have worked with her before, on bowel cancer, which was rather different, but I know that she will take no prisoners. We look forward to that report and trust that it will be out this year.

The EU directive on alternative dispute resolution in a way touches on the area, just raised by the noble Lord, Lord Taylor of Warwick, about whether there should be a consumer ombudsman. In principle, I am more or less with him on that. If you have an ombudsman it is compulsory for the industry covered to allow a consumer to take its complaint there. The problem that we have with the ADR directive, to which the Government signed up in only the most minimalist way, is that there will be alternative dispute resolution organisations in existence. For example, if you were John and Taylor—a wonderful firm, I am sure—but it was in Warwick and you were selling clothes there, you would in future have to say that the clothes-selling ADR provider is that well-known company, Stevenson and Hayter. However, we will not necessarily accept that a consumer should take their complaint there. So we have a very odd situation now which falls short of what the noble Lord would want: basically, anyone can set up an ADR and, as long as it is approved by the trading standards people, it exists but consumers cannot necessarily take their complaints there.

When she replies, perhaps the Minister will confirm when the full implementation of the ADR directive, although it is very minimalist, will take place. I know that it is later than was originally intended, but I missed the date. How many of those ADR schemes have been approved and what proportion of the consumer market does she now consider is covered by some sort of ADR scheme?

I turn to another issue on which the Minister helpfully updated us, which was the announcement made by the Minister in the other place on 29 July—which was, strangely enough, just when we were all going off on holiday and had packed our buckets and spades—of the six-month delay in the services provision of Chapter 4 of the CRA for the rail, aviation and maritime services. It may be that the Government had foreknowledge of what was going to happen at Calais over the holiday and were absolutely sure that they did not want consumers to be able to use their new rights under the Act. I hope that that was not the case.

What concerned me, not in what the Minister said today, but in the letter of 29 July from the Minister in the other House, was the suggestion that the passenger transport sector might be exempted permanently from the Act in certain respects. We would have very serious questions about any suggestion of completely removing the rail sector from the Act. The existing consumer protections under the national rail conditions of carriage are much narrower than those introduced in the new Consumer Rights Act. They basically cover only delays and cancellations, not quality of service, passenger assistance, on-board wi-fi, which gets more and more important, and cleanliness. In fact, they do not cover what the Minister referred to in the rest of the Act: whether the service could be said to be fit for purpose.

Although there are some improvements under the national rail conditions of carriage regulations, in that there is now provision for cash compensation rather than just a rail voucher—which is no use at all if you do not want to go back to where you have been—that compensation is still essentially limited to delays, not those wider issues. We obviously want the Consumer Rights Act to apply to passengers.

The Government had initially reassured the Committee in the Commons that the national rail conditions would be excluded only when they offer equivalent protection to that in the Bill—which is not currently the case. At that point, we were reassured that there was to be no undercutting of what is now the Act. However, the letter from the Minister in the Commons worries us slightly. We know that even with the present level of protection, which is not as good as the CRA, the Office of the Rail Regulator found that more than three-quarters of rail passengers know not very much or nothing at all about their rights to a refund or compensation when trains are delayed or cancelled.

We believe it is vital that the travelling public get the full rights under the Act. Given that the Conservative manifesto pledged,

“to improve compensation arrangements for passengers”,

will the Minister confirm that there is no intention to provide lesser rights for passengers than those in the Bill to which I think she can quite proudly put her name? Will she also undertake that in that six-month pause Transport Focus and other consumer groups are fully consulted and that it will not be just the industry deciding what rights it will deign to give its customers?

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[Baroness Neville-Rolfe]

I thank my noble friends Lord Moynihan and Lord Taylor, the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, for their intelligent contributions to today’s debate. On the subject of beards, two of my sons have grown beards this summer. Of course, I congratulate the noble Baroness, Lady Hayter, on her birthday. We will not sing “Happy Birthday” to her because I think it would be against the rules of this distinguished place. I also thank her for her kind words about the product safety work that we are doing and about the chair. I will of course pass on her comments.

I shall start with transport. I reassure the noble Baroness and the noble Lord that there was no conspiracy in relation to the transport provisions. Our concern is about the interaction between the existing provisions, to which the noble Baroness referred, and the new provisions in the Act. The delay in the order until April next year will allow us to consult widely and we feel that it would be wrong to pre-empt that consultation. The scope of any exemption will be limited and will relate only to the ability to limit liability to less than the ticket price. All other protections under the Act will apply. The consultation will involve both business and consumer groups. Of course I undertake to pass on the points that the noble Baroness has made during this debate to ensure that my colleagues doing this work in the Department for Transport are well aware of noble Lords’ concerns.

As my noble friend Lord Moynihan helpfully said, the provisions are complementary and supplementary to what we did in the Act and to the investigation powers that are already in place. I think that his question was, “Do both orders affect secondary ticketing?”. My answer to that is yes, so, as he says, that is helpful. However, I emphasise that the main provisions have already come in, including those relating to the investigatory powers. We remain committed to these and to the review, whose object is to make sure that the market works properly. The terms of reference have still to be finalised once the chair can confirm that the ideas that have been put forward are in the right place. I hope that that gives some reassurance. On enforcement, in the mean time consumers who have problems should contact Citizens Advice, which will pass information to trading standards for enforcement. Individuals can also challenge in court terms that they believe to be unfair. Therefore, the provisions are fully in force and there is no reason for anyone in the market not to comply with them. Doing so could attract a financial penalty.

[Baroness Hayter of Kentish Town]

It would be interesting to know who has been consulted on the terms of reference. Certainly we have not seen any draft terms of reference. Again, I trust that it is not just the secondary ticketing people who have been consulted.

[Baroness Neville-Rolfe]

I am grateful to the noble Baroness for that intervention. I think that before the election we sent an outline to some of the noble Lords who have been involved in the debate. If those did not come their way, I will make sure that they do. As I am sure noble Lords agree, it will be important that the chair looks at the terms of reference, but a working document was prepared and I can certainly arrange for your Lordships to receive it. We have been making progress in establishing the terms of reference so that we are ready to roll.

I am sure that noble Lords will agree that it has been important to find an appropriately skilled chair and, obviously, the necessary support, on which I think there is more detail to follow. I can confirm that the review will report to both Secretaries of State. As I said, we expect an announcement soon. The review will take evidence from the Rugby World Cup, as it should do, and we remain confident—this is perhaps the most important point—that it will report on time. As my noble friend explained, there is a time-limited window. We have legislated already and we will be responding to the concerns that have been expressed particularly vociferously in this House and elsewhere.

On the CMA, the noble Lord, Lord Stevenson, said that this was history. However, the CMA, which is an independent organisation, will be contributing to the expert group, will provide evidence for the review, and consider its conclusions alongside the Government and other enforcers when considering action in this sector.

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[Baroness Neville-Rolfe]

That is a fair point, which we ought to reflect on. We have been impressed by the way that the private sector has responded to the ADR directive. An increasing number of ADR providers are entering the market, which will be good for business and for consumers. That will increase choice and drive down the costs of ADR.

[Baroness Hayter of Kentish Town]

It will increase choice only for the provider. The consumer will not be able to choose which ADR provider to go to.

[Baroness Neville-Rolfe]

I thank the noble Baroness for making that point. I will reflect on it and come back to her, and to my noble friend Lord Taylor on the general point on ADR. He made a point about how we can align processes so that it is easier for the consumer, a point that I note.

We have had an interesting and helpful debate. I conclude by commending the two orders to the Committee.