Baroness Jolly
Main Page: Baroness Jolly (Liberal Democrat - Life peer)Consumer Rights Bill
Baroness Jolly Excerpts
Baroness Jolly
Baroness Jolly (LD)
My Lords, the Bill’s provisions on consumer contracts for goods build on existing legislation, such as the Sale of Goods Act, and on court- developed common law. Government Amendments 2, 4 and 6 are to ensure that the greater clarity the Bill provides does not override an existing common-law distinction between severable and entire contracts. A severable contract is divisible into parts, which are intended to be independent of each other, so different parts of the payment can be assigned to different parts of the trader’s performance. The amendments make it clear that, where a contract is severable, the consumer may have the right to reject those faulty goods or they may have the right to terminate the whole contract. That will depend on the nature of the goods and the fault and the details of the contract. In some cases, it will be quite right for a consumer to reject all the goods under a contract, even if it is severable. The existing common law recognises that and the amendments are to make it clear that the common law on this applies.
The noble Baroness, Lady Hayter, asked in Grand Committee whether these amendments could create a new incentive for traders to try to make their contracts severable. I hope I have given reassurance that the amendments refer to an existing concept. A contract will not be severable simply because it is described as such but will depend on the genuine agreement and arrangement between the parties in the circumstances. The guidance to the Bill will cover when a contract is severable and when a consumer might be entitled to terminate the whole contract. As I have explained, these amendments are to ensure that the consumer’s clearer rights in Clause 20 should not override the common-law position for severable contracts.
Clause 20 reflects the equivalent provision for Scotland in the Sale of Goods Act—that is, Section 15B—and in related legislation. Therefore, for Scots law, Clause 20 is intended to restate the existing provisions without altering the common law. I beg to move.
Baroness Hayter of Kentish Town (Lab)
I thank the Minister for agreeing to give us some extra time to look at these amendments, which of course were not seen in the Commons or in the Select Committee. Having had time to consider them, and in particular with the reassurance that has now been given by the Minister and the clarity that will be in the forthcoming guidance on the Bill, we are content with the amendments.
Baroness Jolly
“(7A) Whether or not the consumer has a duty to return the rejected goods, the trader must bear any reasonable costs of returning them, other than any costs incurred by the consumer in returning the goods in person to the place where the consumer took physical possession of them.”
Baroness Jolly
My Lords, the Bill sets out key remedies for consumers but the Government recognise that it is also important that consumers are not discouraged from exercising them. These amendments relate to the costs of returning rejected goods to the trader. It is important that such costs do not put consumers off rejecting goods. We debated this issue at some length in Grand Committee.
We listened to the point made by the noble Baroness, Lady Hayter, and the noble Lord, Lord Stevenson, and agree that it does make sense to make it clear on the face of the Bill that the trader bears responsibility for the return costs. These two amendments provide that clarity and set a sensible balance. The trader is responsible for any reasonable costs of the consumer returning rejected goods. This would apply whether or not there is an agreed requirement for the consumer to return rejected goods. The amendments do not cover the costs of the consumer returning the goods in person to the place where the consumer took physical possession of them. We think that these are sensible amendments that meet the needs of consumers by making the law clearer without a causing significant burden to business. I beg to move.
Lord Stevenson of Balmacara
My Lords, I am extremely grateful to the Minister for accepting the words that we used when we proposed the amendment the first time around. It does not happen very often; I will relish this experience. It is a curious irony that, in Committee, in the place where I had to sit in the Moses Room—I am sorry to take up the time of the Chamber in this way—the Minister responding was framed against the television on which, as noble Lords may now remember, those little swinging bells had just been introduced. It struck me that it was Christmas: it felt like Christmas. However, her words did not say, “Christmas”; they said, “No, go away; this is silly; this is already in legislation”. Now she has changed her mind and come back. I am so pleased.
Baroness Hayter of Kentish Town
If we are allowed to have a small word of congratulation, I congratulate the noble Lord, Lord Moynihan.
My Lords, this House, as we know, has had some major achievements in tackling high-cost and exploitative credit. Amendment 14 concerns a new, effectively unregulated and exploitative form of loan that has sprung up on our high streets. Along with other high-cost credit, it is found in low-income and deprived areas. It is known as rent to own. It works by consumers theoretically renting household goods—washing machines, fridges, TVs, beds—but with the rent eventually being used to purchase the product.
However, because it is deemed rent, there are few of the safeguards which would cover, for example, a bank loan, if that had been taken out to buy the same product. So there are no checks on affordability for a product aimed at consumers who are “credit constrained”—those are the words of the person who runs one of these big companies. There are no safeguards against the property being repossessed for missing a payment, because, until the final payment, the product is only rented, not owned. While the consumer is theoretically renting the product, though in their mind they are in the process of buying, a missed payment can lead to repossession.
Some of these stores show little forbearance over a missed payment, despite the fact that the consumer may have already paid well over the true value of the goods by the time they come to miss a payment. Furthermore, the prices charged are pretty exorbitant, far exceeding normal retail prices, even including any interest had a bank loan been used to pay for the item. I found a washing machine priced from £400 to £600, depending on which outlet I went to, but it was £1,560 at one of the rent-to-buy stores—up to four times the price. A table which was £200 at Argos was £468 at BrightHouse, one of the rent-to-buy stores. The APR, which admittedly it prints in some of its brochures, is between 60% and 90%. Adding up all these so-called rents amounts to far more than the list price, plus what interest would be paid if the item was bought with a bank loan.
Furthermore, the companies add in compulsory and expensive insurance, even though the goods still belong to the shop, so probably do not even need insuring. BrightHouse told me that the insurance on a £600 product would be £150 over three years. That is far higher than any of us would be able to get for a normal contents insurance. And the insurance is with its wholly owned, Malta-based insurance company or via its Isle of Man company. To add insult to injury, its marketing uses that favourite trick to tempt the buyer, highlighting the price per week rather than the total cost. So the price of a Samsung gold laptop is splashed as £13 a week, albeit that the full cost is £1,392, which includes 94.7% APR. It is little wonder that more than a quarter return their goods within the first 13 weeks of purchase, by which time they will have paid quite a chunk of money for just three months’ use of the item. In the case I mentioned, £170 would have been paid for something that might retail for only £500.
It is also little wonder that there is money to be made in this way. One of BrightHouse’s companies, Caversham Finance Ltd, made £30 million profit before tax, despite its trading company’s annual report stating:
“2014 was … challenging … with customers under pressure from continued high inflation, low wage growth and … the government’s much heralded changes to the welfare system have increased uncertainty for a significant portion of BrightHouse customers who are completely or partially reliant on benefits”.
We have it even from the companies themselves that they are targeting these products at customers who are completely or partially reliant on benefits. Is anyone surprised that I question the business model of a firm that profits from selling high-end goods at over-the-odds prices with compulsory expensive insurance to some of the most vulnerable in society?
Amendment 14 requires a company to set out the total price of the goods including the cost of the credit agreement. It bans making insurance compulsory and it requires the Government to set out guidelines both on checks on affordability and on possible repossession. This is not an attack on any weekly payment 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 consumer 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; it simply introduces greater transparency along with some safeguards. I beg to move.
Baroness Jolly
My Lords, the Government share the noble Baroness’s concerns about the risk of consumer detriment in the hire-purchase credit market, particularly to the vulnerable consumers that she has described to the House. I wrote to the noble Baroness on this subject recently and want to take this opportunity to underline that this does include rent to own and we are talking about the same issue.
We have stated before in Committee that consumer credit regulation transferred to the Financial Conduct Authority on 1 April this year. The rules for the consumer credit market, put in place by the FCA, were made with the stated aim of: ensuring that firms lend only to borrowers who can afford it; increasing borrowers’ awareness of the costs and risks of borrowing unaffordably; and ensuring that consumers have access to support if they have financial difficulties.
Accordingly, the FCA rules for hire purchase and conditional sale agreements, including rent-to-own agreements, specifically require firms to provide pre-contractual explanations and information to a consumer before a contract is made. These rules are in line with European requirements, including setting out the total amount payable, the cash price of an item and the total cash price if there is more than one.
Firms must also adhere to debt collection rules, including treating customers in default or arrears difficulties with forbearance and due consideration; and assess creditworthiness and affordability, including the potential to impact adversely on the consumer’s financial situation, and the consumer’s ability to make repayments as they fall due. Where firms sell insurance products, they must 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”. Firms must also give a separate price for the insurance product and explain whether it is compulsory.
These rules are in force now, and the FCA can enforce breaches of its rules— there is no limit on the fines it can levy and, crucially, it can force firms to provide redress to consumers. The FCA keeps all its rules under review and continually considers whether further interventions are needed in the consumer credit market. It will set out further thinking early in the new year.
Regarding the noble Baroness’s specific points about contract enforceability, lenders are already required to serve a statutory notice under the Consumer Credit Act before enforcing the agreement or repossessing goods. Goods cannot be repossessed without a court order if the consumer has paid at least a third of the total amount payable. The FCA also sets out how firms must undertake affordability assessments before entering into an agreement, including taking reasonable steps to assess the customer’s ability to meet repayments in a sustainable manner, without undue difficulties.
To underline that point, the FCA has had full use of these powers since 1 April and can make use its broad enforcement toolkit to punish breaches of its rules. The FCA also has flexible rule-making powers to take further action where it deems it necessary in the protection of consumers. The Government believe that this, alongside the existing protections set out in legislation, provides robust protections for consumers in the conditional sale and hire purchase markets. I therefore ask the noble Baroness to withdraw her amendment.
Lord Harris of Haringey (Lab)
Before the Minister sits down, could she address the point about the requirement to purchase an insurance policy? Is that something specifically not permitted at the moment; or is she saying that that is acceptable policy that the Government are prepared to see happen, on the basis that customers are able to enter into choices knowing their position? At the moment, it is not clear that that rather important clause in the amendment is addressed by the answer that the Minister has given.
Baroness Jolly
My Lords, the information that I have regarding insurance is that the FCA makes clear rules about insurance with these sorts of products. I will write to the noble Lord to clarify the situation on insurance that has to be purchased from the same firm from which customers are taking out hire purchase on a product.
Lord Clement-Jones
Logically, one thing follows another. That is exactly the purpose of this amendment. Indeed, I shall refer again to the speech made by the noble Baroness, Lady King, on 20 October, as recorded at column GC 183 of Hansard. It has been extraordinarily helpful in formulating the terms of this amendment.
Let me explain. Amendment 34, tabled in Grand Committee, sought to amend Clause 34 to include a provision stating that it is common for computer software to include defects due to its dynamic nature and the complex environment in which it operates. In response to that amendment my noble friend Lady Jolly asserted that,
“the Bill is flexible enough to cope with”,
the differences between complex software and simpler forms of digital content such as music. She said that “reasonable consumers” understood that complex content contains bugs, and that,
“freedom from minor defects is an aspect of satisfactory quality only ‘in appropriate cases’”.—Official Report, 20/10/14; col. GC 184.]
The Minister was clear about this in Grand Committee, but, as the Federation Against Copyright Theft has said, it is far from the case that a district court or a county court would be clear about it.
In the debate, the noble Baroness, Lady King of Bow, suggested that,
“it seems reasonable to say that where minor defects in software do not affect the overall functionality of the product, that digital content should not be deemed unsatisfactory”.—[Official Report, 20/10/14; col. GC 183.]
I agree—and the software industry agrees, and very much supports this approach, as it is much more outcome based. We have reformulated the amendment as a result, and it now says that as long as the defect does not affect the main functionality of the digital content, it should not be regarded as rendering it unsatisfactory.
My noble friend Lady Jolly questioned in Grand Committee what the driver for industry would be to improve the software if the legislation stated that some types of software contain bugs and, as such, this would not mean that the digital content was faulty. However, it is in industry’s commercial interest constantly to improve its products. In fact, to the contrary, the clause as formulated might have an adverse effect in encouraging industry not to make changes or improvements to its digital content. The consequences of strict compliance are likely to be increased costs to consumers and slower product evolution, arising from the increased time and resource required for testing. It is preferable for consumers and businesses to require that minor defects or malfunctions that may surface as a product or service is used be fixed as promptly as possible.
Amendments 18 and 19 aim to remove the risk of claims in relation to minor software glitches. Such claims are potentially expensive and time-consuming for software providers to resolve and would not benefit consumers. In Grand Committee, Amendments 37 and 38 sought to amend Clause 36 to clarify that the presence of bugs in complex types of digital content does not mean that the content is not as described. My noble friend Lady Jolly responded by commenting that,
“digital content either meets the description or … not”,
and that the amendments would undermine,
“the requirement that the digital content should be as described”.—[Official Report, 20/10/14; col. GC 186.]
My noble friend provided a simple example of a defect in software where the spellchecker no longer worked yet the software was described as having this function. With all due respect, the spellchecker example is very simplistic. It is a different situation with regard to complex software such as security software, which has to evolve over time and needs to be updated to address the myriad situations to enable the software to continue to interface with other third-party software and platforms, to continue to function or to address new vulnerabilities.
These issues were discussed during the debate in Grand Committee on Amendment 40A, moved by the noble Lord, Lord Haskel. His amendment would have amended Clause 40 to enable suppliers to make modifications to the software if they are of benefit to the consumer, remedy risks or improve functionality, irrespective of whether the modification would mean that the digital content no longer meets that description. I am pleased that the Government have partially relented on that and that, as a result, we now have government Amendment 20 to Clause 40. The supplier can now add functionality but software suppliers will still not be able to remove features. Neither Clause 36 nor Clause 40 takes into consideration that certain features may have to be removed or disabled from security software. Suppliers of security software may have to remove a function as it is in the very interest of a consumer to do so, as the function could be vulnerable to attack and this specific vulnerability could leave the consumer open to a range of threats—from a virus that will steal personal information or credit card details to malware that will infect a user’s machine, rendering it unusable and/or wiping data such as precious family photos.
Functions of security software are not removed without good reason. If suppliers do not remove a function, there are many circumstances where this will be to the detriment of consumers. I hope that my noble friend will recognise the particular circumstances of software and give her approval at least to the tenor of these amendments. I beg to move.
Baroness Jolly
My Lords, I thank my noble friend for setting out his stall, and I will set out mine. The new quality rights that we are introducing for digital content provide that digital content should be of satisfactory quality, fit for any particular purpose and as described. These core rights mirror those already used for goods, building on consumer expectations and familiar concepts for business. The core rights are principles-based and flexible. This is important for goods and especially important for digital content, which is constantly evolving. They are intended to work effectively in a wide range of scenarios, applying to goods ranging from rubber ducks to luxury yachts. Similarly, they are designed to apply to the range of digital content, from music files to complex security software products.
The key to the success of the Bill is to balance solid consumer rights with workable outcomes for business. This will create an environment where consumers are confident about buying more, contributing to more innovative products and driving growth and innovation for industry. The concept of freedom from minor defects comes into Clause 34 as a factor that could be taken into consideration in the assessment of satisfactory quality.
I am grateful to my noble friend Lord Clement-Jones for his consideration of the question of how freedom from minor defects would apply to digital content which is of a type that commonly contains defects. However, noble Lords should note that, crucially, freedom from minor defects is only part of the assessment of satisfactory quality in appropriate cases. We have made it clear in the Explanatory Notes, as I mentioned in Committee, that it is the norm to encounter some bugs in a complex game or piece of software on release, so a reasonable person might not expect that type of digital content to be totally free from minor defects. The Government, and most consumers, understand that these types of products are commonly released with minor bugs, as a result of the development cycle of these products or the complex environment in which they operate. So while a reasonable consumer might expect a music file or an e-book to be free from minor defects or bugs, they would not have the same expectations of a complex computer game or a complex suite of business software.
We have not taken the step of defining what is or is not a minor defect because that will depend on the context. For example, in the goods context, a reasonable consumer may not expect the design on some hand-painted pottery to be completely uniform, but may reasonably expect it to be scratch-free. Similarly, consumers may reasonably expect some defects in goods sold as seconds, but there would come a point where a defect may render the goods unsatisfactory. However, a defect that has an adverse effect on the functionality of digital content should be capable of being taken into account in assessments of quality. Minor defects are defects that are unlikely to affect the functionality of the product but which, depending on the context, may or may not affect assessments of quality. For example, a minor defect in digital content could be something such as a click sound on a music file, or a character who has the wrong colour hair in one level of a computer game. Whether or not this would affect the satisfactory quality of the digital content would depend on the context, which would include factors such as the type of content and whether that type commonly contains defects.
I understand that industry would take some comfort from having the fact that some forms of digital content contain minor defects reflected in the Bill but I believe that this is neither necessary nor desirable for consumers. Moreover, as I have said already, under Clause 34, “freedom from minor defects” is only an aspect of satisfactory quality “in appropriate cases”. The amendment, as drafted, could narrow an understanding of what a reasonable person would expect in other circumstances.
Taking Amendments 18 and 19 together, I recognise that a defect affecting the functionality of digital content is unlikely to be minor. It is quite right that a defect that affects the functionality of the digital content could affect assessments as to fitness for a particular purpose and would match the description. Of course, if the digital content is specifically described as being free of defects then any defects in the digital content would not match the description. However, “fit for a particular purpose”, and “as described” are concepts that go broader than simply the functionality of the digital content. As such, I would be concerned that excluding defects that do not affect functionality from assessments as to whether digital content is fit for a particular purpose or as described would risk creating a lack of clarity for consumers and lowering consumer protection.
It is also worth reflecting briefly on the requirements of a trader should digital content not be of satisfactory quality, fit for a particular purpose or as described. As there is no short-term right to reject intangible digital content, the remedy would be a repair or a replacement. As the industry usually provides fixes to remedy issues in the form of an update where digital content is not of satisfactory quality, the Bill provides a remedy that is proportionate and in line with industry practice.
Baroness Jolly
“(1A) Subsection (1)(c) does not prevent the trader from improving the features of, or adding new features to, the digital content, as long as—
(a) the digital content continues to match the description of it given by the trader to the consumer, and(b) the digital content continues to conform to the information provided by the trader as mentioned in subsection (3) of section 36, subject to any change to that information that has been agreed in accordance with subsection (4) of that section.”
Baroness Jolly
My Lords, this amendment reflects the dynamic nature of digital content. We all recognise that digital content changes to some extent over time when we receive updates to our software and apps. I listened carefully to the concerns raised in Committee by the noble Lord, Lord Haskel, and my noble friend Lord Clement-Jones that industry viewed Clause 40 as a potential barrier to providing improvements to digital content, and I am grateful for their careful consideration.
Clause 40 provides that following an update to digital content, that digital content must still meet the quality rights: satisfactory quality, fit for a particular purpose and as described. The provision that digital content should match the description was never intended to fix the digital content to a static point in time. That would not be an option that reflected the way updates work. We made it clear in the Explanatory Notes that there was nothing to prevent updates as long as the contract stated that such updates would be supplied. Moreover, the trader has flexibility in how they describe the digital content at the outset. For example, traders can make it clear that improvements are not precluded. However, the consumer should have some protections against digital content changes which remove features that they relied on when they made a decision to buy the digital content.
There is clearly an important balance to be struck here between the ability of the digital content industry to adapt, change and innovate in a fast-paced environment and the rights of consumers to get what they have paid for. This amendment aims to address the concerns raised in debate that the provision on updates as originally drafted could prevent traders improving digital content or offering flexible products. That is not an outcome that would be good for consumers. The amendment clarifies in the Bill that Clause 40 does not prevent traders adding new features or enhancing existing features as long as the original description is still met. I beg to move.
Lord Stevenson of Balmacara
My Lords, I welcome the Minister’s comments. She is right to have responded to the discussions we had in Committee. I am sure my noble friend Lord Sugar will be looking to hire her shortly, given how much she has responded to what he said through his surrogate, my noble friend Lord Haskel.
I shall ask a couple of questions because, although I am not against this, I am reflecting on the earlier discussions in Committee and the letter received on 5 November from the Minister in relation to free digital content. I am intrigued by her remarks, which are, I think, really about a situation where there has been a consideration—I assume money has passed—so we are talking about content that has been supplied because of a contract that has been established between a consumer and a trader. I am grateful to Pauline McBride of Glasgow University, who raised this point with me, and I shall put a couple of questions to the Minister which arise from the correspondence I have been having with her.
At another point in Committee, my noble friend Lord Knight mentioned that customers frequently supply non-monetary consideration for the supply of digital content. Promises and undertakings made by a consumer under a website terms of use are a good example. There is no doubt that clicking on terms of use or some form of conditions, for example, with a well known retailer would be an example of entering into an arrangement with a supplier of digital content, but is it a contract? If it is, clearly one or two of the things that the Minister said are going to be raised. If it is not a contract, because it is not a monetary consideration, then what exactly are we talking about?
The reason for worrying about this is that research suggests that providers of websites through which access is provided to digital content are applying terms and conditions, warranty disclaimers and indemnity provisions which limit the consumer’s rights. Providers may not be able to circumvent the statutory considerations —even limited to those in the Bill, which I object to them being—but consumers will not be able to get full redress if they have self-limited themselves through clicking on to terms of use created by the website which have somehow reduced the quality of the redress they can get from the original provider. I am taking a long time to describe this, but I hope the Minister understands the point I am trying to make. I am worried about consumers who are not paying a monetary consideration but who are engaging in a contractual arrangement with a website being excluded from normal redress provisions on the grounds that there has been no monetary consideration. If the Minister could write to me on that, I would be quite happy. There is also a question about what happens if the contractual obligations being placed are such that they would not be recognised under the Bill.
Baroness Jolly
I am happy to offer a full explanation to the noble Lord by letter, but I understand that the unfair terms provision still applies when there is a contract but no money is involved.
Baroness Jolly
Baroness Jolly
Baroness Jolly
During the debate on digital content that we had in Committee, I noted a number of concerns raised by my noble friend Lord Clement-Jones, who is not in his place, about the complex environment in which digital content works and the difficulty for the industry in ensuring that its digital content will work seamlessly in all possible configurations on a user’s device and will not have any unintended effects elsewhere on the device.
I am grateful to my noble friend for giving such careful consideration to this matter. As I have said before, it is essential that we strike a balance between providing an appropriate and workable set of protections to consumers in this growing area and the need to enable the industry to innovate and respond flexibly to changes in a fast-paced environment. I believe that the remedies provided in the Bill for faulty digital content are proportionate and appropriate. They provide that if digital content is faulty, the consumer will be entitled to a repair, an update or a replacement, or if that is not possible, some or all of their money back.
However, there is one area in the digital content provisions where statutory liability could extend beyond the price paid for the digital content, covering where the digital content damages the consumer’s device or other digital content, and that is in Clause 46. The clause was drafted to reflect negligence principles and to clarify that consumers have a right to compensation, even for free digital content, when it causes damage and the consumer can show that the trader failed to use reasonable care and skill to prevent the damage occurring.
Clause 46 was drafted to reflect negligence principles. It is therefore appropriate that the position on limitations to liability for Clause 46 is different from that for the quality rights provided in the rest of the digital content chapter. The amendment allows traders to exclude or restrict their liability for damage to the consumer’s device or other digital content to the extent that it would be fair under Part 2 of the Bill. This seeks to maintain the approach taken to this clause of reflecting negligence principles and bring it even closer to the current position on limits to liability. The amendment also corrects an error in a cross-reference in Clause 47(2). I do not think it appropriate, however, to extend this amendment to cover the quality rights in the rest of the digital content chapter. Consumers should clearly be entitled to a remedy for faulty digital content, and the remedies provided in this chapter are appropriate. I therefore beg to move Amendment 22.
Lord Stevenson of Balmacara
My Lords, I am becoming a single-trick pony, as I think it is called. I am going to ask again about free content and I hope that the Minister can give me some solace on it. We on this side are still worried about whether free digital content, generically, can be brought within the requirements of providing quality, fitness for purpose and conformity with description. I am still unclear about how this will work in practice because of the problem in consideration. Maybe that will be covered in the letter she has promised to write to me.
I have an additional worry about this, which is that there are often contracts for delivery of services that might fall into the type caught by the amendment and which may be from a manufacturer rather than from a particular provider of software. I do not wish to accuse any particular manufacturer but will take a well known brand which has a connection with fruit. If its terms of use were such that they were going to cause significant detriment to consumers, would it be possible for the Secretary of State, in extreme circumstances, to make an order specifically addressing the terms of use that were generically produced and always clicked into by people without, I suspect, ever being read? I am a little uncertain about how this bites—sorry about the pun—when we are talking about generic material which will probably be running hidden and not even ever recognised by a consumer, and is possibly free or has at least been delivered free of any additional charge, perhaps because it is an update or a fix. Is there something that could be done on this? I quite understand that it might take time to generate a response and I would be happy with a letter.
Baroness Jolly
I, too, am the digital person for the evening, so rather than trying to put something together here at the Dispatch Box, it is probably safer for all of us if I add it to my letter.
Baroness Jolly
Baroness Jolly
My Lords, before I turn to the amendment in detail, I shall take a step back and look at the amendment in the context of Clause 49 and the wider context of financial services regulation in the UK. The purpose of the Bill is to strengthen the rights of consumers, and it is designed to make changes to consumer law of general application and scope. It is not intended as a substitute for sector-specific legislation or the rules that sector-specific regulators may make. Clause 49 helps consumers by requiring, in effect, that every contract between a business and consumer for the supply of services includes an obligation that the business performs a service with “reasonable care and skill”. The clause would therefore apply to the provision of services of all kinds; it would apply to the provision of financial services by all parts of the financial services industry, not just the provision of core services by ring-fenced banks.
As we all know, the financial services industry—not just banks—is already subject to the comprehensive regulatory regime set out in the Financial Services and Markets Act 2000, a great deal of secondary legislation and the massive PRA and FCA rule books. I am sure that no Member of the House will disagree with the proposition that we need a better deal from our banks, whether as individual consumers, small businesses or, for that matter, society as a whole. The question we now have to consider is whether this amendment would help us to get that better deal. The Government do not consider that it would.
Baroness Oppenheim-Barnes (Con)
My Lords, the noble Baroness missed one sort of case. The plumbers, electricians or whoever they are make a charge for coming in the first place, and when they get there, say, “This will need a part that we’ve got to order”. You have already paid for the visit, they demand the money for the parts before they go any further, and they sometimes never turn up again. The noble Baroness can add that to the list.
Baroness Jolly
My Lords, this Bill sets out for the first time in statute what remedies consumers are entitled to request and traders must offer if traders provide a substandard service. That is a real increase in consumer protection. Consumers of services, from hairdressing to plastering, will have access to statutory remedies if those services do not meet the consumers’ statutory rights. I am very proud of this part of the Bill and believe it will lead to real improvements for consumers on the ground.
To help consumers use these new remedies, we have set out clearly in the Bill how they will work in practice. This will also be set out in guidance, which will be available for traders and consumers well in advance of the Bill coming into force. To give an example, if a service is not provided with “reasonable care and skill”, the consumer can ask the trader to re-perform the service so that it does meet that standard. In practice, it may not be possible to re-perform a service, or the trader may cause significant inconvenience for the consumer in doing so. In those cases, the consumer can ask for a price reduction. If the consumer has already paid more than the reduced price, the difference must then be given to the consumer within 14 days. That is a practical process designed to work for both consumers and traders. We have discussed this extensively with stakeholders and businesses overwhelmingly support this way forward.
Importantly, these new statutory provisions are in addition to, not a replacement for, common-law remedies that consumers can currently pursue. We are not taking away a consumer’s current access to redress through the court system. Quite the opposite: we make clear in Clause 54 that these remedies are still available. Clause 54(7) is a non-exhaustive list of those remedies. Guidance on the Bill will also explain that these remedies are still available. Moreover, we are not restricting consumers and traders to the remedies in this Bill. The consumer has a right to ask for what is in these provisions. However, if the consumer so chooses, they can negotiate a different remedy with the trader. For example, they could negotiate to reduce the price of a service without exercising their right to a re-performance. There is support available to enable consumers to do this, notably through the Citizens Advice service. The service provides advice over the telephone, face to face and online, including practical tools such as template letters.
Baroness Oppenheim-Barnes
That is not what I said. I said that they charge to come in the first place—not to carry out the work but just to come and see what has to be done. They charge for that and then they say, “It needs an expensive part, so I can’t do anything for what you’ve already paid me in coming here”. They then come back, possibly months later, with a very expensive part.
Baroness Jolly
I thank my noble friend for that explanation but I think that I will have to drop her a note to clarify that situation. I ask the noble Baroness, Lady Hayter, to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, the Minister said that not all traders are rogues. She obviously meets a different lot from those whom the noble Baroness, Lady Oppenheim-Barnes, comes across. The noble Baroness knows very well that some of them are rogues.
Baroness Hayter of Kentish Town
Some of them are. However, the Bill throughout is very much about the ones who are not good. If all traders were good, we could throw the Bill away. Frankly, we do not need it for John Lewis. It does not need this Bill in order to be good to us. The Bill is about bringing everyone up to the standards that we expect from all traders. It is fine to say that a good trader will come back. If it is a good trader, the customer will trust it and have it back. That is fine. However, what we are after here are the cases where there is something dangerous in the house or where the householder feels at risk from the trader being back.
If I understood the Minister properly, she said that customers have some choices. They can phone Citizens Advice, which of course will give them only advice—it cannot negotiate—or it will give them a template for a letter, which in the circumstances I do not think would be a lot of help. Alternatively, they can go to a website, although I think that a lot of consumers would not find that very helpful at that moment either.
In fact, the Minister has said the same as I have said: the only route you can take is to seek damages in court, which is what our amendment was trying to avoid. We were trying to say that where someone has been in your house and they have done something so badly that you feel at risk, you should be able to get your money back without that person coming back into your house. Clearly, that is where we and the Government have a different view. In those circumstances, I think that we leave consumers as vulnerable as they are now. They are in no worse a position but, at the same time, their position is no better. That is regrettable but it is clearly the decision that the Government have taken. I beg leave to withdraw the amendment.