Communications Act 2003 (Disclosure of Information) Order 2014

Baroness Jones of Whitchurch Excerpts

Monday 12th May 2014 Grand Committee

[Lord Gardiner of Kimble (Con)]

My Lords, this order provides for the disclosure of information between the telecommunications regulator Ofcom and four other public bodies allowing those bodies to carry out their regulatory duties more effectively, providing greater protection for consumers. The four bodies in question are the Information Commissioner, the Insolvency Service, the Financial Conduct Authority and the subsidiary of the FCA, the new Payment Systems Regulator.

At present, Ofcom is prohibited from disclosing information to these bodies without the consent of the regulated businesses concerned. Ofcom may disclose information to nominated bodies, including the former Office of Fair Trading, whose work is now covered by the Competition and Markets Authority, and government Ministers in respect of certain functions which those bodies perform.

As the Committee will be aware, nuisance calls are a source of great inconvenience for many. Direct marketing certainly has a useful role to play and can, for example, enable us to take advantage of cheaper energy tariffs and lower mobile phone bills and to make donations to charities. It is also right that should we choose not to receive unsolicited calls or text messages, our choice should be respected by the industry. There are regulations in place that enable consumers to make such choices and provide for enforcement action to be taken against those organisations that break the rules. However, it is clear that the laws are not working as effectively as they could be and further action is needed.

Over the past 18 months the problem of nuisance calls has emerged and become a high-profile issue with complaint numbers about unsolicited marketing calls being made to the Information Commissioner—who has enforcement responsibility for unsolicited calls and text messages—rising rapidly in recent years. That is unsurprising as Ofcom research in May last year indicated that 82% of consumers received a nuisance call on their landline telephone number. I should stress that although nuisance calls are a source of inconvenience and annoyance for many, this is a particular concern for the elderly and for those who are housebound, for whom such calls cause great anxiety and distress. Such consumers are also more vulnerable to the potential fraud and scams which are an unfortunate by-product of the world of low-cost mass communication in which we now live.

It is therefore no surprise that the issue of nuisance calls has been the subject of Private Member’s Bills in the other place by Mike Crockart and Alun Cairns, and in this House by my noble friend Lord Selsdon. It has also been the subject of an inquiry by the All-Party Group on Nuisance Calls and by the Culture, Media and Sport Select Committee, as well as the topic of several debates and numerous Parliamentary Questions. It has also been taken up as a campaign by the consumer group Which? calling for government and industry to do more to protect consumers. I would like to take this opportunity to thank all who have raised this issue, particularly my noble friend Lord Selsdon.

In relation to the Information Commissioner, this order permits Ofcom to disclose information that it obtains during its regulatory activity. It will enable information to be disclosed that can be used to take more robust enforcement action against those organisations that are deliberately disregarding the existing regulations by making calls and sending texts to consumers. The fact that the conduct of organisations is being noted by Ofcom and details disclosed to the Information Commissioner will, we believe, act as a stronger deterrent.

Addressing the problem of nuisance calls is a priority issue for the Government. Indeed, we committed to introducing this measure in our strategy paper Connectivity, Content and Consumers: Britain’s Digital Platform for Growth, which was published on 30 July last year. We subsequently confirmed that we would be introducing this measure in our Nuisance Calls Action Plan, which we published on 30 March. We have received widespread support for this reform.

The order also enables Ofcom to disclose information to the Insolvency Service to help to tackle directors behind what are called “phoenix” companies, which provide communications services but do not always supply services as promised. This often results in financial loss to consumers who have paid for a service that is not delivered. Ofcom can issue a penalty of up to 10% of turnover but often the company will enter into insolvency to avoid paying, only to reappear under a different name. The company will also usually transfer its customer base before winding up the original company and then continue to harm the same customers. This measure helps to enable the Insolvency Service to consider taking action against company directors for misconduct as directors. That action may result in a ban from acting as a director of a company for a period of time. Also, action by the Insolvency Service on the basis of information provided by Ofcom may provide a better deterrent for other directors planning to commit similar misconduct.

I also referred to disclosure to the Financial Conduct Authority. The Government are taking action to ensure that UK payment systems and services meet the current and future needs of consumers, businesses, other users and the wider economy. Payment systems enable funds to be directly transferred between individuals and institutions. A prime example is LINK, which underpins the ATM network in the United Kingdom.

In December 2013, the Financial Services (Banking Reform) Act gained Royal Assent. The Act provided for the establishment of a new competition-focused, utility-style regulator for payment systems in the UK. In March this year, the Chancellor announced in his Budget Statement that the concurrent competition powers of the new Payment Systems Regulator would be brought forward to 1 April this year.

The Government recognise that the new regulator faces a significant challenge to build up its capacity and expertise in relation to the market place that it will regulate—in particular, with regard to communications companies that are increasingly becoming important in the electronic payments market. More people than ever are able to link their bank accounts to an application and to make payments via their telephone or tablet device. Online platforms such as Google and Apple offer payment mechanisms via their app stores and are developing new ways to access more traditional payment systems. The UK Payments Council has built a central database, enabling customers from eight large UK financial institutions to make payments to and from an account simply by using their mobile telephone number.

Many of these communication companies are regulated by Ofcom and therefore, as communications networks and their relationship with payment systems evolve, Ofcom’s ability to provide knowledge and expertise of this to the Financial Conduct Authority and Payment Systems Regulator will support effective collaboration with these organisations and help ensure that consumers are not put at risk by any improper activity carried out.

It is important to note that Her Majesty’s Treasury brought into force separate legislation in April that enables the information that the Financial Conduct Authority and the Payment Systems Regulator capture to be disclosed to Ofcom. The Treasury will also be consulting in the second half of this year on which payment systems will be designated for regulation going forward.

This is an important measure for the bodies concerned as it will enable them to undertake their regulatory duties more effectively in the future and further interests of consumers. I assure noble Lords that we will continue to work closely with regulators, industry, parliamentarians and the consumer group Which? to promote effective regulation and, most importantly, to secure consumer protection, particularly, as I said earlier, for the elderly and the vulnerable, who need the most protection. We believe that this legislation is necessary and proportionate, and there will be no cost to business. I beg to move.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the Minister for his explanation of the intent behind the order. I make it clear from the outset that we support these changes. Although the authors of the 2003 Act were quite rightly cautious about encouraging the exchange of too much personal information between government agencies, I am sure we nevertheless accept that in the field of communications the world has moved on significantly and that the current restrictions are preventing our regulators from carrying out their functions effectively. It therefore makes sense to extend the definition of the Information Commissioner, the Financial Conduct Authority and the Payment Systems Regulator as relevant persons and relevant functions under the Act. It also makes sense that Ofcom can disclose information to the Insolvency Service in pursuit of the directors of phoenix companies who are deliberately manipulating the system to avoid being brought to book when enforcement action is taken against them.

These changes provide small but helpful ammunition in the fight against the much bigger problem of nuisance and fraudulent calls. However, I doubt that many of the millions of people plagued by these calls would take too much comfort from the proposals before us today, particularly since—as the Minister has acknowledged—it is the elderly and vulnerable who are most at risk of distress and exploitation from them. Will the Minister take this opportunity to update your Lordships on what further steps the Government are planning to take to tackle this menace? For example, I have had sight of the Government’s Nuisance Calls Action Plan, which was published earlier this year and acknowledges that there were more than 120,000 complaints about these calls in a six-month period alone. However, the action plan seems to lay great emphasis on reducing the legal threshold and increasing fines for those companies, rather than providing mechanisms for preventing the calls in the first place. It seems that consumers are being left to fight their own battles with these nuisance callers, rather than having a right to be protected from the unwanted calls.

There are several devices on the market to help consumers filter or block these calls. Having looked into these devices on behalf of my elderly mother who suffers from these calls—which I am sure a number of noble Lords will also have experienced—I know that they are very expensive. One of the market leaders, trueCall, costs upwards of £160 to install. Does the Minister accept that these devices would not be necessary if the Telephone Preference Service, which already exists, were working effectively? It should filter out these calls but is not carrying out that function as it should. Does he agree that one way of empowering consumers would be to provide caller identification free on all telephones so that people knew who was calling them before they picked up the phone? Finally, does he accept that the regulation of this sector is still too complex and that what is needed is a one-stop shop—a single phone line and website—for citizens to report nuisance calls?

I am very aware that I have extended the scope of this debate slightly beyond the specifics of the order before us. However, I hope the Minister will acknowledge that these are real concerns and provide some further assurance that the Government are taking these matters seriously and have deliverable plans to ensure that these unwanted calls will stop. I look forward to his response.