Consumer Rights Bill

Baroness King of Bow Excerpts

Wednesday 15th October 2014 Grand Committee

Moved by

[Baroness King of Bow]

19: Clause 22, page 13, line 12, at end insert—
“( ) Where, given the nature of the goods and all the circumstances existing at the time the contract was entered into, it is reasonably foreseeable to the parties that the consumer will not be able to ascertain whether the goods are in conformity with the contract within the time period set down in subsection (3), the time limit for exercising the short-term right to reject in relation to those goods shall end once the consumer has had a reasonable period in which to ascertain whether the goods are in conformity with the contract.”

[Baroness King of Bow (Lab)]

My Lords, Amendment 19 allows the period within which a consumer can exercise the short-term right to reject to be extended beyond 30 days when necessary to give the consumer sufficient time to assess the goods. In other words, the amendment is about limited flexibility and maintaining rights available to consumers under current law.

When the Law Commission recommended a 30-day period for a consumer to exercise the initial right to reject, it was on the basis that 30 days would be the “normal period” but that there would be flexibility in appropriate circumstances. The Bill recognises that some goods will typically perish within 30 days, and in those cases a 30-day right-to-reject period clearly is not appropriate. However, the Bill does not recognise that a longer period may be needed in some circumstances. Under current law, a consumer has a “reasonable” period within which to exercise the initial right to reject. The Law Commission recognised that for many purchases a court may consider a reasonable time to be longer than 30 days. We have some of the current case law, including the court finding it reasonable for a consumer to reject a new car after seven months. Presumably without this amendment a consumer would not have that protection from the courts. A more obvious example is a pregnant woman buying a pram before her baby’s birth or goods bought out of season—skis during the summer, lawnmowers in the winter, or the obvious Christmas present scenario.

Without the ability to extend the right to reject in such circumstances, consumers might be worse off under the Bill than under the current law, which allows that reasonable period. That is obviously our concern—and not just ours: apart from the Law Commission, the BIS Select Committee recommended that,

“the Government reconsider an exception to the time limit for the early right to reject where it is reasonably foreseeable that the consumer would need a longer period to inspect the goods and to try them out in practice”.

Amendment 19 would implement that recommendation. I beg to move.

[Lord Clement-Jones]

My Lords, I am intervening rather unfairly on this amendment to say that I do not support it and that, as the Bill’s passage carries on, a number of sectors will have their voices represented. I want to raise issues that have been raised with me by the motor sector, particularly the Finance and Leasing Association, which represents a wide range of those who finance the purchase of motor cars by consumers.

As we heard, Clause 22 introduces this 30-day right to reject goods if they are of unsatisfactory quality, however minor the defect. Sellers are unable to deduct the costs incurred—for example, depreciations—while the goods have been used by the consumer. As a result, the right to reject could have a particular cost implication in the world of motor finance, where 75% of private new car sales are bought on finance. New cars, as my noble friend may know, typically lose 15% to 20% of their value in the first 30 days, and in the event of a defect the car dealer will have to offer to repair the car, although the customer is not obliged to accept that and can simply opt to hand back the vehicle. In a worst-case scenario, as the FLA says, the customer might have had the car for a month and driven it extensively, clocking up thousands of miles, only to hand it back because of a very minor defect—for example, the windscreen wipers failing to work properly. That is the case that the FLA makes.

I am very happy for my noble friend to write, since this is a rather unexpected intervention. There is clearly a balance to be struck between ensuring that customers are able to return faulty goods and preventing potential abuse. I therefore ask my noble friend whether the department will clarify, in the accompanying guidance to the Bill and in any associated publicity, that this new short-term right to reject should be invoked only if the quality of the goods is genuinely unsatisfactory—that is, the defects are not simply minor mechanical or cosmetic ones—and ideally it should be done as soon as possible within the 30-day period.

Secondly, could my noble friend confirm how this new short-term right to reject fits with Section 75 of the Consumer Credit Act, which already allows the customer to make a claim against a supplier or lender for breach of contract? This Consumer Rights Bill gives the consumer a right to challenge the supplier, whereas Section 75 of the CCA establishes an additional right to pursue the creditor for breach by the supplier. Will the Government be making clear in the guidance that the customer must obtain recourse from the supplier first, and that the supplier must not renounce responsibility on the grounds of Section 75?

--- Later in debate ---

In regard to Amendment 19, I confirm that the specified time limit of 30 days is a minimum that does not prevent competitive positioning by retailers to offer more flexible arrangements. Of course, the Bill also offers further remedies once the time limit for the short-term right to reject has passed. For example, the options of repair or replacement and, afterwards, the final right to reject or a reduction in price are available. I therefore hope that the noble Lords are prepared to withdraw the amendment.

[Baroness King of Bow]

My Lords, I thank the Minister for her response but the key point here is that consumers, in some circumstances, will see a reduction in their rights under the current law. That is what would worry me, if I were one of the Ministers taking the Bill through. It is the Consumer Rights Bill, not a consumer rights reduction Bill. Notwithstanding the examples of pregnant women all over Britain, we want to see those rights upheld. The Minister spoke about the undue burdens on business. In theory, I could have some sympathy with what she was saying but in fact, as things stand, we do not see Britain awash with businesses in disarray as a result of the current law. Given that, it seems strange that we would reduce the rights that consumers currently have.

I thank the noble Lord, Lord Clement-Jones, for raising the issue of balance because that is the key issue here: the balance of rights for both businesses and consumers. So, lastly, we think that this is an important issue. Both sides seem to come back to the pregnant women conversation. On hearing of this debate, should any pregnant women with backache in the middle of the night be reading the Hansard of this Committee, they will no doubt hope that they do not have overdue babies but women who have premature babies may rejoice at the current passage of the Bill. I beg leave to withdraw the amendment but we may well return to it at a future date.

Amendment 19 withdrawn.