Baroness Oppenheim-Barnes
Main Page: Baroness Oppenheim-Barnes (Conservative - Life peer)
Baroness Oppenheim-Barnes (Con)
My Lords, I have no doubt in saying that the Bill before your Lordships today is the most important piece of legislation, and certainly the most welcome, since the early 1970s, when the Office of Fair Trading was set up. I am really moved to see on the Front Bench to my right the person who was the original and first Secretary of State for Consumer Affairs in the House of Commons in our history. I am very grateful that he is attending the debate this afternoon.
The Government are to be very warmly congratulated not only on the production of the Bill but on their generosity in terms of the time that has been given to the proceedings in other places—I have read the reports of them all. In particular, the introduction of expert witnesses into the Committee proceedings in the other place and the presence of legislative screening and monitoring were of very great benefit and will continue to be so.
The Bill has been warmly welcomed by all consumer organisations, some of whose comments I will refer to in a few moments. Certainly none of the Bills that I was responsible for introducing in the late 1970s and early 1980s is alive today. They are as dead as dodos. That is because today a majority of consumers still do not know their rights or how to pursue those rights. That became very clear when the expert witnesses contributed to the Committee stage in the other place. From their very wide experience, they said that approximately 75% of all consumers still have no idea of their rights, and if we are not very careful indeed, that will be the case when this Bill is enacted.
I knew that that was a problem but I failed completely. I introduced consumer information packs into schools. I managed to get the money from our then Government to do so, although that was not easy. I taught some of the information in various schools and found that the children were very interested—they got the point immediately. They said things such as, “My mother has bought a knife that says it’s very sharp but it doesn’t cut anything”. I was able to ask them, “Do you think that it was fit for purpose?”. That was a perfect example, but it is not as easy as that. I am afraid that getting into people’s minds exactly what they may be able to do is much more complicated.
I know of all the consultations that have taken place about what remedies will be best. My view is that a clear presentation of the new rights in the Bill and of the responsibilities involved must be shown at the point of sale—not after the sale, not in later contracts and not in anything else. That must be the principal object throughout the Bill or the success that I believe it richly deserves will be greatly diluted. Just as important will be easy access to advice and support when things have gone wrong and people know they have gone wrong. My noble friend must have been as disturbed as I was to read that some local authorities are now cutting funding to trading standards in their areas. The workforce which is being asked to do more and more work will be reduced in number at a time when it will be expected to do more as a result of this Bill. I was shocked to find out that already in some areas trading standards offices can be approached only online. You can imagine where that would have left me. This cannot be allowed to happen and would clearly undermine the success of the Bill.
I hope I have established that a key factor is very thorough infrastructure in all areas from the beginning to ensure that the benefits that consumers deserve are delivered. We are very blessed in this country with a large number of very highly respected consumer organisations whose opinions have been expressed widely. In particular there is our excellent National Consumer Federation, which represents the views of all the other consumer bodies in the country and therefore is possibly one of the most important witnesses to the Bill. One aspect of its charter, which I particularly welcome, is crucial and overdue. It is the need to define much more clearly the role of the regulators. The regulators are powerful and are one of the most fundamental bodies representing the interests of consumers due to the nature of the markets we are talking about.
However, sometimes one gets the impression that when regulators have delivered their ruling involving perhaps a huge £1 million fine to the delinquent company they are interested in all the things they have found out—and want above all else to punish the firm so that it should be a lesson—but they do not really look at the consumer role in these situations. For example, with the billions in fines, surely there is a case to be made for consumers being given a rebate of their fees so that they are the recipients of the benefits that should be coming from the regulators. I think the National Consumer Federation has put this very clearly and has said among other things that it does not think that regulators always ask the right questions and that if they consulted consumers more about their experiences it might alter the balance and be more attractive. Certainly I hope it would result in some cases of refunds being made to the customers who have been so badly hurt.
What I welcome very much in the Bill is rather unusual. My friends will be surprised to hear me say that I welcome the new EU directive which seeks to cover, for the first time, consumers who make purchases online. I did not know that they were not covered. If I did not know that, I think I would be shocked and horrified if I tried to calculate how many other consumers in the country are unaware that they are not covered. It is very good that the directive will be implemented earlier, which I hope my noble friend will confirm, and that eventually it will be incorporated into the Bill.
The noble Lord, Lord Borrie, will be aware of another crucial EU directive. The last that he and I heard about it was in a debate on the financial industries. The Minister said that the Government were actively pursuing negotiations on the directive, which, at last, half-heartedly agrees that the cost of a loan can be displayed below the AER, which no one understands. I challenge anyone who understands it to stand up and explain what it is. I would be delighted to give them the time. It will allow the money cost to be displayed but only if it is in smaller print than the AER. I hope that the Government will hasten to conclude their negotiations on that matter, which will at least bring a small help to consumers.
Clearly, a good deal is to be done in Committee. I am not yet a “professional oldie” but I am well on the way. I therefore hope that I will be forgiven if I say that I do not propose to play an active part in those proceedings—that may be welcomed by many—as I realise how out of date I am. Towards the conclusion of the deliberations in the other place and after a request from a Member, the Minister, the excellent Jenny Willott, who did so well throughout, said:
“The Human Fertilisation and Embryology Authority set up an expert panel, which has conducted three reviews”.—[Official Report, Commons, 16/6/14; col. 922.]
The Member wanted reassurance that the HFEA would be covered. When we got to that, I knew the time had come for me to assume a back seat. Things have obviously gone too fast for me in this area. As I recall, there was a friendly reply. I warmly welcome the Bill and I congratulate the Government. I wish the Bill the speedy and successful outcome that it deserves.
Viscount Younger of Leckie
We still want to make a distinction between consumers and businesses. We think that if we were to cherry pick and bring certain groups in to allow businesses to be included as consumers, that would cause confusion. However, I am very happy to talk to the noble Baroness again about letting agents and the specific point, as I know that she is much exercised by the issue.
The noble Baronesses, Lady Hayter and Lady Howe, my noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the important issue of the effect that advertising has on children as regards payday loans. First, let me be very clear that consumers will be far better protected under the new FCA regime. Logbook loan providers and other high-risk lenders are required to meet the standards that the FCA expects of them, including making affordability checks. The FCA rules are binding on lenders and the FCA has a wide enforcement tool-kit to take action.
My noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the issue of advertisements. The FCA will not hesitate to ban irresponsible adverts, and it has a strong record of doing so. The Broadcast Committee of Advertising Practice is reviewing the extent to which payday loan adverts feature on children’s TV. Separately, the Financial Conduct Authority has set out new rules for consumer credit adverts and it has powers to ban misleading adverts which breach its rules.
The noble Lord, Lord Wills, asked about payday loan firms and cold calling. The FCA is committed to ensuring that cold calling by phone or e-mail makes clear the identity of the firm and the purpose of the communication so that the consumer can decide whether to proceed.
I thank my noble friend Lord Borwick, who raised an important point about consumers being made aware of the country in which a seller is based. Under the consumer contracts regulations 2013, traders in distance contracts, such as online sales, must make available information on their geographical address before a consumer buys from them. I have been in correspondence with my noble friend concerning his recent purchases with Amazon. I cannot comment on the experience of the particular transaction that has been raised but I can confirm that obligation, which I hope goes some way to answering his questions.
My noble friend Lord Clement-Jones asked about exempting intellectual property contracts from the Unfair Contract Terms Act 1977. I sympathise with the situation in which some creators find themselves, but we have not yet seen evidence that amending that Act would address the issue. First, we would need substantial quantitative evidence of a problem and, secondly, we would need to be sure that any such amendment would solve that problem without unintended negative consequences.
My noble friend Lord Clement-Jones also asked about brand owners protecting themselves against misleading look-alike packaging—an issue that I know we have spoken about in the past—on the grounds of intellectual property infringement and the common law tort of passing off. As he will be aware, my department, BIS, is reviewing the case for granting brand owners a civil right of action against copycat packaging and it is aiming to report in the autumn.
There has been some discussion today about the vital role that trading standards officers have in protecting the public. Issues were raised in this respect by the noble Lord, Lord Whitty, and the noble Baroness, Lady King. The Government strongly support the work that trading standards does to protect consumers from rogue traders and scammers. We have better equipped trading standards to take greater responsibility for consumer law enforcement by transferring central government funding to the National Trading Standards Board and Trading Standards in Scotland. Last year, we invested £14.5 million in these bodies to fund co-ordinated enforcement action across the UK.
We also want to develop a better understanding of the impact that trading standards services have on our economy at both the local and national level. Therefore, in partnership with the Trading Standards Institute, we have commissioned a group of academics at the Institute of Local Government Studies in Birmingham to undertake a piece of research on which to build an evidence base on the economic, social and environmental impact of trading standards work, the impact that budget cuts have had on enforcement activity, and the efficiency of trading standards services across England, Scotland and Wales. The project will conclude in the autumn and the outputs will inform future policy considerations.
The noble Baroness, Lady Crawley, raised the question of trading standards publishing data. Trading standards will be able to name and shame a business, giving consumers more information to make better purchasing decisions. That is a key element of the new enhanced measures.
The requirement in the Bill for trading standards to provide 48 hours’ notice of a routine inspection was raised by the noble Baronesses, Lady Hayter and Lady Crawley, among others. I emphasise that this is about routine inspections; it is not about situations where there is any concern or suspicion that a trader is breaking the law. Other powers in the Bill can be used to check letting agents’ compliance with the duty to display fees. I also want to reassure the House that the powers and safeguards are designed to strike a balance—and it is a balance—between protecting civil liberties, reducing burdens on business and enabling enforcers to tackle rogue traders. Businesses, and particularly small businesses, welcome the requirement for notice. The Federation of Small Businesses has said that,
“booking inspections in advance … will allow the business to make the necessary arrangements … so that everyone gets the most possible from the inspection”.
However, I underline again that we have no intention of weakening the powers of consumer law enforcers to investigate rogue activities. That is why the Bill contains a number of clear exemptions from giving notice, such as where doing so would defeat the purpose of the visit—for example, when investigating the sale of illegal tobacco or the production or transit of fake food. Consumer law enforcers will still have more powers to enter premises than the police.
I turn now to an issue I know exercises a number of noble Lords, which is the right to receive bills in paper format. It has been raised today by the noble Baroness, Lady Hayter, and I know it certainly exercises my noble friend Lady Oppenheim-Barnes. I have heard the views expressed in this debate, and empowering consumers is a key objective of the Bill. My department is in the process of commissioning research regarding the issues that help and hinder the empowerment of consumers. We aim to use this research to identify the key target groups of consumers in need of greater assistance and the best ways to reach out to them. I can reassure the House that we will consider the comments made today alongside the conclusions from the research and act accordingly if this suggests the need for further thinking. Let me make one thing clear. There is no penalty for choosing paper—instead, people simply do not receive a discount. Choosing paper bills retains an additional service for those who wish not to take a paperless bill discount.
Baroness Oppenheim-Barnes
I apologise but I must interrupt my noble friend. That is not true. Clearly, at the end of a BT bill there is an item called, I think, charges for processing this bill. That means sending a piece of paper.
Viscount Younger of Leckie
I know that this is probably going to lead to some more discussions offline about this issue. My answer is that my noble friend then has the right to change supplier if she is not happy with that particular supplier.
Viscount Younger of Leckie
It sounds to me as if she has done so. We must also remember that many hard-pressed households welcome the opportunity to save money that paperless bills offer them—which is the other side of the coin—and the Government want this option to be available to consumers.
My noble friend Lord Clement-Jones, the noble Lord, Lord Stevenson, and the noble Baroness, Lady Howe, spoke eloquently about the important new statutory rights for consumers buying digital content. As has been shown, there are competing arguments and a balance to be struck. The digital content provisions are reasonable and principles based. They require that traders put right faults free of charge or, failing that, give some money back. That is what reputable digital content businesses already do. Not all bugs would automatically render digital content faulty, as the magazine Which? recognised:
“consumers are very accepting of updates and patches”,
and,
“would be able to tell the difference between a faulty piece of software and one that is just evolving”.
The noble Baronesses, Lady Hayter and Lady King, and the noble Lord, Lord Stevenson, asked about the impact of the services provisions, especially on public services. This point was quite strongly made. As Peers will know, this issue was discussed at length in the other place. My colleague Jenny Willott has written to set out the position, which is that where a public service is provided by a trader to a consumer under a contract, the services chapter of this Bill applies. That is why our impact assessment of this part of the Bill was comprehensive and covered all sectors. That assessment shows significant benefits—of £33 million per annum—to consumers.
The noble Lord, Lord Alton, raised an interesting point—and at this point I hope my noble friend Lady Oppenheim-Barnes can be persuaded to listen carefully—about the safety of embryos, if I can paraphrase the points the noble Lord raised. We are considering the report mentioned and we will announce our plans as soon as possible. My honourable friend in the other place, Jenny Willott, has already assured the other place and I can assure noble Lords that any proposed regulations on this matter will be subject to debates in both Houses under the affirmative procedure.
The noble Baroness, Lady Howe, asked about an update on the voluntary agreement on preventing unlicensed gambling providers. I will ask my noble friend the Minister for Culture, Media and Sport to reply directly to the noble Baroness.
The noble Baroness, Lady Drake, said that prominence is not sufficient to ensure that consumers understand the terms. We agree that terms should be written in language that consumers understand and that is why all terms must be written in plain and intelligible language. We will be giving guidance on what prominence requires and how it is defined. Business prefers this guidance to detail on the face of the Bill.
The noble Lord, Lord Whitty, who spoke in the gap, raised the issue whether consumers have access to collective redress for breaches of consumer law. Our proposals on enhanced consumer measures offer a more flexible, balanced and proportionate approach with a wider range of remedies.
I am fast running out of time. I will write to noble Lords whose questions I have not managed to answer. I conclude by underlining once again how vital this Bill is for empowering consumers, promoting competition and encouraging growth, which so many Peers have emphasised today.