Consumer Rights Bill

Jenny Willott Excerpts

Tuesday 28th January 2014 Commons Chamber

[Stella Creasy]

I thank the hon. Gentleman for illustrating so vividly why the Government believe there must always be winners and losers in every element of policy. The Labour party believes that if we get the framework right, it would cover a range of industries. My point in describing the many different problems with current pricing and contracts is that if we took a different—indeed, stronger—approach to the laws on pricing and contract than that currently in the Bill, we could deal with a range of detrimental problems. Indeed, I would wager that if we get this right, two-thirds of the casework that many of us see would disappear overnight. Surely the merits of such a proposition alone would cause the hon. Gentleman to reflect on whether we can make the Bill stronger, and therefore better. That is the case we are trying to make.

We have already discussed letting agencies, and the way that charges and a lack of clarity over prices are a problem, but contracts do not cause problems only with pricing. The Minister will be as frustrated as I am about the lack of action on poor services, and I know she feels passionately that in her constituency, where residents are not receiving a mobile phone service they should be refunded. Despite raising the issue for months, she must be frustrated because nothing has happened, and I query whether her constituents are also frustrated. Although she is in charge of the Bill, and therefore has an opportunity to clarify when a refund for poor service would be due, the Bill will do little to help that issue. We would all like stronger powers of redress.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

On the contrary, the issue has been resolved and a mobile phone signal has been restored to my constituents, a number of whom are receiving compensation. It is perfectly possible to do such things under current legislation, and a lot of the issues the hon. Lady raises fall completely outside the remit of the Bill we are supposed to be discussing.

[Stella Creasy]

The Minister raises an interesting question about why, if the Bill will simply consolidate powers that she says are already effective, she does not use the opportunity to go further and deal with matters that she considers to be outside the legislation. She cannot have the argument both ways—either we need new consumer rights in this country, or we do not and she is wasting everybody’s time. Labour Members think there is a case for a new, stronger consumer rights legislative framework, which we are trying to set out, and part of that is about redress. I am delighted to hear that the Minister’s constituents have got redress for their mobile phone coverage, but I hope she will also consider how we can use the Bill for things such as nuisance calls, which she mentioned. This is about how we tackle such problems once and for all.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

This has been a wide-ranging debate with many useful and, on occasion, entertaining contributions from Members of all parties. I thank Members for their considered views.

I agree with the hon. Member for West Bromwich West (Mr Bailey) that this is an important area of work. When something goes wrong for a consumer, it can be devastating, as he said. The Bill will provide remedies for consumers with a wide range of problems, from a broken toaster to a dodgy kitchen installation and for things worth from a few quid to thousands of pounds. The wide range of matters encompassed by the Bill shows how complex an area this is.

I shall try to address as many of the points that have been raised as I can, but as a number of Members have said, we will have further opportunities to discuss the detail in Committee. Contrary to what the Opposition have argued, the Bill will provide a substantial improvement to consumers’ rights, remedies and protections. It is true that it consolidates the current law, which, as a number of Members have said, is spread across eight pieces of legislation and more than 60 sets of regulations. It also brings in major new rights for consumers, however, particularly in digital goods and services, although they have been completely overlooked by some Opposition Members.

It is important to note that the Bill has widespread support among consumer and business groups. The economic benefit is estimated to be more than £4 billion over 10 years. It is more than just minor tinkering, as some Members have suggested; it is an important piece of legislation.

I found the speech made by the hon. Member for Walthamstow (Stella Creasy) rather disappointing. She seems not to have read the Bill in detail as she seems to have rather a poor grasp of what it does and does not do. She barely mentioned much of what is in the Bill and I hope that she has a chance to read it in detail before Committee.

I am proud that the Government are taking such important action to improve the rights of consumers, when the previous Labour Government did very little over 13 years. For example, as a number of Members mentioned today, the issue of cowboy builders was raised repeatedly during the previous Parliament but no action was taken. The coalition Government are doing something for consumers rather than just carping from the sidelines.

As I said, the hon. Member for Walthamstow did not talk about a lot of the issues in the Bill. She laid out an extremely long wish list of things that she wanted to add to the Bill rather than engaging with what was already there. I appreciate that this is the sort of Bill that many people spot gaps in and want to add to, but there is more to it than that.

Hon. Members raised a number of issues that they want included in the Bill, including banking, utilities, telecoms and ticket touting. At the risk of disappointing them, I do not propose to go into much detail on those issues as they do not fall within the remit of the Bill. Although I have sympathy for many of today’s speakers and with a lot of the issues, many are issues for other Ministers and Departments to tackle.

The hon. Member for Walthamstow and a number of others mentioned concerns about consumers having access to their own data. We agreed that that information can be key to empowering consumers to take well-informed action. The hon. Lady mentioned midata and the voluntary approach the Government have taken to it has already had success, with all the major energy companies now providing midata downloads so that their customers can access their data in a consistent and machine readable format. My Department is reviewing progress on the voluntary programme and we wrote to chief executives of companies about that in November. The review, which will be completed in March, will help us to decide whether to use the power in the Enterprise and Regulatory Reform Act 2013 to require companies to release the data they hold on consumers, but we hope that the voluntary approach will make progress. There is progress and I hope that the hon. Lady welcomes that.

Members on both sides of the House expressed concern about lookalike websites. As they will know, misleading information and advertising has long been the subject of consumer protection legislation, which was substantially updated and extended in 2008. Under the Consumer Protection from Unfair Trading Regulations 2008, it is illegal for a trader to mislead consumers to the extent that the average consumer is likely to make a decision that they would not otherwise make. That is slightly wordy, but it includes giving a false impression of cost, such as charging for something that would otherwise be free. That encompasses the example given by the hon. Member for Walthamstow of fake HMRC websites. We accept that there is a problem, but further legislation is not required. The Department for Business, Innovation and Skills has written to public enforcers to draw the issue of copycat websites to their attention and to ensure that the law is enforced appropriately.

[Sheila Gilmore]

If the law is there to deal with this problem, why is it still happening? A constituent contacted me about this only the other day. He was not uneducated or stupid in any way, but he was taken in by one of these websites. What should he do?

[Jenny Willott]

If the hon. Lady would listen, I just said that the Department has written to public enforcers to ask them to enforce the law properly. The problem is clearly still happening, and we are all aware of instances of it. Recently, there were reports about the issue on the radio, particularly about the fake HMRC websites. There are lots of things that are illegal that still go on until there is a crackdown. This is one such thing, and we are doing what we can to encourage public enforcers to take action to close down websites that are clearly in breach of the law.

On a technical point, the issue of devolution was raised by a number of Members from Northern Ireland, and I should like to clarify the situation. The issues covered in the Bill are reserved to Westminster with regard to Scotland and Wales, but they are devolved to the Northern Ireland Assembly. The devolved Administrations in all three nations were consulted throughout the drafting process, and both Cardiff and Edinburgh are perfectly satisfied with the measures and are happy for them to be implemented across England, Wales and Scotland. I completely agree with the hon. Member for Strangford (Jim Shannon) that we are all part of one country and that it is important to be consistent across it. I am glad to be able to tell him that the Northern Ireland Assembly has agreed to a legislative competence order so that the Bill will apply across the board to the whole of England, Scotland, Wales and Northern Ireland. There will be consistency in the application of all the measures to the whole of the UK.

[Mrs Hodgson]

Will the hon. Lady clarify something? I think I heard her say that some of the issues raised by hon. Members did not fall within the remit of the Bill, including the point that I made about the secondary market in controlling ticket touts. Am I correct in thinking that she is not going to respond to any of my points?

[Jenny Willott]

Some of the issues that the hon. Lady raised related to unfair contract terms, which I shall come on to in a minute. Many other issues relating to banking legislation and the regulation of energy markets do not fall within the remit of the Bill, and they are the responsibility of other Departments. However, I shall come on to the points that she made about ticket touting.

As the hon. Member for Mid Norfolk (George Freeman) said, many good businesses already offer enhanced rights to their customers. The Bill will help them, because it will create a level playing field, and it will help us to have fair competition. The hon. Member for Windsor (Adam Afriyie) made it clear that the Bill will bring significant benefits to businesses, saving them time and money, and helping them to provide a better service to customers. It will also make the market more competitive, which helps everyone.

On the specific matters raised, the hon. Member for West Bromwich West mentioned the issue of deductions for use when a product is returned to the trader. As he said, we accepted some of his Committee’s recommendations, and it is vital that we begin the debate by recognising the fact that current legislation allows for a deduction for use whenever the customer exercises their second-tier right to reject. The Bill strengthens that by saying that a deduction for use cannot be made until after the first six months from purchase with a limited exception. As a result of the pre-legislative scrutiny, ably led by the hon. Gentleman, we decided to tighten and limit that exception even further. It is important to maintain the ability to deduct for use, but to ensure that there is a fair balance between the rights of consumers and the pressures on business.

The hon. Member for East Antrim (Sammy Wilson) raised the issue of time- limiting the period available for repairing products, as did another hon. Member. A number of factors will be beyond the control of the trader and a fixed time limit may impose a significant burden on them. When providing a repair the trader must carry out a number of actions, including taking delivery of the goods, diagnosing the faults, and perhaps sending the goods away for repair or ordering in parts. Similarly, the trader may have to order in a replacement. We are concerned that imposing a time limit may lead to a reduction in the quality of the repairs, which may in turn lead to a loss of faith in the repairs, and ultimately to an increase in the number of goods being rejected. We do not want to see that, so we do not propose to lay down a specific time limit in legislation because it could be counter-productive to the interests of consumers.

A number of hon. Members raised the issue of digital content. For the first time, the Bill introduces consumer rights for digital content. We are one of the first countries in the world to legislate in this area. I hope that as well as benefiting consumers, this will help to give this sector of the economy a competitive edge in the future. Such an important and rapidly growing industry needs to be governed by a clear and effective consumer framework. Many consumers assume that they have rights at the moment and are confused and concerned when they find out that they do not. We heard from a number of Members about the scale of this. During the last year, 16 million consumers have had a problem with downloaded material. I accept that, where possible, we should align the digital regime with goods and services to make it as clear and simple as possible for consumers, but we should do that only where it makes sense, and we need to ensure that we neither over nor under-regulate this important sector to ensure that it can grow.

Another issue that was raised by the hon. Member for West Bromwich West concerned the outcome-based quality standard for services. The Bill reflects the current position, which, as he knows, requires services to be undertaken with reasonable care and skill. As part of the consultation ahead of the Bill, the Government asked for comments on additional proposals to move the services regime closer to the regime for goods by introducing an outcome-based quality standard for certain services, but the responses that we received gave a wide range of views, including contradictory views on whether an outcome-based standard would be easier to understand. While in some cases, such as repair or certain installation services, it may be quite simple, in other cases a view on the quality of a service is subjective, and therefore much harder to determine.

As the hon. Gentleman said, the issue is complicated and difficult. I completely understand where he and his Committee are coming from, but the Government feel that the evidence does not fully support the conclusion that they came to and we have decided to stick with the current legal position requiring reasonable care and skill rather than introducing an outcomes-based quality standard. The current system is understood and it seems easier to apply, rather than introducing a new system that could be complicated and subjective, particularly as there are strong views on either side.

[Mr Bailey]

I hesitate to have a mini-debate, but the difficulty is that under the reasonable care and skill provision, anybody who felt that they had a case to bring against a service provider would have no other course of action but a recourse to law. It is extremely difficult for them to prove that if they are not professionally qualified in the service that has been provided for them. An outcomes-based approach would at least give clarity and strengthen consumer rights because they would know that if they took action they had a much better chance of winning.

[Jenny Willott]

Because the services sector is so incredibly broad and varied, what is the case in one area would not necessarily be the case in another. For example, I like the way my hair has been cut, but someone else might not have the same view. That is much more subjective and difficult to identify, whereas whether or not it has been cut with due care and attention is a totally different matter. It is clearly a difficult issue, and one to which I am sure we will return in Committee, because there are strong arguments on both sides. It is a matter of weighing up the evidence and deciding which side to come down on. There is not necessarily a right or wrong answer; either is a possible outcome.

Alternative dispute resolution and an ombudsman service were mentioned. I believe that we must first consult on how to implement the alternative dispute resolution directive, which the Select Committee mentioned in its pre-legislative scrutiny. Having a single consumer ombudsman is one of several options that we are considering, but it would not be appropriate to legislate for that until after we have properly consulted and decided which avenue to pursue and how to pursue it. We intend to publish a consultation document shortly, and I look forward to hearing people’s views on what approach we should be taking and on having a single consumer ombudsman, but this Bill is not the vehicle for that.

I would like to clarify a point made about collective redress. The hon. Member for Windsor mentioned the right of small businesses to participate in collective redress. The proposals in the Bill on competition-based measures and collective action will be available to consumers and small businesses in the specific area of the competition tribunal. On the broader issue of whether small businesses should be eligible to access more of the rights in this legislation, I understand that research by the Federation of Small Businesses will be produced fairly shortly. I am interested to see the case it makes. I am fairly sympathetic to the idea, but I do not think that this legislation is the place to introduce it, because it is specifically about business-to-consumer relationships, not business-to-business or consumer-to-consumer relationships. We want to maintain that clarity. However, this is an issue that will come up again, so I look forward to reading the FSB research.

The unfair terms legislation relates to a very complex area of law. The Bill will make it easier for businesses to apply the law in practice while ensuring that consumers are not tripped up by the small print. The Government agree that consumers should be protected from terms that allow traders to make unilateral changes to a contract, and the so-called grey list of potentially unfair terms already includes terms that permit the trader unilaterally to alter the characteristics of a consumer contract. Through the Bill, we are protecting consumers from terms that are not made prominent and are left in the small print, because they can be considered for fairness by the court. We think that will address many of the problems that have occurred.

To respond to one of the concerns raised by the hon. Member for Walthamstow, under recent regulations implementing the EU consumer rights directive, traders cannot hide costs; they must make all charges and costs clear up front before the consumer buys. That will come into force in June 2014. We have already taken action to tackle hidden costs and do not believe that we need to legislate on it further.

As the hon. Member for West Bromwich West said, we also looked at proposals to make it harder for businesses to change terms, even when they are flagged to consumers as liable to change in certain circumstances, but we believe that could make businesses less likely to offer consumers good deals and bargains for fear of not being able to be flexible in future and to respond to changes outside their control. Our concern is that consumers would ultimately lose out, which clearly we do not want to see. That is why we have not gone ahead with those proposals.

The hon. Member for Washington and Sunderland West (Mrs Hodgson) talked about the charges added by ticketing authorities. That will be covered by the provisions on unfair terms. If consumers are subject to extra charges that are hidden, that would be covered by the measures in the Bill. We have also legislated to prevent companies from charging more to process a credit card payment than it actually costs them, so that should offer customers further protection. I am sure that we will debate that further in Committee.

My hon. Friend the Member for Eastbourne (Stephen Lloyd) raised the important issue of funding for those who tackle breaches of consumer law, and that was also mentioned by the hon. Member for Edinburgh South (Ian Murray). As my right hon. Friend the Secretary of State said, BIS is providing additional funding of about £13 million through the National Trading Standards Board for enforcement to tackle national issues, which is separate from the budget for local issues. It will ensure better co-ordination across local authority borders and improved intelligence-gathering.

Ultimately, the provision of local trading standards services, which I know is the concern, is a matter for individual local authorities, but by supporting the National Trading Standards Board we are working to help trading standards services make better use of their money and co-ordinate better across borders. We are also helping trading standards officers to make more efficient use of their time by introducing 48 hours’ notice for routine inspections, which was welcomed by the hon. Member for Dudley South (Chris Kelly). Businesses, especially small ones, welcome the requirement for notice, because it means that they can ensure the right people are present and that the paperwork is ready, which saves time for both businesses and trading standards officers.

We do not believe that the measure will reduce the ability of enforcers to tackle rogue traders and breaches of consumer law as it applies only to routine visits. Trading standards officers can still turn up unannounced if they feel that providing notice would defeat the purpose of the visit or if they suspect a breach or an imminent risk to public health and safety. The introduction of notice only for routine visits will help trading standards to operate more effectively and efficiently, and save time and effort for both trading standards and small businesses.

The hon. Member for Edinburgh East (Sheila Gilmore) raised the issue of collective action, as well as the cost to consumers of taking individual action. The Bill will tackle that by giving public enforcers more flexibility to seek redress on behalf of consumers, so it will substantially improve the likelihood of consumers being able to get redress without having a court case, which is better for everybody, both consumers and businesses.

We are allowing for the business and the enforcer to reach agreement without the need to go to court, although the option to seek a court order will be available if agreement cannot be reached. The Bill will also allow for more flexible options to get the right solutions—for example, agreeing new delivery times for overdue goods, which might be more appropriate for the customer, or putting in place a better complaints system and joining an ombudsman service, as well as financial recompense. There is therefore a broad range of things that businesses could agree with enforcers to find a way forward. We want a system that is flexible enough to provide the most appropriate redress for consumers, and we believe that that is the right way to do so.

A couple of hon. Members mentioned the need to let people know about their rights and asked what we are doing to let them know about the changes. We have established an implementation group with members from the business community, consumer groups and the enforcement community. It is helping us to put together a strategy to ensure that consumers and businesses know about their rights and the changes that will be made by the Bill.

I completely agree with hon. Members who highlighted that information is absolutely key. The whole point of the Bill is to make legislation so much simpler that consumers will be much more able to understand their rights and to act when they feel that they have not been given the service or quality of goods they deserve. That is very important to us, and we are making sure that it runs alongside our work in the House.

The Bill will improve clarity and reduce the complexity of consumer law for both businesses and consumers. It will reduce the cost and time spent by both parties in resolving disputes, and it will lead to happier consumers and more successful businesses. The consumer law framework will be made fit for purpose in the 21st century by the introduction of a new category of digital content, and it will encourage consumers to shop around and take a risk on new businesses, helping our burgeoning digital industry to grow and to create wealth and jobs. The reforms will also build on and enhance the success of the current consumer and competition law enforcement regimes, making markets fairer and clearer. I therefore commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Consumer Rights Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Consumer Rights Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 13 March 2014.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of the proceedings.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion four hours after the commencement of proceedings on Consideration.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Gavin Barwell.)

Question agreed to.

Consumer Rights Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Consumer Rights Bill, it is expedient to authorise the payment out of money provided by Parliament of:

(a) any expenses incurred by a Minister of the Crown or a government department under the Act; and

(b) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Gavin Barwell.)

Question agreed to.

Consumer Rights Bill (Carry-over)

Motion made, and Question put forthwith (Standing Order No. 80A(1)(a)),

That if, at the conclusion of this Session of Parliament, proceedings on the Consumer Rights Bill have not been completed, they shall be resumed in the next Session.—(Gavin Barwell.)

Question agreed to.