Delivery Surcharges (Transparency for Consumers) Bill

Jo Swinson Excerpts

Friday 13th September 2013 Commons Chamber

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

I congratulate my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) on introducing the Bill. I very much welcome his work to raise awareness of the issue. He and others from across the House have campaigned hard, because their constituents are particularly affected.

People living in very rural and remote areas may expect or be used to deliveries not being straightforward. If people live on an island, they know from experience that for something to reach the island it has to be flown in or come in on a ferry. That can impact on the costs of all sorts of things. Although we want such consumers to have good information, my hon. Friend rightly outlined that people living in the suburbs of Aberdeen, who are not in a remote area by any definition, might not have the same mindset of expecting suddenly to be hit by massive delivery charges.

I support the principles of clarity, transparency and fairness for consumers that lie behind my hon. Friend’s Bill. Those principles are fully supported by the Government and, as the hon. Member for Edinburgh South (Ian Murray) mentioned, they also underlie the draft Consumer Rights Bill that is being scrutinised by the House.

It is right that consumers should be clear about delivery information when they shop online or, as my hon. Friend the Member for Christchurch (Mr Chope) said, when they shop anywhere. We certainly aim to provide much greater clarity for consumers. There is no reason why consumers in some parts of the country should experience a postcode lottery on delivery charges or not receive clear and up-front information about any additional delivery restrictions or charges that might apply to their location, particularly if that occurs late in the booking process. My hon. Friend the Member for West Aberdeenshire and Kincardine made it clear that the problem is not that such information is not provided before the purchase of a product. However, a significant investment of time might have gone into browsing and working out the right products to buy, either for oneself or as a gift. When somebody spends significant time doing that and is suddenly hit with an extra delivery charge, it can be very frustrating.

[Jonathan Lord (Woking) (Con)]

There is probably great sympathy in the House for the thrust of what my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) is trying to achieve, but am I right that it could probably be sorted out through guidance, trading standards or regulation, rather than primary legislation?

[Jo Swinson]

I intend to come on to that point. Legislation already protects consumers in many ways, but there is clearly an issue about how well it is enforced and about what more we can do to ensure that it is enforced. I am certainly committed to working with my hon. Friend the Member for West Aberdeenshire and Kincardine and others to ensure that we deal with the problem through existing channels, as well as to see whether we can do more. We want to make sure that consumers are not disadvantaged by suddenly being notified of delivery charges late in the buying process.

Citizens Advice Scotland reported on the issue last year. It found that consumers encounter a range of problems. One is obviously that of additional delivery charges, but delivery performance can also often be a difficulty: as well as extra charges for the location, there is sometimes an outright refusal to deliver to a particular address or an unfair categorisation of a location as more remote than it actually is. Hon. Members have raised the problem of postcode areas that are quite large and cover places that are remote as well as others that are not.

Delivery charges and arrangements need to be made available early in the ordering process, because they are particularly important for some consumers; if not, that can add to the problems faced by those consumers in researching and investing time in sourcing the products that they want to buy. Underpinning all that is a recognition that the more confident consumers are about what they are buying and about having those products delivered in a reasonable way and at a reasonable price, the more confident they will be to buy, which is helpful for our economy. Creating confident consumers is absolutely what we want.

Let us consider what the law already does in this area. It is clear in requiring traders to provide all consumers, wherever they live, with information on freight, delivery or postal charges when inviting consumers to purchase products. That wording is particularly relevant. The invitation to purchase is the key point. There may be a difference in how some people define that point in the process, or some retailers may just be thoughtless, as my hon. Friend outlined. But if some retailers think that invitation to purchase occurs only at the very end of the process when the consumer clicks “Pay”, they might think that that is an acceptable time to give the information about the delivery charges. Clearly, others might interpret invitation to purchase as occurring at a much earlier point, when the consumer is browsing the website or the shopping app and is implicitly invited to purchase.

Specific requirements are set down for contracts concluded via electronic means. The consumer rights directive that the Government intend to implement by next summer will require traders to ensure that their website indicates clearly, at the very latest at the beginning of the ordering process, whether any delivery restrictions apply. I emphasise that that is at the very latest. The best practice would be for that information to be made available much earlier in the process.

[Sir Robert Smith]

Would it be in scope for my hon. Friend to issue guidance to industry about best practice and about the possibility of implementing it on a voluntary basis?

[Jo Swinson]

I thank my hon. Friend for that intervention. I would be delighted to do that. With the consumer rights directive and the consumer bill of rights that will come before the House later in the year, we will be publishing not just regulations and legislation, but guidance to go alongside that. It would be an excellent idea to include in that guidance information about how retailers might best serve their consumers and comply with the spirit of the regulations about giving that information and making it clear for consumers.

It is therefore important, as the hon. Member for Edinburgh South said, that businesses are made aware of the extent of customer dissatisfaction with the current situation, and of the potential loss of business arising from delivery policies that may be fit for purpose for some parts of the country but not for others. When businesses are made aware of the situation, there can sometimes be success. Consumer Focus Scotland last year reported a case where a consumer queried the high surcharge for delivery and the retailer happily agreed to use another parcel delivery operator who charged much less to deliver the items.

My hon. Friend mentioned the rather excessive £235 courier charge that one of his constituents encountered, which was dropped to as low as £75 when it was challenged. That is still a significant cost but, as a proportion of the original price charged, it was significantly less. I was rather shocked by my hon. Friend’s example of someone who was charged £15 for the delivery of a simple gift certificate, which does not need to go by courier service. An item of that size could go in the normal post. Such examples need to be highlighted.

It is reasonable for consumers to ask for items to be sent via Royal Mail under the universal service obligation, which may not be as cheap as a courier company can offer for delivery to high population density areas, but in most cases will be substantially cheaper. Businesses should recognise that they can offer that, or alternative courier services or parcel delivery services. The first message is that consumers should be aware that it is certainly worth contacting the retailer and challenging a surcharge that they are unhappy about.

Good work has been undertaken by Citizens Advice Scotland, Consumer Futures and others to highlight the issue so that more consumers will feel that they can stand up and challenge a ridiculously high delivery charge. The Citizens Advice research was very specific. It acknowledged that many companies already provide a good service that customers appreciate, but it also identified that some do less well and that their customers feel rather let down. Trading Standards in Scotland has done a huge amount of work, particularly in the highlands, to highlight the issue to businesses and to help them understand and comply with consumer law.

Obviously, consumers with complaints about a retailer’s delivery policy should first ask the retailer for an explanation. If they are dissatisfied with the explanation and think that there is still a problem, I encourage them to contact Citizens Advice, which can then alert the relevant enforcement authority so that there can be an investigation. Encouragement and help to businesses—but ultimately with that enforcement as well—can ensure that consumers feel empowered and confident.

[Jonathan Lord]

The north-east of Scotland and the highlands and islands have been referred to a lot in this debate. Do we know to what extent there is a problem for residents on the Isle of Wight and in Northern Ireland?

[Jo Swinson]

I do not think that the problem has necessarily been quantified for all areas, but the hon. Gentleman is quite right. There has been a lot of campaigning on this issue in the north-east of Scotland and the highlands, not least because of work done by my hon. Friend the Member for West Aberdeenshire and Kincardine and others, but I am sure that it is also likely to be an issue for island or rural communities elsewhere in the United Kingdom.

[Mr Weir]

Citizens Advice also looked at Northern Ireland and found that there was an average mark-up of 216% for packages, so it is not just a problem for the highlands and islands of Scotland.

[Jo Swinson]

I thank the hon. Gentleman for that intervention. If I may add an anecdote, I was discussing the issue a few days ago in the Tea Room with my hon. Friend the Member for Argyll and Bute (Mr Reid), whose constituency is rather further south than West Aberdeenshire. He reported the frustration of some of his constituents in Dunoon when they telephone to ask why something could not be delivered or why it was so expensive. Dunoon, of course, is most often reached by ferry, and that information is clearly in a system somewhere, so the customer service assistant would explain to the customers that it was because they live on an island, which of course they do not, even if a ferry is often the most efficient way to reach it. That could create quite a lot of customer dissatisfaction. The important point for businesses to remember is that an unhappy customer is far more likely to tell other people that they are unhappy than a happy customer is likely to tell them that they are happy, so it is not necessarily in businesses’ interests for that to happen.

[Sir Robert Smith]

With regard to the Isle of Wight, it is notable that the hon. Member for Isle of Wight (Mr Turner) is one of the Bill’s supporters.

[Jo Swinson]

Indeed, and I suspect that is the result of experiences that the hon. Gentleman’s constituents have had.

I share the desire that my hon. Friend the Member for West Aberdeenshire and Kincardine has for the legislation protecting consumers to be clear, simple and transparent. Those are absolutely the qualities that underpin the consumer law reforms that we have set out and that the House is considering in draft. The draft Consumer Rights Bill is a fundamental reform of consumer legislation that will ensure that consumers’ and businesses’ key rights and responsibilities are clear, easily understood and updated to take account of purchases involving digital content. They are modern rights for a digital age. The Bill that we will introduce, once it has been scrutinised, will contain new protections for consumers, alongside measures to lower regulatory burdens for business. The aim is to make markets work better, which is good for consumers, good for business and good for growth.

I will just outline some of the core rights that our reforms will give consumers. I think that it is important that they are straightforward and in plain English. They are the right to clear and honest information before you buy; the right to get what you pay for; the right that goods and digital content are fit for purpose and that services are provided with reasonable care and skill; and the right that any faults in what you buy will be put right free of charge or that a refund or replacement will be provided. The first of those is central to our reforms, as well as to my hon. Friend’s Bill. I absolutely support the aim of transparency of information for consumers. The existing law and the reforms we are taking forward through the consumer bill of rights will continue to make sure that businesses cannot hide the charges they are levying on delivery costs and that they are made clear when the trader invites the consumer to buy. There is already a lot of good work on supporting compliance with existing law. That is positive, but more can be done.

Under our reform of the consumer landscape, more enforcement work is being done by local authority trading standards services, with a great deal being done in the highlands. In Scotland, the Convention of Scottish Local Authorities is responsible for co-ordinating the delivery of significant national and regional cases that cut across local authority boundaries. Of course, this issue does cut across local authority boundaries, and across the entire United Kingdom, as hon. Members have said. It might be worth involving the National Trading Standards Board and the Consumer Protection Partnership, which aims to get together all the enforcement agencies from different parts of the country, to see whether these problems can also be addressed at that level.

The Government significantly fund much of the work on this issue and have allocated more than £1 million to enforcement in Scotland in 2013-14. As I said, trading standards services in the highlands have done significant work, with some success, because some businesses have eliminated or reduced surcharges for the highlands as a result. Others have made changes to their websites to ensure that any surcharges that they may have concluded were unavoidable are at least indicated early in the buying process, so that no false claims are made. That was all achieved under the existing legislative framework.

A consumer will need to consider many factors, apart from delivery costs, when making a purchase. As required by the new directive, information will need to be provided to consumers on price, payment arrangements, delivery times, complaint-handling policy, rights to cancel, return costs, after-sales services and assistance, and duration of contract, to name but a few. All those factors, or in some cases only some, might be crucial for a consumer to know, depending on the person and their circumstances.

I support my hon. Friend’s work on promoting clarity and fairness for consumers, but I am not convinced that extra legislation is necessary or the best option for us to pursue. What should we do if this Bill is not the answer? I have been considering what more we can do to help enhance transparency as much as possible, because he has raised genuine concerns highlighting a specific problem that his constituents and others are experiencing. There are limitations on what can be specified in regulations about the timing of information provided to consumers, because some of the legislation derives from EU law and needs to be the same across Europe. However, we can play a part in highlighting good practice and drawing it to the attention of businesses. The work done by Citizens Advice and trading standards services has shown that this can have some success.

I am glad that my hon. Friend suggested publishing guidance alongside the new regulations that will implement the consumer rights directive in the UK towards the end of the year, because that will draw businesses’ attention to how important it is to alert consumers to extra supplementary charges early in the purchasing process. Some are already effective in this regard. In 2012, a study by Citizens Advice found that two thirds of retailers made delivery information very easy to find on their website. We need to use the opportunity provided by the consumer rights directive not only to draw attention to the good practice of those businesses but to draw attention to those that do less well. Two thirds is good, but it also means that a third of businesses are not making the information easy to find.

I would like to give my hon. Friend a couple of examples of where we could take action to help improve the situation for consumers. First, I would like to draw the issue to the attention of the British Retail Consortium, which, as a trade body, has members that include, I am sure, many of the companies that are causing some consternation to my hon. Friend’s constituents. It would be helpful if the BRC considered whether it can encourage its members to consider what hon. Members have said and what it could do to address the problems. I would be happy to bring retailers to a summit to discuss the problem with my hon. Friend. It would be good to have a mix of attendees, including exemplars—businesses that provide information at an early point and that give alternative delivery options to customers. Perhaps we could also invite businesses that were not doing well but that have improved their game and made the situation better for consumers as a result of the work of Citizens Advice and trading standards. We also need to include offenders—those that do not give consumers the right information and for which the detriment exists. We could then have a discussion on how businesses can solve the problem and recognise their responsibilities.

[Sir Robert Smith]

I welcome the idea of the summit. Bringing together best practice and those that need to learn and understand how to proceed will be welcome. My hon. Friend reinforces the point that online retailers need to be more aware of the need to shop around to ensure they get the best deal for their customers.

[Jo Swinson]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before the Minister carries on, I should tell her that other hon. Members wish to speak in the debate. It is not an Adjournment debate or a discussion between her and Sir Robert Smith. I hope she is watching the clock and leaves enough time for other hon. Members to contribute.

[Jo Swinson]

Thank you, Madam Deputy Speaker. I will take your guidance seriously.

I welcome my hon. Friend’s contribution. As he outlines, we can have a productive discussion with those businesses. It does not need to be rocket science for them. Some might have the problem in the “too difficult to do” box, and some might be unaware of how much distress the problem causes their customers in different parts of the country. By promoting the dialogue, raising awareness and setting out that the problem is not incredibly difficult to solve, we should be able to make things significantly better for the consumers whom the Bill intends to help. I hope I have set out why the Bill is not necessary to target the problem. The problem is genuine, and the Government are keen to work with my hon. Friend and others to ensure that it is properly addressed. I know that other hon. Members who have experienced the problem in their constituencies are keen to contribute and I look forward to hearing what they have to say.