Public Bodies (The Office of Fair Trading Transfer of Consumer Advice Scheme Function and Modification of Enforcement Functions) Order 2013

Lord Borrie Excerpts

Tuesday 12th March 2013 Grand Committee

[Lord Borrie]

I thank the Minister for his very clear explanation of what is in front of us. I did not find it quite as straightforward as the suggestion that complexity is avoided because quite a number of complexities will remain. There will be not only the Trading Standards offices of local authorities but a National Trading Standards Board as well; the Office of Fair Trading will retain some powers; Citizens Advice will have—I agree with the Minister on this—a helpful addition to its services which is, as he rightly said, well appreciated; and there will be the Consumer Protection Partnership, which I do not fully understand yet. So there are lot of different people involved and a lot of different lines to be drawn as to their responsibilities.

However, I would ask the noble Viscount about one or two particular matters. My text, as it were, for this part of what I want to say is, first, the Explanatory Note on the back of the order and what is called the explanatory document—the rather longer paper concerned with public bodies.

In the Explanatory Note on the order, the sixth paragraph—the paragraphs are not numbered—refers to Article 9. It is concerned with enforcers, who will no longer have to consult with the OFT; they will, instead, merely be required to notify the OFT. That, presumably, is in accordance with the Government’s wish to take away the responsibilities of the OFT in overall consumer protection. The Government are not arguing that they are not doing this and the OFT is losing its supervisory role.

What is most important is that in transferring enforcement, particularly to Trading Standards officers, there is to be set up—I should say it has already been set up—the National Trading Standards Board. Paragraph 7.7 of the rather large explanatory document states:

“The NTSB consists of members of Trading Standards officers”.

It means—perhaps it is a matter of semantics—a number of Trading Standards officers representing some local authorities. How they are to be chosen and so on, I do not know but, anyway, the NTSB is certainly to have a national role.

I asked at some stage of the Bill, but did not get an answer, whether that included not only Trading Standards officers—chosen I do not know how—but representative members of local authorities who, at the moment, have a role in relation to Trading Standards officers because Trading Standards officers in each local authority are accountable to councillors. So I am not sure about that.

Paragraph 4.9 of the explanatory document states:

“The Order also makes an amendment … to provide that the OFT will no longer need to consult with enforcers … Instead enforcers will simply be required to notify the OFT”.

As far as I can see, something has gone wrong with the semantics there as to what is intended. Perhaps what is intended is simply that enforcers—meaning Trading Standards officers—will simply be required to notify rather than be required to consult and listen to what the OFT has to say. If you consult, you are supposed to listen to whoever you are consulting. If you do away with consulting and have simply notification, there is no longer any need to take any notice of what you are advised. Is that what is intended? If it is, then, of course, the reduction or removal of the OFT’s supervisory role is much more deep and profound.

The only other matter I wish to mention is that in the Explanatory Note to the order. After dealing with Article 9, on which I have just been concentrating, there is a reference to Articles 10 to 13 amending the Unfair Terms in Consumer Contracts Regulations 1999. It provides that the OFT will simply have a power rather than a duty to enforce those regulations. That means, again, a considerable reduction in the OFT’s role. I am not sure whether the Government intended that because I thought they wanted the OFT to have a particular responsibility with regard to these unfair trading regulations. I may have got that wrong.

What we have today fills out the broad statements in the Bill and one needs to get the phrases right and to understand them. I will be glad if the noble Viscount will answer some of the points that I have made.

--- Later in debate ---

The noble Lord, Lord Borrie, asked whether the Government will retain any consumer enforcement power within the CMA. Yes, the CMA will have the power to tackle competition problems and practices—

[Lord Borrie]

The Minister is leaving the NTSB, but I still have not had an answer to the question about whether local councillors, members of the authority elected to it, will have any role in the NTSB.

[Viscount Younger of Leckie]

I hope I can answer the noble Lord’s question. Trading standards play a critical role in protecting consumers and business in their local authority areas, in particular from rogue traders, but the responsibility was split between local authority trading standards services and the OFT creating an enforcement gap. While BIS provided some support for regional and national enforcement schemes, the NTSB has been formed specifically to tackle cross-boundary and national threats.

The noble Lord, Lord Borrie, asked whether members of the local authority are members of the NTSB, which goes a little further in answering his original question. The answer is no. Heads of local authority trading standards comprise the NTSB. There is a political oversight group made up of representatives of local government and the LGA which connects local decision-making with national enforcement.

The noble Lord, Lord Borrie, was concerned that the OFT will not oversee enforcement supervision. In this case, the OFT, Trading Standards and other enforcers will share a power to enforce. This will ensure that while the OFT will be able to continue to use its expertise in this area, other enforcers, including Trading Standards, will take up cases that more appropriately fall to them. Trading Standards will act as the lead enforcers of this legislation and will retain a duty to enforce the regulations, except in the case of the Unfair Terms in Consumer Contracts Regulations 1999. That is complex, but I hope it explains that slightly more clearly.

The noble Lord, Lord Whitty, asked how Citizens Advice will be accountable for Consumer Direct and consumer education. The work of the Citizens Advice service on Consumer Direct will be accountable to the Consumer Minister through grant arrangements set up by the Department for Business, Innovation and Skills. These grant arrangements will set out challenging performance targets which will be closely monitored by the department. I can reassure the noble Lord, Lord Whitty, that Citizens Advice will take on the role of consumer education.

The noble Lord, Lord Whitty, also asked whether Citizens Advice could be subject to a judicial review. There is a low risk that Citizens Advice may be subject to a judicial review in relation to the function transferred. However, it is more likely that other legal claims will be brought, such as negligence. The Citizens Advice services have taken their own advice on this risk and have given their consent to the transfer of the consumer advice functions on that basis.

The noble Lord, Lord Whitty, wanted to clarify who SMEs will receive advice from. Most business-facing advice and education will transfer from the OFT to the Trading Standards Institute from 1 April 2014, but businesses seeking advice as consumers will be able to access Consumer Direct as before.

The noble Lord, Lord Whitty, also asked for clarification on whether the NTSB will quality control Trading Standards. The NTSB itself, and the teams that it sponsors, are subject to tight funding terms and conditions to ensure that they deliver against business priorities. Local trading standards are subject to local government procedures. The noble Lord also raised concerns about cuts to local trading standards services. The provision of local trading standards services is a matter for individual local authorities, and even in the current climate, they will continue to take local and pan-local cases.

The intention is that there will be specific funding for enforcement against national threats separate from the budget for local issues. There are plenty of examples of cases where local officers have dealt with complex cases successfully. The NTSB will ensure that resources are allocated to large cases as and when appropriate. In addition, local officers often have a culture of working with business to resolve problems. I believe that trading standards services have already demonstrated their ability and professionalism over many years, and I hope that the noble Lord would agree with that.