Lord Clement-Jones
Main Page: Lord Clement-Jones (Liberal Democrat - Life peer)Consumer Rights Bill
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Lord Clement-Jones
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Lord Clement-Jones (LD)
My Lords, I was clearly sitting in the wrong place in Grand Committee, because I did not see any Christmas bells, and that is why I am returning to the fray on Clause 23 on behalf of the motor industry.
The amendment today differs from Amendments 20A and 20B, which were tabled in Grand Committee, by the addition of a new proposed subsection (9). This additional subsection would set a time period for completion of the process of repair to give the repairer the opportunity of a further attempt or attempts at repair. This directly addresses the concerns voiced by the Minister, my noble friend Lady Jolly, and, indeed, the Opposition Front Bench. My noble friend said in Grand Committee:
“The Bill is clear that a repair is an attempt to bring the goods into compliance with the Bill’s requirements. One repair is complete once the trader returns the goods to the consumer in response to the consumer’s request for a repair”.—[Official Report, 15/10/ 14; col. GC 118.]
For the Opposition, the noble Baroness, Lady Hayter, acknowledged that the repair need not be done “in one go”.
The purpose of this amendment is to clarify “one repair” in law, permitting a process of repair to take place. This is to address concerns from industry that the Bill as currently drafted does not provide traders of complex consumer goods, such as motor vehicles, a fair opportunity to repair. This is an issue because complex products may show a fault that requires more than one repair, involving, for example, more than one visit to a garage so that a car’s fault can be diagnosed and tested, and causes ruled out. In addition, a repair may appear complete, but the fault may reappear—as can be the case with electrical faults—and a second or subsequent repair may fix the problem.
My previous amendment regarding this issue, moved and withdrawn in Committee, met with concerns from my noble friend as it was thought that the consumer could become locked in a never-ending cycle of repairs. This revised amendment addresses this very issue while still giving scope for a process of repair to take place. This is through the addition of a determinable end-point for the process of repair, which would be commenced on the occasion that the consumer had to return to the trader for a second attempt at the repair. At that point, the trader would have to complete the process of repair within the requisite time, to be set down by the Secretary of State.
Baroness Neville-Rolfe
My Lords, following the discussion my noble friend Lord Clement-Jones described in Grand Committee, I recently met representatives of the motor industry to discuss their concerns about the issue of one repair and we had a constructive discussion that included other amendments. I am very pleased also to hear from the noble Viscount, Lord Simon, about his discussions with the motor industry and, of course, to see my esteemed predecessor, my noble friend Lord Younger, making a very good point about the costs on traders.
I understand—although I am not a huge fan of motor cars—that motor vehicles are very complex goods and there can be a tendency for faults to reappear after repair. However, a limit of one mandatory repair or replacement sets an important and appropriate balance. The Bill provides key simplifications, as we all know, which we expect to benefit both consumers and traders, including the motor industry. The Bill sets a 30-day period for consumers to exercise the short-term right to reject, whereas in the past, claims have been made in relation to motor vehicles some months after the car was bought. The amendments we have laid on deduction for use, which my noble friend Lord Clement-Jones referred to, recognise the particular nature of motor vehicles, being complex and subject to rapid depreciation. He also noted in Grand Committee that the issue of one repair is pertinent to the final right to reject. I am grateful to my noble friend for going away and amending his amendment.
To the extent that the Bill’s provisions regarding one repair may impact on the motor industry, I think that being able to apply a deduction for use in the first six months mitigates against that and is an important and complementary protection. I am not blind to the needs of the industry, but the revised amendments go too far. They would undermine both the consumer protection and the clarity that the Bill provides. The limit of one mandatory repair or replacement before a consumer is entitled to some money back follows consultation by both the Law Commission and BIS, both of which identified that approach as being the preferred option. The Law Commission recommended that there should be greater clarity as to when a consumer can move from repair or replacement to access some money back. The Bill’s one repair or replacement provision gives that clarity and I am concerned that it should not be undermined. Importantly, the Bill does not prevent the consumer from agreeing to further repairs. I think consumers—certainly a consumer like myself—tend to act reasonably with a motor trader, especially if they are treated reasonably in return. As long as the trader keeps them well informed I think most people would be willing to accept further repairs. If, however, the relationship breaks down, the consumer should, and will under the Bill, have the right to exit the contract if the trader has tried and failed to fix the fault.
I also feel that a time limit set by the power included in the amendment would fail to provide the necessary safeguard to protect the consumer fully. There is a real risk that such a time limit would become the default, leaving consumers stuck waiting. Without the certainty of being able to ask for money back after one failed repair, consumers would have to show that a repair process had caused them significant inconvenience or taken more than a reasonable time. While these are important protections within the Bill, we do not think they are sufficient alone for goods. This was the very issue on which the Law Commission recommended that there should be further clarity. The evidence submitted to the Law Commission’s consultation showed that it is unclear when the point of significant inconvenience is reached, allowing considerable scope for dispute.
All of these concerns are compounded by the fact that these amendments are so broad in scope. We believe that as drafted they could apply to all goods, even a table that needed more than one repair. Essentially, the amendment seems to cover both complex faults in simple goods and simple faults in complex goods. It would be unclear whether or not the consumer had to make the goods available to the trader more than once. It would also be all too easy for an unscrupulous trader to argue for repeated repairs—even on simple non-complex goods if they claimed that the nature of the fault justified it.
My noble friend mentioned guidance and perhaps, without commitment, I can come back to him on that issue.
Lord Clement-Jones
Perhaps I can interrupt my noble friend to see what her reaction is before I respond. Does she accept that there is a conflict between what Ministers have been saying about the one repair concept and what is in the guidance? If so, clearly she could go further in undertaking that the guidance should be revised.
Baroness Neville-Rolfe
My advice is that there is no conflict, but as my noble friend has raised the issue, I shall certainly take a look and write to him. The amendments cut across the simple, clear provision set out in the Bill, so I ask my noble friend to withdraw his amendment.
Lord Clement-Jones
I detect in a mild kind of a way that that is a no—a fairly firm no. The motor industry will be very disappointed by that response, and I thank the noble Viscount, Lord Simon, for his support. I am somewhat surprised by the noble Viscount, Lord Younger, because this amendment is heavily supported by dealers and manufacturers. It is designed for their benefit; it is certainly not designed to add to their woes, which I believe Clause 23 has the capacity to do. It will bear unduly harshly on dealers, in particular, but I recognise a stone wall when I see one. I very much hope that my noble friend will undertake to review the guidance on page 39 and the conflict between what on the face of it seems to be a completely contrary statement to what is in the guidance. Perhaps we can make progress in that respect. In the mean time I beg leave to withdraw the amendment.
Baroness Heyhoe Flint (Con)
My Lords, once again, I return to the subject I raised at Second Reading and in Committee by speaking to Amendment 13, to which I have added my name. I also have to declare an interest to the House: I am a board member of the England and Wales Cricket Board.
Like so many of my colleagues on both sides of the House, I want the very best for sport and entertainment and their fan bases. I make this address feeling a bit like Mrs Echo of my noble friend Lord Moynihan. As the House has heard, this is a redrafted amendment. It is shorter, sharper and has absolute clarity. It is designed to empower consumers by placing extremely light requirements on the reselling of tickets. Crucially, it does not in any way prohibit or ban the resale of tickets. It seeks to replicate the standards that the Government intended—I stress the word “intended”—to introduce through the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
Frustratingly, the regulations are not working at all. I have now studied many online ticket sales sites, as have the major sports groups mentioned by my noble friend Lord Moynihan. We can find no sales at all complying with the stated regulations. In meetings with officials working for the Minister, they, too, have been unable to cite evidence of the consumer contracts regulations having any effect. The regulations are clearly ineffectual. That is why I plead from my sporting heart that we need the amendment. It clarifies matters by placing in legislation key characteristics that must be provided by the seller when a ticket is resold, rather than the existing vague guidance and confusion about what constitutes a trader and what constitutes a consumer. That creates a huge loophole that can be exploited by the unscrupulous leading to, as my noble friend Lord Moynihan said, a £1.5 billion racket.
I hope that all sides of the House will support me when I emphasise what we are trying to achieve. Those who buy a ticket from a secondary seller should be provided with the same information and protection when they buy that ticket as they would expect to receive when purchasing direct from the event organiser. It is as simple as that. But you would not think so, judging by the anguish that sports governing bodies are having to suffer in seeking a satisfactory resolution with this amendment.
If the amendment is made, every purchaser will be told the original face value of the ticket, the location of the seat in terms of block, row and seat number, whether it has restricted vision, and whether it is a seat for a child or senior citizen being sold at what I think is called a top-whack price. It will also allow people to check with the venue that the ticket is genuine. Importantly too, they would be told the original terms and conditions relating to the ticket purchase, and whether the resale was in breach of those original terms and conditions.
As has already been said, it takes only a matter of seconds to provide this information online. Remember that anyone who sells online has to create an account with a secondary seller or website in any event. This is an infinitely longer process than just providing three key details when selling a ticket. If you are extremely modern, you could even take a photo of the ticket and upload it.
Those facts are material for the consumer in making an informed decision about whether to purchase a ticket. I assure the House that this is not an unnecessary burden— and it would certainly not seem like a burden to the 150 or so very angry fans who were refused admission to the Ashes test at the Oval two years ago because they had been sold invalid tickets online. Club officials were angrily confronted, and are probably still recovering from the onslaught, but they had no armoury in legislation to solve the problem. In some circumstances there is no block, row or seat number. That is why the amendment offers the alternative of citing the seat booking reference number.
If the Government intend to continue to defend a status quo that is patently failing, I have three questions for the Minister. First, does she accept that the amendment, if accepted, would place very little burden on the seller? Secondly, why does the Minister not agree that is important to empower consumers by giving them key information about the tickets they have bought, and to protect them from being mis-sold or, even worse, turning up at the event and not being admitted because the terms and conditions have been breached? Thirdly, does she accept that the 2013 regulations are not working, because they rely on guidance alone and are too imprecise about how a trader is defined? Surely individuals who buy tickets with the sole aim of selling them on at inflated prices to make a profit are trading, so should be classed as traders.
I am sad to tell the House that there are very many people doing just that. Only yesterday I went online to research the issue. Across the sites of major secondary sellers such as viagogo, Get Me In!, Seatwave and StubHub—they have been vigorously lobbying against the amendment; well, they would, wouldn’t they?—I found more than 5,000 tickets being sold for next summer’s Ashes test series. This is flabbergasting. These tickets have only just gone on sale. It is inconceivable to me that such a large number of tickets have been bought by consumers who now find, eight months in advance, that they cannot go to the tests. How very strange and coincidental is that? These tickets are being hawked around for profit. Every single one of them is being sold in breach of the 2013 regulations, because they have been put there by opportunistic traders, colloquially known as touts; they are not put there just for fun, or by individual consumers exploiting the system. It is naive to think otherwise and to believe that those actions are acceptable.
Is this how we want to showcase our international sports and entertainment events in this country? Is this how we want to go about protecting a nation of sports fans? Before us is a Bill about consumer rights, so please let us give those consumers the right to know that what they are buying is genuine and is what it purports to be.
I have in the past been regarded as a rebel with a cause in fighting for fairness in sport. Speaking in support of this amendment, I am once again revealing my rebellious nature—old habits die hard—but I am merely seeking fair trading for all. I hope that the Minister is now ready to accept this amendment or at least prepared to offer some room for negotiation before Third Reading. The MCC’s “Spirit of Cricket” project, which engenders fair play, should be adopted for secondary selling of tickets so that all consumers are protected from those who seek to prey on their enthusiasm and desire to acquire genuine tickets.
Lord Clement-Jones
My Lords, as the third signatory to the amendment and as someone who tabled amendments in Grand Committee, in the face of the superb introductions by my noble friends Lord Moynihan and Lady Heyhoe Flint, I intend to be extremely brief. I bow to the knowledge, expertise and passion which they bring to the amendment today and I will simply emphasise four points.
First, this amendment is not intended to create a ban on secondary ticketing and would not do so in practice. It is not designed to inhibit the legitimate exchange of tickets on secondary platforms. The target of the amendment is those who are using the lack of transparency to mislead or defraud consumers; it will benefit all those wishing to buy tickets on the secondary market.
Secondly, as my noble friend Lord Moynihan said, some of our biggest national governing bodies of sport, such as the FA, the ECB, the RFU and the LTA—I am sorry about the initials but there are plenty of them—as well as the organisers of events such as Wimbledon, England 2015 and the London Marathon, are calling for this because they believe that their consumers, the sporting enthusiasts, are being harmed by the lack of transparency in the secondary market.
Thirdly, as has been very clearly illustrated, the current consumer contract regulations are too narrow and capture only traders. Yet no one selling on the secondary market identifies themselves as a trader. Furthermore, as my noble friend Lord Moynihan said, the obligation to list the main characteristics applies only if they are known. I thought that “Honest, guv” was an extremely good way of putting it. They can say, “I don’t know the characteristics or the ticket number”, and so on. The consumer contract regulations are pretty ineffective. It is quite clear that none of the main ticketing platforms has put anything additional on its website as a result of them, so in that sense they are completely ineffective. Of course, as my noble friend Lord Moynihan pointed out, there is a minimal amount in the regulations themselves; the rest is in the guidance, which is not binding.
Fourthly, my noble friend Lady Heyhoe Flint gave us a number of illustrations. There is a very recent illustration from the rock world with the Fleetwood Mac tour. Something like 12,000 tickets for that UK tour are available on the secondary websites. Have all those enthusiastic Fleetwood Mac fans really decided, having bought those tickets in the first place, to put them on the secondary market because they are washing their hair one day? That is a completely incredible scenario and it only illustrates the need for far greater transparency in the ticketing world. I very strongly support the amendment.
Lord Stevenson of Balmacara
My Lords, Amendment 16 stands in my name and in the name of my noble friend Lady Hayter of Kentish Town. Digital sales are booming and the digital music, video and games market now accounts for 43% of the total UK entertainment sector. Recent research puts the UK as the leading European country for total digital spent per capita. This is indeed the future.
The main focus of Amendment 16 is the question of whether, when digital content is provided in an intangible form and does not meet quality standards, the consumer should, as the Government propose, be restricted simply to a right of repair or replacement. We believe very strongly that, in addition, the consumer should in such cases have both a short-term and a long-term right to reject the digital content. The Government’s argument is that where digital content is downloaded or streamed, it is not provided on a tangible medium and therefore cannot be returned in any meaningful sense. Passing over the obvious metaphysical absurdity of believing that only physical objects can be meaningful, that is inconsistent—not least because consumers will have a short-term and a long-term right to reject the identical digital content if it is bought on a tangible medium, such as a DVD or CD.
As the BIS Select Committee commented when it was reviewing the draft Bill:
“The different remedies available for tangible and intangible digital content in the bill would … embed inconsistency into consumer law. Consumers experience intangible digital content in the same way as tangible digital content, as a good, and therefore would expect to be able to reject it and receive a refund if the statutory rights are not met”.
Well, they can get a refund, but they cannot reject it. It cannot be sensible for the Government to be sanctioning two different regimes for tangible and intangible goods and services, and I very much doubt that the courts will support that.
The department has produced and circulated a useful note on this whole issue, for which I am very grateful. I am also grateful to the Minister, who wrote to me after the debate we had on this issue in Committee. That was also extremely helpful and informative. However, it is a question of consistency and equity not whether we can analyse this or parse it to the last extent. The right thing to do here is to provide the same rights for all faulty purchases, tangible or intangible, while recognising that any short-term or long-term right to reject needs to be matched by a requirement placed on the consumer to delete the content and, if that is impracticable, to desist from use or copying. There are already remedies in law that would match this issue.
The BIS adviser on this issue, Professor Robert Bradgate, who sadly, I recently learnt, died before he could see his recommendations implemented, recognised that problem in his initial report and suggested that it should be tackled by,
“an extension of the definition of goods to apply provisions of the Act both to goods, and to digital products … and to include power in the … legislation for Her Majesty’s Secretary of State to apply the Act by Statutory Instrument to new developments as they arise”.
That remains good advice. I beg to move.
Lord Clement-Jones
My Lords, I am not sure whether the noble Lord, Lord Stevenson, will thank me for making an even shorter speech than I made in the previous debate. I must say that my breath is somewhat taken away by the sweeping nature of the amendment, which tries to sweep all digital content into the clauses on the sale of goods. The software industry may have some difficulty with some areas of Chapter 3 on digital content, but if what the noble Lord wants happened, it would be horrified. The dialogue between the software industry and the Government may not have produced everything that the software industry wants, but it has recognised that digital content is very different. I forewarned the noble Baroness, Lady King, that I would cite her. Like me, she said:
“I will not speak at length on this amendment or the other amendments … but it seems worth reiterating the peculiar nature of digital content”. [Official Report, 20/10/14; col. GC 183.]
Although I do not have the exact reference, I entirely agree with her. The noble Lord, Lord Knight, made similar points about the peculiar nature of digital content. It would be an extremely retrograde step to sweep up the additional content in this. If the noble Lord had come with individual amendments to the clauses to bring digital content in, I might have been more sympathetic, because one then could have seen the exact consequences of the amendments, but the consequences of this amendment could be quite unforeseen and extremely contrary to the interests of the strong and vibrant software industry that we have in this country.
Baroness Neville-Rolfe
My Lords, the Bill brings in clear quality rights for consumers of digital content for the first time. In this digital age, many of us are consumers of digital content on our smartphones, our smart televisions, our computers and, I was hearing this morning, on wearables. The sector is crucial and growing for the UK economy. The Business Population Survey estimated that there were more than 300,000 digital content firms in 2013—e-book publishers, games, software and website developers—with an annual turnover of just over £200 billion. It is vital that we have the right sort of regulation for that important, very innovative sector. That is why we have consulted widely on our approach to digital content.
The digital content chapter provides that when digital content is faulty, the consumer is entitled to a repair or replacement of the digital content. If that cannot be done within a reasonable time, or without significant inconvenience to the consumer, the consumer is entitled to a price reduction, which may mean some money back or, in some cases, 100%. I set out the general picture because we are about to discuss a number of amendments in this area.
This approach takes account of the way that industry works. As my noble friend Lord Clement-Jones, who I am delighted to see here at this debate, said in Grand Committee,
“in practical terms the software industry will always find a workaround or fix to a problem”.—Official Report, 20/10/14; col. GC 211.]
I have been using that quote elsewhere. In other words, when digital content is faulty, the problem is usually remedied quickly through an update.
The proposed amendment would apply to intangible digital content the same rights as apply to goods. So when intangible digital content is faulty, the consumer would also be entitled to a short-term right to reject, a limit to a single repair or replacement, and a final right to reject. Applying the full suite of goods remedies to digital content where it does not form part of goods, as it does in a washing machine, for example, would result in provisions that were not fit for the digital world.
We want provisions that encourage an increase in uptake and allow industry to innovate and flourish. This amendment would be a retrograde step, to the detriment of consumers. As the noble Lord, Lord Knight, who has already been quoted as a real digital expert, reflected in Committee, we must remember that many digital content producers are micro-businesses and start-ups, and we need to maintain an environment in which they can flourish and provide innovative products—while, of course, not letting them off the hook for substandard offerings.
The noble Lord, Lord Stevenson, made a number of good points, but I feel, as does my noble friend Lord Clement-Jones, that the proposals in his amendment could have unforeseen effects. A short-term right to reject intangible digital content and strict limits on the numbers of repairs and replacements would not be practical in the complex world we live in. In the digital environment, a fault in one copy of digital content may be replicated in all copies, or the fault may not be a result of an action by the trader at all. That is why a repair is a more equitable solution in the first instance than a full refund.
There are also issues around the practicality of “returning” intangible digital content. I think the noble Lord, Lord Stevenson, is suggesting that there should be an obligation on the consumer to delete digital content and on the trader to provide a refund. I do not believe it would be equitable or necessary to impose such a burden on consumers, who may not be technically savvy enough to achieve this—or not without assistance from the content supplier. Of course, many forms of digital content are quickly used, so the consumer may already have taken advantage of the digital content as much as they intended—for example, having viewed the film or read some of the e-book—before they reject it. There is a high risk that a short-term right to reject would therefore push manufacturers towards more restrictive data management techniques that would not be in the best interests of the consumer. Or it could cause the industry to be more conservative in its product offerings, reducing our competitiveness. Innovation would be chilled.
Looking to the future, it is also worth considering the moves in Europe towards a digital single market, and remembering that digital content is commonly sold across borders. The short-term right to reject is a domestic law; there is no short-term right to reject in the consumer sales directive from which many of the goods remedies derive. If we went ahead with a short-term right to reject intangible digital content, we could be out of step with Europe, creating problems for our manufacturers who want to sell across borders.
I believe that, although there are attractions in providing a short-term right to reject for digital content where it does not form part of goods, this would tip the balance of the Bill too far the wrong way. Indeed, it would be to the detriment of consumers, who would suffer from, at the very least, restricted product offerings and higher prices. I therefore ask the noble Lord to withdraw his amendment.
Lord Clement-Jones
“( ) For the purposes of subsection (2), a reasonable person shall be taken to be aware that certain types of digital content commonly include minor defects which do not have an adverse effect on functionality.”
Lord Clement-Jones
My Lords, my noble friend was kind enough to quote me in her previous response, so I hope that she will go even further than that and accept an amendment from me. One lives in hope. I am indeed returning to the fray on the subject of software. I hope that when the noble Lord, Lord Stevenson, reads Hansard he will realise how accurate my quote from the noble Baroness, Lady King, was.
Lord Stevenson of Balmacara
I did not say it was inaccurate; I just said that it was not the complete phrase as recorded. The reference that my noble friend showed me was to bug fixes; it was not about the particularity of the need for a separate regime for returning material to digital suppliers because it was defective in some way.
Lord Clement-Jones
Logically, one thing follows another. That is exactly the purpose of this amendment. Indeed, I shall refer again to the speech made by the noble Baroness, Lady King, on 20 October, as recorded at column GC 183 of Hansard. It has been extraordinarily helpful in formulating the terms of this amendment.
Let me explain. Amendment 34, tabled in Grand Committee, sought to amend Clause 34 to include a provision stating that it is common for computer software to include defects due to its dynamic nature and the complex environment in which it operates. In response to that amendment my noble friend Lady Jolly asserted that,
“the Bill is flexible enough to cope with”,
the differences between complex software and simpler forms of digital content such as music. She said that “reasonable consumers” understood that complex content contains bugs, and that,
“freedom from minor defects is an aspect of satisfactory quality only ‘in appropriate cases’”.—Official Report, 20/10/14; col. GC 184.]
The Minister was clear about this in Grand Committee, but, as the Federation Against Copyright Theft has said, it is far from the case that a district court or a county court would be clear about it.
In the debate, the noble Baroness, Lady King of Bow, suggested that,
“it seems reasonable to say that where minor defects in software do not affect the overall functionality of the product, that digital content should not be deemed unsatisfactory”.—[Official Report, 20/10/14; col. GC 183.]
I agree—and the software industry agrees, and very much supports this approach, as it is much more outcome based. We have reformulated the amendment as a result, and it now says that as long as the defect does not affect the main functionality of the digital content, it should not be regarded as rendering it unsatisfactory.
My noble friend Lady Jolly questioned in Grand Committee what the driver for industry would be to improve the software if the legislation stated that some types of software contain bugs and, as such, this would not mean that the digital content was faulty. However, it is in industry’s commercial interest constantly to improve its products. In fact, to the contrary, the clause as formulated might have an adverse effect in encouraging industry not to make changes or improvements to its digital content. The consequences of strict compliance are likely to be increased costs to consumers and slower product evolution, arising from the increased time and resource required for testing. It is preferable for consumers and businesses to require that minor defects or malfunctions that may surface as a product or service is used be fixed as promptly as possible.
Amendments 18 and 19 aim to remove the risk of claims in relation to minor software glitches. Such claims are potentially expensive and time-consuming for software providers to resolve and would not benefit consumers. In Grand Committee, Amendments 37 and 38 sought to amend Clause 36 to clarify that the presence of bugs in complex types of digital content does not mean that the content is not as described. My noble friend Lady Jolly responded by commenting that,
“digital content either meets the description or … not”,
and that the amendments would undermine,
“the requirement that the digital content should be as described”.—[Official Report, 20/10/14; col. GC 186.]
My noble friend provided a simple example of a defect in software where the spellchecker no longer worked yet the software was described as having this function. With all due respect, the spellchecker example is very simplistic. It is a different situation with regard to complex software such as security software, which has to evolve over time and needs to be updated to address the myriad situations to enable the software to continue to interface with other third-party software and platforms, to continue to function or to address new vulnerabilities.
These issues were discussed during the debate in Grand Committee on Amendment 40A, moved by the noble Lord, Lord Haskel. His amendment would have amended Clause 40 to enable suppliers to make modifications to the software if they are of benefit to the consumer, remedy risks or improve functionality, irrespective of whether the modification would mean that the digital content no longer meets that description. I am pleased that the Government have partially relented on that and that, as a result, we now have government Amendment 20 to Clause 40. The supplier can now add functionality but software suppliers will still not be able to remove features. Neither Clause 36 nor Clause 40 takes into consideration that certain features may have to be removed or disabled from security software. Suppliers of security software may have to remove a function as it is in the very interest of a consumer to do so, as the function could be vulnerable to attack and this specific vulnerability could leave the consumer open to a range of threats—from a virus that will steal personal information or credit card details to malware that will infect a user’s machine, rendering it unusable and/or wiping data such as precious family photos.
Functions of security software are not removed without good reason. If suppliers do not remove a function, there are many circumstances where this will be to the detriment of consumers. I hope that my noble friend will recognise the particular circumstances of software and give her approval at least to the tenor of these amendments. I beg to move.
Baroness Jolly
My Lords, I thank my noble friend for setting out his stall, and I will set out mine. The new quality rights that we are introducing for digital content provide that digital content should be of satisfactory quality, fit for any particular purpose and as described. These core rights mirror those already used for goods, building on consumer expectations and familiar concepts for business. The core rights are principles-based and flexible. This is important for goods and especially important for digital content, which is constantly evolving. They are intended to work effectively in a wide range of scenarios, applying to goods ranging from rubber ducks to luxury yachts. Similarly, they are designed to apply to the range of digital content, from music files to complex security software products.
The key to the success of the Bill is to balance solid consumer rights with workable outcomes for business. This will create an environment where consumers are confident about buying more, contributing to more innovative products and driving growth and innovation for industry. The concept of freedom from minor defects comes into Clause 34 as a factor that could be taken into consideration in the assessment of satisfactory quality.
I am grateful to my noble friend Lord Clement-Jones for his consideration of the question of how freedom from minor defects would apply to digital content which is of a type that commonly contains defects. However, noble Lords should note that, crucially, freedom from minor defects is only part of the assessment of satisfactory quality in appropriate cases. We have made it clear in the Explanatory Notes, as I mentioned in Committee, that it is the norm to encounter some bugs in a complex game or piece of software on release, so a reasonable person might not expect that type of digital content to be totally free from minor defects. The Government, and most consumers, understand that these types of products are commonly released with minor bugs, as a result of the development cycle of these products or the complex environment in which they operate. So while a reasonable consumer might expect a music file or an e-book to be free from minor defects or bugs, they would not have the same expectations of a complex computer game or a complex suite of business software.
We have not taken the step of defining what is or is not a minor defect because that will depend on the context. For example, in the goods context, a reasonable consumer may not expect the design on some hand-painted pottery to be completely uniform, but may reasonably expect it to be scratch-free. Similarly, consumers may reasonably expect some defects in goods sold as seconds, but there would come a point where a defect may render the goods unsatisfactory. However, a defect that has an adverse effect on the functionality of digital content should be capable of being taken into account in assessments of quality. Minor defects are defects that are unlikely to affect the functionality of the product but which, depending on the context, may or may not affect assessments of quality. For example, a minor defect in digital content could be something such as a click sound on a music file, or a character who has the wrong colour hair in one level of a computer game. Whether or not this would affect the satisfactory quality of the digital content would depend on the context, which would include factors such as the type of content and whether that type commonly contains defects.
I understand that industry would take some comfort from having the fact that some forms of digital content contain minor defects reflected in the Bill but I believe that this is neither necessary nor desirable for consumers. Moreover, as I have said already, under Clause 34, “freedom from minor defects” is only an aspect of satisfactory quality “in appropriate cases”. The amendment, as drafted, could narrow an understanding of what a reasonable person would expect in other circumstances.
Taking Amendments 18 and 19 together, I recognise that a defect affecting the functionality of digital content is unlikely to be minor. It is quite right that a defect that affects the functionality of the digital content could affect assessments as to fitness for a particular purpose and would match the description. Of course, if the digital content is specifically described as being free of defects then any defects in the digital content would not match the description. However, “fit for a particular purpose”, and “as described” are concepts that go broader than simply the functionality of the digital content. As such, I would be concerned that excluding defects that do not affect functionality from assessments as to whether digital content is fit for a particular purpose or as described would risk creating a lack of clarity for consumers and lowering consumer protection.
It is also worth reflecting briefly on the requirements of a trader should digital content not be of satisfactory quality, fit for a particular purpose or as described. As there is no short-term right to reject intangible digital content, the remedy would be a repair or a replacement. As the industry usually provides fixes to remedy issues in the form of an update where digital content is not of satisfactory quality, the Bill provides a remedy that is proportionate and in line with industry practice.
Lord Clement-Jones
My Lords, I thank my noble friend. She may be quite surprised to hear this, but I thought that was a very useful exposition, and I do not think we are a million miles apart. If she is not careful, she may be quoted for years to come on a Pepper v Hart basis, and there is no finer monument than that for a Minister. I was pleased to hear that. Consideration of Hansard in due course will give quite a lot of assurance to the software industry. I thank my noble friend very much for that statement and beg leave to withdraw the amendment.