Consumer Rights Bill

Lord Clement-Jones Excerpts

Wednesday 26th November 2014 Lords Chamber

Moved by

[Lord Clement-Jones]

49: After Clause 86, insert the following new Clause—
“Communications services: change of service provider
In section 3 of the Communications Act 2003 (general duties of OFCOM), after subsection (2)(f) insert—“(g) the maintenance of processes that promote the consumer interest and competition, to include a switching regime that is led by the receiving provider”.”

[Lord Clement-Jones (LD)]

This amendment, which was Amendment 103 in Grand Committee, received solid support from both sides of the House. Like the previous amendment I moved relating to Ofcom’s powers, it needs and deserves a better answer. To that extent it is a probing amendment, but I hope that I shall be using a fairly sharp stick to probe with.

The DCMS seems utterly determined not to give Ofcom any Christmas presents this year. The amendment addresses one of the fundamental rights of consumers—the ability to switch suppliers. It would introduce gaining provider-led switching across the communications sector. This is an opportunity to act in the interests of consumers and competition. Not only is this the Government’s own policy, as set out in Connectivity, Content and Consumers—a document issued last July—but it is supported by every party in this House.

Legislative change is also supported by Ofcom. In a letter written on 13 November to my noble friend Lady Jolly, Ed Richards, the chief executive, made it clear that without the support of legislation it would be difficult, if not impossible, to drive through this vital consumer change. The current evidence threshold to make the case is high and inevitably leads to expensive litigation. The amendment would enable Ofcom to address switching issues more quickly and directly.

In the light of the replies in Grand Committee to my noble friend Lord Stoneham, who ably put forward the argument there, I have retabled the amendment to give the Government a second opportunity to demonstrate that they stand firmly behind consumers and against vested interests and proponents of anti-competitive practices. Whoever replies to the amendment on behalf of the Government will need to address the issues raised so ably by my noble friend Lord Stoneham, such as the consumer harm created by the current complicated regime—witness the 1.2 million mobile customers who are double-billed or experience a total loss of service—and the hassle and confusion for consumers, which ultimately deter them from switching provider. The car insurance market, for instance, has a switching level of 38%, compared with 9% in the mobile and broadband market, and just 3% in digital television. There are also the poor retention practices caused by the current system, which forces customers to contact their original supplier and often leads providers to operate barriers to switching.

The Consumer Rights Bill offers a window to act in the interest of consumers, especially the vulnerable and those who do not know how to game the system. As discussed in Grand Committee, this would bring mobile communications in line with banking and introduce GPL systems across the sector, not only making switching easier for the consumer, but ensuring a more competitive market that works to drive down prices. My noble friend Lady Jolly insisted in Grand Committee that more work needs to be done to consult before the Government could accept a change to Ofcom’s duties such as this, but surely the need for change could not be plainer. That has been evident since 2007.

This is supported further by the recent evidence given to the House of Lords Communications Committee by Ed Richards, the CEO of Ofcom. He said:

“We have to pursue the consumer interest, but if we believe that the consumer interest lies in moving to gaining provider led, we have to demonstrate that at every level. If we had legislation that said Ofcom should start with the presumption that gaining provider led is the right answer, that changes the onus of responsibility quite significantly. In the litigation and the appeals, and the process of stopping us moving in that direction, which people will understandably enter into, that would make, in my judgment, quite a significant difference. If you start by making the case and bringing the evidence to bear with a presumption from Parliament that easy switching based on gaining provider led is where we are guided to begin, then I think the burden of responsibility on us to demonstrate that it is in the consumer interest is significantly easier”.

I thought, as did many of us, that Mr Richards made a very strong case before the committee. The amendment is also supported by the leading consumer rights group Which?. In its A Government for All Consumers, it rates simpler switching as the key policy priority for telecoms. In the Government’s previous response to this amendment it was stated that the Connected Continent package being discussed by the EU may deliver reform. However, Ed Richards’ letter to my noble friend has confirmed that progress is unlikely any time soon in that respect. What is the alternative—years of litigation on every change to GPL switching? It seems extraordinary that the basic case is that we have to wait until the whole EU does anything under the Connected Continent package before acting ourselves in the UK. I beg to move.

[Lord Stoneham of Droxford]

My Lords, I shall speak briefly in support of my noble friend Lord Clement-Jones. As I said in Committee, this is a very important change which is needed in this sector and follows what has already been done in banking and utilities. The current practice is anti-competitive because it reserves competitive offers for new and switching customers at the expense of existing customers. I accept that there are problems about how we can actually make the change. Ofcom clearly wants to do it. The complication arises because, as we know, the landline and broadband change applying to BT Openreach, which also affects Sky, TalkTalk, Post Office and EE broadband, is already in place, and now we want the final stage so that all the mobile operators are covered. There is also the issue of bundling as regards the connection with TV, satellite and so on. Ofcom is currently carrying out a consultation on that. We need to hear from the Government when that consultation is likely to be concluded, whether the Government fully support Ofcom in pushing that forward and whether Ofcom now has the power, in the Government’s view, to initiate it once the consultation is over.

--- Later in debate ---

[Lord Clement-Jones]

I thank my noble friend for that reply. The one thing that I suppose I really should be grateful for is that—although one would have thought that it was natural in the course of events in Grand Committee and on Report—discussions have clearly taken place between the DCMS and Ofcom, finally, so that there seems to be at least some sort of a meeting of minds. Instead of the chief executive of Ofcom having to write as he did just after Grand Committee to clarify Ofcom’s legal situation and general position on this, discussions have taken place. We are somewhat unsighted by the fact that we do not have chapter and verse as to exactly what Ofcom said in these circumstances. However, it seems extraordinary that, whereas in the letter and in communications before the Communications Committee the CEO of Ofcom said that Ofcom did not have sufficient powers, he now seems to have agreed with the DCMS to roll over and say that it does have them.

I am sure that all sorts of arcane discussions are taking place. I think that there is a big distinction between powers formally to mandate GPL—subject to a merits test, which means that litigation therefore ensues at length about the merits of that decision—and an amendment such as this which makes a presumption that GPL is in the interests of consumers. I am not going to unpick that today; I said that this is a probing amendment. However, I still believe that further answers are required. I very much hope that the Minister will be able to write after this debate to clarify some of the points that I have raised. I hope that that will get us to a more satisfactory way of thinking about this.

[Baroness Neville-Rolfe]

My Lords, before my noble friend sits down, I am happy to say that I will write.

[Lord Clement-Jones]

I thank my noble friend for that undertaking. I hope that, at the same time, she will include a pretty firm timetable that has been agreed between the DCMS and Ofcom. On that basis, I beg leave to withdraw the amendment.

Some Lords objected to the request for leave to withdraw the amendment, so it was not granted.