Consumer Rights Bill

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Monday 8th December 2014 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, I understand that my honourable friend Mr Ed Vaizey is dealing with this issue. I think we have the powers that we need, and we discussed this on a previous occasion. As I say, my right honourable friend is dealing with the issue. We are not in a position to add a provision to the Bill but I assure the noble Lord that the issue is being progressed very keenly.

[Lord Clement-Jones (LD)]

My Lords, I do not know whether I am in order in speaking now but, before the Minister sits down, it may help the House to hear that I have received correspondence which I assumed had been copied to other noble Lords around the House on precisely the two matters which the noble Lord, Lord Stevenson, mentioned. One was a letter from my noble friend Lady Neville-Rolfe and the other was a letter from my honourable friend Ed Vaizey, so they have responded to the amendments tabled on Report—not wholly positively, I may say, but they have responded and set out their reasons for doing things other than agreeing to the amendments that were tabled on Report.

Consumer Rights Bill

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Wednesday 26th November 2014 Lords Chamber

[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.

Consumer Rights Bill

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Wednesday 19th November 2014 Lords Chamber

[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.

--- Later in debate ---

[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.

Ticket Touting

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Wednesday 5th November 2014 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, the Olympics and Paralympics were a fantastic achievement. It took an enormous enforcement effort to police the resale of tickets at that event, which we cannot do for every event. Since my appointment, I have taken a great deal of interest in this issue. I have had meetings with event organisers, including the Rugby Football Union, the England and Wales Cricket Board and UK Music, with online marketplaces and with consumer groups, to hear how the market is working. At present, we have broadly the right balance between consumer protection, with a number of regulations and allowing the market to operate, but I am considering new evidence as it becomes available.

[Lord Clement-Jones (LD)]

My Lords, my noble friend mentioned the Olympics. Will she take the opportunity of commending the report from Operation Podium of the Metropolitan Police, which so valuably made a number of recommendations about ticket fraud and abuse? Does she agree with its conclusion that self-regulation is unlikely to be successful, given the current lack of transparency, and unscrupulous practices by some? Is the Consumer Rights Bill not the ideal vehicle for reform in this area?

[Baroness Neville-Rolfe]

My Lords, Parliament has debated this issue for more than 10 hours on the Consumer Rights Bill alone, and we have legislated and produced guidance. New regulations came into force this year in June, which ensure that consumers get the information they need. We have included specific guidance on how the regulations apply to tickets. In terms of the police, consumers are protected by the Fraud Act. Action Fraud is now the single national reporting centre for fraud, and since 1 April, responsibility for that has moved to the City of London Police. They are making good progress.

Consumer Rights Bill

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Monday 20th October 2014 Grand Committee

[Lord Clement-Jones]

My Lords, in moving Amendment 34B I will speak also to Amendment 34C.

Under the current wording of Clause 35(1), a consumer can include in a contract for digital content a term that the content is fit for the purpose for which the consumer wants to use it without providing the trader with a realistic opportunity to evaluate, reply to, agree to or reject the consumer’s request. This means that the consumer can unilaterally include terms in a contract which go against the terms and conditions or the normal use of the content or even against the use of the content stipulated by the trader. Consumers should surely not be able to include a term in the contract on their own. A term should only be included if agreed by both parties. Clarity in a shared agreement as to contract terms is essential so that both parties understand and truly agree the contract. As currently drafted, the consumer may include a term in the agreement by implication. Contract terms should be expressly agreed, not by implication.

Surely if a consumer e-mails an online content store, saying that they intend to watch “Match of the Day” for a romantic night in, then that content would be deemed fit for that purpose under the current drafting. If it did not perform the stated purpose, the consumer would have a course of action against the store. As a second example, a consumer may e-mail an online content store saying they are buying a film to watch on a plane when they will not, in fact, be able to watch it because they need to stream the film over an internet connection and cannot download it. As currently drafted, unless the trader replies before the transaction takes place, the contract will, by implication, include a term that the consumer can use the content on a plane and the trader will be in breach of contract. I am sure there are many other possible scenarios that one might dream up, but it seems very strange that the consumer can, essentially, determine the nature of the contract in these circumstances as a result of Clause 35(1). I beg to move.

[Baroness Neville-Rolfe]

My Lords, I am grateful for the comments of my noble friend Lord Clement-Jones and for his constructive and telling contributions throughout this session. I note his comment about the consumer essentially creating the contract. I will answer, and try to cast light on the circumstances that we foresee for this provision, by looking at another scenario. Where a consumer e-mails a trader about their desired use for the digital content and then downloads it immediately—as is the case in the example proposed—it is highly unlikely that the consumer would be able to claim a remedy under Clause 35 from the trader if the digital content was unsuitable for that particular purpose.

This scenario would already apply to goods bought online. A consumer could e-mail a trader saying that they wanted to use the goods for a particular purpose that was not their usual purpose, and then order the goods without waiting for a response. However, there is no evidence that consumers are playing the system in this way, nor that it is causing problems for traders. The first key point is that the consumer must make known to the trader the purpose for which they intend to use the digital content. Secondly, the clause does not bite if the consumer does not rely on, or it was unreasonable for them to have relied upon, the skill and judgment of the trader.

In my scenario, we think it would be open to traders to raise a number of arguments. First, the consumer may not have made known their purpose to the trader, particularly if the time interval was such that the trader could not have been aware of the purpose at the time the contract was made. Secondly, the trader has not responded in any way and so has not exercised any skill or judgment. Finally, the consumer did not rely on the trader’s skill and judgment in these circumstances since their decision was made before the trader responded, and possibly even before the trader could have done so. So the clause is unlikely to apply in the scenario I outlined.

Amendment 34B says that we should remove the phrase “or by implication”. It is important to reflect that the requirement that a trader makes known the particular purposes for which digital content is intended implies that the trader must be aware of the consumer’s intentions. The phrase “or by implication” is to be seen in that context and may be more relevant in face-to-face sales than online ones. For example, a consumer may tell a salesperson that they are teaching their child to read when they are buying a particular piece of software but may not expressly say that they want to buy the software for the purpose of teaching their child to read. I do not want to deny consumers a remedy in such a case.

Amendment 34C requires that traders should expressly agree the purpose. Again, there are scenarios where the consumer may rely on the skill and judgment of the trader without their express agreement. For example, a consumer may e-mail a trader several times, providing the trader with an opportunity to respond to their request. The consumer may assume that the fact that the trader has not denied that the digital content is suitable for their purpose implies their agreement. Again, I do not want to deny consumers a remedy in such a scenario. Nor would I want to introduce additional steps into the purchasing process that were not necessary.

The clause replicates the related clause for goods, Clause 10, and also, crucially, that in the Sale of Goods Act. Keeping the wording consistent wherever we can retains the link with existing case law on fitness for a particular purpose, and ensures a close alignment between goods, digital content sold on a tangible medium and intangible digital content. While on the face of it, this amendment seems like a sensible clarification of the provisions for digital content, it could, as I have explained, have a perverse effect. I therefore ask the noble Lord to withdraw his amendment.

[Lord Clement-Jones]

My Lords, I thank my noble friend the Minister for her response. It is interesting and rather tricky. This is one of the trickiest areas that we have come across to date. I can understand my noble friend’s attachment to existing case law; that is what many lawyers would say in the circumstances. However, I want to innovate. The existing case law for goods in these circumstances could be extremely dangerous.

I accept some of the Minister’s points about the consumer having seriously tried to get the trader to respond and they have not, and about circumstances in which is entirely reasonable for consumers to rely on their skill and judgment. However, the digital world is different from the product world. The ability to communicate in one direction over e-mail without having a response adds a new dimension. It will not always be the case that it being unreasonable for the consumer to rely on the skill or judgment of the trader or credit broker will get the trader out of this particular situation, where there has been a unilateral statement that the product is required for such and such and, for some reason, the e-mail has not been received or the trader has not acknowledged receipt, or whatever.

Of all the clauses we have talked about to date, I do not think that this one is really the finished article yet. There is still some room for improvement precisely because the digital world is different from the product world. If you are buying a car on the dealer’s forecourt, you are in a very different position from that of winging e-mails and pressing buttons on purchasers’ websites. This clause does not yet reflect that adequately. I shall read what the Minister has said carefully and have further discussions. In the mean time, however, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, the rationale for this amendment is that Clause 46, which deals with consumer compensation for damage to a device or other digital content, fails to appreciate totally the complexities of security software products. Failures and malfunctions in software can occur for a variety of reasons, often without any connection to the design or development of the product itself. Improper use of the product is one common cause, while defects in the consumer's own equipment are another. The incompatibility of different pieces of digital content used simultaneously by the consumer is a third. In all these instances, the liability of the software provider can extend only to what is effectively in the sole control of that provider; that is, to cases where the cause of the damage sustained by the consumer is unambiguously and exclusively the product of that provider.

In the area of internet security products, urgent critical fixes for serious threats may sometimes get released before companies have tested the process extensively as there is generally a greater benefit for a greater number of consumers compared with a small number who may experience minor compatibility issues or false positives. These updates are developed with reasonable skill and care and they are tested against numerous possible known configurations. However, by their very nature the updates are a process that needs to be automated, and that is done under extreme time pressure. As a general rule, the faster an update is released to consumers, the greater the number of people who are protected from a new threat.

However, the current clause might encourage suppliers to slow down, delay or discourage the release of new security solutions or urgent critical fixes, to the ultimate detriment of consumers. Against that backdrop one must add the fact that the Bill does not allow the trader to restrict his liability under any circumstances. It then becomes apparent that the security industry will be confronted with a very real disincentive. Moreover, in the digital environment it is sometimes necessary to sustain minor damages that are unavoidable to protect the consumer from greater or further harm. A few examples may be helpful to illustrate this point because it is so specific to the digital environment.

It is better to delete a malware-infected e-mail from the consumer’s webmail account and to lose the content of that one e-mail than to have the consumer’s entire computer corrupted. It is also preferable as a precaution to temporarily block the consumer’s access to a website that is suspected of distributing malware rather than giving access and exposing the consumer to the risk of an infection. Similarly, it might be advisable in certain cases to take a service offline in order to address a security threat before making it available again to the consumer. In all these cases, the consumer or the consumer’s property may sustain damage, such as the loss of the content of an important e-mail that was deleted because of the malware that had infected it, the failure to receive a live video transmission while access to the service platform was blocked, or the inability to perform a particular online action at a precise moment because of a service outage. But in certain circumstances it has to be understood that this minor damage is a reasonable price to pay for the avoidance of much bigger harm, and Clause 46 should acknowledge that. I beg to move.

[Baroness Neville-Rolfe]

My Lords, I listened with great interest to my noble friend’s concerns. However, it is worth going back to the driver for this clause, which is to make it clear that all consumers of contractually provided digital content, free or paid for, may have a right to damages if the circumstances warrant it. Perhaps I can expand on that a little. The consumer already has the ability to bring a negligence claim in this area. If a consumer downloads some digital content that contains a virus, the consumer could seek to make a negligence claim against the trader if the virus caused loss or damage to the device or other digital content. However, excluding free digital content from the quality rights may leave consumers unsure that they have the ability to make a claim when free digital content causes damage, so Clause 46 clarifies the position. It is designed to reflect negligence principles and not to introduce any new burdens on industry.

On the question of consumer responsibility, I agree that traders should not be liable for damage that results from something the consumer has done with the digital content that it was not reasonable for them to do. Clearly, in this case, it is the consumer’s behaviour that has caused the damage and not the digital content. However, I do not agree that it is necessary to lay this out in the Bill. It is already implicit in the way the clause works. In order to prove a breach of the clause, the consumer has to show first that the digital content itself caused the damage to their other digital content or device. Secondly, they would have to show that the trader failed to use reasonable care and skill to prevent the damage. If the damage occurred because of something the consumer had done, then the consumer would not be able to prove a breach.

The concept of reasonableness in the application of this provision was referred to. I recognise that digital content operates in a very complex environment, as has been said often, and furthermore that no digital content trader can be expected to know every possible configuration of digital content on a consumer’s device. That is why we used the concept of reasonable care and skill in this clause. Reasonable care is part of the test of whether there was a breach in the first place. Even if the digital content can be shown to have caused the damage, there is no breach if the trader acted with reasonable care and skill to prevent the damage. This effectively protects the trader from expectations that they must have acted in every way possible to prevent the damage if it was not reasonable for them to have done so. It means that the trader would not be expected to test exhaustively for every possible scenario and that the trader’s activity would be judged against the normal standards in the industry.

The concept of reasonably foreseeable is slightly different. It addresses whether it was reasonably foreseeable that breaching this clause would cause the loss that the consumer suffered. However, expressly limiting the application of the provision to damage of a kind which the trader ought reasonably to have foreseen makes the provision more complex and creates an additional hurdle for consumers, making it harder for a consumer to secure a remedy.

My noble friend raised the issue of urgent updates and the need for them to be automated under the inevitable pressure of time. It is unreasonable—

--- Later in debate ---

[Baroness Neville-Rolfe]

My Lords, I had finished explaining the background to what we were seeking to achieve, which is important for the Committee to understand and for the record because of the original nature of the discussions on online. However, my noble friend Lord Clement-Jones was particularly concerned about emergency security updates. He rightly emphasised that they need to be carried out with great speed and that some consumers could suffer minor damage.

The position as the Government see it is as follows. The consumer has to demonstrate that the trader failed to use reasonable care and skill to prevent the damage. We would expect that all reputable traders in this area would use reasonable care and skill as a matter of course, even for security updates that obviously have to be released rapidly. However, what constitutes reasonable care and skill for urgent security updates would be judged against the normal industry standards in that context, not against the standards for regular updates.

I sympathise with my noble friend’s concerns about traders facing claims concerning minor damage caused to a few consumers during the process of an emergency update. However, if the trader has used reasonable care and skill, given the context, I would not expect that Clause 46 would be engaged. I therefore ask my noble friend to withdraw the amendment.

[Lord Clement-Jones]

My Lords, I thank my noble friend once again for a very clear exposition. If there is ambiguity when it comes to a court looking at some of the provisions of the Bill when it is enacted, some of the explanations may be quite useful in a Pepper v Hart kind of way. That useful exposition would give some assurance to anybody looking at the clause. I will read Hansard with great interest. I thank my noble friend and I beg leave to withdraw the amendment.

Consumer Rights Bill

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Wednesday 15th October 2014 Grand Committee

[Baroness Neville-Rolfe]

My Lords, we have heard a range of detailed and informed comments during this debate and I thank all noble Lords for their contributions, to which I have listened very carefully; it was good to have a variety of points made, and I am grateful to all noble Lords who have spoken. I am also grateful to the various sports, music and ticketing businesses that have spent time briefing me and the Government on these issues. In fact I should probably declare an interest as a big sports fan and a mother of cricketers.

Given the breadth of this issue and the different angles that people are coming from, I will divide my response into the two main types of sales in this market: sales from a trader to a consumer, and sales between consumers. I will then touch on the issue in Amendment 30 concerning refunds and compensation.

Before I do that, I shall briefly address the philosophical question posed by the noble Lord, Lord Stevenson, of whether a ticket—because it is either a goods item or an intangible legal right—is even capable of being sold on or transferred. The answer is that it is possible for a ticket to be defined either way. However, I am advised that this is ultimately a matter for judicial consideration, so it is not appropriate to attempt a determination in this Bill, or indeed for the Government to state publicly how we think a court would or should determine that question.

I turn to Amendments 26, 28 and 29 on business-to-consumer sales. I reassure the Committee that when traders sell to consumers there are already rules in place to ensure that consumers are aware who they are buying from and what they are buying. My noble friend Lord Clement-Jones said that the market was not subject to the same rules on transparency as other sectors, but this is simply not the case. The ticketing market is subject to consumer laws, including information requirements, to the same extent as any other retail sector.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, to which my noble friend Lady Heyhoe Flint referred, set out clearly in list form what information must be provided. For distance and online sales, such as ticket sales, that includes the price, the identity of the trader, contact details for the trader and the main characteristics of the ticket. In fact, there are no fewer than 24 information requirements on that list covering all the information that the consumer needs to make an informed decision.

In guidance on the regulations, we have included a specific paragraph on how the information requirements apply to tickets. I can quote directly from the guidance to reassure your Lordships that much of the information listed in the amendment is already required. The guidance states:

“Information on the main characteristics of the tickets and their total price (including delivery costs and other charges) must be given to the consumer in a clear and comprehensible way before the consumer purchases the ticket … For a ticket associated with a particular reserved seat (e.g. Seat 1, Row A) the seat number is a main characteristic”.

The regulations build on existing consumer law. The Consumer Protection from Unfair Trading Regulations 2008 protect consumers from being misled into a purchase by a trader.

The noble Lord, Lord Clement-Jones, asked about the October regulations. They are the Consumer Protection (Amendment) Regulations 2014; is that right?

[Lord Clement-Jones]

I did, but before my noble friend moves on to that, I quoted from the guidance and pointed out that, effectively, this is voluntary. The guidance states:

“Main characteristics include (if known to you)”.

I directly quoted from the regulations, as well. My noble friend has cited other parts of the guidance, but that is the crucial part.

[Baroness Neville-Rolfe]

I thank the noble Lord for that clarification. Perhaps I can continue to address the trader side. Where a consumer is sold a ticket that is claimed to be on the front row, for example, which turns out to be on the back row, that would breach the 2008 regulations. Advertising for sale a ticket that a trader is not in a position to sell because the ticket is either not available through the primary outlet yet or because the trader is awaiting the outcome of a ballot would also be a breach of the regulations, as well as a potential Fraud Act offence. Criminal penalties reinforce the legislation. A trader or a marketplace can be subject to a fine or even imprisonment if these regulations are breached. In conclusion, we believe that there is already sufficient law in place to ensure that consumers have all the information they need about what they are buying before they buy from a trader.

The noble Lord, Lord Stevenson, asked about botnets. A range of offences is available to law enforcement to tackle the fraudulent sale of tickets and the criminal harvesting of tickets from online ticket sales. The Computer Misuse Act 1990 sets out the framework of offences associated with interfering with a computer, including the criminal use of tools or articles to commit a computer misuse offence, such as a botnet. It was good to hear from my noble friend Lord Borwick that he believes that we are on the way to solving the botnet problem.

The noble Lord, Lord Stevenson, also asserted that there is evidence of large-scale criminal activity. We disagree. Europe Economics found that 90% of sales are by consumers such as you or me. There is already a strong framework to deal with criminality, such as fraud and money-laundering laws, which the noble Lord mentioned, that might take place in a market. Additional legislation for ticket marketing would not address such criminal activity. Obviously it is important to work with the police and other enforcement authorities, and we will review the data that the noble Lord asked for to see what up-to-date data we have. I will write to him on that point.

My noble friend Lady Heyhoe Flint said, “Will the Minister look at the websites?”. I will, but the enforcement of the law is for the CMA and trading standards. We have done some research. These sites already require key information to be given. All these sites have money-back guarantees. Most ticket transactions pass without problem—it is over 90%—so I think progress has been made there.

My noble friend Lord Moynihan gave us a very interesting summary of his experience with the Olympics—that wonderful summer which we all enjoyed in the brilliant sunshine, and the success of the Games. Indeed, as he described, it was very successful in terms of ticket sales, although of course there were some gaps in the audience, which was a sadness for consumers who would have liked to have been sitting in those seats. A ticket resale regime was a condition for hosting the Olympic Games. We brought that in and said at the time that such cases have to be considered on a case-by-case basis. I do not think that my noble friend was suggesting that this should be extended widely but he was asking us to consider that issue.

My noble friend Lord Moynihan also asserted that other countries had found a good way to regulate ticket sales. Our finding is that the evidence is mixed. New South Wales has a draft Fair Trading Amendment (Ticket Reselling) Bill restricting ticket resales, and we do not yet know its impact. As we understand it, these new restrictions are not the same as those in one of the amendments under discussion today. We have also seen press reports arguing that Queensland’s anti-scalping laws, as I think they call them, have had little effect. However, obviously we will keep those under review.

I have tried to talk about traders. I should now like to turn to the subject of Amendments 26, 28 and 29, which is consumer-to-consumer sales. We want consumers to be active and empowered in the market as buyers and sellers. It is a fact of life that sometimes consumers have a ticket that they cannot use. At this time of year I might buy tickets for my husband, a son and myself for a classical concert in the Royal Parks next summer. If my husband is taken ill six months later and cannot attend, I need to resell the ticket. That means that I can get my money back and it gives other consumers the chance to attend the sold-out event. We see no need to restrict this. Consumers should be able to freely and easily resell in this way tickets that they cannot use; my noble friend Lord Borwick made this point very well. The OFT has said that secondary agents can,

“provide a useful function for consumers who need tickets for events and are willing and able to pay premium prices”.

My noble friend Lady Heyhoe Flint asked about the impact of her amendment and how to build on the 2013 regulations. I shall try to answer. We know that over 70% of consumers think that they should be able to resell their tickets. Not only is it the right thing to do to allow this market to operate, but that statistic also indicates that if we restricted the legitimate resale market, consumers would find other ways to sell on the black or grey markets. We also know that consumers care about protecting their data and identity online. The Communications Consumer Panel reports that nearly two-thirds of social network users said that they had a high level of concern about the use of information from profiles by companies. In that same survey, the largest top-of-mind concern related to the safety of personal details or ID theft, with just over one-quarter of internet users spontaneously mentioning it.

Most consumers would not be comfortable having their contact details prominently displayed on a website. I am not sure I would like that—but I am sure I am not the only one who already receives too much junk mail. Consumers want to sell online and to protect their personal data. The current regulatory system allows that, while protecting consumers when they buy from traders.

Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Tuesday 29th July 2014 Lords Chamber

[Baroness Neville-Rolfe]

I thank the noble and learned Lord and will come back to him on that. I think that I addressed the issue—perhaps we could look at Hansard together and have a further word on this important point.

The noble Lord, Lord Stevenson, my noble friend Lord Clement-Jones and the noble Baroness, Lady Morris, were interested in compensation schemes and the EU law on this, which is set out in the EU copyright directive, also known as the information society directive, or infosoc. Article 5(2)(b) of the copyright directive permits member states to introduce exceptions for private copying, such as the one before us today. The article requires that any exception must include certain conditions, for example that the copy must be for ends which are neither directly nor indirectly commercial. The exact wording is on page 2 of the instrument before us. The article states that the right holder must receive fair compensation when copying takes place under the exception. It is what exactly is meant by “fair compensation” that is at the crux of this question. In interpreting this phrasing, the Government have been guided by recital 35 of the copyright directive. This states:

“In cases where rightholders have already received payment in some other form, for instance as part of a licence fee, no specific or separate payment may be due”.

Later it goes on to say:

“In certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise”.

In other words, fair compensation can mean no compensation, as long as the exception causes no, or minimal, harm, or if an appropriate payment has been received. This is how the exception before us has been designed, and it therefore falls within the margin of discretion that the directive allows.

As I said earlier, this view is supported by many, including several eminent legal experts. The JCSI noted in its report that there are persuasive arguments in the Government’s favour. Furthermore, European case law to date, although not directly addressing the question as to what is meant by minimal harm, is consistent with the Government’s approach. I would add that there is no guarantee that the European Court ruling in the Copydan case will have any bearing on the UK’s exception for personal copying. The recently published Advocate-General’s opinion confirms once again the wide latitude that member states have in this area.

The Government do not deny that ultimately only the European Court of Justice can rule definitively on the definition of minimal harm, and it has not done so to date. However, uncertainty—for the reasons I have already articulated—is not a justification for inaction, particularly when the evidence and reasonableness of a change is clear. For all these reasons, the Government believe that the regulations are intra vires.

In response to the request from the noble Lord, Lord Stevenson of Balmacara, the Government do not routinely publish their legal advice, and I am not persuaded that an exception should be made in this case. The Government are confident in the advice they have received that the exception proposed is compatible with all the relevant EU case law and also with our international obligations, such as the Berne convention. On the question of EU law, it was right to mention that there are talks going on in Brussels in this important area. This is a new area that I will be looking at, and I have spent a lot of time in Brussels. But the fact that there may be new measures coming in at an EU level is no reason not to proceed with a package which is useful and important, both to copyright holders and to consumers. The personal copying exception before us today is narrowly drawn, and merely legitimises existing consumer behaviour. This policy is right and fair to both rights holders and consumers.

The noble Lord, Lord Clement-Jones, asked whether the changes will be evaluated, as did others. I reassure the House that the impact of these changes will be evaluated in line with evaluation best practice, and the results of this evaluation will be published within the five-year evaluation period. The Government believe that these changes will have a positive effect on the economy including the creative industries. Additionally, the strategy for carrying out the evaluation will be published. The evaluation will seek to study a range of impacts, including on the creative industries. The Government will obviously be keen to hear from experts and from noble Lords on the proposed evaluation.

The noble Lord, Lord Clement-Jones, asked whether there were really 50 exceptions to copyright law. There are around 50 exceptions in Chapter 3 of the Copyright, Designs and Patents Act 1988. They are found in Sections 28 to 76.

[Lord Clement-Jones]

I asked whether there are 50 exceptions that have been introduced by secondary legislation.

--- Later in debate ---

[Baroness Neville-Rolfe]

I thank the noble Lord for that question. I think that we will need to wait and see what the evaluation looks like—I urge him to make some input on the nature of evaluation. It is a bit of a hypothetical question. As a representative of the Government, I would be uneasy about making any promises, but I thank the noble Lord for the point made.

I should move on, as time is pressing, to say a little about fair dealing, which the noble Lord, Lord Clement-Jones, raised. Fair dealing is an established legal concept that has been part of copyright law for more than 100 years. It is a question of fact, degree and impression and will take into account a number of factors, the main ones being whether the alleged fair dealing is in commercial competition with the owner’s exploitation of the work; whether the work has already been published or otherwise exposed to the public; and the amount of work which has been undertaken and the importance of it. We did not intend to define it further in the legislation, because doing so would upset this well established case law and undermine its main benefit, its ability to adapt to the circumstances of any specific case.

The noble Lord, Lord Berkeley, asked what evidence the Government had relied on in developing their policy proposals. The Government have worked hard to ensure that the proposed changes are based on evidence. The impact assessments are based on the best evidence available and were reviewed and validated by the independent Regulatory Policy Committee.

The noble Baroness, Lady Morris, referred to cloud services. This is a difficult and very important area which was explored as part of the Government’s impact assessment. However, we were not provided with sufficient data to enable us to determine what the impact would be. The majority of evidence received related to licence services, which would not fall within the scope of the exception; for example, because they provided streamed content so were not relevant. The music industry has accepted unlawful private copying for many years, so one might reasonably assume that the ability of the consumer to make copies of CDs is already taken into account when licensing deals are negotiated. Negotiation of contracts between businesses is a matter for those businesses. If, however, this is an issue of market abuse, it would obviously be a matter for the competition authorities.

The Government have published the changes through social media and website updates and through contacting interested stakeholders, such as those who responded to the technical review. They have published plain English guidance aimed at different user groups as well as an unofficial consolidated version of the copyright Act. We would expect wider education initiatives, such as the recently announced education campaign, to include educational messages—

[Lord Clement-Jones]

I alluded briefly to inaccuracies in the guidance. If those inaccuracies are clearly shown to the IPO, will the Minister undertake that those guidance notes will be changed? They are extremely important for consumers.

[Baroness Neville-Rolfe]

My Lords, I accept that the guidance notes are important and I will take the point away, if my noble friend is kind enough to give me the detail. I also say to the noble Baroness, Lady Morris, that I will keep an eye on the cloud aspect, which she rightly raised. I feel that it is important to include the cloud, because it is part of modern life, but clearly we need to look at how it is going.

My noble friend Lord Grade of Yarmouth felt that changes would harm rights holders. I would say that the exception legitimises what millions of people already do, something that the market has accepted for many years. This is aimed at consumers who have paid for content and support the creative industries by paying for music, films and books.

Many points have been made. I will study Hansard carefully and come back if there are points that I have not addressed in my summing up. As I said in my opening speech, this is a delicate balancing act. The Government believe that the copyright system has not kept pace with the digital revolution. As a result, a great many intuitively acceptable activities are illegal or uncertain. These changes relating to private copying, parody and use of quotations form part of a package that should make copyright works more valuable to all, give users clarity about their rights and build respect for copyright in the process. They will contribute to a more modern statute book that meets the challenges of an increasingly digital and changing world.

Copyright and Rights in Performances (Extended Collective Licensing) Regulations 2014

Debate between Lord Clement-Jones and Baroness Neville-Rolfe

Monday 21st July 2014 Grand Committee

[Lord Clement-Jones]

Perhaps I may add a question so that my noble friend can answer them all in one fell swoop. Strangely enough, although I agree with the five-year initial term, it not clear, as the noble Lord, Lord Stevenson, pointed out, whether a subsequent authorisation can be longer than five years. The noble Lord, Lord Howarth, might be entirely delirious with a 20-year extension. I would not be very keen on that but he might think that it was a wonderful thing. But from my reading of the regulations, it is not clear whether or not that subsequent authorisation could be longer than the initial authorisation.

[Baroness Neville-Rolfe]

The noble Lords have raised good points in their passion to get this right. I would like to look at this and write to the noble Lords about what can be achieved. There is good sense in having clarity for five years to get things off the ground but the noble Lords have made the point about the period after five years and having a look at what makes sense.

I also commend the points that the noble Lords made about the part that officials have played in developing the IP regime and these regulations in particular. Perhaps unsurprisingly, my first meeting after today’s business is with the CEO of the IPO, and I shall be visiting it soon, so I will have the opportunity to pass on your Lordships’ kind words.

I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments. We have had a good debate. The Government believe that these regulations are a fair and reasonable reform and I commend them to the Committee.