I am grateful to my noble friend for that factoid, of which I was not aware. Of course, our proposed regime provides for routine inspections and then, where there is a potential problem, for immediate inspections when they would be more appropriate. That difference is entirely justified, for the reasons that I have explained. Having worked in business, I know that when you have routine inspections you want to make sure that the people who understand all the rules and how the systems work—and have all the necessary paperwork—are available, because otherwise you often end up with a second visit. That is what we are trying to avoid, because that costs both parties.
We have clarified where notice needs to be given by adding to the Bill reference to what a routine inspection is. To offer further reassurance—
In the Minister’s amendment, the only definition given is that it is not one of those things that are exempt. In which case, what value does “routine” add?
We felt that it helped to clarify that there was not a gap. In Committee, we went through a number of examples about which individual noble Lords were very concerned. Having checked through the examples, we are able to show to people’s satisfaction that the thing would be clear. Doing it this way in the Bill achieves that effect. However, I want to add a further reassurance. I am today committing the Government to reviewing the practical effect of the notice requirement within two years of commencement of this part of the Bill. I have listened to what has been said and we have made changes to try to clarify this. We want to have a good enforcement regime—
My Lords, I am grateful to the noble Baroness, Lady Hayter, for her comments and to my noble friend Lady Bakewell of Hardington-Mandeville for sharing her experiences.
The Government have already taken the opportunity of this Bill to increase transparency in the lettings market—an important change. In addition, a letting agent is already required to be a member of an independent complaints scheme. Now is not the right time to introduce yet further regulation on lettings, which will introduce greater costs into the sector. Instead, we have agreed to review these measures a year after introduction. That is the time to see whether the changes are working and whether further measures are required.
I turn to Amendments 44ZA and 44D. While I share the concerns expressed about the practice of charging both parties for a transaction by estate agents and lettings agents, I do not believe that regulation is the right way to tackle this issue. Many letting agents do share the cost of providing a service between tenants and landlords where both benefit from the service. This is consistent with standard practice in other industries—for example, auction houses—and is not considered to be double charging.
Letting agents are commercial operations and it is important that they are able to set their own terms and conditions without interference from government. Restricting these terms and conditions risks perverse consequences, such as increased fees for one party or an increase in fees for other services, such as property management and property searches. Mandating transparency, as we propose, will enable landlords and tenants to shop around, encouraging competition between agents on fee levels. Agents with the best-value services will prevail in the market, and that is what is best for tenants and landlords.
Turning to the possible prohibition of fees to tenants proposed in Amendment 44D, we see this as yet another example of a demand for blanket regulation which will only introduce costs, put off new providers, and ultimately reduce choice for tenants and deter lettings. Banning letting agents from charging fees to tenants is not necessary; transparency is a low-cost measure which will promote competition on fees. Transparency encourages agents to be competitive on their fees, and ensures that tenants and landlords are able to make informed choices.
Amendments 44ZA and 44D, concern a different strand of business but with some similarities. In fact, the local estate agent in my village has just sold her lettings business. The noble Baroness, Lady Hayter, expressed concern that estate agents are not covered by our amendments. I think she feels that they do not have to be transparent about their fees. I can assure the House that this is not the case. Under existing legislation, including the Consumer Protection from Unfair Trading Regulations 2008, estate agents must make fees and charges clear. She also talked about unethical agents but, in addition to the 2008 regulations, estate agents are regulated by the Estate Agents Act and they have their own industry standards.
Since concerns were raised in Committee about charging buyers as well as sellers, I am glad to say that we have continued to work with the Property Ombudsman, who has confirmed that updated guidance will be in place early in December. This guidance will address concerns raised by noble Lords at that time in relation to charging by estate agents and the need to avoid conflicts of interest. It will ensure that agents understand their obligations to make charging arrangements clear and avoid such a conflict.
In Committee, noble Lords also raised concerns that this non-legislative solution does not go far enough. However, estate agents must belong to a redress scheme. If they are removed from a scheme for breach of the code, including a breach of this new guidance, they would effectively not be able to work as an estate agent. That puts a considerable bite behind the obligations set out by these schemes. I would be happy to update noble Lords when the guidance is published.
As regards Amendment 50E, I agree that retaliatory eviction is a problem within the private rented sector. As the noble Baroness said, we have given support to action in the other place. I was very pleased to hear from my noble friend Lord Cathcart that as a landlord he is completely against the practice. He expressed concern and pointed out the circumstances in which tenancies normally end, bringing his experience of the sector to our proceedings. On 11 September, the Government announced their support, in principle, for the Tenancies (Reform) Bill, a Private Member’s Bill, which is designed to outlaw retaliatory action. As has been said, that Bill is due to have its Second Reading on 28 November. Our support is subject to the proviso that safeguards are put in place to ensure that the reforms do not bring in excessive red tape and so make it harder for landlords to evict tenants who should be evicted, for example, for non-payment of rent in circumstances as described by the noble Lord, and that the legislation does not impose unfair burdens on good landlords because of spurious or unfounded complaints.
We will produce a guide for tenants to help them understand how to identify health and safety hazards in the home.
If the Government are in support of this Private Member’s Bill in the Commons, which may or may not pass, why are they not prepared to see similar provisions written on the face of this Bill, in legislation that will get through Parliament?
I thank the noble Lord for his intervention and I will come to that point.
Perhaps I may pick up on the point about health and safety, which I know is another concern that I share with the noble Lord. There will be a guide for tenants to help them understand how to identify health and safety hazards in the home and what to do if the landlord does not take action to make the necessary repairs. Furthermore, our How to Rent guide, which was published in June, makes it clear to tenants that if a property is in an unsafe condition and the landlord will not repair it, they should contact their local authority, which can make the landlord deal with serious health and safety hazards.
We agree with the need to tackle the problem of retaliatory eviction, but we do not think that this amendment will add anything further to the guidance that is already available and which we have committed to. I am aware that some are concerned that the Tenancies (Reform) Bill is unnecessary as existing consumer law already provides protections. I have listened to the comments of my noble friend Lord Cathcart and his description of good practice, but the Government are clear that legislation is necessary: hence our support, in principle, for tackling this problem through the Tenancies (Reform) Bill. The noble Lord, Lord Harris, asked why we could not simply write this into the Consumer Rights Bill before us today. I have explained our attitude to the Private Member’s Bill. There are certain aspects of it that need to be debated and we are not happy simply to write it into the legislation as it is. We would like to see it debated in Parliament and we will obviously give it our support.
In the circumstances, I ask the noble Baroness to withdraw her amendment, and I look forward to her party’s support for the Tenancies (Reform) Bill.
My Lords, about a year ago, in my capacity as chair of the National Trading Standards Board, I had a meeting with what I think was then called the Electrical Safety Council, now rebranded as Electrical Safety First. We were not discussing this issue but it was raised as one of the concerns that the then Electrical Safety Council had about the way in which the recall system worked.
My noble friend highlighted a number of concerning issues. These include, for example, the length of time that often seems to elapse between manufacturers becoming aware of a product failure or an incident, even one leading to an inquest, before they take action to recall products. Their recall efforts are often minimalist in trying to make sure that the message reaches consumers.
I hope that the Government are not simply going to tell us that self-regulation works best and that the systems in place are adequate. The examples that have been cited and the fact that this remains a continuing concern show clearly that action needs to be taken along the lines of my noble friend’s amendment.
My Lords, protecting consumers from serious injury and property damage caused by unsafe appliances is a crucial government responsibility. I can assure your Lordships that the Government are listening carefully to the concerns expressed in this House during the passage of this Bill and are absolutely committed to improving the systems of product recall, as I will explain. I am grateful to the noble Baroness, Lady Hayter, for sharing some recent experiences.
I am grateful for the work done by the noble Lord, Lord Harris, and the trading standards teams across the country which put considerable effort into enforcing an effective product safety regime. In 2012, they inspected more than 100,000 products, which led to more than 2,000 product lines being withdrawn from the market and more than 750 voluntary actions by manufacturers and retailers. There are other withdrawals that good retailers take proactively. Product liability law is an added incentive to action. Most manufacturers and retailers are keen to co-operate with this enforcement effort and there are strong sanctions if they do not. Under product safety law, offenders can rightly face fines of up to £20,000 and 12 months in jail.
However, noble Lords are understandably concerned that we should be rigorous in looking for ways to improve the effectiveness of the recall system, the importance of which I know so well from my retail experience. One important aspect of an effective system is making sure that retailers and manufacturers can contact consumers who have bought an unsafe product. Some good work is already going on across the supply chain to address this issue. It is being led by the Association of Manufacturers of Domestic Appliances and supported by BIS and the Trading Standards Institute on a Register my Appliance portal for consumers, which was launched earlier this month—I hope that noble Lords are all listening because, as a citizen, one should register one’s own appliances. This will make it considerably easier for consumers to register contact details so that they can be traced more easily in the event of a product recall. By encouraging consumers to register their products and to maintain their contact details, it will be much easier to contact relevant consumers in the event of a product recall.
In addition, Electrical Safety First, to which the noble Lord, Lord Harris, referred, is working to explore the options for improving traceability and recall effectiveness, in partnership with government and industry members. While this work should increase the traceability of consumers in the event of a product recall, we also need to consider whether we can improve the effectiveness of the current system for registering and publicising products that are subject to recall. Alerting consumers to the risks posed by faulty products can be difficult, especially where goods have changed hands or contact details have altered. It is important that all those who have a part to play in alerting consumers can access the information they need. That is why we are acting today to address the concerns raised by noble Lords by launching an independent review of the product recall system. The review will consider existing information systems, such as the Trading Standards Institute website for informing consumers about product recalls, and how well these work in practice, as well as looking at the cases and data to which the noble Baroness referred. It will also consider how well the EU’s RAPEX rapid alert system for dangerous consumer products covers UK needs and identify any gaps in the coverage that may need to be addressed. Once we have appointed a suitable chair for this review, we will expect it to report back within 12 months.
That review demonstrates that the Government take very seriously the issues raised by noble Lords during the passage of the Bill. Robust product safety legislation is in place based on an EU-wide regime, and this legislation provides consistency for business and consumers across member states, but we must ensure that the whole system works effectively to minimise harm to consumers. That will require all the different players to work better in partnership across the supply chain.
In the light of our decision to conduct an independent review of product recall, I very much hope that the noble Baroness will feel able to withdraw her amendment.
Before the noble Baroness leaves that point, I think she said that if you move towards a system of regulation of letting agencies it would be necessary to set up a new system for banning and warning orders. Why is it not possible to graft that on to the existing system for estate agents?
The noble Lord makes the fair point that a precedent exists. However, if you are going to introduce provisions into a new area, it is necessary to look at the detail, to consult and so on.
My Lords, I thank the noble Lord, Lord Best, for provoking a wide-ranging and thoughtful debate. As I mentioned in respect of the previous amendment, we are consolidating and updating consumer law investigatory powers in order to make enforcement more efficient and more effective. I will try not to be too repetitious of that debate, but I will repeat something I said in earlier sessions of this Committee: I feel strongly that trading standards officers around the country do a very good job. I have dealt with them a lot over many years and I am very grateful for the work they do.
The Government are keen to support the honest trader and to tackle the rogue, so there is a joint and agreed objective in these areas. I am going to speak at some length, for which I apologise in advance. I hope that noble Lords will realise that our heart is in the right place and we are trying to do the right thing in this area. As I have said, we are consolidating and simplifying consumer law investigatory powers across 60 pieces of legislation, setting them all in one place. This variety of instruments can be a cause of confusion and a burden for enforcers as well as businesses. We are also clarifying the law to make it easier for trading standards to work across their local authority boundaries in order to tackle the rogue traders who cause real harm to consumers and damage consumer confidence and reputable businesses.
The noble Baroness, Lady Hayter, asked about what had happened with the consultation and about the benefit to consumers. I can confirm that we did have mixed responses, but the British Retail Consortium and the Federation of Small Businesses, which together represent a large number of small businesses, support the notice provision. Businesses in general welcome it for reasons that I will come on to explain. It reduces the burdens and unnecessary costs that they are facing, and those costs are in turn passed on to consumers in a competitive market. The Government consider it vital that trading standards and other consumer law enforcers can protect us from businesses that are deliberately or inadvertently breaking the law.
I am sorry to interrupt her, but can the Minister tell us why it is more costly for a business to be inspected without notice than it is to be inspected with notice?
If the noble Lord would bear with me, I have an example which we can debate.
While we share some common objectives, there are clearly real differences of opinion about how trading standards officers and other law enforcers should carry out their duties. The Government start from the principle behind the Protection of Freedoms Act 2012, which aims to protect civil liberties and reduce burdensome and intrusive powers of entry. It starts from the simple premise that an investigating officer should have good reason for entering premises. This is really important because both as private individuals and as businesses we should rightly expect to be treated as law-abiding unless there is a justification. The requirement in the Bill for enforcers to give two days’ written notice for routine inspections—I emphasise routine—flows from this principle. However, we take very seriously the importance of ensuring that enforcers such as trading standards can continue to tackle rogue traders. I am sorry to keep repeating this but I think it is common ground, and I can assure noble Lords that we are doing nothing to prevent enforcers investigating illegal activities—quite the opposite.
Let me explain in more detail why we have decided to require notice for routine inspections. Enforcers currently have some very intrusive powers such as the power to enter commercial premises without a warrant to carry out their inspections. They can demand that documents are produced and break open containers, and any person on the premises has to provide assistance and the information requested. Small businesses have told us that unannounced inspections are burdensome and inefficient. In particular, the Federation of Small Businesses is concerned about unannounced visits and has said that booking inspections in advance will allow the businesses to ensure the appropriate staff and paperwork are available. This ensures that neither the trader’s nor the enforcer’s time is wasted in these routine inspections. The owner or manager might be visiting a supplier away from the premises, leaving a junior member of staff not equipped to deal with an investigator’s questions or to find the documents needed. Staff may be in the middle of receiving deliveries or busy dealing with customers or an important new client when the enforcer arrives. This can be disruptive and embarrassing for the business. While large retailers may be able to cope more easily—the noble Lord mentioned them—it is really difficult for compliant businesses to see why they should be so disrupted when they are giving no cause for suspicion.
Business disruption hits the bottom line. We estimate that this measure would generate net savings to the economy of almost £50 million over 10 years. This net figure includes the savings to business as well as the costs and benefits to enforcers arising from a greater degree of efficiency in inspection.
Of course, I agree entirely that businesses cannot expect to have notice of an inspection when there is risk of a breach of the law. We have listened very carefully to enforcers’ concerns on that: to local authorities, regulators and trading standards officers, as I think was hinted at earlier in the discussion. Therefore, the Bill provides a number of very clear exemptions that still allow enforcers to carry out unannounced inspections, as they do at present, where they need to investigate illegal activities and matters of urgency. I will go through those and try to pick up the examples that have been quoted in debates and which have obviously been concerning people.
The first exemption would apply where an enforcer reasonably suspects a breach, for example where the sale of counterfeit alcohol is suspected or where a test purchase has been made and failed, e.g. on an age-restricted purchase. The noble Baroness, Lady Crawley, asked about access to warehouses and whether, if the officer suspects a breach, the exemption applies. Of course, that is particularly important in relation to rogue traders and the same would be true of the example of the sale of counterfeit goods.
Is it then reasonable for a local authority to invoke that grounds of reasonable suspicion if, for example, it is clear to the trading standards department in a small town that a certain form of counterfeit or dangerous goods is circulating and there are eight potential retailers who might be selling it? Is it then reasonable for the trading standards department to inspect all eight? If it is reasonable to inspect all eight in that town, is it reasonable to inspect 200 in a city?
In my opinion, that is reasonable if there is a suspicion—for example, if trading standards officers have had some intelligence. There is an example I am coming to about cigarette butts, unless we cut that out. In relation to each of these exemptions, I am trying to explain why they are generously drafted so that we can do what we think is needed.
The second exemption would apply where giving notice would defeat the purpose of entry, for example, where an enforcer suspects that counterfeit DVDs are being sold and the enforcer considers that the traders in question are likely to conceal the illegal products if notice is given. The third exemption would apply where it is not reasonably practicable in all the circumstances to give notice, for instance because an officer reasonably suspects that there is an imminent risk to public health or safety. For example, enforcers may find evidence of illicit tobacco, such as stubs and papers, in the street near a couple of suspected outlets. The enforcers need to act swiftly to remove it from sale. I know that illicit tobacco is a concern.
A fourth exemption would apply where the enforcer is carrying out market surveillance, for example to check the safety of toys. Finally, notice need not be given where the trader has waived the requirement to give notice so that agreement to an immediate visit is always possible. We also carefully listened and have already responded to the BIS Select Committee’s very sensible recommendation on this issue by simplifying the exemption for giving notice where that would defeat the purpose of the visit. That is the second safeguard I referred to and I think that noble Lords commented favourably on that earlier in the debate.
I have set out these examples to show that we really are only talking about giving notice for routine inspections. In my view, it is perfectly reasonable to do that and highly desirable. Routine inspections are where a business, such as a DIY store, may be operating properly without any significant breaches of legislation. Trading standards may consider them to present a risk simply due to the nature of the sector in which they operate or because of the time that has lapsed since an inspection. Trading standards officers have raised with us a number of examples where they felt they would need to inspect without notice and, without exception, we were able to show how the powers of these wide-ranging exemptions could be used.
For example, another area which has been referred to in the debate is where an officer wishes to check whether petrol is being sold in short measures. The officer can use the power to carry out a test purchase and if that discloses a potential breach by the trader, he can immediately exercise a power of entry in order to investigate. Another concern that was raised is when an enforcer comes across a new shop during visits to other premises. I am happy to confirm that an enforcer can enter those premises immediately, using the power to observe the business, or indeed he can undertake a test purchase. If while on the premises he discovers that fireworks, for example, are being sold in breach of regulations—or mattresses, as one noble Lord mentioned—the enforcer can make a test purchase. If that discloses a potential breach by the trader, the officer can exercise a power of entry immediately.
It means observing as though the officer was a member of the public, but obviously a test purchase can be undertaken. The officer can speak to the trader and agree that there should be an exemption, in which case the exemption would apply. Moreover, if the officer suspects a breach, that also implies.
Perhaps I may press this point a little because it is important and getting to the root of the issue now might save the Minister time later. What is sufficient for a suspicion of an individual trader? The officer has made a test purchase and now he has prima facie information to suggest that the trader is up to something. That is straightforward and no one would see any issues around that. However, I will come back to my example. It is known that something is circulating in a town and it is likely that it has only been purchased from retailers in that town. Is that sufficient to cover all the retailers? Does that change if we are talking about eight retailers or 200 retailers? That is also possible. If it covers 200 retailers, that would certainly reduce any concerns I might have, but if it covers eight retailers, I would like to know what the cut-off number is.
As my noble friend the Chief Whip has just mentioned, you must have some sense of proportionality. I think that I gave a clear answer to the question of eight retailers earlier and I stand by that. Once we get to 200 retailers, we could be in slightly different territory. However, if there is a reasonable suspicion of a breach—although 200 premises seems to be rather an unlikely example—
I am sorry to interrupt the noble Baroness, but perhaps I may give a specific example. There is a suspicion about a dangerous electrical fitting such as a plug adaptor which the trading standards department has come across and knows is circulating in the area, and those plug adaptors might be on sale in several hundred small retail outlets, local shops and newsagents which sell a range of other things. Without being unreasonable about it, there might well be several hundred outlets in an area. It may be thought that the device was such that it could kill someone, which means that the test would be proportionately higher. That is what I am trying to get at.
I can reassure the noble Lord on that point. There is of course another exemption on the grounds of health and safety and I am absolutely clear that it would apply in that case.
The officers would be looking for a faulty electrical product that might be in circulation in an area; there would be a suspicion. That is exactly the kind of thing I am talking about. I am sorry, but I wanted to take the noble Lord through the examples in order to explain how the power will be used.
Perhaps noble Lords will bear with me while I make another point about powers of entry. The powers that other law enforcers have when they investigate offences are of interest, and the noble Lord has raised one or two of those. The police have no general powers of entry to commercial premises. They can enter a premises only with reasonable suspicion or a warrant. So there is, if you like, a form of notice. Even with a notice requirement, enforcers such as trading standards will have very substantial powers—more powers than the police, who deal with serious offences and serious crimes.
A noble Lord mentioned Ofsted—a question I have asked, actually. For practical purposes, Ofsted does give notice. It normally gives up to two working days’ notice before a planned inspection to a further education college—that is, a routine visit—but for schools, notice is given by midday on the working day before the start of the inspection. But it also has the right, quite rightly, to undertake unannounced inspections in cases of serious concern.
The noble Lord, Lord Best, asked about interpretation. I assure the Committee that we will be providing guidance. We are not creating principles such as reasonable suspicion. They are already well understood but obviously we will need to explain them for day-to-day work.
The noble Lord, Lord Harris, asked about evidence of the abuse of powers. This is not about abuse of powers; it is about reducing the burden on business from intrusive powers of entry and protecting civil liberties. It is about routine inspections, which, in my opinion, should be the subject of a warning. Where there are reasonable grounds of suspicion, obviously you can proceed immediately. I am a businessperson and I think business planning can have value in these circumstances.
I was also asked how notice can be given. Notice can be given by post or e-mail to the occupier or by leaving it at the premises. Actually, we have engaged extensively with the trading standards community while formulating the exemptions. That brings me on to the point that a number of noble Lords have made about the funding of the trading standards service. Obviously, spending and resourcing decisions are made by individual local authorities, which are better placed to make decisions about the enforcement needs of their communities than central government. Like all parts of central and local government, the services have faced budget reductions in recent years. There is no point denying it; that is agreed.
As noble Lords know, the Government are committed to tackling the inherited budget deficit by making savings and trying to improve value for money for the taxpayer, and this is part of that effort. We greatly value the work of trading standards to protect consumers from rogue traders and scammers, and we want to develop a better understanding of the impact it has across the economy. That is why, in partnership with the Trading Standards Institute, we have commissioned a group of academics at the Institute of Local Government Studies in Birmingham to undertake research to build an evidence base on the impact, effectiveness and efficiency of services, how improvements can be made, what works well and how we can do partnerships. This sort of evaluation is really important in public policy.
I think I have pretty well finished. I was asked about the deterrence effect of inspections. We would be concerned about the resource implications for trading standards services where uncovering breaches by chance is seen as an effective strategy for the future, even on the basis that it has been useful in the past. Targeting finite enforcement resources using an intelligence-led approach is a more efficient and effective strategy. I speak as a former businesswoman, with experience of a pretty small business trying to do a good job, and I think that better planning and targeting can save money both for business and for enforcers.
In conclusion, it has been an important and good debate. I have listened. I have tried to explain where we are coming from in the way in which we have drafted the Bill. I am trying to ensure that the investigatory powers in the Bill, modernised and brought together, strike the right balance between protecting civil liberties, reducing the burden on compliant businesses and ensuring that enforcers can tackle rogue traders.
My Lords, I make it clear that sites that try to palm themselves off as legitimate government services need to be stopped. We do not want cowboys battening on the services that are legitimately provided by the state. Therefore I sympathise with these amendments. This is a problem that the Government recognise and are taking action on. I was to glad to hear from the noble Lord, Lord Harris, about some of the successes that trading standards has had. He is right to emphasise the scale of the issue and the numbers involved in copycat websites.
We know that the way most people inadvertently end up on misleading websites of this kind is by clicking on adverts that are prominently displayed on search results pages. The Government Digital Service, which the noble Baroness mentioned in relation to the Cabinet Office letter, has been working with search engine providers such as Google to take down adverts for these sites. They are in breach of the search engines’ own policies and many of them have been removed.
There are a lot of parallels here with the problem of websites offering copyright-infringing material which also tend to be found through search results. We have been working on that, too. I have had meetings with some of the ISPs and others, and I am pleased to say that the main search providers are fully engaged on the issues.
We have also made sure that the existing law is being effectively enforced. Earlier in the year, my colleague Jenny Willott MP provided £120,000 in additional government funding to the National Trading Standards eCrime Team to support enforcement action against copycat websites. In late June, four search warrants were executed on properties in England. The operation led to the arrest of five individuals and disrupted the operation of at least 25 copycat websites. A criminal investigation is ongoing. This sort of action matters because it sends a message to the cowboys that this will not be tolerated.
Government agencies are also proactive in this area. The Intellectual Property Office is pursuing, prosecuting and putting out of business two operators of websites masquerading as official IPO services. That action was pursued successfully using the common-law remedy for passing off.
The noble Baroness, Lady King, mentioned the ASA. It continues to take action on a case-by-case basis and can take action on repeat offenders. It took action in November 2013 on Jars Services Limited which was trading—wait for it—as www.drivinglicence.org.uk. In September 2013, it took action against TAD Services trading as UK-Passport.net, and in June 2013, it took action against European Health Insurance Card trading as EHIC. The noble Baroness made a good point about the areas where this fraud is being perpetrated. We need to work to get those sites taken down.
The IPO case has been helped because for the first time ever, we have set up a website where consumers and traders can report copycat sites. This is specifically to protect and empower other consumers. Full details can be found on the excellent GOV.UK website which we are all pleased to see up and running. It allows a modern and dynamic response appropriate to the online era.
I reassure noble Lords that there is already law in place to protect consumers from being misled into a purchase. The Consumer Protection from Unfair Trading Regulations 2008 have been much mentioned during our debates and are very important. We also take enforcement action against these websites under intellectual property law. With a robust legal framework in place, we have been working to enforce the law and go further in partnership with industry.
However, I am not convinced that the law needs to be changed in the way proposed today. The amendment would in effect require government to regulate every third-party service. Government would need to approve it, issue guidance and determine reasonable cost scales. That would be a significant intervention in this marketplace. We should not take such steps unless the interventions we already make are not working and there is clear evidence that further intervention is needed.
People’s behaviour and expectations with regard to online services are constantly evolving and difficult to predict. We are keen not to stifle innovation or negatively impact websites that are honest and legitimate and provide value-added services. The most effective option is to enforce the existing legal sanctions against misleading websites which breach consumer protection legislation or IP law. In addition, we are going further by supporting search engines in assessing whether a third party offering services related to a government service is actually a genuine service. This complies with the search engines’ own guidelines and polices.
Could the Minister elaborate on that point? If the Government are working with search engine providers and essentially saying to them, “This is a legitimate additional service provider”, or, “That is not”, are they not already starting the process of regulating what she talked about as a legitimate marketplace? They must make that judgment already to be able to say to the search engine providers, “This is an illegitimate, copycat website”, or, “That is a legitimate service provider”.
My Lords, I thank the noble Lord for raising that point. I know what is happening in certain areas but not across the board. If I may, I will take the noble Lord’s question away and come back to him. It is also important to publicise better the sort of things that are being done in this area. I have tried to do that in a small way today, as has the noble Baroness, Lady King. For the present, I ask her to withdraw her amendment.
(10 years, 1 month ago)
Grand CommitteeI thank the noble Baroness, Lady Crawley, for her intervention and for bringing the whole issue to life to an even greater extent. While I am waiting for a bit of advice, I would say that there are different business models. I used to go abroad on business and I got quite frustrated when I could not print out my boarding pass. Some airlines allow you just to show the boarding pass on your phone or your iPad. That has obviously been a great step forward.
On fairness, airlines are a competitive industry. If consumers do not like the deal that the airlines are giving then, to some extent, we vote with our feet. I have explained the frustration that I have had and how I dealt with it. It is not obvious to me how you could resolve this under the general heading of fairness. There are advantages and disadvantages to the way that services are supplied, and this is perhaps something for us to contemplate.
My Lords, I hesitate to intervene. This may be the first time that I have intervened on the Bill, for a variety of reasons. I should declare my interest as chair of the National Trading Standards Board. I am now confused. I thought that I understood what this debate was about, but the Minister has raised the interesting topic of how people can understand what they are entering into. She has talked of the fact that different companies have different business models. That is all very well and good, but it is surely incumbent on them to ensure that those business models are transparent to people who might enter into a contract with them.
As we seem to be hung up about airlines and booking airline tickets, there is a particular issue about price comparison sites. That applies not just to airlines but to other services. The price comparison site will try to identify the headline figure for the cost of a particular service. That is where suppliers who operate a business model which adds in a series of extra charges further down the line can score. People say, “I will go for the cheapest”—the one which seems to be the cheapest—and then discover that they are being hit for all sorts of extra charges. I would be grateful if the Minister could tell us how she feels that the Bill addresses that problem.
I am grateful to the noble Lord, Lord Harris, for his intervention. It is great to have the trading standards voice joining in our debate, because we have referred to that several times already in Committee. I reiterate my point that the consumer must have agreed to the additional payment before entering into a contract. If the contract is not clear that the consumer has to pay but he or she pays, they can seek reimbursement. That is a basic principle. Of course, the law has been much strengthened by the contract regulations that we have been discussing. They require certain information for transparency, and making online sales requires information about extra costs to be given in advance. Obviously, I cannot comment on particular circumstances, but one would have to ask how the situation on boarding passes is described in the terms and conditions of that airline.
My Lords, my question was: how do the Government anticipate that the regulations that they are introducing, whether amended or not, will deal with the issues about price comparison sites and the headline price? It was because these are hidden costs, which are not automatically picked up.
My Lords, Members of the Committee have highlighted a number of categories of people for whom this is a necessity. We should also be clear why it remains a necessity for virtually every citizen. That is a consequence of the approach of both the current Government and their predecessor in not enabling the citizens of this country to have a readily available means of identity proof and assurance. Had proposals gone forward on identity cards, it would no longer be necessary to prove your identity by turning up with a paper copy of a utility bill, which is one of the two elements that you nearly always have to have to demonstrate and prove who you are. I think that the failure of successive Governments to provide a proper system of identity assurance is lamentable, but that is for a separate debate.
We are left in a position where most citizens need to be able to produce a hard copy of a paper bill for a utility or similar service; otherwise, they cannot prove their identity to their banks, to apply for certain documents and for all sorts of other purposes. Under those circumstances, the Government need to look favourably on this group of amendments.
My Lords, I am grateful to my noble friend Lord Hodgson for his amendment and for bringing up an issue that matters for the grey haired and the vulnerable. It is a very House of Lords issue, I have to say, so we must try to get to the right conclusion for the population at large.
For some, there is something comforting and reassuring about holding a bill or a statement. As others have hinted, it can engender a feeling of greater control over your finances. Equally, not everyone can manage with quarterly bills, which are mentioned in my noble friend’s amendment. We must not forget those who need to budget carefully when considering these issues—those who struggle to make ends meet.
There are a couple of elements in the amendment, as well as others for the debate that we will probably have on Monday on a similar issue: first, whether there should be a requirement for quarterly bills and, secondly, whether the customer should be able to choose the way in which they receive bills and statements. I turn to the frequency of bills first. It is common in most service supply contracts to receive a minimum of four quarterly statements of account, which reflects the historical habit of four quarterly payments. Other arrangements have grown up more suited for the circumstances of today—a mortgage customer may need only an annual statement, while for current accounts or credit cards a monthly statement would, in my view, be essential. For these, the benefits of moving to a system of quarterly statements upon request are not immediately obvious and could have the unintended consequence of increasing costs or restricting flexibility in the frequency of information.
The appropriate arrangements are set out at the time of the original contract, and I agree that these details should be clear and transparent at the time of purchase or engagement so that the customer knows how his or her bills and statements are to be provided. This is what the current law requires. So what is the case for change? The amendment requires that, notwithstanding the original terms of the contract, a customer can request at least four statements a year in written form, at any time of their choice, which could introduce a randomness into the billing process that would add to the administrative costs and could have undesirable side effects. That is probably not my noble friend’s intention.
Paper bills have never been free. Historically, there was just one way to pay and the fee for processing them was always included, obscured in the administrative costs of the utility and the charge spread across the customer base. However, of late, charges have been more transparent—partly due to advances in consumer law—and have been linked to specific costs and customer categories. Now cheaper to administer payment methods are available and utilities are seeking to incentivise their use by separating out costs and allocating them accordingly. The uncertainty that this amendment would introduce would be of disadvantage to online customers, for whom statements are readily available and can be printed if necessary. Many hard-pressed households welcome the opportunity to save money that paperless bills offer. Paying monthly by direct debit can also enable people to budget more effectively, rather than being faced with quarterly or lump sum bills. For them, the proposed statutory requirement set out in these amendments adds little but extra costs.
I agree, looking at the bill format, that the choice to have paper bills should be generally available, but when we consider the utility providers we can see that the choice is widely available. It is true that not all tariffs offer this option, but customers can and do choose to receive paper bills from their suppliers. So what is the objection? The issue lies with differential pricing, to which my noble friend Lord Hodgson referred—and on this I am afraid I must disagree. It is reasonable for a supplier to take the cost of processing bills into consideration when setting the price of its tariffs. Such decisions go to the heart of running a business and encouraging efficiency in the economy. It is undoubtedly more expensive for a business to print out and post bills to its customers than it is to deliver them electronically online.
It is not for the Government to dictate that certain costs cannot be accounted for and that the consequent burden instead should be placed on all the customers. It is surely reasonable for a business to incentivise its customers to use the cheaper processing mechanism by sharing the savings with customers. This amendment would outlaw that and almost certainly drive up the charges to online customers and perhaps to customers more widely. What does that do to our efforts to encourage more people online within the economy?
The noble Baroness, Lady Hayter, rightly mentioned how useful paper bills were as proof of identity. But, of course, that is not a primary function of utility bills. Other more reliable forms of identity are available to many people, such as passports and driving licences. Going forward, the Government Digital Service is leading work on the development of the ID assurance programme, which will enable people to prove their identity and access government services in a digital world. Bills can always be printed out from an account if they are needed. I thank the noble Lord, Lord Harris, for his comments on ID cards but that may be a debate for another day.
It is not entirely a debate for another day. I understand the arguments but the Minister is saying that to drive down costs is an unnecessary burden on the businesses concerned. If the requirement is for citizens to be able to prove who they are—and in most instances that is the case—they need as a second form of back-up a utility bill that gives their address. That is a problem that needs to be met. Are the Government arguing that that is not a fair cost on either the utilities, the companies concerned, or on the generality of consumers? As the Government are requiring that information and have created a situation in which we all need to prove our identity, the logic of the Minister’s argument is that the Government ought to be paying the utilities to provide us all with paper bills.
I note what the noble Lord said. That is fair but difficult logic. His points are well made. Perhaps we can come back to that question on another occasion, but I did emphasise that work is in hand on the ID assurance programme, which is very important if we are going to have a digital economy. We say that we are leading in Europe, so we should be doing this sort of thing as well.
What is being done to help people and businesses go online? A lot of work is going on across the public, private and voluntary sectors to help people and organisations get online, but digital exclusion is a huge issue. The digital inclusion strategy was published alongside the digital inclusion charter in April. It sets out 10 actions that government and partners from the public, private and voluntary sectors will take to reduce digital exclusion. There is quite a lot of good practice for the vulnerable and disabled that we may end up discussing in a little more detail.
Before I conclude, I return to the first point made by my noble friend Lord Hodgson concerning his experience of getting copies of BT bills. That is an experience I entirely empathise with, having had exactly the same issue when trying to prepare my expenses in the old days. The only thought I can add is that, like all sector regulators, Ofcom requires any charges to be cost-reflective. If a customer feels that a charge is excessive—I am not sure whether that was what my noble friend was saying—they can complain to Ofcom. Ofcom does listen to complaints. I believe it receives an average of only five complaints a month about paper bills, so not a huge amount of writing to Ofcom seems to be going on. That is obviously another avenue of public debate.