Consumer Rights Bill

Lord Hodgson of Astley Abbotts Excerpts

Wednesday 22nd October 2014 Grand Committee

[The Earl of Lytton]

My Lords, I have considerable sympathy with the amendment, but I am not sure that I would advocate it in this form. I am very familiar with the cost of something being “from £X” and you find you have to order three dozen of whatever it is in order to get the £X. That has always been a bone of contention for me. Where I depart from the noble Baroness is when it comes to an area of my own expertise, which I shall use as an example.

In party-wall cases, where people want to undertake certain work to their building, they have to serve a notice on the adjoining owner, and if the adjoining owner does not agree, then the parties have to appoint surveyors to deal with the matter for them. That takes the two neighbours out of the frame, which is part of how the thing is designed to work. The person proposing the work is obliged under the legislation to meet the reasonable costs of the adjoining owner, which may include their professional fees. When a surveyor is faced with this situation, as I frequently am, it may be a building owner but it is normally an adjoining owner who rings up and says, “I have been served with a notice by our neighbour and I think I need a surveyor”. Assuming that it is a case which needs a surveyor and that they are not best advised to agree to the thing and let their neighbour get on with it, there is then the question of how to structure the fee that is dealt with.

There is a European directive on the provision of services. I forget its precise name, but I am sure that the Minister will know about it—I will find out if necessary and write to her. One of the things in it refers to the cost of the service provided or the manner of calculating it shall be set out—I do not know whether I am quoting that verbatim but it is something along those lines—along with all the other things, including the identity of the trader, the time taken to deliver the service and that sort of thing. The difficulty is that, until one gets on site, one does not necessarily know what one is faced with. You may take on a job and then find that the person promoting the work has a fly-by-night builder but has no engineer on site, yet they are doing things involving some quite serious construction that affects, for instance, party walls or adjacent excavation in an urban environment. You may conclude that they are not doing it safely. They may also have as their surveyor someone who is not that experienced and does not know what is supposed to be done. Then you end up having to hold the hand of the other person’s surveyor.

All this can run up costs which one did not anticipate at first, so providing full details of the total cost of the service in that instance would be nigh-on impossible. However, providing the mechanism for calculating it is perfectly reasonable. It so happens that, under party-wall legislation, the building owner carrying out the works is obliged to refund only the reasonable costs of the adjoining owner. There is that fall-back and it is obviously up to the surveyor to justify the reasonableness of whatever it may be—the hourly charge, the amount of travel, the frequency of visits and everything else. However, the total costs in such circumstances would be extremely difficult to pin down.

That might also happen in any other construction-related job where there are a number of variables and where, typically, you will have provisional sums in a building contract to cover certain things. Those might be based on a prime cost or just a spot figure, but they are subject to a demonstration of the amount of man-hours and materials that have gone into the job at the end of the day. Sometimes I get called in, as do colleagues, to try to deal with situations where the amount claimed is unreasonable because a contractor has an add-only calculator or the consumer is on a fixed budget and cannot agree to anything that exceeds it, and so on.

The idea is to get to having provisions that deal with the real world of things. I know that the noble Baroness, Lady King, has rightly pointed to a situation where you buy a product, such as the tickets to the theatre or whatever it is. Inevitably, services do not necessarily quite fall into that category. Yes, you can get a fixed price for doing your bathroom floor—I am sorry to go on about bathrooms but your Lordships get the drift—but other things are not capable of being drilled down to that degree of finesse. I would advise a bit of caution and flexibility in the overall approach.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have some sympathy with the noble Baroness. Who wants to upset their mother? My mother-in-law is 95 tomorrow; I am taking her to see “War Horse” and I have paid the surplus on the tickets, so I understand the point. I am particularly interested in Amendment 50G because you might be left on these phones for a long time while trying to enforce your rights. That is an interesting matter for the Minister. There may be existing legislation to deal with that issue but it is worth following through.

I am much more concerned about Amendment 48B, the lead amendment, because its wording seems to run exceptionally widely. Thinking about how this might work, to take another example, you may buy a service as part of a package of services and not wish to buy all that package at once. An alarm for your house might be a plain alarm but you might have sensors or lights outside. You might or might not have it connected to a central station. It might be wireless or with a cable. You buy the basic system and later decide to upgrade it. You have the same service, but I am not clear what the requirement would be for a supplier of such equipment to fulfil any additional services fees or charges that could be incurred by the buyer. The buyer could incur quite a lot of charges if they chose to make changes along the way. Would they then be able to use this measure as a basis for defaulting on or changing the contract?

I found the wording potentially rather alarmingly wide. What the Government have in Clause 50(1) as it stands deals with the issues which I think are in the back of the noble Baroness’s mind. Proposed new subsection (1B) in Amendment 48B contains the word “portrayed”. If the information is to be portrayed for an internet purchase, which is the example that the noble Baroness gave, that is going to be quite difficult.

Although I have sympathy with Amendment 50G, I think that Amendment 48B is probably redundant, and the Minister may well say that Amendment 50G is covered by another piece of legislation.

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Moved by

[Lord Hodgson of Astley Abbotts]

50: Clause 51, page 31, line 19, at end insert--—
“( ) A supplier must provide on request a written statement of account free of charge no more frequently than once per quarter.”

[Lord Hodgson of Astley Abbotts]

My Lords, Amendment 50 is a very broad, sweeping but probing amendment. It is designed to tease out the Government’s thinking on the position of those consumers who are increasingly being pressured to give up paper bills in favour of a paperless, usually direct debit system of charging. That is one of the two issues most frequently raised regarding consumer protection. Simply put, some people want to be told in advance what the cost of the service is to them. They want to be able to pay in the way that is most convenient to them, including by cheque, and they do not wish to be charged extra for using any aspect of that facility that they do not see as an optional extra.

To give a practical example, I have a bill from BT, which is headed, “How we worked out your bill”. After explaining that there is a charge of £48 for the service, it also explains that you get your phone line at a special rate. It gives a refund of £2 a month, which it says is shown on the bill—it is not shown, but never mind about that. Eventually it comes down to a £56 charge, and it then says “a payment processing fee”. That is the fee charged by BTPS, whoever it may be, for processing your payment. If you are in any doubt as to where you are being steered, on the right-hand side of the bill, in small type, it states, “To avoid future payment processing fees you can set up a direct debit at www.bt.com or call 0800 443311”. That fee is now £6 of £56, which must be doing quite a lot of good for BT’s profit margin.

It goes much wider than just individuals. In my work in the charity sector, one of the most common means—

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[Lord Hodgson of Astley Abbotts]

My Lords, before getting back to the issue of paper bills, I hope that I will not be out of order in congratulating the noble Baroness who is taking the Chair of our Committee for the first time this afternoon. I did not want to risk it until I checked with her in the Division Lobby.

I was explaining the importance of people being able to get a paper record of what they are being asked to pay, and not being charged extra for that or for how they make a payment. I pointed out that in the case I had in my hand, BT was charging £6 for postage and payment and indicating strongly that, of course, there was an easy way to avoid that by paying by direct debit. I am not clear how the £6 is arrived at, or why it should not ask for £10, £20 or £30. I am not clear who will protect me when it does that but we can tease that out during the debate. Perhaps one of the regulators would step in, and if so, I should be interested to hear how. That is my first point. The cost of having a paper bill delivered can be 10% of the amount charged, as in this case.

The practical example that I was about to give when the Division Bell went was about charities. Charities use a very simple procedural device to minimise fraud, which is to have two signatories on a cheque. It is very easy for smaller charities. It is pretty effective and costs nothing but, of course, it does not, and cannot work on the direct debit system. Indeed, when the Government, or the industry, decided not to proceed with the phasing out of cheques for two or three years, that was one of those issues that we raised strongly to ensure that the position of these smaller groups was protected.

In passing, the other great complaint that I cannot see how to tackle is the fact that people are infuriated by their inability to talk to a real, live person, and have to go through a veritable steeplechase of Qs and As, and buttons to be pressed. People can lose the will to live. I mention that only because we are discussing the Consumer Rights Bill. Clearly, the easiest way to deprive consumers of their rights is to establish a CRM system that discourages people from complaining except in the most extreme cases. I know that people say the market will work to sort this out, but I have not seen much evidence of that yet.

Returning to Amendment 50, it was previously grouped with Amendment 53 in the name of my noble friend Lady Oppenheim-Barnes, which is a much better-focused amendment than mine. She has used a scalpel where I have used a butcher’s cleaver. I look forward to hearing her comments on that amendment when we get to it at the next sitting of the Committee. I say that her amendment is superior to mine. It is in all but one sense: it is focused on utilities and does not mention banks. One of the most frequently required paper statements is that for a bank account. You often need one from a bank account because of money laundering and other purposes, and banks are beginning to charge for this. In particular, online banks are trying to find ways of charging for it. I hope that when my noble friend has a chance to read the record of these proceedings, before we meet again, she will think how she might wrap up the banks into her otherwise exceptionally well drafted amendment—

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[Lord Hodgson of Astley Abbotts]

Amendment 53, which we shall discuss at the next meeting of the Committee, is a much better focused amendment and I look forward to hearing the Minister’s reply to it. I hope that my noble friend can see a way to include the banks in it as well as the utilities, but for tonight, with this amendment and, I imagine, the amendment that the noble Baroness, Lady Hayter, is going to speak to—an amendment to this amendment—we at least have the chance to have a preliminary canter over the ground and see how the Government’s thinking is developing in what is a very important area and a very significant concern for a large number of our citizens, particularly those of the greyer variation. I beg to move.

Amendment 50ZA (to Amendment 50)

Moved by

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[Lord Hodgson of Astley Abbotts]

I am pleased, surprised and grateful to the Minister for telling me that I do get information about the costs of different billing in advance. I am sure that I do and that it is somewhere in the fine print, but it has not always struck me. I am also grateful for the reassurance that Ofcom will keep an eye on additional charges being made, which is the important thing. I suspect that only four people write because only four people know that Ofcom has a particular interest in this part of the Bill. Never mind—it is a step in the right direction. I am grateful to the Minister for all the information and I beg leave to withdraw the amendment.

Amendment 50ZA (to Amendment 50) withdrawn.