Consumer Rights Bill
Debate between Viscount Younger of Leckie and Baroness Oppenheim-Barnes
Viscount Younger of Leckie
We still want to make a distinction between consumers and businesses. We think that if we were to cherry pick and bring certain groups in to allow businesses to be included as consumers, that would cause confusion. However, I am very happy to talk to the noble Baroness again about letting agents and the specific point, as I know that she is much exercised by the issue.
The noble Baronesses, Lady Hayter and Lady Howe, my noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the important issue of the effect that advertising has on children as regards payday loans. First, let me be very clear that consumers will be far better protected under the new FCA regime. Logbook loan providers and other high-risk lenders are required to meet the standards that the FCA expects of them, including making affordability checks. The FCA rules are binding on lenders and the FCA has a wide enforcement tool-kit to take action.
My noble friend Lady Bakewell and the noble Lord, Lord Alton, raised the issue of advertisements. The FCA will not hesitate to ban irresponsible adverts, and it has a strong record of doing so. The Broadcast Committee of Advertising Practice is reviewing the extent to which payday loan adverts feature on children’s TV. Separately, the Financial Conduct Authority has set out new rules for consumer credit adverts and it has powers to ban misleading adverts which breach its rules.
The noble Lord, Lord Wills, asked about payday loan firms and cold calling. The FCA is committed to ensuring that cold calling by phone or e-mail makes clear the identity of the firm and the purpose of the communication so that the consumer can decide whether to proceed.
I thank my noble friend Lord Borwick, who raised an important point about consumers being made aware of the country in which a seller is based. Under the consumer contracts regulations 2013, traders in distance contracts, such as online sales, must make available information on their geographical address before a consumer buys from them. I have been in correspondence with my noble friend concerning his recent purchases with Amazon. I cannot comment on the experience of the particular transaction that has been raised but I can confirm that obligation, which I hope goes some way to answering his questions.
My noble friend Lord Clement-Jones asked about exempting intellectual property contracts from the Unfair Contract Terms Act 1977. I sympathise with the situation in which some creators find themselves, but we have not yet seen evidence that amending that Act would address the issue. First, we would need substantial quantitative evidence of a problem and, secondly, we would need to be sure that any such amendment would solve that problem without unintended negative consequences.
My noble friend Lord Clement-Jones also asked about brand owners protecting themselves against misleading look-alike packaging—an issue that I know we have spoken about in the past—on the grounds of intellectual property infringement and the common law tort of passing off. As he will be aware, my department, BIS, is reviewing the case for granting brand owners a civil right of action against copycat packaging and it is aiming to report in the autumn.
There has been some discussion today about the vital role that trading standards officers have in protecting the public. Issues were raised in this respect by the noble Lord, Lord Whitty, and the noble Baroness, Lady King. The Government strongly support the work that trading standards does to protect consumers from rogue traders and scammers. We have better equipped trading standards to take greater responsibility for consumer law enforcement by transferring central government funding to the National Trading Standards Board and Trading Standards in Scotland. Last year, we invested £14.5 million in these bodies to fund co-ordinated enforcement action across the UK.
We also want to develop a better understanding of the impact that trading standards services have on our economy at both the local and national level. Therefore, 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 a piece of research on which to build an evidence base on the economic, social and environmental impact of trading standards work, the impact that budget cuts have had on enforcement activity, and the efficiency of trading standards services across England, Scotland and Wales. The project will conclude in the autumn and the outputs will inform future policy considerations.
The noble Baroness, Lady Crawley, raised the question of trading standards publishing data. Trading standards will be able to name and shame a business, giving consumers more information to make better purchasing decisions. That is a key element of the new enhanced measures.
The requirement in the Bill for trading standards to provide 48 hours’ notice of a routine inspection was raised by the noble Baronesses, Lady Hayter and Lady Crawley, among others. I emphasise that this is about routine inspections; it is not about situations where there is any concern or suspicion that a trader is breaking the law. Other powers in the Bill can be used to check letting agents’ compliance with the duty to display fees. I also want to reassure the House that the powers and safeguards are designed to strike a balance—and it is a balance—between protecting civil liberties, reducing burdens on business and enabling enforcers to tackle rogue traders. Businesses, and particularly small businesses, welcome the requirement for notice. The Federation of Small Businesses has said that,
“booking inspections in advance … will allow the business to make the necessary arrangements … so that everyone gets the most possible from the inspection”.
However, I underline again that we have no intention of weakening the powers of consumer law enforcers to investigate rogue activities. That is why the Bill contains a number of clear exemptions from giving notice, such as where doing so would defeat the purpose of the visit—for example, when investigating the sale of illegal tobacco or the production or transit of fake food. Consumer law enforcers will still have more powers to enter premises than the police.
I turn now to an issue I know exercises a number of noble Lords, which is the right to receive bills in paper format. It has been raised today by the noble Baroness, Lady Hayter, and I know it certainly exercises my noble friend Lady Oppenheim-Barnes. I have heard the views expressed in this debate, and empowering consumers is a key objective of the Bill. My department is in the process of commissioning research regarding the issues that help and hinder the empowerment of consumers. We aim to use this research to identify the key target groups of consumers in need of greater assistance and the best ways to reach out to them. I can reassure the House that we will consider the comments made today alongside the conclusions from the research and act accordingly if this suggests the need for further thinking. Let me make one thing clear. There is no penalty for choosing paper—instead, people simply do not receive a discount. Choosing paper bills retains an additional service for those who wish not to take a paperless bill discount.
Baroness Oppenheim-Barnes
I apologise but I must interrupt my noble friend. That is not true. Clearly, at the end of a BT bill there is an item called, I think, charges for processing this bill. That means sending a piece of paper.
Viscount Younger of Leckie
I know that this is probably going to lead to some more discussions offline about this issue. My answer is that my noble friend then has the right to change supplier if she is not happy with that particular supplier.
Viscount Younger of Leckie
It sounds to me as if she has done so. We must also remember that many hard-pressed households welcome the opportunity to save money that paperless bills offer them—which is the other side of the coin—and the Government want this option to be available to consumers.
My noble friend Lord Clement-Jones, the noble Lord, Lord Stevenson, and the noble Baroness, Lady Howe, spoke eloquently about the important new statutory rights for consumers buying digital content. As has been shown, there are competing arguments and a balance to be struck. The digital content provisions are reasonable and principles based. They require that traders put right faults free of charge or, failing that, give some money back. That is what reputable digital content businesses already do. Not all bugs would automatically render digital content faulty, as the magazine Which? recognised:
“consumers are very accepting of updates and patches”,
and,
“would be able to tell the difference between a faulty piece of software and one that is just evolving”.
The noble Baronesses, Lady Hayter and Lady King, and the noble Lord, Lord Stevenson, asked about the impact of the services provisions, especially on public services. This point was quite strongly made. As Peers will know, this issue was discussed at length in the other place. My colleague Jenny Willott has written to set out the position, which is that where a public service is provided by a trader to a consumer under a contract, the services chapter of this Bill applies. That is why our impact assessment of this part of the Bill was comprehensive and covered all sectors. That assessment shows significant benefits—of £33 million per annum—to consumers.
The noble Lord, Lord Alton, raised an interesting point—and at this point I hope my noble friend Lady Oppenheim-Barnes can be persuaded to listen carefully—about the safety of embryos, if I can paraphrase the points the noble Lord raised. We are considering the report mentioned and we will announce our plans as soon as possible. My honourable friend in the other place, Jenny Willott, has already assured the other place and I can assure noble Lords that any proposed regulations on this matter will be subject to debates in both Houses under the affirmative procedure.
The noble Baroness, Lady Howe, asked about an update on the voluntary agreement on preventing unlicensed gambling providers. I will ask my noble friend the Minister for Culture, Media and Sport to reply directly to the noble Baroness.
The noble Baroness, Lady Drake, said that prominence is not sufficient to ensure that consumers understand the terms. We agree that terms should be written in language that consumers understand and that is why all terms must be written in plain and intelligible language. We will be giving guidance on what prominence requires and how it is defined. Business prefers this guidance to detail on the face of the Bill.
The noble Lord, Lord Whitty, who spoke in the gap, raised the issue whether consumers have access to collective redress for breaches of consumer law. Our proposals on enhanced consumer measures offer a more flexible, balanced and proportionate approach with a wider range of remedies.
I am fast running out of time. I will write to noble Lords whose questions I have not managed to answer. I conclude by underlining once again how vital this Bill is for empowering consumers, promoting competition and encouraging growth, which so many Peers have emphasised today.
Public Bodies (Abolition of the National Consumer Council and Transfer of the Office of Fair Trading’s Functions in relation to Estate Agents etc) Order 2014
Debate between Viscount Younger of Leckie and Baroness Oppenheim-Barnes
Baroness Oppenheim-Barnes
My noble friend will remember that in Committee during consideration of the then Enterprise and Regulatory Reform Bill I cited the amount of money that I made available to Citizens Advice in 1979-80 because of a small increase in its duties. It was £3 million then, which, in terms of what is being given now, causes me great concern. All members of citizens advice bureaux are not necessarily well versed in consumer affairs—they have other qualifications. If situations arise in which they do not know what to advise, who are they going to ask to tell them?
Viscount Younger of Leckie
I should like to write to my noble friend to clarify that question and give her more detail about the transfer. I hope that I will be able to give her some figures and will copy in other noble Lords to provide further details. I hope that that gives my noble friend some reassurance.
The noble Baroness, Lady Hayter, suggested that the provisions in the order do not provide—
Consumers: Vulnerable Consumers
Debate between Viscount Younger of Leckie and Baroness Oppenheim-Barnes
Viscount Younger of Leckie
Interestingly, this is not an area where regulators receive many complaints and more vulnerable customers often have access to special tariffs. However, the noble Baroness raises an interesting point. I understand, for example, that BT charges £1.50 for paper bills, which relates largely to its broadband customers who clearly have internet access and can receive bills online. We believe that the charge is reasonable, covering costs such as printing and postage. Customers using a BT basic telephone service are not charged for paper bills.
Baroness Oppenheim-Barnes (Con)
Is my noble friend aware that the noble Baroness, Lady Deech, is to be congratulated on raising this issue? The problem is very widespread. The Government are not to be congratulated. People of all ages often choose not to go online even if it is available to them. Charges are made by the utilities because you have to use that very expensive telephone line, which has the most often-played recording of all time which starts, “We are encountering an extraordinary level of calls”. That means the call will cost even more. That is only one of the things that consumers have to put up with. The excuse given by all who make those charges is that it is more efficient and they can therefore charge lower prices. I have not noticed that happening. This is an urgent matter and I hope that the Government will take it seriously.
Viscount Younger of Leckie
My noble friend makes a good point that clearly some people still wish to receive bills through the post. However, a number of organisations across the UK offer free IT skills training and cater for the elderly and disabled, including the UK online centres funded by the Skills Funding Agency. We are keen to encourage more people to go online.
Enterprise and Regulatory Reform Bill
Debate between Viscount Younger of Leckie and Baroness Oppenheim-Barnes(11 years, 8 months ago)
Lords ChamberRead Full debate Read Hansard Text
Baroness Oppenheim-Barnes
My Lords, I have to start my remarks with the words, “Oh dear”. We have reached a disappointing spot in the advance of the protection of consumers, with the part of the Bill to which the noble Lord, Lord Whitty, referred leaving out, as it does, all the references that he wants to add about consumer protection. One reason is that the CMA and the consumer body are very different from what exists today. There is direct access for consumers to the Office of Fair Trading. If that is not enough and can be improved, why not improve it? The same applies to all the competition clauses throughout the Bill. They may be good—some of them probably are—but I do not see that what exists today warranted such a total and revolutionary change in the way that these matters have been discussed, enacted and valued by those consumers, consumer organisations and others who have benefitted from it in the past.
The noble Lord, Lord Whitty, spoke in particular about the phrase “promoting competition”. I am not quite sure how you promote competition—I have no idea—but what is important is to ensure that there is protection against anti-competitive practices that are directly harmful to the interests of consumers. It is as simple as that. I do not see the proposed amorphous body getting to the kernel of the problems that will affect consumers.
The noble Lord, Lord Whitty, rightly said that the trading standards departments will need a great deal more financial support than they are likely to get. They are respected by consumers and others alike. They have dealt successfully over the years and most people have thought of them as among our most trustworthy and available resources. They are being given a much more important role, which I am content about, and I am confident that they will, given the right resources, be able to carry it out. They have had the experience and, as long as they are given the opportunity to digest the role, they will know what they will be required to do in borderline cases.
Once again I come to the point about access for consumers. This will now go because the Office of Fair Trading is going. Apparently, collections will be made from the experiences of citizens advice bureaux and of the trading standards officers themselves. They will receive information about the big consumer concerns that will confront them but, once again, there is no clear process in the Bill—and certainly not the funding—for the citizens advice bureaux, which are all staffed by voluntary and diverse workers, to go to their top echelons. They will have to collate the information and carry out research on it, which they have not yet had to do to such an extent, and then pass it on to the trading standards officers. They will discuss it with them and then decide whether the matter—it could be a competition matter—should go to whichever of the respective bodies. That will be their responsibility.
As I pointed out in Grand Committee—I apologise for raising this matter again—the funding of the National Association of Citizens Advice Bureaux, which was announced by the noble Lord, Lord Marland, at Second Reading, was going to be £1.7 million. I was able to look up the figures for 1979, when we were closing some citizens advice bureaux. The National Association of Citizens Advice Bureaux said that it needed more money, and I gave another £1.7 million then, making the amount up to £3 million altogether. In today’s money, goodness knows what that would be. Since Grand Committee, I have looked even further and have found that in 1981, while the process was still going on, I increased funding to £4 million for the citizens advice bureaux alone. If it cannot do its job properly because it has not got enough money, then the whole chain of information going down through trading standards, to the CMA, to whoever will be receiving it, will not have strong enough links. I hope that my noble friend will be able to tell us something encouraging about that.
I do not propose to say anything about the Monopolies Commission replacement part of the CMA at this stage. That may be more appropriate later.
Viscount Younger of Leckie
My Lords, Amendments 40, 41, 47 and 48 recognise the importance of consumer protection and consumer interests and I thank the noble Lord, Lord Whitty, for the opportunity to debate this important issue. I also know that the noble Baroness, Lady Hayter, has spoken strongly in favour of consumer rights and I note and acknowledge her interest in this area.
As we said in Grand Committee and in the other place, empowering and protecting consumers is a vital element of our approach to promoting growth in the UK economy. Indeed, in the coalition agreement, the Government committed to take action to protect consumers, particularly the most vulnerable, and to promote greater competition across the economy. That is why we have put consumer interests at the heart of the CMA, and in particular, by the following: first, by giving the CMA a single general duty to seek to promote competition for the benefit of consumers; secondly, to retain the OFT and Competition Commission’s markets powers that aim to make markets work better for consumers; thirdly, by giving the CMA primary expertise on unfair contract terms legislation and additional consumer enforcement powers to address business practices that distort competition or impact on consumer choice in otherwise competitive markets; and lastly, by transferring the OFT’s super-complaint function, which provides a fast track process for complaints by consumer bodies.
Given the vital role the CMA will play in protecting and promoting consumer interests, and this vast range of consumer functions, we do not consider that these amendments are required. Further, in some respects the amendments could produce the wrong result. Amendment 40 cuts across existing legislation where the CMA is required to consider a range of objectives. For example, in carrying out its regulatory appeals functions, the CMA must take into account the objectives of the sector regulators, which may include media plurality or energy security. A requirement for consumer benefit or detriment to be paramount in all its operations might therefore cast doubt on the ability of the CMA to carry out its regulatory appeals functions fairly.
Amendment 40 would also provide that “consumers” include SMEs where appropriate. While I agree with the sentiment, I do not believe that it is actually necessary to deal with SMEs in this way. The existing legislation has not to date constrained the OFT from considering business to business markets, because if there are competition issues in these markets they will usually ultimately affect end consumers as well.
With regards to Amendments 41, 47 and 48, as a core function of the CMA, I expect the board and panel members to have great expertise in consumer issues. However, it would be inappropriate to establish a legislative criterion of this kind for appointments to the CMA board and CMA panel. We should not impose unnecessary constraints on the sort of people who can be appointed to these. As is currently the case for the Competition Commission panel, we expect the CMA panel to be made up of a range of experts, such as lawyers, economists, accountants and business people. Between them, they have the range and depth of expertise to deliver on inquiries across the economy, including on consumer issues and different markets.
I now turn to Amendment 44. In the current regime, the OFT is not subject to a statutory requirement to estimate impact on consumers in relation to its work. At present the OFT and Competition Commission estimate the impact of their past work on consumers over a rolling three-year period, using a common approach. Looking backwards helps to make the impact estimates more precise, and looking over three years helps level out peaks and troughs in impact. Requiring the CMA to estimate impact of its future work would be significantly less precise and in many cases difficult to forecast. Merger cases, for example, are responsive to market developments, and the CMA cannot pre-empt the outcome of independent market inquiries. This amendment could also leave the CMA at risk of judicial review if forecasted consumer benefits were not realised, and it could incentivise CMA to underestimate, and underachieve.
On Amendment 51 we do not consider that the OFT’s function to promote “good consumer practice” needs to be transferred to the CMA. As we said during our debate in Committee, in the current regime, Section 8 of the Enterprise Act 2002 gives the OFT a general function of promoting good consumer practice, which recognises its leading role in providing consumer education, its function in relation to approving consumer codes and its international consumer advocacy work.
In the new consumer landscape, the Citizens Advice service will take the lead role in providing consumer-facing education from the OFT as well as taking over responsibility for consumer advocacy from Consumer Focus; the Trading Standards Institute will have the role of approving consumer codes. The CMA will continue to have an international consumer role—for example, to represent the UK at the OECD’s Committee on Consumer Policy. A specific provision has been made for this in paragraph 19 of Schedule 4 to the Bill.
Baroness Oppenheim-Barnes
At the beginning of his response, my noble friend said that the fast track would be a helpful element in the Bill. I have looked everywhere but I cannot see anything about a fast track. It would be helpful if he could tell us a little more about it. Who is at the beginning of it and who is at the end, and where is the information coming from?
Viscount Younger of Leckie
I thank my noble friend for that point. Given that it is a very specific question, I will most certainly write to her.