Consumer Rights Bill

Baroness Neville-Rolfe Excerpts

Wednesday 26th November 2014 Lords Chamber

[Lord Maxton (Lab)]

My Lords, I am looking for one small piece of clarification on this. I fully support these amendments, as someone who suffers from cold calling. Despite having set up a service that is supposed to stop it, I still suffer from it, both on my mobile phone and on my landline at home. However, there is a particular issue with this place. When someone phones out from here, it comes up as an unrecognisable number. It does not give a telephone number, so of course my wife now waits until the phone has rung about five or six times before she answers it because she is worried that it might be a nuisance call. It may be that this would be covered under proposed new Regulation 10A(5) in my noble friend’s amendment, which says:

“Where OFCOM determines that there are reasonable grounds to exempt a non-domestic caller or group of non-domestic callers”,

then it would give an exemption. However, there is a small problem with this place—there may be other places or other public bodies in a similar position—as it would be wrong to identify that the number comes from the Houses of Parliament. That is obviously for security reasons, but I hope that I can get some sort of assurance on that.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)]

My Lords, I thank the right reverend Prelate the Bishop of Birmingham for presenting the right reverend Prelate the Bishop of Truro’s amendment with such clarity, oratory and, if I may say so, brevity. I also thank the noble Lord, Lord Alton, for his telling contribution and the noble Baroness, Lady Hayter, for her contribution to our debates on unsolicited calls and nuisance calls and for the examples that she has given, which I will not seek to repeat.

Amendment 48 combines two matters which concern us all deeply: payday lenders and nuisance calls. It brings those matters together and I have listened to many eloquent speeches on it, so I hope noble Lords will not mind if I take the time to reassure the House that the Government share their concern, including the impact of cold calling on the vulnerable and on family life. In terms of payday loans, it is worth reiterating that the Government have introduced a wide range of reforms. That includes the Broadcast Committee of Advertising Practice’s review, which will be enhanced following the discussion that we had on the earlier amendment.

The Government’s action also includes the transfer of regulation to the Financial Conduct Authority earlier this year. That independent regulator is already having a dramatic impact on the payday loan market, with tough rules such as the limit on rollovers and more rigorous affordability assessments, and far closer supervision.

The regulator also has a wide-ranging enforcement toolkit to take action where wrongdoing is found. Recent high-profile redress schemes, such as the recent cases involving Wonga, show that payday lenders will not be able to get away with failing to comply with the FCA’s rules. The FCA’s tougher regulatory approach has had an impact, with the volume of payday loans shrinking by over a third since April.

However, the FCA is not standing still; it has a clear plan of action to continue to tidy up this sector. Noble Lords have already mentioned several of the actions. From next week, all payday lenders will be required to start applying for full FCA authorisation, in which the FCA will rigorously assess firms’ compliance and the appropriateness of their business models. Firms which do not meet the FCA’s threshold conditions will not be allowed to operate. As my noble friend Lady Jolly has already described, the FCA’s cap on the cost of payday loans comes into force on 2 January—my birthday—and it will have a dramatic impact.

On the specific issue of payday lenders’ and brokers’ use of unsolicited marketing calls, the FCA shares the concerns of all of us. Payday loan firms are subject to the existing rules under the Information Commissioner’s Office, as well as the measures in the Government’s Nuisance Calls Action Plan. The FCA also has rules in place that require payday loan firms to ensure that calls are made only at an appropriate time of day and to make clear at the outset the identity of the firm and the purpose of the communication.

However, today I can announce new measures. As part of the FCA’s clear and ongoing plan to tackle sources of consumer detriment in the payday loan market, next year it will consult on payday loan firms’ unsolicited marketing calls. This consultation will be undertaken in the early summer, following the closure of the authorisation “landing slot” for payday loan firms. The FCA has written to me committing to this, and I am happy to place its letter in the Library of the House. The consultation will specifically include looking at whether these calls should be banned. The FCA will also take a close look at payday loan firms’ use of other unsolicited communications, including text messages and e-mails.

To conclude on this amendment, the industry is already seeing dramatic changes. We look forward to the continuation of the FCA’s work in the months ahead and to hearing the results of the consultation that I have just announced. As the right reverend Prelate said, it is important to act quickly and to be persuasive in this complex area.

I turn to Amendment 50A. As noble Lords are aware, concerns about unsolicited marketing calls relate not just to payday lending. I doubt that there are any of us who do not suffer regularly from the frustration of receiving nuisance calls, whether they are about PPI insurance or whether it is someone trying to sell you solar panels or double glazing. Some of these calls can be genuinely alarming, particularly for the elderly—people such as my father, aged 93—making them very reluctant to answer the phone.

It is worth reminding the House that there are strict rules in place governing the activities of direct marketing companies. Callers must not call people who have registered with the Telephone Preference Service register. They need to obtain prior consent for automated marketing calls, e-mails and fax messages. Consent to such calls is a point picked up in the amendment. I reassure the noble Baroness that if prior consent is not sought, there are tough penalties—I do not think that everybody knows that the Information Commissioner’s Office can issue a monetary penalty of up to £500,000. However, some firms are ignoring these requirements, leading to many unwanted calls. That is one reason why we are working closely with regulators, consumer groups, communications providers and parliamentarians to find ways to stop this law-breaking. This is starting—but only just starting—to make a difference.

It may help if I briefly set out some of the action that the Government have taken under our Nuisance Calls Action Plan, published in March. We have made it easier for consumers to find out how to complain on regulators’ websites. Also, we have ensured that nuisance calls are treated as a priority by the Information Commissioner’s Office and Ofcom. They are taking enforcement action, including issuing significant penalties to organisations found to be breaking the rules.

We are also tackling issues that have been hampering enforcement. In July this year, we amended the Privacy and Electronic Communications Regulations to allow Ofcom to disclose information to the Information Commissioner about organisations breaching the regulations. We are currently consulting on proposals to make it easier for the Information Commissioner to take enforcement action against organisations breaching those regulations. Enforcement in this area is patently hugely important and must be improved.

Currently, there is a requirement to show that substantial damage or substantial distress has been caused. We are proposing, as the noble Baroness said, to lower—or preferably remove—the legal threshold which the Information Commissioner needs to show when taking action. Which? has done great work in this area and is leading a task force considering consent and onward sales that are believed to be the cause of nuisance calls being made to consumers. It will report to the Government next month.

A further important aspect of the issue is, as the noble Baroness, Lady Hayter, has said, identifying who is making unwanted calls when the caller line identification is withheld. This is one of the main issues behind the noble Baroness’s amendment, which seeks to require non-domestic callers to present CLI for all calls. The noble Baroness knows that I very much share this objective. As she says, it is very difficult to complain to Ofcom or to your provider about a caller if you cannot see who is making the call.

Since this issue was raised in Committee, we have been looking very carefully at whether we can take further legislative action on caller line identification that is consistent with EU law—specifically the e-privacy directive, which allows direct marketing firms to withhold their number. Within some strict limits we do have the ability to derogate from the directive and restrict these rights. We have to demonstrate that this change is a necessary, appropriate and proportionate measure to prevent, detect and prosecute the unauthorised use of electronic communications systems, such as for callers making unsolicited direct marketing calls.

We are aware that Germany has already legislated within this derogation. I note what the noble Baroness said about France and Italy. I am therefore pleased to say that we are now satisfied that we can seek a derogation from the e-privacy directive to impose a requirement to provide CLI on any person making unsolicited calls for direct marketing purposes. The Government will therefore commit today to bring forward secondary legislation to amend the Privacy and Electronic Communications Regulations in the coming months, following an appropriate consultation.

While we will require caller line identification to be provided for marketing calls by committing to such legislation, we do not think it would be right to require caller line identification display services to be free of charge as proposed in the amendment. This service does cost providers money and we think it is a commercial decision as to whether they offer it separately or as part of a package. I am happy to say that TalkTalk already provides free caller line identification display and BT customers can obtain this service for free if they have signed up for a 12-month contract. So consumers can already opt for a free service. I expect others will offer this in view of the legislation we now plan on caller line identification.

As I hope I have shown, the Government take the issue of nuisance calls very seriously, and I have outlined the areas where we are taking action to tackle the problem of payday loans and more generally. We have responded to the specific concern raised in Committee—a very fruitful discussion, I should say, and I thank all those involved, especially the noble Baroness, Lady Hayter—about requiring mandatory caller line identification for marketing calls by committing to bring forward new legislation.

I hope the robust package of protections I have outlined today, and the FCA’s continued commitment to root out the bad practices we have all been discussing, reassures noble Lords, and that the right reverend Prelate will withdraw his amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, Amendment 49, which we support, would amend Section 3 of the Communications Act 2003, requiring Ofcom to promote competition and consumers’ interests by introducing a gaining provider led—or GPL—switching regime to the communications market.

It is obviously clear from what we have already heard and what we heard in Grand Committee that simple switching processes are vital to the health and future of all markets. While banking and energy customers are able to switch by contacting their new provider of choice, in mobile, pay TV and broadband customers have to contact their original provider before switching. The current losing provider led process is complicated and slow, works against consumers and distorts fair and open competition.

What is this mystery all about? As outlined by previous speakers, we have a situation where the Minister assured noble Lords, when she responded to this debate in Committee, that the Government have considerable sympathy for GPL switching in the UK. She said:

“In the Connectivity, Content and Consumers paper published last year, we emphasised that we want that across the board”.—[Official Report, 5/11/14; col. GC 692.]

That seems to be a supportive statement. Given that GPL switching already operates for fixed-line voice and broadband services delivered over the BT Openreach network, it is incomprehensible that it does not yet operate for mobile services or for pay TV. In Grand Committee, the Minister said that Ofcom had the power to mandate GPL switching for all communications services. However, as we have just heard, that does not seem to be Ofcom’s view. Indeed, so much does it disagree with what the Minister has said, it had to write to correct her after the debate in Grand Committee. It is worth quoting:

“We have said consistently that legislative reform to support GPL switching would enable us to address switching issues more quickly and directly, and make it easier for consumers to take advantage of the competitive UK communications market. Therefore we were pleased both with the government’s full support for Gaining Provider Led switching”—

in the July 2013 paper—

“and with the subsequent amendment tabled by Lord Clement-Jones … which would give effect to this aspiration by giving Ofcom a clear duty to mandate GPL switching”.

It is clear that Ofcom not only feels it does not have the power, but would welcome the certainty provided by legislation in the Bill. I suspect that that has more to do with the fact that this is a very litigious market within which a number of providers will probably seek judicial review on other issues if there is any doubt at all over whether the powers exist. It seems not so much a Christmas present but a necessary condition for the improvement of our markets that we should go ahead with this. I do not understand why the Government are reluctant to do so. I hope that they will be able to clear this up by supporting the amendment.

[Baroness Neville-Rolfe]

My Lords, as someone who has switched provider recently, I have seen at first hand how important it is to make the switching process easier for consumers. I empathise with people who are troubled by this, but I believe that we are close to solving the issue. Obviously the consumer is at the heart of our efforts and I am as keen as other noble Lords to make progress. I hope that I have some good news.

I am aware that Ed Richards has written to support the principle behind the amendment and I have also heard what he said to the parliamentary committee. As a result of that correspondence, we have had subsequent discussions with Ofcom. It has confirmed that it already has sufficient powers to deal with mobile services, on the same basis as it already deals with fixed line and broadband, which I will mention. We will want to see the conclusions of Ofcom’s current call for inputs before deciding what legislation is required for pay TV and bundles, but pay TV is not the issue that we are debating.

While I understand the concerns behind my noble friend’s amendment, I believe that it is not necessary, given Ofcom’s existing functions under the Communications Act 2003. Ofcom announced in December that RPL switching would be mandated for all providers delivering broadband and fixed telephony over the existing copper network. Work has started and full implementation of it will be completed by June 2015. Because many consumers now subscribe to telephony as part of a bundle of services, it does not make sense to focus on telephony alone. In July, Ofcom published a call for inputs to understand better the processes used to switch providers of bundled voice, broadband and pay TV. It will also hold discussions with the industry and consumer organisations, and, to respond to my noble friend Lord Stoneham’s question about the timetable, it will publish a document setting out the results in the first half of 2015. Ofcom will consult further and as appropriate on mobile and bundled services with a view to mandating RPL switching.

I share my noble friend’s concerns about RPL switching, but a short-term partial solution is not the answer. I can assure him that we are fully engaged on this matter with Ofcom and we will continue to be so. Given that progress, and everything that Ofcom is achieving with its existing powers and the ongoing work to move towards a system of RPL switching across the board, I ask my noble friend to withdraw his amendment.

[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.

--- Later in debate ---

It is great that some people can pay electronically. My guess is that they do so for their own convenience rather than for savings. They are likely to be younger and slightly savvier people who have a lot of advantages in life anyway. Do the utility companies have to make life difficult for the rest of us who want paper bills and to use cheques in order to encourage those who can to take up the electronic option? I doubt it. For the moment, we should look at all citizens and ensure that they can receive their utility bills by post and pay them promptly by cheque.

[Baroness Neville-Rolfe]

My Lords, we are living in a digital age, and many of us welcome the convenience of receiving and settling bills online. I have had an interesting discussion with my noble friend Lady Oppenheim-Barnes about the many issues she raises, and I certainly understand that many people want a paper bill. As she says, not all people can manage online, and we empathise with them. As the noble Baroness, Lady Howarth of Breckland, said, some people have no relatives to help. I also take the points made by the noble Baroness, Lady Hayter, about the poor and the vulnerable. However, all utility companies will give a paper bill on request. Bills can also be settled by cheque, which was another point made in the amendment, although I accept that certain payment types may attract discounts.

I was glad to hear from the noble Lord, Lord Clarke of Hampstead, about the importance of the universal postal service and that he found our exchange of correspondence helpful. Perhaps I may write to him again on the point that he raised. Some noble Lords referred to identity. Although paper bills are useful for the purpose of establishing identity, that is not their primary function. More reliable forms of identity are available, such as passports and driving licences. Going forward, as regards the transition, 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. That is an important bit of long-term work.

I have mentioned the availability of paper bills and I should summarise the current position in each of the utility areas. In water, companies do not make a charge for paper bills and offer a choice of payment methods including cheques. In telecoms, blind or visually impaired consumers who have requested bills in an accessible format, such as large print and Braille, and consumers on social tariffs, such as BT Basic, are not charged for paper bills. Ofcom requires that if there are charges for paper bills they must be set out in a clear, comprehensive and easily accessible manner and providers must publish clear and up-to-date information on these charges. In energy, paper bills are available and companies are already required under the terms of their licence to ensure that any differences in charges to consumers between different payment methods reflect the cost to the supplier.

I do not want to play party politics but we have reduced energy bills, and of course the energy companies have been referred to the Competition and Markets Authority. I am sure that we will all be very interested to see the progress of its study. As to other communications providers such as broadband, while paper bills might not always be provided, the main suppliers such as BT and Sky make them available and all companies must make a basic level of itemised billing available to all subscribers on request, either at no cost or for a reasonable fee. It is worth noting that the nature of these services is, of course, online.

In my very good meetings with my noble friend Lady Oppenheim-Barnes on various amendments to the Bill we discussed a number of the issues that are before the House in this amendment. I understand my noble friend’s analysis that paper transactions can sometimes cost relatively little, and I can agree that it is sometimes costly for a utility to sort out a problem caused by queries, for example a failure to pay electronic bills. However, these are not many cases compared with the total volume of bills. The reality is that utility companies save money by communicating electronically with consumers. That is a cost saving which is then passed back to consumers. As the noble Lord, Lord Stoneham, said so elegantly, that is occurring at a time when the cost of living is a really important issue. According to the Digital Efficiency Report, transacting online with the government will deliver more than £1.1 billion in savings because the average cost of a digital transaction is 20 times lower than on the phone, 30 times lower than a postal transaction and 50 times lower than face-to-face contact.

[Lord Tebbit]

I wonder if I could make a helpful suggestion. Perhaps the Minister could suggest to the utility companies that, before they start to charge customers for issuing paper bills, they will guarantee that they will stop pestering customers with letters to “The Occupier” offering their wares. After all, it must be enormously expensive to do that. So they could save some money there, and that would help cover the costs of what my noble friend would like.

[Baroness Neville-Rolfe]

I thank my noble friend for his intervention and indeed for that suggestion. The whole business of costs, benefits and so on in this changing world is a very important one and the obvious answers are not always the right ones. I was trying to say that the savings are considerable and, with direct debit in particular, there are savings on both sides. In fact, 50% of those in fuel poverty use direct debit to spread the costs—so there are advantages. I do not want to discourage firms from innovating to protect and empower consumers in different ways. I do not want firms to get the message from this House that we are the enemies of progress. We have to be careful about that.

[Baroness O'Cathain]

The figures my noble friend gave us about the cost savings of doing it online in comparison with paper bills did not take into account the cost of installing broadband and buying computers to be capable of going online.

[Baroness Neville-Rolfe]

I agree that broadband is a substantial investment. The Government and the utilities are putting a large amount of investment into a broadband structure, not least—I used to campaign on this when I was on the Back Benches—to ensure that there is proper broadband right across the UK. There are obviously costs to consumers in change but it is extraordinary how the cost of software, smartphones and so on has come down as a result of our innovative industries in the UK demonstrating great progress.

Transparency is also important. If utility providers choose to make a charge for providing a paper bill or for settling bills by a more expensive payment method, the law requires that these additional charges be made clear to customers before they are bound by a contract. We are working on this. We are not standing still. The regulators keep a close eye on charges to customers and on the issue of choice and there is a good deal of work going on in this area. For example, Ofcom has announced that it will be collecting further information on energy suppliers’ approaches to settling price differences between payment methods. When Ofwat approves water companies’ charges each year it makes sure that the companies offer a reasonable range of payment options. Ofcom published research in July which looked at the affordability of essential telecom services. It found that the cost of the itemised bills was not a material concern to its customers.

Turning to the amendment in detail, I shall explain why I cannot accept it. There are legal constraints, particularly from European directives, which would prohibit legislation in the manner proposed. My noble friend Lady Oppenheim-Barnes mentioned the French and Spanish legislation in this area and the excellent staff in the House Library have provided a note on that. It records that the French Minister made an order regulating billing for electronic communications services—that is, calls, text messages and the internet. However, some of the parallels stem not from the consumer rights directive but from French national policy under French law. We have already fully implemented the consumer rights directive in the UK—that is the directive to which my noble friend referred—and that process was completed in June. I should add that the consumer rights directive requires the provision of pre-contractual information on a wide range of matters before the consumer is bound by a contract. However, it does not require bills to be provided to the consumer in paper form. I just wanted to clarify the legal position.

Although I agree that we need to think about the interests of the 7 million people who are not online, what really matters is getting people the best advice and putting them on the right tariff. Citizens Advice is seeking to help people to do that, as are the comparison sites to which the noble Baroness, Lady Hayter, referred, and to save significant sums of money. The key message we should take away from today’s debate is how much you can save by being on the right tariff.

As I have said, the Government cannot support the amendment but I want to take action in this area. I thank the noble Baroness, Lady Oppenheim-Barnes, for promoting the importance of choice for a paper bill and the need to keep a close watch on this important issue. We also need to ensure that the pace of change is not so fast that it is detrimental to consumers, a point well made by several noble Lords.

I announce today two things. My honourable friend the Minister for Consumer Affairs will ask Citizens Advice and Citizens Advice Scotland to develop new guidance on this issue. This means that when a consumer phones Citizens Advice or CAS with a concern, the staff have useful relevant information to help the consumer. The Competition and Markets Authority has agreed to follow up its recent work on problem debt by considering further practices or markets that may generate particular problems for consumers with low incomes. If lack of access to paper bills is highlighted as an issue, the Government would look to act further.

In conclusion, I do not agree with the terms of the noble Baroness’s amendment, although I value all she has done during the passage of this Bill and in her long career as a consumer champion. The world is changing. We cannot and should not try to prevent that. But paper bills and cheque payments are available and we are taking action shortly through the Small Business, Enterprise and Employment Bill to make accepting cheques more attractive to business. I have set out in detail what is being done to protect choice and I have announced some action today as a result of the contributions that have been made by my noble friends and others during the passage of the Bill.

I warmly thank the noble Baroness, Lady Oppenheim-Barnes, for making this debate possible, but I ask her to withdraw her amendment.

[Baroness Oppenheim-Barnes]

My Lords, I thank the noble Baroness for the amount of time that she has spent on this issue with me. I also thank her for not making more public some of the arguments that I put forth when we met privately.

We shall have to do this. The fact that the French have taken one road and the Spanish another does not solve anything. The directive says that when a contract is embarked on its details can be provided in a way appropriate to the means of the person and should be given on paper unless other requests are made. Identity proof by passport or driver’s licence immediately knocks out most of the neediest people in the country: the elderly. They do not drive cars. They do not have passports. They do not go away. Those sorts of helps are not really any good to them. But the number of people in this country who still do not have broadband is about 1.7 million, so there is a big area of exclusion.

I am grateful to everyone who has contributed, and especially to my noble friend Lord Tebbit. His seal of approval is very important to me and to the House. Therefore, I think I really must test the opinion of the House.