Consumer Rights Bill

Baroness Primarolo Excerpts

Monday 12th January 2015 Commons Chamber

[Jo Swinson]

I beg to move, That this House agrees with Lords amendment 1.

[Madam Deputy Speaker (Dame Dawn Primarolo)]

With this we may take Lords amendments 2 to 11 and 13 to 78.

[Jo Swinson]

I am delighted that we are bringing the Bill back to the House in such good shape. There was a good debate in the other place and a number of amendments build on and improve the Bill. We listened to concerns in both Houses about consumers being out of pocket if they have to pay to return rejected goods, and as a result we agree that it is sensible to make it clear in the Bill that the trader bears responsibility for the reasonable costs of returning goods that have been rejected by the consumer. That provides clarity and sets a sensible balance between the parties, without causing significant burden to business.

The Bill has always contained a provision that if a consumer exercises the final right to reject, the trader may reduce the refund to take account of the use that the consumer has had of the goods, unless the goods are rejected in the first six months, in which case the general rule is that no deduction may be applied. That is intended to balance the interests of consumers and traders, and for that reason the Bill provides a limited exception to the general six-month rule. However, we understand the concern that that exception could be interpreted too broadly, and in response we have narrowed the exception to address specifically the impact on the motor industry.

The particular nature of motor vehicles may affect the balance between traders’ and consumers’ interests because cars are high-cost items that lose value quickly. They are also complex, so it is more likely that a car will develop two faults in the first six months than, for example, a piece of furniture. The option to make a deduction for use in the first six months is therefore particularly significant for traders in motor vehicles.

The amendments include a power to increase the scope of the exception if appropriate in future. We think that is important, as it is not possible to predict the goods and technologies that may develop. We are conscious of the need to reflect the dynamic nature of digital content. Many forms of digital content are not static products and change over time with updates to software and apps. The Bill provides that the digital content must meet the quality rights—satisfactory quality, being fit for a particular purpose and as described—following an update. We listened to concerns raised in the other place that as originally drafted the requirement could prevent traders from improving digital content or offering flexible products. That outcome would not be good for consumers, so we have clarified that the requirement does not prevent traders from adding new features or enhancing existing features, as long as the original description is still met.

We have amended the provision on digital content that causes damage to a consumer’s device or other digital content. That will allow traders to exclude or restrict their liability under the Bill for damage to the consumer’s device or other digital content, to the extent that it would be fair under the unfair terms provisions in part 2 of the Bill. That provision will apply even to free digital content, specifically when it causes damage and the consumer can show that the trader failed to use reasonable care and skill to prevent the damage occurring. We have clarified the maximum fining penalty that the regulator of premium rate services can impose on non-compliant and rogue operators, and we are making clear that where appropriate and proportionate, the regulator can impose the maximum fine for each contravention of the code. That maximum is £250,000, so in the event of a company making two serious contraventions of the code, the regulator could impose a fine of up to £500,000 if that was considered appropriate and proportionate.

We are determined to tackle the minority of rogue letting agents who offer poor service, and in Committee we added provisions to ensure transparency of letting agent fees, to give consumers the information they want while supporting good letting agents. It is important that that requirement comes into effect as soon as possible to ensure that tenants have certainty over the payments that they make, and for that reason we are putting the enforcement details in the Bill. We are also applying the duty on letting agents to publicise fees in Wales as well as England. That was requested by the Welsh Government and has the added advantage of minimising any cross-border enforcement problems.

Existing legislation requires landlords and letting agents acting on their behalf to protect the tenant’s security deposit. That is the most significant money likely to be held by an agent, but they might hold other money on their client’s behalf, which is why the Government already encourage agents to join client money protection schemes. Public awareness of that is not as high as we would like, so we are also requiring agents to state whether they are a member of a client money protection scheme.

From 1 October last year all letting agents and property managers must belong to one of our three approved redress schemes that provide tenants with an effective way to address complaints. We will now require letting agents to publicise which redress scheme they have joined. Those changes will level the playing field for agents by raising awareness of what best practice looks like, put downward pressure on fees, and provide consumers with the information they need without introducing significant new costs to the sector.

As set out in our 2011 White Paper on higher education, we are providing all higher education students who receive public support with access to external dispute resolution. That reflects the fact that increasingly, new and different providers are offering higher education, not just the traditional university sector, yet only a handful of alternative providers—seven in total—have so far voluntarily joined the Office of the Independent Adjudicator’s complaints handling scheme. We are making it mandatory for alternative providers whose courses are designated for student support to join.

I convey my grateful thanks to the Delegated Powers and Regulatory Reform Committee. It published the outcome of its scrutiny on 11 July 2014, and I was delighted to accept its recommendations that the exercise of certain powers in the Bill be subject to the affirmative resolution procedure, as reflected in the amendments. We also addressed concerns that current provisions for the appointment of the Competition Appeal Tribunal—or CAT—effectively exclude judges from the Scottish Court of Session or the Northern Ireland High Court. We have now ensured that Lord Chief Justices of England, Wales and Northern Ireland, and the Lord President of the Court of Session, may nominate any suitably qualified individual who is already a judge sitting in a relevant court to be deployed as a CAT chair.

We have improved provision for private actions in competition law. First, we are allowing the Competition and Markets Authority—the CMA—to approve an outline of a voluntary redress scheme, and for the business to create a full scheme afterwards. That is part of a wider Government initiative to promote alternative dispute resolution, and it allows responsible businesses who wish to make redress to those they have wronged an avenue to do so. The amendment allows the CMA to impose conditions necessary to set up a full scheme. If those conditions are not complied with when the full scheme is set up, the CMA can withdraw approval or consider a revised scheme.

We are enabling provision to be made for claimants to incur costs if they apply to have the representative to the action removed but lose the application. That is in line with the wider “loser pays” principle that exists in domestic law, and should deter vexatious applications. The Government recognise that during collective proceedings, not all damages are claimed. Therefore the Bill makes provision that the CAT may award unclaimed damages from opt-out collective action proceedings to a prescribed charity—currently the Access to Justice Foundation. Although the body to receive unclaimed damages may be changed, we are ensuring that it must always be a charity.

The Bill consolidates and simplifies important provisions on investigatory powers of consumer law enforcers, and the Government greatly value the vital work that enforcers such as trading standards do in protecting consumers and legitimate businesses. We now require enforcers to give two days’ written notice for routine inspections, and we have set out clear exemptions to that. We are firmly underlining that provision by putting it beyond doubt that notice need be given only for routine inspections, which is when there is no reason to doubt that the business in question is operating properly without any significant breaches of legislation. We have committed to review the practical effect of the notice requirement within two years of the commencement of the Bill. As a result, we are confident that the powers and safeguards strike the right balance between protecting civil liberties, reducing business burdens, and ensuring effective enforcement, and I invite the House to agree with the amendments.