Consumer Rights Bill

Lord Best Excerpts

Wednesday 29th October 2014 Grand Committee

[Lord Deben (Con)]

My Lords, I hope that the Minister will listen to this very carefully. I will repeat for her interest an experience I had as a Minister when I sought to insist that the providers of telephonic communications should be able to withdraw the service to telephone numbers used by people advertising illegally in telephone boxes. This had become an increasing problem and it seemed not unreasonable that we should say that if you advertise a telephone number illegally in those circumstances, the telephone company might withdraw it.

One of the telephone companies took me to Ofcom, or the equivalent then, to say that this was contrary to competition and would create a cartel. With very great regret, the regulator said that it thought that the law did mean that. So this very simple way of removing very objectionable content in telephone boxes in the centre of London, which were very often used by young people, was stymied. I use the example so that my noble friend will recognise that this is an area in which very great care must be taken not to allow the very necessary protection for competition to interfere with the very necessary protection for other reasons.

The noble Baroness who introduced the amendment did so in a very broad-minded and sensible way, saying, “We just want to do this in order that the Minister will take it very seriously”. I just want the Minister to understand that this is much trickier than sometimes Ministers are advised. Having been through this, it is a very dangerous area to be in and the Committee will probably agree that we want both—protection of competition and protection of people so that they can make the choices that they want to make. There are many unscrupulous people around who will use the one to play against the other.

Therefore, will the Minister take it from me that it is much more difficult than is sometimes suggested, and that she needs to be on her guard in a particular way? I hope she will be able to answer the very pertinent questions that were raised by the noble Baroness.

[Lord Best (CB)]

My Lords, I have added my name to Amendment 56B. I was approached by the Internet Telephony Services Providers’ Association—ITSPA—because I chair your Lordships’ Select Committee on Communications. However, my committee has not had a chance to consider this particular issue so, having discussed it at length with ITSPA, which represents some 80 providers of telephony services via the internet, I speak in a personal capacity.

The amendment addresses a consumer rights issue relating to the penalties facing unwary customers of some of the companies that supply our mobile phone and internet connections. Unbeknown to those who sign up to get the internet from their iPhones and other mobile phones—unless they have studied all the small print and those terms and conditions that we all accept but have never read—some of the big players have built-in penalties for using the internet to make telephone calls—for example, through Skype. While providers such as BT, O2 and Sky, for example, have not adopted such practices and do not penalise their customers in this way, Vodaphone and EE have done so in recent years.

Presumably, the restrictive practices of these companies are a consequence of them providing mobile telephone services, which could be less popular and profitable if people use the internet to make telephone calls at a much lower cost. However, this practice is bad not just for the innocent consumer who can have their calls blocked or degraded, and/or could find some hefty charges on their mobile phone bills, it is also bad for this industry that finds it harder to attract investment to extend a really useful communication tool which, increasingly, could benefit more and more of us but has this cloud hanging over it. The practice is detrimental to consumer interests as well as anti-competitive and will gradually affect other services as we increasingly access the internet via mobile connections.

I note that amendments to this effect were tabled in the other place by both Conservative and Labour Members. We learnt there that the Government and Ofcom are keen to see an end to the current bad practice. We hear that in recent days Vodafone and EE have bowed to pressure from all sides and agreed to sign up to the industry’s code of practice which outlaws the technical blocking or restricting of telephone services through the internet. This is a step in the right direction. Nevertheless, as ITSPA points out, there are ways of interpreting this code of practice that could circumvent its intentions, for example simply by avoiding the term “internet access” and using a synonym such as “mobile data” or “mobile broadband”. There are also no sanctions for breaking the code, and those who voluntarily sign it one day can withdraw from it another. Only through legislation is the matter fully resolved.

As I know from the work of the Communications Committee, ensuring the law keeps pace with technological change—particularly in respect of the internet—is an important challenge for today’s legislators. This Bill takes steps in that direction and this amendment is very much a case in point. It seems that in the somewhat arcane world of telephony services, the consumer needs the protection of the law, not just of a voluntary code, to ensure fair play.

Finally, I gather that there is a school of thought that suggests we should await an EU directive on so-called internet neutrality—to which the noble Baroness, Lady Thornton, referred. That would cover this point, among other measures. However, I fear that we could wait a very long time for agreement on the content of this Europe-wide measure. Surely it is much better for UK citizens if the Government act now with a small, well-focused amendment to the Bill already before us. I am delighted to support this amendment.

[Lord Stoneham of Droxford (LD)]

Briefly, I lend my support to this amendment. Most of the points have already been made but wherever uncompetitive activity is trying to distort a market and deprive market entry to competitors it should be exposed and eliminated. Internet access should be open and consumers buying that service expect it to be so. Can the Government really achieve their objective of an open market without considering this amendment? Selective blocking is abhorrent to innovation and generally has uncompetitive motives. Consumers are not fully aware of the practices when ISPs and mobile providers undertake inhibiting their services. Ofcom has already indicated that it would welcome more clout against the blocking of or economic deterrents for internet services. It recognises that these practices should be unacceptable. The voluntary code of practice should be given statutory support.

--- Later in debate ---

Moved by

[Lord Best]

62A: Schedule 5, page 80, line 14, leave out sub-paragraphs (3) to (11)

[Lord Best]

My Lords, I declare my interest as a vice-president of the Trading Standards Institute, a post I occupy because I chair the council of the Property Ombudsman, which works with trading standards in relation to the world of estate agents and letting agents. I greatly welcome the Minister’s earlier announcement on fees. I also declare my interest as president of the Local Government Association.

The TSI welcomes the Bill and applauds the Government’s efforts to simplify and clarify consumer law. The real problem for the trading standards service is the startling decline in its manpower and budgets. Over the lifetime of this Parliament, the workforce will fall by almost half and budgets will be cut by an average of 40%. These reductions mean that we all face greater risk at the hands of rogue traders. New legislation needs to strengthen the hand of the remaining trading standards officers rather than in any way undermine their good work.

There are two areas of concern to the TSI in this regard. This is the first of two amendments in my name seeking to rectify these. I am grateful to the noble Baroness, Lady Hayter, for adding her name to this amendment and already speaking in support of it. I am grateful also to the noble Baroness, Lady Crawley, for doing likewise.

--- Later in debate ---

[Baroness Neville-Rolfe]

I thank the noble Baroness. Perhaps she will also read Hansard on these points. We carried out an impact assessment and I think that the £50 million figure comes from that assessment, which I can certainly make available. I wanted to say that I was going to mention consumers at the end because this is the Consumer Rights Bill. It is important that we have a deal that is good for all sides. There are various different pressures relating to investigatory powers. I have tried to explain the wider picture and the parallels elsewhere. I am very keen that this should be an effective part of the Bill, which is obviously designed to modernise and improve both consumer rights and consumer enforcement. I therefore ask the noble Lord, Lord Best, if he will consider withdrawing the amendment.

[Lord Best]

My Lords, that was a powerful exchange all round. Clearly, this is an issue of great interest and concern to your Lordships. I am grateful to the noble Baroness, Lady Crawley, who, among other things, welcomed the fact that the Government have already made a number of concessions along the way—that needs to be on the record. However, she pointed out that there are considerable costs involved for the trading standards service because there is a lot of bureaucracy involved in sending out 7,000 notices of intention to inspect each year, and the correspondence that has to go back and forth on all that. This is not a cost-free new regulation.

I am grateful to the noble Lord, Lord Harris, for calling into question whether there was a problem here that needed to be solved at all. He pointed out that this measure is bound to lead to endless litigation if we are not careful and made the important point that the ability of trading standards officers to make unannounced visits is, in itself, a deterrent, and it is uncertain what the world would look like if that deterrent effect was removed.

I am grateful to the noble Baroness, Lady Hayter, for raising key questions. She asked what would be the benefit of this measure to consumers and whether they would really benefit from it. She made the important point that an awful lot of unannounced visits follow anonymous tip-offs. Other traders know what is going on down the road. They do not want to get into a fight over it but want trading standards to know about it. However, there is a difficulty with that information being used later in a court of law since it is important but confidential information. I can see that that may cause a problem in future.

The Minister provided reassurance under a whole series of headings, which was extremely helpful. We have made some progress on these issues tonight. She paid tribute to trading standards officers, which I welcome, and emphasised continuously that this is about routine inspections only and that the legislation is generously drafted. We are reassured that suspicion is good enough in these cases. If a suspicion of a breach in the law is enough to trigger a perfectly legitimate unannounced visit, that covers an awful lot of cases. However, it leaves unanswered whether it is really worth putting on statute this new regulation and the binding condition on trading standards officers if they are to be able to bypass it in an awful lot of circumstances.

To conclude, we have a lot of new and extra reassurance on the record from tonight which is more than helpful. Putting this in the Bill also seems rather heavy-handed when we know there will be guidance in any case following the legislation. Guidance not statute sounds rather less of a sledgehammer to crack the remaining nut after we have heard about the many exemptions and exceptions. With those words, and the thought that we might need to bring this back again, I beg leave to withdraw the amendment.

Amendment 62A withdrawn.