Consumers, Estate Agents and Redress Bill [HL]

My Lords, I beg to move that this Bill be now read a second time. The Government are committed to a robust and effective consumer and competition regime, one that is fair to consumers as well as to business. We are committed to strong, effective, competitive markets where firms can constantly challenge one another to offer greater choice, better quality and lower prices to consumers. But consumers themselves have a key part to play. Business needs demanding and confident consumers to encourage higher standards and innovation. Pressure to retain custom is also a powerful incentive for business to act with integrity and responsibility. That is why we want a consumer regime that is fit for the 21st century. We need to make sure that consumers have the right information to make informed choices. We need to remove the rogue traders and give consumers access to redress so that they feel confident and secure when dealing with business. In a competitive marketplace, it is the companies that give their customers what they want that will thrive. But we in government must keep thinking about what consumers need, too. What are the Government doing to achieve this? The Consumers, Estate Agents and Redress Bill forms part of a wider programme of government reform to empower UK consumers. The Consumer Credit Act, which received Royal Assent earlier this year, represents the biggest overhaul of consumer credit legislation since 1974. It greatly improves consumer rights and redress in relation to borrowing money. The Act also introduces major changes to the licensing of consumer credit businesses and new powers to drive dishonest traders out of the market. The Government will shortly announce their plans to implement the EU unfair commercial practices directive. The UCPD is a powerful tool, designed to tackle the rogue traders and unfair business practices that target the most vulnerable people in society and damage the reputation of honest firms by association. Once implemented, the directive will ban 31 types of unfair commercial practices outright, including high-pressure or unreasonably persistent selling methods. The directive also has rules stopping misleading and aggressive practices, and introduces a catch-all duty not to trade unfairly. We will implement the directive by the end of next year, shortly before the provisions of the Bill take effect. The Consumers, Estate Agents and Redress Bill complements both the Consumer Credit Act and the UCPD and will empower consumers yet further. The largest element of the Bill is the ““consumer voice”” proposals. There has been extensive consultation on consumer voice over the last three years. UK consumers now benefit from choice in most of our essential services, thanks to a long-term commitment by the Government to champion open, competitive markets. The aim is to deliver choice and to foster high standards and good value in our key sectors. The markets for essential services have been progressively liberalised over a long period, and several regulatory regimes have been developed. But there was a common model: licensed companies overseen by an independent economic regulator, and a consumer body with duties in respect of each individual sector. That has led to the current position where we have several sectoral consumer bodies, as well as a National Consumer Council that represents consumer interests across a range of markets. The National Consumer Council, Energywatch and Postwatch have provided a valuable service to consumers. However, key issues around the current system of consumer representation have to be addressed. Consumer representation in the UK is fragmented. We lack a coherent voice for the consumer to speak with expertise and authority in discussions with companies, with government or in Europe. We need a body that is able to compare different markets and focus on areas of real concern. In addition, any consumer who needs advice or assistance must first work out where to go for help. Promoting the existence of consumer bodies has consistently been a problem, as each of the relevant bodies has sought individually to make consumers aware of its services. A sectoral consumer body cannot necessarily look at all aspects of a company’s service. Although the Consumer Action Network offers potential for increased co-operation between consumer bodies, difficulties over exchanging information remain. Different structures prevent resources or facilities from being shared effectively. To address these issues, we propose to bring together the National Consumer Council, Energywatch and Postwatch to form a stronger, more coherent consumer advocate: the new National Consumer Council. This new body will be independent. It will have the stature to engage effectively with government, regulators and industry. It will be able to look across sectors and give advice on the basis of expert and informed analysis. Responsibility and authority to speak for consumers will rest with a single organisation. That will provide a stronger and more effective voice in the ear of policy-makers in the UK and the European Union. Savings will be achieved by cutting the cost of complaint handling, the consolidation of offices and staff and a reduction in property expenditure. Analysis by KPMG on behalf of the DTI estimates net ongoing savings of about £8.9 million per year, increasing to about £9.5 million per year by around 2015 as redundant property leases come to an end. We also propose to extend the availability of redress for consumers. Energywatch and Postwatch currently labour under a significant burden of complaints that they can resolve only through persuasion. They have no powers to enforce resolution and cannot provide for redress or compensation. That is the role of a redress scheme, and the creation of new, separate redress services forms part of the provisions of this Bill. The provisions in Part 2 will enable Ministers to require suppliers or service providers in the energy and postal services sectors to belong to redress schemes. This will give consumers confidence that their complaint will be resolved, and there will be access to compensation and redress where warranted. The Bill also offers the potential to include the water sector within this requirement in future, following consultation. I now come to the provisions relating to estate agents. For most people, buying a place to live is the most expensive purchase they ever make and the process can often be stressful, for buyers and sellers alike. Estate agents play a crucial role in this process. It is vital that the market for estate agency services works well, and that consumers are protected against unfair practices. Consumers need to be confident that estate agents will deal honestly with them. Many estate agents are rightly angry that their reputation is tarnished by a small minority who at best lack professionalism and at worst are dishonest. The Office of Fair Trading recognised these issues in its study of the estate agency market published in March 2004. It found that the market was generally competitive and in most cases worked well for consumers, but that a significant number of consumers were not happy with the service that they received. Some consumers simply received poor service, with estate agents turning up late for appointments, for example, or not returning keys on time. But other complaints were more serious, such as a failure to pass on offers to sellers or to declare a personal interest in a property. In its report, the OFT made a number of recommendations to bring the Estate Agents Act 1979 up to date with modern enforcement practices. The OFT was keen to ensure a basic level of protection and to promote quality of service and redress. The Government published their response to the OFT report in July 2004. They went further than the OFT and stated that they wanted to make membership of a redress scheme mandatory for all UK estate agents. We amended the Housing Act 2004 to ensure that complaints relating to home information packs could be addressed through redress schemes. The Bill goes further. It will fulfil our promise that any private individual with a legitimate complaint against an estate agent should have access to redress. It also implements a number of other recommendations in the OFT report. It will improve the audit trail for transactions by requiring estate agents to make and keep records—including records of offer letters—for a period of six years. The Bill will give the OFT and local authority trading standards officers powers to go into premises and inspect records in a wider range of circumstances. This will enable them to investigate all breaches of the 1979 Act, not just criminal offences. The Bill will also expand the circumstances in which the OFT can consider the fitness of an estate agent to practise and, if necessary, take regulatory action against them. The OFT can already ban estate agents when they have been convicted of a specified criminal offence. The Bill will allow the OFT to ban an estate agent where there is sufficient evidence that an offence has been committed, even if there is no conviction. Furthermore, the OFT will also be able to ban an estate agent where an enforcement order under the Enterprise Act 2002 or a statutory undertaking has been breached. These changes are needed to bring the 1979 Act in line with modern enforcement practice, where civil or informal action is generally used as a cost-effective and proportionate alternative to criminal prosecution. Part 4 includes provisions on doorstep selling. In September 2002, the National Association of Citizens Advice Bureaux—now Citizens Advice—published a report, Door to Door, which looked at a wide range of goods and services sold on the doorstep, and addressed problems that had been reported to its offices. The report was submitted to the Office of Fair Trading as a super-complaint within the terms of the Enterprise Act 2002. In November 2002, the OFT confirmed that it would investigate doorstep selling. Its report, which included seven recommendations for improving consumer protection, was published in May 2004. In response, the Government launched a public consultation and on 7 September this year they published their response. As part of that response, they decided to introduce primary legislation to ensure that all consumers have the safety net of a cooling-off period for all doorstep sales, whether the visit is solicited or not. Consumers will be protected if they are subjected to high-pressure selling and subsequently change their minds. Removing the distinction between solicited and unsolicited visits will make the law simpler and clearer for the consumer, businesses and enforcement agencies. Businesses will be able to work with one contract for both solicited and unsolicited visits, reducing ongoing costs in the production of contracts and training of sales staff. The simpler rules will ensure that businesses do not need to spend time establishing whether their visit is solicited or unsolicited. We welcome the report of the Delegated Powers and Regulatory Reform Committee and intend to accept both its recommendations in relation to this Bill. We are seeking the relevant clearances and will table government amendments shortly. I hope that your Lordships’ House will join me in supporting these provisions. The Bill equips enforcers to get rid of dishonest estate agents. It gives consumers a strong champion to fight their corner, and it gives them the rights and redress that they deserve. I look forward with great anticipation to hearing noble Lords’ contributions to this important debate. Moved, That the Bill be now read a second time.—(Lord Truscott.)