Consumers, Estate Agents and Redress Bill [HL]

This seems to be a good moment for me to come in. I shall deal with AmendmentsNos. 111 and 112 to Clause 42, but before that I shall answer a couple of questions. The noble Baroness, Lady Wilcox, asked about how the redress schemes apply to relevant consumers. In the energy sector they apply to private consumers and businesses, but not suppliers. Both the noble Baroness and my noble friend Lord O’Neill mentioned the protection of vulnerable consumers. I repeat that the Bill provides under Clause 11 for the council to have specific powers to investigate complaints made by vulnerable consumers in the designated sectors and under Clause 12 to act on behalf of consumers who become vulnerable through disconnection of their gas or electricity supplies. So there is provision for immediate support for vulnerable consumers who find themselves in difficulty, particularly in relation to disconnections. Returning to Amendments Nos. 111 and 112, subsection (2) states that the regulator may make regulations in respect of all complaints or those of a specified kind. Amendments Nos. 111 and 112 replace each ““may”” with ““must””. It is normal for legislation to use the word ““may”” when conferring a power, because the legislation does not and cannot say when the power should be exercised or how it should be exercised. The timing and content of regulations is not prescribed in the Bill. These provisions will need to adaptable, to be applied on a sector-by-sector basis, with each regulator being able to take a different approach to suit the sector’s own particular requirements. It will be for the regulator to determine the need to make regulations, or when and how to amend them in the future. If there is to be a duty, then the legislation must lay down clearly what the person is duty-bound to do. If there is to be discretion as to when and how the regulator is to act, then ““may”” is legally the right word. I hope that that adds some clarity, but I appreciate the points made by my noble friend Lord Whitty and I will consider them further. However, I would point out that we have consulted with the regulators concerned and they are broadly content with the approach we have adopted. As drafted, the power allows a regulator to take a view about whether and when such regulations are necessary. I turn now to Amendment No. 114, which seeks to alter Clause 46 covering the requirements relating to redress schemes. This clause introduces a statutory requirement for service providers in the energy and postal services sectors to belong to a redress scheme, and will in effect give consumers in those sectors greater assurance of achieving certainty of resolution of their complaints. It allows the Secretary of State to make orders requiring regulated suppliers in those sectors to belong to a redress scheme. It specifies that such a scheme must be approved by the relevant regulator or be administered by the Secretary of State or a person appointed for the purpose, and designated as an appropriate redress scheme. Before an order can be made under this clause, the Secretary of State is required to consult the relevant regulator and others who represent those with an interest in the matter. The Secretary of State must be satisfied that there is at least one redress scheme that regulated suppliers who are required by order to belong to a scheme are able to join before making such an order. Moving on to the point made by the noble Lord, Lord Newton of Braintree, about having several schemes up and running and questions asked by other noble Lords and my noble friend Lord Borrie about whether there are any precedents, the answer is yes, for example in the telecoms sector. The Department for Culture, Media and Sport and the Department of Trade and Industry are responsible for the telecommunications and broadcasting regulatory regime where two telecoms redress schemes are operating. It is our view that regulators are best placed to decide on the appropriate number of schemes to be approved to operate within each of the sectors. In approving a redress scheme, the provisions place a requirement on the regulator to have regard to the total number of qualifying schemes available to the relevant suppliers. But that does not mean that there has to be a plethora of schemes; there can be just one. That is the current position. In the event that no scheme is set up by industry, the clause contains provisions for the Secretary of State to establish one. This is an additional guarantee that in the unlikely event that industry is not able to put a scheme in place, the Secretary of State has the power to establish a suitable one so that he will be able to make an order requiring suppliers to belong to a scheme. Amendment No. 114 would remove those contingency arrangements. I hope that noble Lords will accept that this provision is needed as a fallback to give an assurance that a qualifying scheme will be available for suppliers to belong to, and so that the Secretary of State can bring these requirements into force. The essence of these reforms stems from our firm belief that empowering and protecting consumers is fundamental to the achievement of a successful, fair and competitive market. We want to give consumers a simple and effective system of redress that is easily accessible and offers the best all-round protection. A basic requirement for such a system must involve the consumer interest being taken into account. These provisions have been drafted to provide explicit assurances on several levels. The introduction of redress schemes means that consumers will benefit from the certainty of a resolution of a complaint and the provision of redress where appropriate. In approving the redress schemes, the relevant regulator will be required to have regard to established good practice such as, for example, the guidance published by the British and Irish Ombudsman Association. Regulatory oversight will help to avoid the undue proliferation of schemes and ensure monitoring of standards of performance for consumers seeking redress. On balance, we feel that a regulator is best placed to ensure that sector-specific issues in the interests of relevant current consumers, or indeed those who may become consumers in the future, are captured and considered as part of the approval process, including the number of other redress schemes that are available to regulated suppliers which qualify as suitable redress schemes. The consumer’s interest is key to this package of provisions and must be seen to be taken into account. Amendment No. 117 relates to Clause 48. The clause outlines the matters a regulator must take into account prior to approving the key features of any qualifying redress scheme. The clause places a requirement on regulators to consider the provisions of the scheme and the manner in which it must be operated, the interest of relevant consumers, including the total number of qualifying schemes, and the recommendations of any generally accepted principles of good practice that may be applicable to the operation of a redress scheme. The amendment seeks to replace the word ““good”” with ““best”” in this instance. I believe that we agree on the fundamental issue of the need to ensure that any approved redress scheme conforms to generally accepted criteria for recognition in the provision of redress. An example of such criteria would be the guidelines provided by the British and Irish Ombudsman Association, which covers issues such as independence, fairness, effectiveness and public accountability. We fully understand the sentiment behind replacing ““good”” with ““best””. On the one hand, we want consumers to receive the best treatment under these redress schemes; on the other hand, we do not want to place too onerous a burden on a regulator in trying to evaluate and compare all the good practices in order to determine which is the ““best”” practice. I therefore want to consider the amendment further to see if we can accept it. We are giving regulators the power to make regulations to prescribe complaint-handling standards that would be binding on suppliers. Information about suppliers’ levels of compliance with any prescribed standards would be placed in the public domain. That is a fundamental aspect of the new model for consumer redress being introduced by these measures. The amendment would place an additional burden on regulators and scheme administrators in determining whether suppliers operated appropriate and effective schemes. We believe it is possible to achieve the desired outcomes through the imposition and monitoring of performance in meeting complaint-handling standards. Amendments Nos. 120 and 121 concern the terminology used to describe the Consumer Direct service, which is supported by the OFT. The paragraph concerned refers to the necessary flows of information to be established between the Consumer Direct service and the redress schemes. Consumer Direct is a public consumer advice scheme supported by the OFT. We cannot refer to it by name in the Bill, as the service has no legal personality. The word ““public”” describes those to whom Consumer Direct offers consumer advice—the public. Advice is provided to an individual member of the public in a one-to-one conversation with an adviser. As I have said, Consumer Direct is simply the name under which the service is provided. The draftsman has given us a good set of words, and we hope that noble Lords will understand why the Government feel it appropriate to form the clause in this way. On Amendment No. 122, we envisage that a regulator should have the option to withdraw approval from a scheme either generally or simply in relation to specified consumer complaints. The amendment would risk disadvantaging consumers in respect of whom a scheme was operating satisfactorily by requiring the regulator to take an all-or-nothing approach to removing approval. Clause 49 sets out provisions on how the application and approval of redress schemes is to be conducted, and it is important that it stands part of the Bill. It enables the regulator to determine the manner in which an application for approval is made, and places a requirement on the scheme administrator of an approved redress scheme to provide notice of any changes to the scheme within a specified period. It also allows a regulator to refuse or withdraw approval for a scheme in accordance with the procedure in Clause 50. I apologise that it has taken so long to go through all these amendments, but the group was quite large.