As Chair of the Select Committee on Business, Innovation and Skills, which spent four sessions examining and discussing the Bill, I understand the point made by my hon. Friend the Member for Barrow and Furness (John Woodcock), although I do not totally agree with it. It is not often that an intervention gets such currency throughout a debate. While some of the issues in the Bill are extremely arcane and legally complex, the consequences of not getting them right could be devastating for individual consumers, as well as detrimental to the economy and to the culture of informed consumerism that we want to underpin and drive better standards of business provision in this country.
Several hon. Members have unfairly criticised my hon. Friend the Member for Walthamstow (Stella Creasy) for the range of issues with which she dealt, but of course not only do consumer rights encompass a huge range of issues, but how goods and services are delivered changes all the time. The growth of online retailing and
the digital revolution have thrown up new products and purchasing and marketing processes, all of which, to the unscrupulous, offer new opportunities to rip off the consumer. I agree with hon. Members who have said it is impossible to devise consumer rights legislation that deals with every possible eventuality, but we can consider certain basic elements of legislation that will at least inform consumers and make them less susceptible to being ripped off in what is a rapidly changing and sometimes pretty vicious business world.
The Secretary of State himself said that the Bill was only part of the picture. The much bigger picture includes competition and transparency, and the idea that we can solve all consumer rights problems with one piece of legislation is fanciful. It must be accompanied by a range of policies across Government designed to improve competition and transparency, so that those who wish to exercise their consumer rights have the right information basis on which to do so. I would single out three elements as being essential for everyone: first, clarity of pricing; secondly, clarity of contracts; and thirdly, and in some respects most important of all, clarity in the mechanism by which someone can obtain redress if they are not satisfied with either the quality or pricing of a particular good or service. The Bill tries to address some of those, but could be improved in certain areas.
The Committee heard evidence from business and consumer rights groups, and both Government and local government organisations, and received 43 pieces of written evidence. In its report, the Committee welcomed the aims of the reforms but also raised a range of issues that it felt merited further examination and it made stronger recommendations on those. A rough count of the Government’s responses would indicate that they have accepted about 70%, which is a decent hit rate for pre-legislative scrutiny. We recognise the Government’s willingness to listen to the Committee’s arguments and to take them on board.
I will not pick out those that the Government rejected and re-argue the arguments from the Committee, as I am sure that they will form part of the debate that will take place in the Public Bill Committee. Having said that, I will single out some issues where I feel the Government have not delivered and which merit further debate in Committee. The first is the sale of goods. The Bill retains the provision for “deduction for use” which, in effect, is a discounting of the refund for something that is faulty that may be made if the consumer exercises his or her final right to reject. The Committee—based to a certain extent on the Law Commission’s recommendation—said that that should be removed. The Government’s arguments for not doing so, which they will no doubt rehearse during the Bill’s progress, is that that would lead to complications in terms of the time scale involved, the level of use and so on. They asked whether it would be fair to give anybody a total refund or replacement for something that they had had, and had used, for a while.
We proposed a fallback position, which happily the Government accepted: if the Government retained the deduction for use provision, they should have a formula that was fairer than the ones that were debated beforehand. I will not go into the technical elements of that but basically the provision should reflect the cost to the
consumer for the loss of use rather than the market condition or the cost to the business providing that product.
On digital content, we felt that the remedies for tangible content—for example, CDs—and intangible content, such as a download, were inconsistent. There are again some complex legal issues surrounding that but we felt that the Government had taken the safest position and perhaps should try to equalise the rights of redress so that anybody could get a refund for downloaded content as well. I recognise that the Government have gone some way towards that but the issue is complicated and needs further examination.
On services, it is fair to say that that was a subject of considerable debate and disagreement among witnesses in the evidence that the Government and the Committee have had. Where there is the provision of a service—the Minister mentioned cowboy builders—it is true that the Bill contains the opportunity for redress. But the Government have retained the legal liability standard of where a service is provided with reasonable care and skill, rather than the one that the Committee preferred, which was basically an outcomes-based model; if the service were not provided, full stop, the person who paid for the service should be entitled to a refund.
To encapsulate the different perspectives on that, there was an argument that one could have a very competent and expert French teacher who took somebody on a course for which that person paid but, at the end, the person—for various personal reasons—was no better at speaking French. Would that person have a right of redress notwithstanding the quality of the teaching received? I agree that there are issues there. However, I would have thought it possible to build into the legislation some conditions that recognise that one could measure reasonable care and skill rather than the outcome.
The Government looked at the other perspective in their reply to the consultation, using the example of an electrician who rewired a house very competently but, for one reason or another, could not wire it up to the mains. The Government said that because that electrician had exercised reasonable care and competence in rewiring the house, the person who paid for the service should not get the full compensation. In effect, the electrician would be entitled to discount the compensation because he had done at least part of the job correctly. That was the Government’s example but I could not help but feel that if an electrician did not start off on the basis that he could connect a house to the mains, that would be a fundamental flaw in their competence. We would reasonably expect a person, whatever the electrician’s skill, who could not access electricity in their house to be entitled to a full refund.
I mention those examples to demonstrate the different perspectives and complexities involved, but the Committee would have preferred a harder line to be taken, not least from the point of view of the consumer, because it is much more difficult to prove that a person has not exercised reasonable care and skill—and much more difficult for a consumer to take that through a legal process—than if there is a simple outcomes-based standard based on the failure of someone providing a service to deliver that service.
On unfair contract terms, the Bill does not add a term to the grey list, with which MPs may not be familiar; it is the indicative list of contract terms that
may be regarded as unfair. The Bill does not add a term concerning a change by the trader where the consumer is not free to dissolve the contract without being disadvantaged. Again, that is an arcane point but here is an example to give it some depth. In at least one quoted example, a bank changed its interest rate halfway through a mortgage period and a person paying that interest was highly disadvantaged. There was an option in the contract to get out but there was no alternative provider. It was felt that, where a person was locked into a contract—even by default—they could be severely disadvantaged by a change in the terms of the contract. If that change were for no reason other than the desire of the company to get extra profit, that should be put in the grey list of unfair contract terms. I hope that the Government will look at that further in Committee.
Earlier I outlined three elements where it was essential that the Bill should demonstrate that it empowered consumers; pricing, contracts and redress. Members may not have seen the excellent briefing from Citizens Advice, whose recommendation of a legislative requirement for a trader to promote that statutory right to the purchaser at the point of sale was supported by the Select Committee. It should be possible for a receipt to contain information about how and where the purchaser of a good or service can obtain redress if for any reason that good or service is not up to scratch. The Government have made sympathetic noises, but they have yet to agree to implement that recommendation.
Surely the first stage in the creation of an informed consumer society involves enabling consumers to know exactly where they need to go and what they need to do in order to obtain redress if what they have purchased is not what it ought to be. We are living in a highly complex world, in which goods and services are delivered in all sorts of ways. I believe that that one simple change would do an enormous amount to create that society of informed consumers, which could then drive our economy, and hence drive the business practices of those who provide goods and services.
I could go into much more detail, but I think that I have exercised the patience of Members to a sufficient degree. I hope that the Select Committee’s arguments and recommendations will be examined again in the Public Bill Committee, perhaps in a more politically robust way. Overall, however, although I do not think that this is the most ambitious of Bills—it is essentially a consolidating Bill, and it has a long way to go before it can realise the visionary objective of transforming consumers’ awareness—I think that it is a step in the right direction, and that if the Government accepted the Select Committee’s other recommendations, they would take a few more steps in the right direction.
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