My Lords, I thank all noble Lords who have taken part in this short debate for their valuable and broadly supportive comments.
We intend to use these powers where self-regulation fails, as has been mentioned. This power is light touch, as my noble friend Lady Buscombe mentioned, and is important to guarantee minimum standards. These powers are proportionate and designed to act as a deterrent. I think there is general agreement in the Committee on that.
We recognise that collecting societies play an important role in facilitating legal access to copyright works. They bring together rights holders and users to enable them to do business efficiently. The Government have worked with the collecting societies to develop the co-regulatory framework so that they continue to operate effectively, while ensuring that there are protections in place for their members and licensees.
I should like to emphasise again that the Government’s preferred option is self-regulation. This is why these regulations are designed to allow licensing bodies to remedy matters themselves in the first instance before recourse to statutory intervention. We are confident that collecting societies can self-regulate effectively. However, when needed, these regulations will provide robust, proportionate measures.
The regulations also contain provision for financial penalties, which are designed to deter non-compliance. They can be used only should self-regulation fail. This gives members and licensees the comfort of knowing that the standards that are set out in the collecting societies’ self-regulatory code of practice are guaranteed.
I hope that I have made it clear that the Government are serious about self-regulation and it is important that collecting societies have every opportunity to put their own house in order. Equally important, if they fail to do so there should be no way to avoid the consequences. If the Secretary of State is concerned about a collecting society’s behaviour, there is an opportunity for him to act, using the three-step process in the regulations. The fallback position is to impose a statutory code if collecting societies have not taken up that opportunity. While it appears unlikely at the moment that that point will be reached, it is important that the statutory power is available so that there is a deterrent to ensure that collecting societies face consequences if they do not act in a proper manner.
My noble friend Lord Razzall raised a number of points relating to a letter received by the PRS. I will attempt to answer them. The first issue was on information and timing. The collecting society concerned should have all the relevant information to hand anyway, and therefore be able to meet the 14-day deadline. The timeframe for supplying information to the statutory licensing code ombudsman and code reviewer are included in the regulations to ensure that any investigation can be conducted as swiftly and efficiently as possible.
The licensing code ombudsman will require information to effectively investigate disputes between a collecting society and the licensee or member. The code reviewer’s power relates to the information needed in order to undertake an effective review of the codes of practice adopted by collecting societies and their compliance with their provisions. If a collecting society has concerns about meeting the deadline, it is open to it to notify the licensing code ombudsman or code reviewer as soon as possible. Finally, where the collecting society concerned can show that it has made every effort to comply with any request, the Secretary of State can take these arguments into consideration when deciding whether to impose a financial penalty. If such a penalty is imposed, there remains the option to appeal against its imposition and the amount. I rather laboured that answer but I hope it provides a full response to my noble friend.
My noble friend also raised the issue of cost recovery. Where the Secretary of State has incurred costs by having to intervene, it is right that he should be able to cover the costs of that intervention, but they should not be borne by the taxpayer. Where a collecting society has had a statutory code imposed on it and/or has failed to appoint an ombudsman or code reviewer, as required, the associated costs of regulation should be borne by the collecting society concerned. Where the Secretary of State needs to appoint a statutory ombudsman or code reviewer when the self-regulatory appointment has failed, it is right that all the collecting societies which will use the new system should bear the costs of that appointment and any ongoing costs. I should state that this would have gone way down the line before that point was reached, so it would be in extremis that this provision would be realised.
My noble friend Lord Razzall raised the issue of the legal basis. The gist of his question was: what legal power enables the Secretary of State to request information from collecting societies under Regulation 9? The provisions in Schedule A1 to the Copyright, Design and Patents Act 1988 allow for the Secretary of State to request information, as outlined in Regulation 9.
Paragraph 7(1)(a) includes the power to make incidental, supplementary or consequential provisions and paragraph 5(3)(a) allows for provisions for determining whether there has been a failure to comply with the requirement of a code of practice. The provisions in Regulation 9 will enable the Secretary of State to request the information necessary to enable them to discharge their duties equitably under the regulations.
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The noble Lord, Lord Razzall, raised the issue of fees. The imposition of a financial penalty on a collecting society is very much a last resort, as I indicated earlier. There would need to have been a history of non-compliance before any penalties were imposed. It is important to have proportionate, dissuasive and effective sanctions to deter non-compliance within the self-regulatory framework. We believe that there is sufficient scope for collecting societies to meet the cost of penalties from within their administrative budgets. In addition, where a director or similar officer is responsible for a breach, the regulations do allow for the individual
rather than the collecting society as a whole to be held accountable. This would be a matter that would or could arise a long way down the line of a particular issue.
The noble Lord, Lord Stevenson, asked about the relationship between these regulations and the CRM Directive. When the intention to bring forward a directive was announced in 2010, domestic policy was well advanced. After lengthy delays, the proposed directive was published, as the noble Lord will be aware, in 2012. With no guarantee that it would be agreed, and with our desire to give licensees and members safeguards at the earliest possible time, we decided to press ahead with these measures. We developed these with an eye on the draft directive so as to minimise burdens on business. This is why, for example, the definition of relevant licensing body in the regulations mirrors that of collective management organisation in the directive. Ultimately, the intention is to implement the directive where possible, avoiding additional burdens on collecting societies.
The noble Lord, Lord Stevenson, also asked about the link between the codes and the regulations and the Copyright Hub. The impact on the Copyright Hub will depend ultimately on how that industry-led initiative develops. A hub that simply signposts people to the correct licensor would not be subject to the self-regulatory system, although some participants are collecting societies and so would be covered. If the hub expands its role over time and becomes a relevant licensing body, it will be governed by this self-regulatory regime. I would argue that it is a work in progress. The noble Lord also mentioned that, and I am pleased to say that we continue to make progress. I recently met with the chief executive officer, Dominic Young, and had an update on the Copyright Hub.
I hope that I have covered all the questions that were raised and if I have not I apologise; I will write to noble Lords. In conclusion, I have every confidence that these regulations, coupled with the self-regulatory framework, will create a level playing field on which licensees and members of licensing bodies can enjoy minimum standards of fairness and transparency. I have given due regard to the Secondary Legislation Scrutiny Committee’s decisions and comments. The Government believe that these regulations are a reasoned and proportionate reform, and I commend them to the Committee.