My Lords, I should start by saying that it is extremely important to the Government that the implementation of the Bill should be done really well. Good implementation is a key feature of good regulation and our attention will not fade. That is why we set up an implementation group last year with representatives from business, consumer organisations and consumer law enforcers. I think we are agreed that we all need a better understanding of our rights. The group is helping us plan key aspects of implementation of the new law, including: the content, channels and timing of guidance; advice; and publicity. The group has been influential in devising our implementation strategy, which is summarised in the implementation plan that we recently published.
If this legislation is to be effective then it is hugely important that consumers should feel confident about exercising their statutory rights and that businesses should know and fulfil their statutory responsibilities. We certainly accept that this is not currently the case. This year’s consumer detriment survey and research by Citizens Advice and Which? show that consumers become discouraged from pursuing claims to a satisfactory settlement. Lack of knowledge about their rights and even misinformation by sales staff are factors in their giving up. That is why we asked the implementation group to consider carefully whether there should be a requirement for traders to provide information on consumer rights to all consumers at point of sale or when rights are enforced.
As your Lordships can imagine, the implementation group strongly supports the Government’s objective of making it easier for consumers to find out about their rights. We believe that traders have a very important role in this. Business and consumer organisation members of the group have therefore worked together to develop a high-level summary of consumer rights when consumers buy goods, services and digital content. The summary also signposts consumers to the Citizens Advice helpline and website for more detailed guidance on specific issues. We have begun testing this model wording with businesses and consumers to ensure that it is easily understood and we have had some very good feedback on the concept so far. We aim to make it available to businesses by April next year to use in their
communications with their customers. I have a working draft, which is being canvassed widely, on my iPad. I do not think that I am allowed to show noble Lords my iPad on the Floor of the House.
5 pm
However, there are several reasons why we do not believe that it is desirable to require the provision of information detailing a consumer’s rights at point of sale as required by Amendment 9.
First, consumers often have a lot of information, both about the goods themselves and about the trader, to absorb at point of sale and they may also be comparing different products. To quote the noble Baroness, Lady Hayter, consumers cannot take in too much information. Like her, I am a keen consumer, and my sometimes embarrassed family also think that I am something of the consumer from hell. There is a real risk that additional information will be ignored or will irritate the customer, as this is not information they are likely to consider essential before making their purchasing decision.
Secondly, it is likely to be impractical in certain settings; for example, in telephone sales or street markets where the trader would have to make an oral statement. Few of us would appreciate being reminded of what our rights are every time we bought fruit in Lower Marsh Market, or a newspaper in our local shop.
Thirdly, it could send mixed messages where the trader’s own policies were more generous than consumers’ statutory rights. One major retailer—a household name, and not the one I used to be associated with—told us that when a consumer had a good case, its store policies would allow a full refund for faulty goods significantly beyond the statutory 30-day limit. It had built its brand on customer loyalty and thought that displaying information on consumers’ statutory rights would undermine its core message that a customer who was dissatisfied for any reason could bring that product back.
For these reasons we believe that this amendment is not the best way to address the real problem of consumers being uninformed or misinformed about their rights. Which?—whom I saw last week—shares this view and told me that it does not think that mandating the provision of point-of-sale information on consumer rights will automatically mean that either consumers or businesses are better informed. Instead, it is supporting our approach. This is to encourage businesses, when they communicate with consumers, to use the model wording on consumer rights, which I referred to earlier, which was developed jointly by BIS and the consumer and business groups. That means that businesses and consumers will be able to have confidence in its accuracy. I am pleased to say that business groups have already committed to promoting use of the model wording and also the signposting of consumers to Citizens Advice to their members.
It is not that consumers are put off complaining because they do not know their rights; the most recent consumer detriment survey in 2014 found that the vast majority of consumers—87% in the survey—take action when they have a problem. Of those who take no action, only one quarter of 1% fail to complain because
they are unsure of their rights. Moreover, the consumer contracts regulations, which came into force this June, already require traders to remind consumers before they enter a contract that they have a right that goods must conform to the sales contract. I listened to what was said earlier about those regulations and the consumer protection from unfair trading regulations, and I am sure that we should include guidance on those regulations in our implementing plan, as both businesses and consumers need to understand the breadth of consumer law.
Amendment 13 raises some similar practical issues. It would be quite straightforward to put a full summary of consumer rights on a trader’s website, but it is less easy to see how this would work in other settings. What if I return to a shop to ask for my money back six weeks after purchasing a faulty pair of shoes? I know that the noble Baroness, Lady Hayter, and I, have shared that experience. Do I really need to be told that my right to an immediate refund has expired and I am entitled only to a repair or replacement if the retailer is actually perfectly happy to give me an immediate refund? Conversely, if I had returned to the shop within the first 30 days and said that I wanted to exchange the faulty but very fashionable shoes, would you expect the retailer to say, “Have you considered having your money back instead, because that is your right within the first 30 days?”.
This, again, is why we have preferred a more flexible and voluntary approach. The summary of rights developed by the implementation group is a useful tool for traders to explain their full set of rights to consumers, and we want traders to use this in a way that works best for their customers. However, requiring the trader to set out the consumer’s full rights at every point in the complaints process would be onerous for both consumers and business, and would come at a cost.
Businesses will be able to use the wording in full or incorporate only the elements relevant to their businesses. It will also help to avoid shop-floor staff causing unnecessary disputes by making mistakes and giving inaccurate information. For all these reasons, we expect businesses to see this as a helpful tool to comply with the new legislation.
I turn to Amendment 25. I should clarify that this clause applies only to guarantees that are provided alongside goods at no additional cost to the consumer. It does not apply to guarantees that the consumer has paid for, such as extended warranties, for which consumers have other protections. For example, an extended warranty should comply with the unfair terms provisions of the Bill.
Clause 30 already requires, I am glad to say, that any free guarantee must be written in plain and intelligible language. It must also include a statement informing the consumer that he or she has legal rights that are not affected by the guarantee. Given that the clause covers only freely provided guarantees, which must make clear that the consumer remains entitled to their full statutory rights, it does not seem reasonable to impose a further requirement to set out the consumer’s basic rights. I hope that this provides sufficient reassurance that we can achieve better information to consumers
about their rights without the drawbacks of a mandatory approach, and I ask noble Lords to withdraw the amendment.