I thank the noble Baroness for outlining the reasoning behind her amendments, and will look first at Amendment 21. The principle of deduction for use is fair. Where the consumer has enjoyed uninterrupted use of the goods, the consumer should be accountable for that use. For example, if a consumer has been driving a car around for three years of normal use and then a fault manifests, the trader should be able to reduce the refund to take account of those three years of unaffected use. Of course it is right that consumers should be able to exit the contract at that point, but it is unfair to require the trader to bear the costs of that use.
When the Government consulted on the issue, only a very small minority of respondents to BIS’s consultation favoured scrapping the deduction for use, and two-thirds of online respondents agreed that it was right to allow a deduction to be applied in some instances. However, it is frustrating for consumers to get a partial refund even though they have had little use of the goods. The irritation of having to deal with a fault often eclipses what little enjoyment the consumer may have had from the goods, so the Bill includes a new protection that prevents, in most cases, a deduction from being applied within the first six months. There is a limited exception to this rule and it is this exception that Amendment 21 would remove.
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The Government are concerned that there are some goods types—in particular, complex, high-value goods—for which the removal of the right to make a deduction in the first six months could be hugely detrimental to traders. Cars are the obvious example, but we do not consider it appropriate to limit the exception to them in any way: other types of complex goods will benefit from the exception. The noble Baroness gave some examples. There will be technologies and industries that do not yet exist for which this exception would be appropriate. This is therefore as much about future-proofing the law as it is about protecting existing traders.
We have included an exception aimed at these types of goods because they may sometimes be subject to a series of minor faults. A car might, for example, have two small faults: the windscreen wipers might need
fixing and then an indicator bulb fails. These can both be quickly and easily addressed. I do not think it would usually be reasonable for a consumer to reject the whole car on this basis and expect a full refund, especially after driving it around for a few months. Traders will therefore be able to reduce the refund during this six-month period if they can demonstrate an active business-to-consumer second-hand market in goods of the same make and model. We want this exception to apply where it is most needed: to high-value or complex manufactured goods. Those types of goods tend to be those which traders have an interest in selling second-hand.
I stress the point that the market must be between business and consumers, so that the exception does not apply to goods that are commonly traded only between consumers, so the trader cannot point at sales on online auction sites as justification to apply a deduction. Furthermore, the example market that the trader uses as evidence must be in the same goods—taking into consideration any factors that a reasonable consumer would be expected to consider—so the trader cannot simply direct the consumer to a market in similar goods. For example, if a consumer would be expected to consider things such as the size or capacity of the goods when buying them new, the trader would need to demonstrate an active business-to-consumer market in the same goods of the same size or capacity. In any case, any deduction that a trader applies must reflect the use that the consumer has had of the goods and not simply the second-hand value of those goods. This is above all a deduction for use, not a deduction for value. What represents a fair deduction will be made on a case-by case basis.
To sum up, I believe that this is a proportionate exception that represents a fair and sensible protection for business and is targeted where it is needed. The criteria that we have set out mean that it is limited in scope, so the vast majority of consumers will get a full refund in the first six months. In any case where a deduction is applied, it will fairly reflect the use the consumer has had.
Turning to Amendment 22, the subsection that it would remove defines the concept of corresponding goods, which is used in the exception to the six-month rule on deduction for use. I have already explained the importance of requiring the example market used in the exception to be in goods of exactly the same type. The definition in this subsection is crucial to that criterion and therefore to limiting the scope of the exception. Without it, there is a real risk that the exception may be used more widely than is intended.
I therefore ask the noble Baroness to withdraw the amendment.