My Lords, Amendment 63B in this group is in the name of the noble Lord, Lord Best, and of myself, and I will speak mostly to that amendment.
Amendment 63B is key to the implementation of many of the powers that we much welcome in the Bill. The problem is that without this amendment, trading standards will think twice—or three or four times—before using the Government’s suggested route of taking civil rather than criminal action following infringements. At present, where criminal action is taken—which of course does not allow for redress for consumers—trading standards does not risk having to pay defence costs. However, should it use the new civil enforcement measures, which we welcome, it would then risk expensive legal costs, which will automatically make local authorities very risk averse. Indeed, a large case could cost as much as £250,000, which is a massive chunk of the annual budget of many local authorities’ trading standards services.
Trading standards, of course, have always had the option of injunctions, but that only puts an end to whatever sharp practice was going on—it neither penalises the trader nor compensates the customer. We therefore support the advances in the Bill, because they take that further. However, without this amendment, we fear that the risk of cost—as it would be a civil action—will undermine the new, enhanced measures in the Bill. If the Government prefer these to the criminal route, which is what we understand, they will have to reduce the disincentive which this threat of civil costs poses.
We realise that it is possible to apply to the courts for a protective costs order to limit the exposure if the case has been brought forward by a trading standards officer in the public interest. However, that is a pretty rarefied procedure, and it is much more likely that, in those circumstances, the case will be taken through the criminal courts—of course at considerable expense to the taxpayer—or else it may not be pursued at all.
Which? has strongly supported Amendment 63B, as has the Trading Standards Institute. I know that Which? wrote to the Minister in August—I think that it was to the Minister in this House but it could have been to
the Minister in the other place—saying that the Bill should be amended to limit significantly the risk that enforcers taking action under Part 8 of the Enterprise Act 2002 would be liable for the defendant’s legal costs in the event that the action was unsuccessful. It is felt by them and by us that they should only be liable where the enforcer has acted unreasonably. Therefore, Which? feels that this amendment will be key to ensuring that the enhanced consumer measures are used in the way that the Bill intends. It is particularly important for trading standards, which will have to get a lot of sign-off from many committees before it takes civil action, and those requirements will be much higher with that risk of paying the defendant company’s costs, which has not been before it when it has taken criminal action.
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Amendment 63AC, which is in the name of my noble friend Lady Drake, would remove the requirement in Schedule 7 to stop a private enforcer taking action if it was inconsistent with advice from a primary authority. We share those concerns about this restriction, which effectively allows a local trading standards office to give safe harbour to a trader. Moreover it would, as it were, gold-plate that safe harbour, because it would mean that the decision would then not even be open to challenge by a private enforcer. This is quite in contrast to what would happen if a trading standards officer in one area wanted to take action against a company where the primary authority had said otherwise, because in that case all the trading standards people get together—they have a committee or something—and are able to challenge that advice and are part of the decision-making process about it. However a private enforcer is not part of that statutory family, so it would be barred from challenging the advice from the primary authority because of the way in which the Bill is currently worded. It would also be excluded from the process whereby trading standards gets together to discuss these issues.
There is also the civil rights issue. The Government might want to consider that, because if the primary authority did not give its consent—and it is unclear to us whether that could be challenged anyway—it would block the rights of a private enforcer to take action. So, while we understand the laudable aim of the safeguard—to ensure a consistent approach to enforcement—the way in which it is worded risks giving an effective veto to a trading officer’s decision which would never have been tested in the court of public opinion, by his or her elected council or by a court: it will have been a decision drawn up with no consultation with any outside stakeholders, just by the trading standards officer and the firm.
As my noble friend Lady Drake has said, it is in any case unnecessary, because under the 2002 Act a private enforcer has to consult with the CMA to ensure that the proposed enforcement is neither duplicative nor detrimental to any action another enforcer might be taking. Consultation is there: it is the veto, if you like, that worries us. It would undoubtedly be good practice for any private enforcer to consult the relevant private authority, to find out some good intelligence, to make sure they know what is going on, but the primary authority’s potential veto worries us.
There is also, as suggested by my noble friend, the issue that there may be times when the primary authority gave its guidance some time ago. More may now be known. The company’s personnel may have changed. Public attitudes may have changed. It is quite worrying that advice which is some years old would seem to be set in stone and still able to prevent a private enforcer from taking action. We look forward to reassurance on these points but we think it is particularly important to remove this risk of costs against trading standards, should it use the civil powers which would in future be at its disposal.