Dr. Vincent Cable (Twickenham): I should like to identify myself with those comments. We on the Liberal Democrat Benches regard the consumer protection provisions as possibly the most important parts of the Bill and, as I stated in my opening remarks to the Committee, until recently so did the Department for Trade and Industry. However, we have a ludicrously short time in which to discuss them and the Government amendments that we hope will improve them.
I share some of the concerns expressed about the definition of a consumer. The example of petrol retailers was cited. Another topical example is that
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of newsagents, who have to buy from big distributors. Newsagents are retailers, but the terms on which they act as buyers—consumers buying from the two or three distributors that dominate that market—raise major competition issues. There are many similar examples of companies at different stages of the hierarchy of production and distribution being both consumers and producers. It is important that businesses that are themselves consumers should be protected.
Miss Johnson: I understand Opposition Members' points. They are right in their surmise that a distinction has been made between consumers for the purpose of domestic infringement, and consumers for the purpose of infringement of the legislation to which the injunction applies. Businesses are not treated as consumers in the Bill. Prospectus business may be covered by the provisions, but that is to address the issue of people hit by homeworking scams. Otherwise, relationships between businesses are not covered. What we have done is consistent with the approach of successive Governments to consumer protection legislation. We recognise the reality of relationships between consumers and businesses; in general, businesses have an advantageous bargaining position over consumers.
I accept that some small businesses, such as those mentioned by the hon. Member for Twickenham (Dr. Cable), might sometimes feel at a disadvantage when dealing with larger businesses. However, there is a clear difference between consumers and small businesses. Those who go into business do so knowing how to negotiate, bargain, form relationships with other firms and so on, and advice and support services are available to small businesses.
I am aware of calls for businesses, particularly small businesses, to be covered by consumer protection legislation. Indeed, we have looked into that, but the results of our consultation showed that it was not a major worry. The point was not pushed by business groups. Such provision would result in a significant extension of trading standards responsibilities, which are currently focused on consumer issues. We must be careful not to impose too much state intervention on normal business dealings. The hon. Member for Twickenham was hinting at a small business to large business provision, but it would be difficult to know where to draw the lines in the sand without covering all business-to-business relationships.
For the reasons that I have given, we do not propose going down such a path. I accept that there has been some interest, but business in general has not picked up on the matter. I hope that the Committee will accept that there is a coherence about our approach, which is in line with that taken by successive Governments over many years.
Dr. Cable: I hear what the Under-Secretary says, but there are several instances—petrol retailers are a good example—of the matter having been referred to the OFT. However, the OFT has said that it has no standing in the matter and that it cannot investigate. If the problem cannot be dealt with by the route that we
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propose, does the hon. Lady have any other suggestions on how business-to-business consumer exploitation issues can be dealt with properly under competition and consumer law?
Miss Johnson: I shall need to check exactly what the OFT said about petrol retailing, but it has been decided that there are no competition issues. I am sure that the hon. Gentleman accepts that to try to intervene in the relationships between businesses would be to enter into a massive domain, and trading standards are not resourced to deal with business problems. Over successive years, Governments have taken the attitude that they ought not to be involved, and to do so would be fairly intrusive. Many members of the Committee would have criticised me if I had made such a proposal—for reasons that I would entirely understand. That is why I did not do so.
Question put and agreed to.
Clause 201 ordered to stand part of the Bill.
Schedule 13 agreed to.
Mr. Waterson: I beg to move amendment No. 46, in page 145, line 32, after '(2)', insert—
'or is an unfair commercial practice'.
The Chairman: With this it will be convenient to take amendment No. 47, in page 146, line 19, at end add—
'(8) For the purposes of this section an ''unfair commercial practice'' is an act, omission or course of conduct, whether or not it involves a contravention of any enactment or rule of law, which contrary to the requirement of good faith, is deceptive or unfair and which causes detriment to the economic interests of one or more consumers.
(9) In determining whether an act, omission or course of conduct amounts to an unfair commercial practice, the court shall take into account—
(a) the nature of the goods or services in question;
(b) the circumstances of the consumer or consumers in question, including their ability to understand the character, nature and language of any prospective or actual obligation;
(c) the terms of any contract related to the act, omission or course of conduct;
and the court may have regard to whether it involved or involves any of the following—
(d) any misleading or deceptive statement made by the person in question;
(e) any undue influence or pressure exerted by that person on a consumer;
(f) any exploitation by that person of a consumer not reasonably able to protect his own interests because of physical or mental infirmity;
(g) any failure by that person to disclose any information which a reasonable consumer would expect to receive in the circumstances;
(h) any failure by that person to comply with a consumer code of practice (as defined in section 8(4) of this Act) which he claims to follow.
(10) Without prejudice to the generality of subsection (9) above, the following are indicative and non-exhaustive examples of acts, omissions or conduct which may be regarded as unfair commercial practices—
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(a) refusing to leave a consumer's home until a contract has been signed;
(b) putting pressure on a consumer to sign a contract by stating that the same goods, service or price will not be available later when this is not the case;
(c) exaggerating the dangers to which a consumer may be subject to persuade him to buy an insurance policy or other protection product;
(d) pressurising a consumer to sign a contract without a reasonable opportunity to study its contents;
(e) without good reason accompanying a consumer from his home to obtain money for a purchase;
(f) selling goods or services which are clearly unsuitable, having regard to the consumer's apparent disability or infirmity;
(g) awarding a prize which promises a free offer or reduction in price for goods or services which are not in fact available;
(h) promising a prize or award or where the cost of claiming it exceeds the value of the prize or award or where the value of the prize or award cannot be used without further unrevealed expense by the consumer;
(i) unreasonably delaying consideration of a complaint by a consumer under the terms of the contract or requiring the consumer to meet onerous conditions before the complaint is considered;
(j) unreasonably delaying consideration of a claim under an insurance policy or other protection product;
(k) failure to keep a consumer reasonably informed about matters related to a contract which affects him;
(l) obstructing a consumer who attempts to terminate a contract.'.
Mr. Waterson: The hon. Member for Twickenham rightly said that, for many, this is one of the most important parts of the Bill. For that reason, I make no apology for developing my arguments at some length. If I can develop our arguments in sufficient detail, the need for a clause stand part debate might be obviated, which would be desirable only because of the time constraints under which we find ourselves.
Our amendments are by no means perfect. They are a reasonable attempt to tackle a problem. I am indebted to the National Consumer Council for its input and drafting, and to that extent these are probing amendments. I accept immediately the problems of definition involved. The proposals are a fairly significant departure in English law, although not one that other countries have found particularly difficult. We have at least tried to plug a gap in legislation in good faith and with the limited resources available to us and the consumer organisations. At the first hint of the Under-Secretary accepting the principle, I would with alacrity relinquish the task of drafting to the Wykehamists and the double firsts from the civil service who whisper in her ear on a regular basis.
We give a broad welcome, as do the consumer groups, to the extension of stop now orders and the attempt to make the remedies available for obvious and serious breaches of consumer protection more relevant and immediate. Having said that, it is not all good news. We think that the Government have missed a historic opportunity to give real help to consumers. It is a sad fact, as we have discussed before in this Committee and on Second Reading, that we revisit consumer law only about every 30 years or so,
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so it seems a shame to waste the opportunity when it comes around.
The Government have set their face against a new duty not to trade unfairly, even though it is supported by all the major consumer organisations. As I will go on to describe, that new duty would offer to the most vulnerable, such as the sick and the elderly, a broad measure of protection from a whole new range of scams. Because the Government have turned down the chance to close some major loopholes in consumer protection legislation, the result of the new provisions will be that the tricksters will stay one step ahead of the enforcement authorities. In short, the Government have let consumers down.
Only the other day, the ''Stop Shark Practices'' campaign was launched in Portcullis House by several leading bodies, in particular the National Consumer Council. The NCC chairman, Deirdre Hutton, and representatives from the Consumers Association, the National Association of Citizens Advice Bureaux and the Trading Standards Institute were present. They were trying, in a nice, friendly way to keep up the pressure on the Government. The hope is that, while there is the opportunity, the Government will grasp the nettle, whether through our amendments or in some other way. Such opportunities do not come up very often in the legislative programme.
The aim is to introduce a general duty not to trade unfairly. We have set out in proposed subsection (10) a non-exhaustive list of the types of activities that may be regarded as unfair. To those lawyers or non-lawyers to whom the word ''unfair'' sounds a bit vague, I would point out that the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1999 already establish the concept of unfairness.
The NCC makes a particular issue of oppressive doorstep selling. The organisation told the story of an elderly lady who was visited, without invitation or appointment, by doorstep salesmen. They sold her a bed for £3,000—with various gadgets—which was entirely inappropriate to her medical condition and far too complex for her to use. They stayed in her home for five hours, until she signed the contract. I do not think that many elderly, frail ladies would be able to resist signing, if only to get rid of such ghastly people.
The amendments would provide some way of taking action against businesses that systematically adopt an unfair commercial activity against the collective interests of consumers. The enforcement body, whether or not it is the trading standards department or the OFT, could obtain an undertaking from such a business to stop the practice voluntarily. If the business did not do so, the enforcement body could bring civil proceedings for a stop now or enforcement order under the provisions in the clause.
Amendment No. 47 is drafted in negative terms. In an ideal world, the consumer bodies would have produced a general duty to trade fairly, and it sounds a touch Irish to impose a duty not to trade unfairly. However, as a matter of drafting, that is the right approach. Examples are drawn from the Unfair Terms in Consumer Contract Regulations 1994, which came
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into force in July 1995. The regulations updated in 1999 include a non-exhaustive list of indicative terms that may be regarded as unfair.
A recent example of the OFT taking action was its investigation of fitness clubs. It stepped in and took action under the regulations to prevent those clubs from treating their members unfairly. Clubs were trying to exclude liability for death or personal injury. There was a lack of clarity about membership periods and cancellation charges, among other things, and a question over allowing clubs to make unrestricted changes to facilities.
We shall address the Government's amendment in more detail later. With some prompting from us, they have produced a draft exhaustive list of legislation and common-law duties to be covered by stop now orders, on which there will be further consultation. The NCC makes the point, with which we agree, that an exhaustive list will be prone to loopholes that could be exploited. It thinks that the Bill's wording merely needs illustration and that a non-exhaustive list would be more appropriate. We agree with that. The NCC refers to the fact that only certain sections of key consumer legislation are listed. For example, only sections of the Sale of Goods Act 1979—a large piece of legislation—that deal with implied terms are listed. The Under-Secretary may be able to shed some light on that matter. The NCC goes on to say that the Government measures do not go as far as it would like. Amendments No. 47 would provide an indicative list of unfair practices, which would cover unfair, innovative practices not currently caught by specific legislation.
Subsection (10) of amendment No. 47 sets out concrete examples of problems occurring at the moment. One danger of consumer protection legislation has always been that a practice or abuse is dealt with somewhat ponderously and laboriously, only to discover that the con artists have moved on and found a new activity from which they can make money from gullible and vulnerable consumers.
During the half-term break some weeks ago, I went to the Canary Islands with my family. As we strolled down a street, we were accosted by an English person who offered us something that said, in large letters, ''This is not timeshare''. Timeshare is a thing of the past, and con artists are now into something called holiday clubs. Those are a major abuse, and some of the briefings that we have received discuss them in detail. People used to make a fortune from timeshare, although one leading exponent has just been ordered to pay £36 million in compensation for his activities over a number of years—