Enterprise Bill

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Mr. Field: It strikes me that some scams will be very difficult to legislate against, not least because as soon as legislation is introduced, the scam artists move on to the next thing.

My hon. Friend the Member for Eastbourne made a valuable contribution. Clearly, there are some gaps in the current legislation, but I have some sympathy with the situation in which the Under-Secretary finds herself. I am a little concerned about the lack of definition of ''trading unfairly''. Effective enforcement is key to any such legislation. Much trading standards is in the hands of local authorities, many of which are caught for cash and unable to enforce many of their regulations, be they in relation to trading standards or planning, to the full satisfaction of their residents. I would be concerned about putting too much regulation into statute and then finding that we could not enforce it. I hope that the Under-Secretary will give some thought to our amendments, because they make some useful suggestions. Following the examples given by my hon. Friend, I hope that we can go at least some way to closing the loopholes that exist under the current law.

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Miss Johnson: I have a great deal of sympathy for the motives behind the amendments, but it is important to obtain proper evidence of the extent and the nature of unfair commercial practices that are not already unlawful before rushing to legislate. I shall deal with how they may already be unlawful in a moment.

It is very important that new legislation is founded on a robust evidence base to ensure that it targets the right issues and does not create undue burdens on business. Although we have heard from the Opposition on several occasions today about the importance of not creating such burdens—I agree entirely, in principle—it is interesting that on this matter that point has not been made at all.

I will deal with a number of the specific points that have been made about scams, problems and sharp practices, because it is helpful to go through as many as possible. I cannot promise to deal with every issue that has been raised in what has been an extensive and full debate, but, as I said, I have a great deal of sympathy for the motives behind the amendment.

Many of the unfair practices that have been mentioned, including the sharp practices and the mis-selling covered by the hon. Member for Twickenham, will be covered by existing legislation and will either be Community or domestic infringements under this part. The draft lists I have made available to members of the Committee include, for example, the inclusion of unfair terms in consumer contracts, the sale of goods that are not fit for their purpose, misleading advertising and the giving of misleading price indications. I shall return later to the relevance of that to some of the examples that have been given. It is essential that existing legislation is enforced properly before we introduce new law. That is the purpose of this part of the Bill.

Significant extensions of the law are involved and I hope that hon. Members are taking them into account in their thinking as they consider problems with which many of us are familiar, perhaps because we have experienced them directly. It is not only little old women who experience such problems, but little old men and some who are not old at all. Even some in the City have been caught; I am sure that some smart City lawyer was caught by the wine scam. Some consumers are more vulnerable than others, but all of us are potentially vulnerable to such practices.

Mr. Djanogly: We have continually spoken about vulnerable people, but I have not heard anyone say how ingenious the people who run these scams can be.

Miss Johnson: I am afraid that criminality and ingenuity often go hand in hand. Such ingenuity could be used for better purposes, which is how we would like it to be.

Amending the Bill as proposed by the amendments would have a significant impact on the current consumer protection regime and the full implications need to be properly considered. For example, it is difficult to define an ''unfair commercial practice''. ''Unfair'' can mean different things to different people, notwithstanding the point about unfair terms made by the hon. Member for Twickenham. Unless terms are

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properly defined, the result will be vague legislation, which will take years of interpretation by the courts before a clear meaning emerges.

Mr. Waterson: I assume that the Under-Secretary accepts that since 1977 there has been the Unfair Contract Terms Act, which defines the meaning of ''unfair''. A body of law has grown up around the meaning of the word ''unfair'', which could be translated into a provision in the Bill.

Miss Johnson: It would be a matter for the courts to decide whether it was appropriate to transfer existing decisions in that way. Either way, the amendment would make it difficult for consumers to be certain of their rights, for businesses to be sure that they were complying with the law and for enforcement bodies to apply it. Much of what is proposed is as broad as the Fair Trading Act 1973. That Act was broad and brave, but it did not work for a variety of reasons that I know the hon. Member for Eastbourne will accept.

Mr. Charles Hendry (Wealden): Before the Under-Secretary moves on, can she say under what circumstances it might be fair to refuse to leave a consumer's home until a contract has been signed?

Miss Johnson: I have said that I shall address individual cases in a moment, and will consider what redress, if any, might be available under existing legislation. Our consultations on the European Commission's proposals in that area have clearly demonstrated that business is concerned about the introduction of a general duty, defined in broad terms, which might result in ''fairness'' and ''unfairness'' being defined differently in different courts.

That brings me to Europe, which has been absent from our debate. As many hon. Members are aware, the Commission has published a Green Paper on the EU consumer protection regime. It proposes an option for tackling unfair practices. In that context, we are encouraging the European Commission to build up an evidence base about the extent of any problem and to focus on ensuring that existing legislation is properly enforced. If we have difficulties defining ''fair'' and ''unfair'' in a UK-only context, it will be even harder to do so in a European context, in which countries with diverse regimes might have to be considered.

The hon. Member for Eastbourne asked about the terms concerning the sale of goods covered in our list of community infringements. They are in the community list because of the scope of the sale of goods directive. All other breaches of contract are in the list of domestic infringements.

When someone receives an unsolicited visit, such as the elderly lady mentioned by the hon. Member for Eastbourne in the context of doorstep selling, the distance selling regulations provide for a seven-day cooling-off period. I accept that if one invites the salesperson in, one is not covered in that way. However, it is a criminal offence for the salesperson not to inform the consumer of his cancellation rights. The hon. Gentleman's example is covered in the Bill, under community infringements.

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Mr. Waterson: The entire point that I was making to the Under-Secretary was that salespeople are getting around the problem by going to consumers homes after they have responded to an advertisement. That immediately takes the transactions outside of the provisions.

Miss Johnson: Indeed. I have accepted the point in that case. We can construct any number of cases that will not be covered. I fear that whatever we do, there will always be scams, thanks to the ingenuity that hon. Members have mentioned and the degree of effort that goes into them.

I remind hon. Members that a consumer who asks a salesperson to call has the opportunity to check what is available elsewhere and to arrange for a friend or relative to be present. When an individual invites someone into his home, rather than experiences the unsolicited call that is covered in the Bill, it can be difficult to tell whether that can be defined as unfair. I shall go through some of the cases that have been put to us. Existing legislation provides some protection.

In the first instance, the Sale of Goods Act 1979 provides individual rights of redress. The Consumer Credit Act 1974 allows the consumer to pursue the credit card company for redress as well as the supplier. In other cases, the Sale of Goods Act 1979, the regulations covering doorstep sales included in the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) (Amendment) Regulations 1998 and the Unsolicited Goods and Services Act 1971 might provide the relevant protection. In many of the cases that have been cited, the Misrepresentation Act 1967 could provide additional rights of redress.

A point that we need to bear in mind, which has been made by a number of hon. Members, it is often a question not of no provision being made, but of enforcing the provision and/or the consumers' knowledge of the provisions and how to go about getting them enforced. We all know that many consumers do not have the wherewithal to take action. That would be same whatever legal provision was in place; it will still be difficult for some consumers to know what to do to obtain justice.

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Another problem is extended warranties given by companies that have since gone bust. In such cases there will be no one to take the goods back, but that would not be changed by a general duty to trade fairly—or, if we so choose, a duty not to trade unfairly. As for the small print example given by the hon. Member for Huntingdon, regulations covering unfair terms require the terms to be plain and intelligible. If they are written in print so small that is difficult to read, they will breach the regulations, which is a Community infringement, so they are likely to be covered. We are also considering advertising and print size in relation to other issues.

Prize draws would be covered under the misleading advertising provisions. Pyramid selling, such as in the Women Empowering Women case, is quite tricky. We are certainly looking to see what can be done, but hon. Members must be aware that the system is based on

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one individual giving a gift to another. No overall promoter is involved. Individuals simply pass the object on, as members of the Committee might do. The question is: who can we take action against? It is not entirely clear that a general duty would help. As for unsuitable products, such as the armchair that was delivered in place of the expected back embrocation, it is implied in the Sale of Goods Act 1979 that goods must be of a satisfactory quality and reasonably fit for their purpose; in that example, it would seem that the goods were not fit for the expected purpose.

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