The Chairman: With this it will be convenient to discuss Government new clause 7—Person supplying goods.
Miss Johnson: Clause 202(2) gives the Secretary of State the power to specify by order the legislation and common law obligations, breach of which will constitute an act or omission for the purposes of the definition of a domestic infringement when it consists of anything done or omitted to be done, as set out in subsections (2)(a) to (2)(d).
Subsection (2)(a) provides for criminal offences and (2)(b) for breaches of contract. Subsection (2)(c) provides that in the order-making power are included things done or omitted to be done in breach of a non-contractual duty owed to a person by virtue of an enactment or rule of law enforceable by civil proceedings. Subsection (2)(d) provides that within the definition are acts or omissions for which legislation provides a remedy or sanction enforceable by civil proceedings. However, neither subsections 2(c) nor 2(d) would cover the situation in which an enactment created a sanction of unenforceability, restricted the
Column Number: 249exercise of rights in relation to the supply of goods or services or prevented the exclusion of liability in relation to the supply of goods or services.
An example of the first of the situations is the requirement in relation to the form, content and signature of agreements in sections 60 and 61 of the Consumer Credit Act 1974, and the duty to supply copies of the agreement and notice of the right to cancel in sections 62 to 64 of the 1974 Act. In these cases the court can allow the agreement to be enforced except in cases set out in sections 127(3) and (4); for example, improperly executed agreements or security instruments. We therefore want to cover breach of these requirements when the sanction is unenforceability as a domestic infringement. There is potential harm to the collective interests of consumers if lenders fail to meet the requirements deliberately or without taking adequate care to ensure they do not fail. Consumers who are not aware of their rights will not know that the agreement is unenforceable and may consequently pay up. New subsection (2)(e) will cover that situation.
New subsection (2)(f) further extends the definition of a domestic infringement to include any act or omission by which a person purports or attempts to exercise any right relating to his supply of goods or services when legislation forbids him to do so in the relevant circumstances. Subsection (2)(f) will include, for example, the creditor who seeks to enforce a term of a regulated credit agreement when he has failed to comply with the statutory precondition for enforcement, such as the requirement to give the debtor or hirer seven days' notice of his intention to do so. A person who demands or accepts payment of sums when legislation relieves the payee of liability for them would be exercising a right within subsection (2)(f).
New subsection (2)(g) will include within the definition of a domestic infringement an act or omission by which a person supplying or seeking to supply goods or services purports to avoid or attempt to avoid liability relating to the supply when such avoidance is restricted or prevented under an enactment.
New clause 7 is consequential to this amendment. It repeats in substance section 138(4) and 138(5) of the Fair Trading Act 1973. That provides that in relation to the supply of goods under a hire purchase agreement, a credit sale agreement or a conditional sale agreement, the person conducting the antecedent negotiations, as well as the owner or seller, shall be treated as a person supplying or seeking to supply the goods. The effect is that in such agreements the dealer will be treated as the supplier as well as the finance company, which is technically the supplier under the contract with the consumer.
Mr. Waterson: We join the National Consumer Council in welcoming amendment No. 167. It is an improvement, although it goes nowhere near as far as we would like. I am sure that the following is right, but I shall repeat it so that the Under-Secretary can intervene if she considers that I am wrong; all the important and useful enactments and provisions to which she referred are part of existing law, whether it
Column Number: 250be primary or secondary legislation in this country or something that has emanated from Europe. There is no basis upon which the clause, even as amended, can deal with the new problems and scams that we have been discussing.
The National Consumer Council makes the point that the Bill aims to cover situations in which a consumer uses an agent or other intermediary—for example, an insurance agent, travel agent or mortgage broker—to act on his behalf and is entitled to services as part of a separate contract. The NCC has concluded that, as a result of the amendment, it would be possible to deal with problems caused by such intermediaries through enforcement orders, as envisaged in the Bill. However, it sounds a note of caution. It has concerns about whether the Bill covers everything that might go wrong and wants further information as to whether all the common law duties of agents will be covered. For example, would it apply to a situation in which an agent fails to set up an agreement, such as a mortgage broker failing to set up an endowment insurance policy? If the Under-Secretary does not know off the top of her head, perhaps she can write to me.
Although NCC would have preferred amendments Nos. 46 and 47, it supports the aim of this amendment in seeking to stop traders' exploitation of consumers' lack of knowledge of their rights by attempting to exercise non-existent or restricted rights against them. It says that there are many examples of people who, already in severe financial difficulties, are misled, intimidated and exhorted to release their property to bailiffs and other debt collectors without proper processes having been followed. It also points out that it is unclear whether the wording of the amendment would cover a situation in which a debt is enforced by a business that fraudulently or recklessly claims to have supplied goods or services. Apparently that has been a major problem in the United States, where a business supplying internet services fraudulently claimed to have supplied web addresses. The Federal Trade Commission had the power to bar the practice and to publicise the case.
Miss Johnson: I am happy to write to the hon. Gentleman about those points.
Mr. Waterson: That is very helpful. The National Consumer Council also makes the point—which came up in a different context—that the Government have helpfully produced a draft exhaustive list of legislation and common law duties to be covered by the stop now orders, and that there is to be further consultation. It repeats the point that an exhaustive list, almost by definition, could leave loopholes that could be exploited. It expresses a clear preference for a non-exhaustive list.
The Under-Secretary might be able to deal with the next example by saying that it comes under community infringements. The only DTI legislation, it appears, is the Food Safety Act 1990, prohibiting the sale of unfit food and controlling quality standards. That is missing from the Bill, claims the NCC, as are other pieces of legislation that would directly benefit consumers. Perhaps that is another example of something that is dealt with in another list, such as the Community infringement list, in which case the
Column Number: 251Under-Secretary can tell me and I shall shut up—temporarily—or she can write to me to clarify the matter.
Miss Johnson: It is in another list.
Mr. Waterson: It is very helpful to have that made clear. Again, the Under-Secretary might want to consider that matter in her consultation on the draft list that she has so helpfully provided. We are not being critical for the sake of it, and we are grateful for what the Minister has tried to do in producing that exhaustive list—
It being five minutes to Ten o'clock, The Chairman proceeded, pursuant to Sessional Order D [28 June
Column Number: 2522001]and the Order of the Committee [16 April 2002], to put forthwith the Question already proposed from the Chair.
Amendment agreed to.
The Chairman then proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time.
Clause 202, as amended, ordered to stand part of the Bill.
Clauses 203 to 226 ordered to stand part of the Bill.
Further consideration adjourned.—[Mr. Pearson.]
Adjourned accordingly at five minutes to Ten o'clock till Thursday 25 April at half-past Nine o'clock.
The following Members attended the Committee:
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