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Part 2 of the Bill will, for the first time, give consumers guaranteed access to redress schemes that
have the teeth to enforce their awards. The Bill will enable Ministers to require suppliers or service providers in the energy and postal services sectors to belong to redress schemes. That will give consumers not only confidence that their complaint will be resolved but access to compensation and redress where that is warranted.
The redress provisions in the Bill have been strengthened by changes resulting from discussion in the other place. Gas transporters and electricity distributors have been brought within the scope of the redress schemes. We have also made it absolutely clear that the new national consumer council can investigate complaints relating to threatened disconnection of gas or electricity supplies as well as actual disconnection. That also relates to the point made by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) about vulnerable consumers. Furthermore, the new national consumer council can investigate complaints from consumers who use prepayment meters, where disconnection arises as a result of a failure in the prepayment system. Those changes provide yet further protection for consumers, especially the most vulnerable consumers in our society.
Peter Luff: As I understand it, the energy sector already has a redress scheme, and the energy supply ombudsman already exists. However, there is no such ombudsman for the postal sector, which is a major concern for consumer bodies and businesses. When will there be a postal services ombudsman?
Mr. McCartney: I will come back to that point, but the hon. Gentleman may rest assured that for the first time ever each of the sectors in the Bill will have comprehensive redress schemes, which will be consistent with each other. That is the whole purpose of the Bill, as I was trying to get across, and I hope that that reassures the hon. Gentleman.
Estate agents play a crucial role in the home buying and selling process. For most consumers, buying a home is the most critical and the most expensive purchase that they ever make. I speak from personal experience when I say that it can be shattering to the nerves on occasion. It is vital that the estate agency market works well and that consumers are protected against unfair practices. Consumers need to be confident that estate agents will deal honestly with them; and many estate agents are rightly angry that their reputation is tarnished by a small and unscrupulous minority.
The Office of Fair Trading recognised those issues in its study of the estate agency market published in March 2004. The OFT found that the market was generally competitive. However, it also found that a significant number of consumers were not happy with the service that they received. Some consumers simply received poor service with estate agents turning up late for appointments, for example, or not returning keys on time. But other complaints were more serious, such as failure to pass on offers to sellers or failure to declare a personal interest in a property. The OFT therefore made a number of recommendations to put that right.
The Government accepted the OFTs recommendations in July 2004. In fact, in the area of redress, the Government went even further than the OFT and promised to make membership of a redress scheme mandatory for all UK estate agents. We fulfilled that promise in part by amending the Housing Act 2004. As a result, complaints against estate agents relating to home information packs in England and Wales will now be addressed through redress schemes.
The order requiring estate agents to belong to a redress scheme for the purposes of HIPs was laid on 1 March, and estate agents have until 1 June to sign up to an approved scheme. But this Bill goes further. It will fulfil our promise that a private individual with a complaint against an estate agent should have access to redress. Estate agents could face costly pay-outs and possible loss of livelihood if they do not abide by the law and generally accepted voluntary codes of conduct in the industry. I am confident that we will see higher standards as a result. Our intention is that this should come into force in April 2008.
At the same time as providing redress for consumers the Bill also tightens the current negative licensing regime. First, the Bill will improve the audit trail for transactions by requiring estate agents to make and keep records, including records of offer letters, for six years. Secondly, it will give the OFT and local authority trading standards officers powers to go into premises and inspect records in a wide range of circumstances. That will enable them to investigate not just criminal offences but all breaches of the law and of undertakings given to enforcers. Finally, the Bill will expand the circumstances in which the OFT can consider the fitness of an estate agent to practise, and if necessary it can take regulatory action against them.
At present the OFT can ban an estate agent only when they have been convicted of specified criminal offences. The Bill will allow the OFT to ban an estate agent when there is sufficient evidence that an offence has been committed, even if there is no conviction. That will ensure that the OFT can consider the fitness of estate agents, for example, where another regulator has taken enforcement action against them but they have not been taken to court. Furthermore, the OFT will also be able to ban an estate agent when an enforcement order or a statutory undertaking under the Enterprise Act 2002 has been breached.
Those changes are needed to bring the Estate Agents Act 1979 into line with modern enforcement practice. The Government wholeheartedly support the efforts of the National Association of Estate Agents and the Royal Institution of Chartered Surveyors to raise standards through training. Any good estate agent should have knowledge of the legislation governing estate agents, just as any professional should be aware of the legal obligations relevant to their industry. However, the OFT found that in the majority of cases where it took action against an estate agent the root cause was lack of integrity or honestynot lack of knowledge of the law.
What the Bill does is more sophisticated than positive licensing: the estate agents provisions will mean that a consumer dealing with an estate agent anywhere in the UK knows that there is somewhere they can go to seek redress. Any estate agent who does not belong to a redress scheme will now face being
fined and banned as a result. More evidence and audit trails will make it easier for enforcers to deal with rogue agents and remove them from the marketplace. At the same time, other measures strengthen the current regime and give enforcers the powers they need to take action against rogue agents. Ultimately, that approach will serve consumers better.
Finally on this issue, I shall comment on the concerns raised about the fact that letting agents and others are not included in the Bill. Lettings and new build are important sectors of the property market, and the Government are committed to ensuring that consumers are not disadvantaged in those areas. However, the Bill implements the recommendations made in the OFT report on the estate agency market. The report did not look at lettings agents, property developers or any other property professionals, so we do not yet have a clear evidence base for extending the redress provisions to those sectors.
Secondly, the Bill amends the Estate Agents Act 1979, which has a specific definition of estate agency work. Changing the definition would require a lengthy and careful examination of the consequences for the whole Act. However, the Government are committed to looking at the whole property market and, on the basis of proper research and evidence, to consider what more needs to be done. At my prompting, as Minister with responsibilities for consumers, the Government will conduct a review of the property sector, including looking at redress for lettings and new build. Ministers will consider carefully the conclusions of that work and decide the next steps that should be taken. I hope that is seen as a positive response to the comments made in another place.
Part 4 contains provisions relating to doorstep selling that will give consumers the right to change their mind, whether they asked for the sales visit or not. This part of the Bill has a long history, going back to 2002 when Citizens Advice submitted its report, Door to Door, to the OFT as a super-complaint. The OFT subsequently made a number of recommendations for improving consumer protection in that area. As part of the Governments response to the OFT report, published last September, we decided to introduce primary legislation to enable us to make regulations, so that consumers who ask salespeople into their home will also have cooling-off rights for doorstep sales; at present, they apply only when a salesperson turns up uninvited.
Breaking down the distinction between solicited and unsolicited visits will make the law simpler and clearer for the consumer, business and enforcement agencies alike. Businesses will be able to work with one contract for both solicited and unsolicited visits, reducing ongoing costs in the production of contracts and training of sales staff. The simpler rules will ensure that businesses will not generally need to spend time establishing whether their visit is solicited or unsolicited. The provisions are particularly important for vulnerable consumers whohaving invited a salesperson into their homecan feel pressured into buying something they do not want or need. Together with the unfair commercial practices directive, the
measure sends a clear message that businesses that lack integrity and feed on fear will not be tolerated.
The Government are committed to a robust and effective consumer and competition regimeone that is fair to consumers as well as to business. First, the Bill creates a new National Consumer Councila powerful advocate for consumers. Secondly, it gives consumers the rights to redress that they deserve. Thirdly, it demonstrates our commitment to getting rid of rogue estate agents. Fourthly, for the first time, it tackles effectively rogue doorstep sales persons. I look forward to hearing the contributions of right hon. and hon. Members to the debate on this important Bill. I commend it to the House.
Alan Duncan (Rutland and Melton) (Con): I thank the Minister for talking us through the main points of the Bill, which Conservative Members broadly welcome. As he said, it is important for consumers, it merges key consumer bodies and it makes a serious attempt to give consumers greater rights when buying or selling their house.
I pay tribute at the outset to the work done in the other place by my noble Friend Baroness Wilcox and others whose efforts have already significantly improved the Bill. We firmly believe in consumer choice and in the accessibility of information to enable people to exercise that choice. That is best achieved through a spirit of shared responsibility with the Government, businesses and consumers all working together. That, of course, is not always the reality and when businesses fall short of their responsibilities, it is important that consumers have the means available to obtain timely and efficient redress. It is on the basis of those principles that we approach the Bill today.
We support much of what the Bill does, but have several specific concerns, some of which the Minister referred to earlier. One of its principal features is the amalgamation of Energywatch, Postwatch and, in time, the Consumer Council for Water within a new statutory national consumer council. The Government argue that it is designed to strengthen and streamline consumer representation. However, the Governments record has given rise to concern that the implementation of those changes may mean that consumers are, in fact, disadvantaged by these proposals.
There is, for example, increasing disquiet about how and when the Consumer Council for Water will be merged into the new regime. The next water industry price review, which will fix limits for water companies charging systems, is due to be completed in 2009. The period leading up to that date will therefore be a busy one for the Consumer Council for Water, yet it is just the period in which the Government want to begin abolishing it.
Mr. McCartney: I thank the hon. Gentleman for giving way and apologise if I misrepresent what he has said. I recognise the point that he makes, as I have already met representatives of that body and suggested that I would be happy to bring forward the review if it would help in dealing with the other matters that the hon. Gentleman mentioned. I am now waiting for a response.
Alan Duncan: That is not in the Bill at the moment, but I welcome and appreciate the Ministers constructive response. If it is amended in Committee along the lines that he described, that would make for good progress and we would be happy to follow that line with him.
Mr. McCartney: I thank the hon. Gentleman for having this helpful conversation. I do not need to amend the Bill in respect of consultation, because it does not have to be done through primary legislation.
Alan Duncan: The last couple of minutes seem to have been more effective than the entire proceedings of Public Bill Committees, so we are making progress. I am grateful to the Minister. I do not know whether I am going to achieve quite as much with my next point, but I am going to try.
The timing of the abolition of Postwatch is also unfortunate, to say the least. At just the time that the Government are making deep cuts in the post office network, they are planning to mire the postal consumer watchdog in a transition process, too. Surely there is a danger of giving less focus to consumers at just the time that they most need the representation that Postwatch can offer.
Robert Key (Salisbury) (Con): I have tried diligently to make use of Postwatch, whose motives are tremendous, but for several years it has been completely overwhelmed and unable to respond within a reasonable time scale. Actually, the best watchdogs are consumers themselves: the people in receipt of the lettersor not, as the case may be.
Mr. McCartney: I have to respond to my next-door neighbour in London. Extensive work has been done in co-ordinating with the body concerned. It is engaged at the very highest levelat every levelon a fortnightly basis with the planning and implementation process. Perhaps it should spend more time on that rather than sending out reports to MPs about fears that are absolutely groundless.
Alan Duncan: I think many may disagree with what the Minister says about groundless fears. There are serious concerns about the entire future of the Post Office. Postwatch and successor bodies will be responsible for elements of consumer representation and we want to make sure that the mechanisms for that are of the highest possible quality.
Mr. Jim Cunningham (Coventry, South) (Lab): I am sure that the hon. Gentleman will agree with me and the Minister that Postwatch was not effective and that we should have a stronger body to regulate the post.
Let me just ask the House whether bigger means stronger. Conservative Members are concerned about the skills and experience that have been built up in Postwatch and Energywatch. Those bodies know the detailed issues in their sectors and have experienced people working for them. Perhaps the
Minister will now have to concentrate on how he will ensure that those valuable skills are transferred intact to the new body. For example, will the new body retain separate sectoral specialists? Can he assure the House that it will carry at least the same weight and reputation as the existing sectoral bodies that have worked hard to get name recognition?
Peter Luff: We are in the fortunate position that the Minister replying to the debate is responsible for post offices, so I would like to reinforce my hon. Friends point. Postwatch has learned from the problems of the urban reinvention programme and has become a sufficiently more effective body. It has a big contribution to make to the current round of post office closures planned by the Government, so it is a great shame that it will be abolished at this precise moment.
Alan Duncan: I am grateful to my hon. Friend. To many, there is a suspicion, on which they need reassurance, that the decision to create the new body was motivated not by a desire to improve consumer representation but simply as a drive to cut costs. My hon. Friend asked the Minister earlier about the name of the new body. I did not quite understand the answer; it came out as a bit of a jumble and appeared to us all as a bit of a Prescottism. I am confused, so perhaps the Minister can clarify what its name will be.
Mr. McCartney: I am not going to apologise for my accent. From my perspective, the answer was clearit will be the new national consumer council and I said that more than once in my speech and in response to the hon. Member for Mid-Worcestershire (Peter Luff).
Alan Duncan: That does clarify the matter, so I am grateful to the Minister. However, in the course of his earlier answer, he used, perhaps by accident, the word voice. However, we now know what the answer is, and that is fine.
Our second area of specific concern is the lack of provision relating to internal complaint handling procedures. We differ from the Government over how best to ensure that complaints are dealt with quickly and effectively. Redress schemes are at the heart of the Bill, yet they are the last resort of the unhappy consumer. The first port of call is, and should be, the company from which the goods and services were purchased. Effective complaints procedures at this stage would have the effect of ensuring that more complaints were resolved at their outset. It would reduce the burden on the new NCC and make for better satisfied consumers too. Good internal complaints procedures are the best way to protect and empower consumers, and yet there is precious little about that in the Bill.
Existing redress schemes vary greatly from granting immediate access to insisting on a three-month wait before the consumer can invoke the services of the ombudsman. Three months is a long time to wait for a consumer and that creates an opportunity for supplier companies to avoid resolving complaints quickly, knowing that the process for the consumer may simply turn out to be too long and drawn out for them to bother pursuing things further. Conservative Members
believe that companies should have in place effective internal complaints procedures to deal with consumers quickly and efficiently. The best way to make that happen is to insist that internal complaints procedures that reflect best practice are a fundamental requirement for the membership of any approved redress scheme for which the Bill provides.
This is not re-inventing the wheela similar model already successfully works in the financial services sector. The Financial Services Authority requires that membership of the Financial Ombudsmen Service is dependent on an organisation having an appropriate and effective internal complaint-handling function. We hope that a similar system can be replicated. I am glad to see the Minister nodding. That is good news, if that is what is going to happen.
Initially, the Government made only a small concession towards this approach when the issue was raised in the other place. The phrase that they introduced into clause 49 was a tad vague. They required regulators only to
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