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Consumers, Estate Agents and Redress Bill

Consumers, Estate Agents and Redress Bill

The Committee consisted of the following Members:

Chairman: Mr. Martin Caton
Brown, Lyn (West Ham) (Lab)
Burt, Lorely (Solihull) (LD)
Clarke, Mr. Tom (Coatbridge, Chryston and Bellshill) (Lab)
Duddridge, James (Rochford and Southend, East) (Con)
Ellwood, Mr. Tobias (Bournemouth, East) (Con)
Fitzpatrick, Jim (Parliamentary Under-Secretary of State for Trade and Industry)
Gauke, Mr. David (South-West Hertfordshire) (Con)
Hodgson, Mrs. Sharon (Gateshead, East and Washington, West) (Lab)
Kramer, Susan (Richmond Park) (LD)
McCabe, Steve (Birmingham, Hall Green) (Lab)
McCartney, Mr. Ian (Minister for Trade)
Pound, Stephen (Ealing, North) (Lab)
Prisk, Mr. Mark (Hertford and Stortford) (Con)
Turner, Mr. Neil (Wigan) (Lab)
Wallace, Mr. Ben (Lancaster and Wyre) (Con)
Watson, Mr. Tom (West Bromwich, East) (Lab)
Mr C. Shaw, Committee Clerk
† attended the Committee

Public Bill Committee

Thursday 19 April 2007


[Mr. Martin Caton in the Chair]

Consumers, Estate Agents and Redress Bill

Clause 13

Investigation of complaints relating to disconnection of gas or electricity
9 am
Lorely Burt (Solihull) (LD): I beg to move amendment No. 53, in clause 13, page 9, line 41, at end add—
‘(8) If the Council refuses to investigate a complaint under subsection (4) it must write to the complainant as soon as reasonably possible, setting out—
(a) its decision not to investigate the complaint, and
(b) the reasons for its decision.’.
We have a two-handed situation on the Liberal-Democrat Benches, so I apologise in advance for any future confusion that we shall cause. I welcome you to the Chair, Mr. Caton, of this extremely well-mannered and productive Committee as it has so far proved to be.
The amendment is simple. It would introduce subsection (8) to ensure that, if the council refuses to investigate a complaint, the complainant is entitled to know in writing that it will not investigate the matter and the reason why it has taken that decision. Such a provision would be entirely reasonable and we look forward to hearing what other members of the Committee think of this sensible amendment.
The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): Good morning, Mr. Caton. The Committee warmly welcomed you and your co-Chairman on Tuesday and expressed its collective confidence in your skill to guide us through our deliberations. I am sure that I can say on behalf of Labour Members what a pleasure it is to see you in the Chair this morning.
Amendment No. 53 would require the new council to write to a consumer as soon as reasonably possible if it decided not to take up a complaint made by that consumer as a result of any of the exceptions listed in clause 13(4) and to provide reasons for its decision. At present, the Department for Trade and Industry sets key performance indicators for its non-departmental public bodies as part of the annual budget and work programme round. That process results in targets. In the case of Energywatch, for example, the body has targets to resolve 95 per cent. of inquiries within 10 working days; to resolve 80 per cent. of complaints within 35 working days; and to resolve 95 per cent. of complaints within 66 working days.
Those targets and performance against the targets are published in the Energywatch annual report. The Committee can be sure that that will be a feature of the annual reports for the new council as provided by clause 7(2)(c), which allows the Secretary of State to specify matters to be included in the report. In future, for the new council we will establish a comprehensive set of performance targets that will be measurable and meaningful. They will be challenging and more precise than what is envisaged by the amendment, which refers to the council writing to the complainant
“as soon as reasonably possible”.
The performance targets will cover such issues as response times to consumers on any inquiry or correspondence and keep consumers informed about the progress of their inquiries. We want to ensure that the new council delivers on demanding targets to provide excellent service for consumers. The amendment attempts to set what should be best practice for the new council in dealing with consumers’ complaints. Since the functions of the new council are focused specifically on aiding consumers, the council should develop its own processes and targets for communicating with consumers.
We take the purpose of the amendment seriously and do not disagree with the overall objective. However, as I have explained, we are already doing what the amendment seeks by setting targets for non-departmental public bodies such as Energywatch. The system will provide us with the flexibility to set the right targets for the new council to ensure that it provides the high standards of service for consumers that we expect. In light of my explanation, I hope that the hon. Lady will understand why the Government are unable to accept the amendment and that she will withdraw it.
Lorely Burt: If the Minister is saying that the requirement to respond in writing to the complainant is already covered in the clause, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 ordered to stand part of the Bill.

Clause 14

Reference of matters to the Gas and Electricity Markets Authority
Question proposed, That the clause stand part of the Bill.
Jim Fitzpatrick: Clause 14 requires the new council to refer a complaint that it considers to raise issues of general relevance made under clause 11(1)(a) to Ofgem. It will also be required to refer complaints made by designated vulnerable consumers and those relating to the disconnection or threatened disconnection of a gas or electricity supply to which clauses 12(3) or clause 13 apply. The council will refer such complaints when it considers that Ofgem’s regulatory functions may be exercisable and when Ofgem is not already aware of the complaint. When a complaint about a gas or electricity disconnection is made to the council and referred to Ofgem, the council is not obliged to investigate until the authority has had a reasonable chance to exercise its enforcement functions.
Clause 14 focuses on resolving problems in the most effective way. When the authority has enforcement powers in respect of complaints made by the consumer, it is sensible to ensure that Ofgem—the regulator—is aware of the matter and that it has the opportunity to use its powers to resolve it. That position is the same as the current provision.
It is important that Ofgem is made aware of problems that arise from a situation in which a licencee’s behaviour breaches licence conditions. Ofgem has powers to enforce licence conditions by, for example, imposing financial penalties of up to 10 per cent. of turnover. Ofgem also has powers to determine connection charges. When a consumer seeks connection to the electricity or gas network and is not willing to accept the distribution company’s quotation for the work, the issue can be referred to Ofgem, which can make a determination on the reasonable amount that a consumer can be asked to pay. That is an example of an issue that can be referred to Ofgem by the council for resolution.
The clause provides for the new council to notify a complainant if it considers that a complaint refers to a matter that can be referred to Ofgem under existing legislative provision. In our sitting of Tuesday 17 April, reference was made to the need to ensure that the council notifies a complainant in accordance with the key performance targets that we will set out. I commend the clause to the Committee.
Mr. Mark Prisk (Hertford and Stortford) (Con): Thank you, Mr. Caton. I, too, welcome you to the Chair. I do not think that I have had your guidance before in a Standing Committee or, as we must now call them, a Public Bill Committee, but I am delighted to have such guidance now as we continue our deliberations.
I welcome the Minister’s opening remarks on the clause. He rightly said that it will require the council to refer a complaint that stems from clauses 11, 12 and13 to Ofgem when it considers the authority’s powers to be exercisable which, in principle, is a perfectly reasonable measure. However, as the Minister will know, there will be cases on the margins of Ofgem’s power, as it were, over which there may be some dispute, particular regarding disconnections. It would be helpful if the Minister would express his views or give some guidance to the Committee now or in the future as to what will be the guiding principles in cases that involve a dispute over whether a matter should be referred to Ofgem.
Susan Kramer (Richmond Park) (LD): Thank you, Mr. Caton. We are making the matter of who is speaking for the Liberal Democrats very complicated, so I much appreciate your powers of observation.
For the sake of clarification, as I understand it, Ofgem will be responsible for setting the standardsfor complaints procedures for electricity suppliers. Presumably, Ofgem will need to get information about the kinds of complaints that are being made from the National Consumer Council, whether or not suppliers’ complaints procedures are adequate, or whether the process is effective in the real world. Does the Minister see the Bill as providing the structure that will allow the transfer of necessary information?
Jim Fitzpatrick: In our Tuesday sitting, there were quite a few references to double acts—I myself was subject to some of the knockabout. The hon. Members for Richmond Park and for Solihull were not referred to then as Thelma and Louise, but I can assure them that if they ever were, it would be in a complimentary sense. [Interruption.] The hon. Member for Rochford and Southend, East (Mr. Duddridge) clearly does not have a problem with which Minister will respond to him today.
The arrangements about whose uncertainty the hon. Member for Hertford and Stortford asked will to a certain extent have to be worked out in the implementation and work programme stage in the months ahead to identify the lines of responsibility. The new council will clearly have a keen interest in ensuring that it knows when it will have responsibility and when it can and cannot pass matters on. There will need to be co-operative arrangements and understandings between the regulators and the NCC on how to handle complaints, who should do so and how to resolve issues that could be handled by either or both. They will have to identify in due course how the arrangements are working and I am sure that that will be of direct interest to the consumer, who needs to be confident that it is seamless. The consumer will need to understand that a complaint that they register will be dealt with. Whether it is handled by one or by the other will be a matter for the organisations, but they will need to communicate that to the consumer so that the consumer knows that their complaint is being handled and who they can contact.
On the point made by the hon. Member for Richmond Park, flows of information will be established between the regulators, the redress schemes and Consumer Direct under the redress provisions. I know that she has informally raised matters about complaints handling procedures, and we shall deal with those in detail later—probably under clauses 47 to 52. We are happy also to talk to her informally to give her as full an answer as possible before the matters are raised in more detail in due course.
Question put and agreed to.
Clause 14 ordered to stand part of the Bill.

Clause 15

Reference of matters to the Postal Services Commission
Question proposed, That the clause stand part of the Bill.
Jim Fitzpatrick: This discussion is virtually identical in point of principle to that on clause 14.
Susan Kramer: I wish to raise an issue similar to that which I raised on the previous clause, but there is a slightly broader set of questions here. With the disappearance of Postwatch, can the Minister clarify which of its responsibilities the National Consumer Council will pick up and which will be left to be picked up by Postcomm? He will be conscious that Postwatch has effectively acted as the consumer arm of Postcomm and that the situation has been a little different from the energy utility arrangements.
In that context, we are particularly concerned by earlier discussions in the Committee. The Minister will know that 90 per cent. of Royal Mail’s activity is related to businesses rather than domestic consumers, and there is a new consultation on a proposal by Royal Mail to change its pricing to a zonal basis. Yet in our earlier discussions there seemed to be a fair amount of ambiguity about how much the National Consumer Council’s remit would include the importance of focusing on business. It could, but it was clear that that played a secondary role to that of the domestic consumer in the view of many Government Members. A critical issue for business arises: where on earth will that responsibility lie? Postcomm focuses on the licence criteria, which do not capture any notion of consumer benefit or disadvantage.
As in the earlier clause, Postcomm will need to set up complaints standards. Royal Mail has a modest complaints process, and in the past everyone has relied on Postwatch to add a complaints arm. Postcomm will need to develop and approve a proper complaints system. How does the Minister envisage that process going forward so that we do not have a hideous gap in the transition from one system to the other?
9.15 am
Jim Fitzpatrick: The hon. Lady raises several fair points. To a certain extent, the hon. Member for Hertford and Stortford raised the principle of working out the details of complaints handling procedures, responsibility, accountability and communications, and that is work in progress. I will be able to say a little more on that when we deal with clause 16 stand part.
I am grateful that the hon. Member for Richmond Park told me informally outside Committee that she was going to raise the question of complaints—business complaints in particular. I know that we are going to have another informal discussion in the interval today to ensure that we can give a more substantive answer when we get to the part of the Bill that deals with complaints handling and redress procedures. I hope that we can deal with that matter in due course.
The new council will provide consumer advocacy and support for vulnerable consumers and businesses as well as consumers generally. It will be a matter for the new redress schemes to resolve the complaints, which we will be coming to between clauses 47 and 52.
Question put and agreed to.
Clause 15 ordered to stand part of the Bill.
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