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Session 2006 - 07 Publications on the internet General Committee Debates Consumers, Estate Agents and Redress Bill |
Consumers, Estate Agents and Redress Bill |
The Committee consisted of the following Members:Mr C.
Shaw, Committee
Clerk
†
attended the Committee
Public Bill CommitteeTuesday 24 April 2007(Morning)[Mr. Mike Weir in the Chair]Consumers, Estate Agents and Redress Bill10.30
am
Clause 42
ordered to stand part of the
Bill.
Clause 43Standards
for handling
complaints
The
Minister for Trade (Mr. Ian McCartney):
I beg
to move amendment No. 60, in clause 43, page 26, line 3, leave out
‘may make regulations prescribing’ and insert
‘must by regulations
prescribe’.
The
Chairman:
With this it will be convenient to discuss the
following: Amendment No. 33, in clause 43, page 26, line 3, leave out
‘may’ and insert
‘shall’.
Amendment
No. 34, in clause 43, page 26, line 5, leave out ‘may’
and insert
‘shall’.
Amendment
No. 30, in clause 43, page 26, line 7, leave out ‘may’
and insert
‘shall’.
Amendment
No. 73, in
clause 43, page 26, line 9, at
end insert—
‘(3A) The
regulations must require a regulated provider to collate information on
the number of complaints received by subject-matter of a complaint, or
the description of a person making a
complaint.’.
Government
amendments Nos. 61 to
66.
Mr.
McCartney:
Good morning, Mr. Weir. I shall make
comments on the amendments tabled by the hon. Member for Hertford and
Stortford (Mr. Prisk) and my right hon. Friend the Member
for Coatbridge, Chryston and Bellshill (Mr. Clarke) and I
shall explain in detail the purpose of amendment No. 60 and the
consequential amendments Nos. 61 to 66. I hope that members of the
Committee will first permit me to reiterate the intentions behind parts
1 and 2 of the Bill to set in context what the amendments are
about.
The Bill is
intended to introduce new measures to strengthen and streamline the
current system of consumer advocacy and redress. Our vision of how that
new model for consumer representation will work is centred on the case
for the new National Consumer Council, which we debated at great length
last Tuesday and Thursday, as a strong, independent consumer champion
in a position to take a cross-sectoral approach to consumer
representation across all markets.
Consumer Direct is an existing
telephone and online advice service and has enjoyed considerable
success in providing help and advice to consumers with inquiries
and simple complaints. The service will be extended alongside the
measures in the Bill to act as a first port of call for consumers in
all sectors. It will help consumers in the energy and postal service
sectors to progress their complaints about their service providers.
When a service
provider is unable to resolve a complaint to the satisfaction of the
consumer, redress schemes in those sectors will ensure complaint
resolution, as decisions made in the redress schemes will be binding on
providers. The schemes will also be able to offer compensation or other
forms of redress to consumers if they are warranted. The measures in
the Bill are therefore about empowering and protecting the
consumer.
The
Government amendments will ensure that the regulated providers in the
electricity, gas and postal service sectors have in place and operate
appropriate and effective internal complaint handling procedures.
Consumers will be assured of an approved standard of complaint handling
by the regulated providers in the energy and postal services sectors,
whoever those providers may
be.
Under the new
arrangements for consumer representation to be introduced as a result
of the provisions of the Bill, there will no longer be a
sector-specific consumer body with a complaint handling function for
the energy and postal service sectors. Regulated providers in those
sectors will be required to take full and proper responsibility for
handling their own complaints, which means that service providers will
need to take better ownership of complaint handling. It is important
that the right incentives be put in place to enable that to happen.
Regulated providers are, of course, entirely free to improve standards
beyond the level prescribed by the regulator if they so
choose.
Consumers
will therefore benefit from getting their complaints handled
effectively by the regulated service provider to an approved standard,
but the regulated providers can also benefit. Recent research
undertaken by Ernst and Young found that the retailers that are best
able to resolve customer complaints quickly, satisfactorily and with
the minimum of fuss are more likely to retain customers than those that
do not.
Complaint
handling standards have been debated extensively, and I believe that
there is no difference between us on it. However, while we understand
the intention behind hon. Members’ amendments, they would not
fully achieve their desired effects. The Government amendments will
place a requirementon the regulators to make regulations
prescribing standards for complaint handling. Regulators are best
placed to determine what is appropriate and necessary for their
sectors, and they must be able to exercise a degree of flexibility in
determining what standards should be set, to which complaints they
should apply and how they should be
enforced.
Amendment
No. 61 allows for future changes in the energy and postal service
sectors. It provides for the Secretary of State to make an order
prescribing a date on which the duty on regulators to prescribe
complaint handling standards will change to a power to do so. Before
making such an order, the Secretary of State must consult the
regulator, the new council and other persons as appropriate.
The amendment is required to
allow for future changes in the energy and postal services market that
may make the requirement for regulators to prescribe complaint handling
standards obsolete. Any decision by the Secretary of State to remove
the duty in question will be informed by representations
madein the consultation and in particular the views
ofthe regulator on the continuing need or otherwiseof
the standards. For example, in the postal services sector the
UK’s mail market was opened to competition only recently, on 1
January 2006. Over time, stronger competitive pressures might result in
greater incentives for firms to deal effectively with consumer
complaints in order to win or retain a larger share of the market. When
all firms in the market meet or exceed the prescribed standards, the
prescription of complaint handling standards might no longer be
necessary. I am sure that hon. Members will recognise that that is in
line with better regulation
principles.
Amendment
No. 73, in the name of my right hon. Friend the Member for Coatbridge,
Chryston and Bellshill, raises a reasonable point: the need to ensure
that regulated providers
“collate information on the number
of complaints received by subject-matter of a complaint, or the
description of a person making a
complaint.”
I hope that I
can reassure my right hon. Friend that that is provided for already in
the Bill.
Clause 43(2)
provides for the regulator
to
“prescribe standards
in relation to all consumer complaints, or...complaints of a kind
specified”.
Clause 43(3)
states that, complaints can be specified
“by reference to the
subject-matter of a complaint, or the description of person making a
complaint.”
Let us assume
that standards prescribed apply to all complaints received. In order to
comply with the relevant requirements detailed in schedule 5, and to
provide the regulator with information regarding compliance, providers
must record all complaints received and standards relating to
them.
Schedule 5 to
the Bill amends the ElectricityAct 1989, the Gas Act 1986 and
the Postal ServicesAct 2000, to require regulators to collect
information on compliance with standards, and gives the
regulatornew powers to direct its regulated provider to do
that. Clause 45 also places a duty on the new council to publish
appropriate statistical information about levels of compliance by
regulated providers with the prescribed complaint handling standards.
For that reason, amendment No. 73 is
unnecessary.
On
complaints, in a previous sitting of the Committee, my hon. Friend the
hon. Member for Ealing, North, raised the question of how complaints
about the activities of the new council would be dealt with. The
parliamentary health service ombudsman investigates
complaints about Government Departments, their agencies and certain
other public bodies in the UK accused of having not acted properly or
fairly, or of having provided a poor service. The Bill makes provision
for complaints about the activities of the new national consumer
council to be subject to the same procedure. That is set out in
paragraph 37 of schedule 1.
On the basis of my
explanations, I hope that hon. Members, including my right hon. Friend
the Member for Coatbridge, Chryston and Bellshill, will be minded
to withdraw their amendments, in favour of the Government amendments,
which have been designed to address all the issues raised in another
place and this
Committee.
Mr.
Mark Prisk (Hertford and Stortford) (Con): Thank you,
Mr. Weir. I, too, welcome you to the Chair for
today’s
deliberations.
Amendments
Nos. 33, 34 and 30, which are in my name and that of my hon. and right
hon. Friends, are probing amendments. I have to say, on this occasion,
I am encouraged that that probing has generated that positive reaction
from the Minister. We welcome the Government’s recognition of
our view, which has been discussed here and in another place, of the
need for effective complaint handling standards. I believe that that is
essential for good business service, as he alluded to, and for
meaningful reform of consumer
redress.
Interestingly,
the Government’s regulatory impact assessment relating to the
amendments echoes that point. It argues that requiring companies in the
energy and postal services sectors to adhere to complaints handling
standards will ensure that more customer complaints are dealt with
first hand by the regulated provider to the satisfaction of the
consumer. So we are at one on the principle, which is very
encouraging.
Our
amendments seek to ensure that regulators put in place effective
standards through the simple device of prescribing
“shall” rather than “may”. However, I
recognise entirely that, in content and on the nature of the powers
provided, the Government’s amendments are more comprehensive,
flexible and, indeed, more sophisticated. Again, the regulatory impact
assessment recognises that we are dealing with standards and not
procedures, which is important. I know that a number of players in the
field are concerned about a prescriptive approach to procedures, so
that is understandable. However, that is not what we are debating. The
Government propose to establish standards. How each company responds to
that will be up to them. Good companies with good procedures in place
have nothing to fear from the amendments. On that basis, I am pleased
that the Government have recognised the strength of the argument that
we put both here and in another place, and I will be more than happy to
support the Government amendments. I will not, therefore, press
amendments Nos. 33, 34 and 30 or, in due course, amendment No. 36 to a
vote.
Mr.
Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab):
Mr. Weir, I am grateful for the opportunity to speak to
amendment No. 73. Let me start by agreeing with my right hon. Friend
the Minister that amendment No. 75 is not necessary, not least because,
so far as I can see, it does not exist. Before my right hon. Friend
rises—
Mr.
Clarke:
I am grateful. That was a test of Hansard,
because I notice that last week the Minister’s jokes had
“laughter” added after them. I look forward with interest
to the next publication.
Mr.
Clarke:
I am always grateful for my right hon.
Friend’s support. He does not realise how appropriate that test
would have been this morning.
Let us return to amendment No.
73, before we test your patience any further, Mr. Weir. That
would
insert:
‘(3A)
The regulations must require a regulated provider to collate
information on the number of complaints received by subject-matter of a
complaint, or the description of a person making a
complaint.’.
I am half
convinced by what the Minister has said. However, those who advise me
and, if I am not mistaken, Energywatch—if I am mistaken, I
apologise—have not, in the absence of further information from
my right hon. Friend, been convinced that the Bill is as explicit on
those matters as we would wish it to be. Therefore, I offer this
probing amendment. As I argued on Second Reading, in order to spot
trends or weaknesses in the industries, the new NCC will need access to
accurate, transparent data. However, as it will not be fielding most
complaints, it will not be in a position to collate the
data.
Clause 43
requires suppliers to deal effectively with complaints, and later
clauses require information on such matters to be made publicly
available. For example, clause 45 requires the new council to publish
statistics on the compliance of suppliers, and clause 46 requires
suppliers to communicate information tothe public. All of that
is welcome. However, my contention, and the raison d’être
of the amendment, is that there is nothing between those two to say
that suppliers must keep track of the data needed to fulfil those
requirements. If I am right, then when the NCC attempts to publish
statistics on complaint handling, suppliers will be justified in saying
that no records have been kept. Perhaps my right hon. Friend will
clarify that later. I shall be glad to be told that I have got it
wrong, in which case I will not press the amendment, but the point is
worth putting. The amendment seeks to close the loophole, if it exists,
and to ensure that reliable, transparent data will be provided to the
NCC in order to facilitate evidence-based policy making by the new
council. Some might ask why I seek to be so firm about suppliers. Let
me be blunt. I do not believe that they have served the public
well.
I am not alone
in taking that view. A headline in this morning’s Daily
Record reads:
“Power
to the People. One million Scots could save £122 a year by
ditching ScottishPower”.
Later on in the paper another supplier
spends a full page telling us how inadequate Scottish Power is,
particularly in providing information, the very point that my amendment
seeks to address. In the leading article Ofgem’s Alistair
Buchanan is quoted as
saying:
“Competition
is all about customer
power.”
Well if it is, I
welcome it, but I have not seen as much evidence of it as I would want
to see. Alistair Buchanan
continues:
“Any
supplier that tries to buck the market by not lowering prices or
failing on service risks an exodus of
customers.”
My
amendment seeks to ensure that suppliers act efficiently, competently,
and keep information about who is complaining and what they are
complaining
about. That is absolutely reasonable. In order to givea
political balance, indicating how the Committee’s thinking is
perhaps ahead of the world outside, some of us might have seen in the
tube last night last night the headline in the Evening
Standard:
“Power
rip-off hits millions. Regulator tells energy firms to cut their
prices.”
Fine. As I said
last week, I want the regulators to exercise the powers that they have
and to be tougher in so doing. I have not seen the suppliers exercise
their responsibility to consumers in a way that we are entitled to
expect. Again the figures are given in both newspapers for the profits
that have been made and the £4 million golden handshake that was
given to the chief executive of Scottish
Power.
Mr.
Prisk:
I fully understand the point that the right hon.
Gentleman is making about customer handling. But does he also recognise
that the message from both those newspapers is that competition does
have a role to play and that the combination of good procedures, or
good standards in complaint handling, and good competition is
important? Does he recognise the role that competition can
play?
Mr.
Clarke:
I would not dispute that. But as we have tried to
ensure that competition—Ofgem might have been sincere in what it
was seeking to do—more weight seems to have been given to the
input from the suppliers than to the views of consumers. In the absence
of the information which the amendment seeks—my right hon.
Friend the Minister might be able to assure me that it does exist in
the Bill—consumers are not being given the service which they
are entitled to expect from the regulator. Their views ought to be
represented. In that spirit I invite my right hon. Friend and the
Committee to consider amendment No.
73.
Lorely
Burt (Solihull) (LD): I welcome you to another exciting
day on this Bill, Mr. Weir. We are pleased that the
Government have paid attention to the amendments tabled in another
place requiring the regulator to prescribe standards for complaints
handling. It should be noted that Ofgem and Postcomm were not very keen
on this idea. But we certainly feel that it goes to the heart of the
matter of whether companies themselves be able to have full control
over all complaint handling. The right hon. Member for Coatbridge,
Chryston and Bellshill mentioned earlier that although we have a
requirement for competition, and competition will drive service, it is
still not necessarily in the company’s interests to gold-plate
service unless it will result in bottom-line profits. We support the
amendment. The question is this: would redress schemes on their own be
a big enough stick to force companies to raise their
game?
The other
question is do these companies have the physical ability to take on the
extra volume of complaints when Energywatch and Postwatch are
abolished? We saw stories in the press last week involving British Gas,
which indicate that there are one or two problems that need to be
addressed.
Amendment
No. 60 is highly commendable, but amendment No. 61 seems to take back
with one hand what the other hand has just given. It gives more leeway
than we would have wished to see. I take it from the
Conservative Members that there is no desire to push this matter to a
vote. However, we certainly wouldhave preferred if we could
have voted separately onthe two amendments and we would have
liked tosee amendment No. 61 not being implemented.
Nevertheless, in the light of the conciliatory attitude from the
Conservative Members, to push that amendment to a vote would be
somewhat churlish.
We
have supported amendment No.33, which the Conservatives tabled. I
appreciate that the hon. Member for Hertford and Stortford is going to
withdraw it, but we think that that amendment is the one that the
Government should have made in the first place.
As far as amendment No. 34 is
concerned, that is another proposed change from “may” to
“shall”, which again we support. We think that amendment
No. 30 is very important. It matters because Energywatch in particular
keeps detailed records on complaints by categories and how complaints
are broken down—the capture of that data in that way—is,
we feel, very important
indeed.
We certainly
would support amendment No. 73, which was tabled by the right hon.
Member for Coatbridge, Chryston and Bellshill. We feel very strongly
that complaints data is useless until and unless it is broken down. So
we would certainly support that
amendment.
Mr.
McCartney:
First, I again thank my right hon. Friend the
Member for Coatbridge, Chryston and Bellshill for the passionate way in
which he has pursued this issue. I hope to reassure him, not simply for
the purposes of asking him to withdraw the amendment. What he has
expressed, describing what has goneon and what continues to go
on, shows a totally unacceptable situation. That is why in this Bill we
have given such extensive powers regarding redress; that is why these
amendments are set out in the way that they are. They incentivise the
industry to clean up its act. If the industry does not do so, it will
potentially face having to make, each day, compensation payments of
significant amounts, along with the loss of reputation in a market
place that is filled with alternative providers of the services that
they seek to provide.
So it is important that, as we
approach this subject in the way that we are, that we incentivise
improvements; build on the good practice that exists, and, where good
practice does not exist, create good practice and give the relevant
powers to the regulator to do that.
The proposal improves the
situation regarding both regulators and companies. We know, because
both companies and regulators have been telling us during the
consultation process and since, that great strides have been made in
the sector to improve performance, and that improvement is set against
a backdrop of difficult issues for the sector. For example, British Gas
claims that the issues that it faces are due to migrating 14 million
customers into a new billing system. As a consequence of that, we know
that there have been substantial problems in the implementation of that
system.
As the
situation currently stands, there is little that customers can do but
wring their hands. After this Bill becomes law, they can do more than
wring their hands; they will have not only a complaints procedure, but,
if
the matter is not resolved, they will have a procedure that will allow
them compensation, including financial compensation, for the failure to
respond effectively to their
complaint.
My right
hon. Friend asked me to ensure that there is an umbilical cord between
the provider, the regulator and the NCC. I want to reassure him on that
point. [
Interruption.] I know that it is a three-way
umbilical cord, but I think that I am entitled to some licence. Clause
20 requires the new council to enter into co-operation arrangements
with designated bodies such as the OFT, which supports Consumer Direct.
That is intended to allow information about complaint numbers and
trends to be sent to and used by the NCC.
In each part of the
process, whether involving a provider, a regulator or the NCC,
information is important, not only for establishing trends, but to
confirm whether there is compliance with the customer complaints
processes and to identify the areas in which significant customer
complaints are received for a particular company and what that company
must do in conjunction with the regulator to resolve those issues. We
also need to know the issues and trends that will require the NCC to
improve complaint-handling processes and to improve and extend redress
schemes. Information is a critical factor in ensuring that the system
works effectively at all levels. My right hon. Friend is absolutely on
the money on this issue, which is why I want to reassure him and why I
took care in talking about his amendment to clause 43 and its
relationship to schedule 5 and the relationship of those provisions to
clause 20.
The
purpose of the Bill is to put the building blocks together, which will
show that ours is a comprehensive approach. As we move into the
implementation phase, I assure the Committee that I will review all the
points that are raised here. Whence they are raised is irrelevant; I
aim to ensure that all the practical comments made here are reflected
by the implementation of the proposals. Since the debate in the Lords,
we have taken a great deal of time to consider the bringing forward of
the amendments. I have acted in good faith. I thank the hon. Member for
Hertford and Stortford for his kindness, although to extract a
political point it was he who first took up the idea. We will not argue
about that. The main thing is that there was a level playing field, in
that everybody recognised the need for incentives. I hope that I have
reassured my right hon. Friend the Member for Coatbridge, Chryston and
Bellshill that there is a deliberate link between the different
elements. I shall write to him during the development of the
implementation strategy to discuss it with him in detail, so that he
can be certain that what I am saying will happen in practice.
The hon. Member for Solihull
made a criticism of the sunset clause—I think that that is the
jargon that is used in the industry. I have a reputation for being in
favour of red tape and bureaucracy, but that is not true. I never count
employment rights and the minimum wage as red tape; they are
reasonable, decent measures and I am pleased to say that I think that
the party of the hon. Member for Hertford and Stortford now accepts
that. Amendment No. 61 will merely facilitate market changes in the
event of improved handling and complaints processes. There will be
potential, after
public consultation by the Secretary of State and if the regulation is
redundant, to secure changes under the provision. That is all that the
amendment will do. It is not a back-door policy; it will not undermine
the principle set out in amendment No. 60, but it is a process that has
been widely used, and reasonably so, in the last few years.
Until the hon. Member for
Solihull made her remarks, I thought that there was a common purpose in
regulatory matters and that if improvements in the market place made it
clear that a regulation would become redundant, that should be accepted
after consultation and an evidence-based assessment. Amendment No. 61
does not give with one hand and take away with the other, as the hon.
Lady so luridly put it. I hope that with those explanations, hon.
Members will accept my amendments and that we can proceed with
improving the
Bill.
Mr.
Clarke:
My right hon. Friend is always remarkably
convincing. Nevertheless, I hope he will agree that it was right for
the Committee to take the opportunity of amendment No. 73 to give these
issues an airing, even before we read the Daily Record and the
Evening
Standard.
11
am
I very much
welcome my right hon. Friend’s description of how the Bill, if
enacted, will be implemented, and I followed what he said about the
umbilical cord. I also welcome what he said about information being a
critical factor. It is at the heart of everything that we are trying to
achieve and was the purpose of amendment No. 73.
In the spirit of generosity
that is typical of the Committee, but consistent with the clear
explanations given by my right hon. Friend and anticipating that the
issue might emerge again when these matters are discussed on the Floor
of the House, I will not press the amendment to a Division.
Amendment agreed
to.
Amendment
made: No. 61, in clause 43, page 26,line 14, at end
insert—
‘(5A) If a date is
prescribed in relation to a regulator for the purposes of this
subsection, from that date subsection (1) has effect in relation to
that regulator as if, in that subsection, for “must”
there were substituted
“may”.
(5B) In
subsection (5A) “prescribed” means prescribed by order
made by the Secretary of State under this
section.
(5C) Before
prescribing a date in relation to a regulator for the purposes of
subsection (5A), the Secretary of State must
consult—
(a) the
regulator,
(b) the Council,
and
(c) such other persons as
the Secretary of State considers
appropriate.’.—[Mr.
McCartney.]
Clause
43, as amended, ordered to stand part of the
Bill.
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