Clause
44
Requirements
for making regulations under section
43
Amendment made:
No. 62, in clause 44, page 26,line 28, leave out paragraph
(a) and insert—
‘(a) set out the standards the regulator
proposes to prescribe,’.—[Mr.
McCartney.]
Clause
44, as amended, ordered to stand part of the
Bill.
Clause
45
Information
with respect to compliance with complaints handling
standards
Amendment
made: No. 63, in clause 45, page 26,line 37, leave out
‘where standards are’ and insert ‘in relation to
standards’.—[Mr.
McCartney.]
Clause
45, as amended, ordered to stand part of the
Bill.
Schedule
5
Information
relating to compliance with complaints handling
standards
Amendments
made: No. 64, in schedule 5, page 61, line 16, leave out
‘where standards are’ and insert ‘in relation to
standards’.
No.
65, in
schedule 5, page 61, line 32, leave
out ‘where standards are’ and insert ‘in relation
to standards’.—[Mr.
McCartney.]
Schedule
5, as amended, agreed to.
Clause 46 ordered to stand
part of the
Bill.
Clause
47
Membership
of redress
scheme
Mr.
Prisk:
I beg to move amendment No. 32, in
clause 47, page 27, line 19, leave
out paragraph
(b).
This simple,
probing amendment would remove the Secretary of State’s
administrative role when setting up a redress scheme and leads to a
single, simple question for the Minister: will he explain why the
Secretary of State would need to directly administer a scheme? It is
important that redress schemes are approved by a local regulator, but
it is also important that they are independent of central Government,
and are seen to be such. Therefore, could the Minister explain why the
Government deemed it necessary to be so involved, directly or
indirectly, in the administration of redress schemes? What exactly
could the Secretary of State do that the regulator could
not?
Mr.
McCartney:
I thank the hon. Gentleman for the spirit in
which he moved his amendment. I accept that it is a probing amendment,
and I hope that my response will explain fully the intention of clause
47. If he has any further questions to put to me, I will respond to
them, and I hope that he will then feel able to withdraw his
amendment.
The
amendment relates to clause 47 and the redress provisions in this part
of the Bill. The clause will introduce a power for the Secretary of
State to require service providers in the energy and postal services
sectors to belong to a redress scheme. It will, in effect, give
consumers in those sectors greater assurance of
achieving certainty in the resolution of complaints. So that there is no
doubt, I will explain how the measure will work in
practice. Under the
Bill, the Secretary of State will be given the power to make an order
that requires regulated service providers in those sectors to belong to
an approved redress scheme. If minded to exercise the power, the
Secretary of State can consult the relevant regulator and others who
represent those with an interest in the
matter.
The purpose of
that consultation includes the need to obtain confirmation of sectoral
redress requirements and to look at the appropriate scope of the
redress schemes. The Bill stipulates that, before making such an order,
the Secretary of State must be satisfied that there is at least one
qualifying redress scheme that regulated service providers can join or
that such a scheme will be in existence when the order comes into
force. That is critical. Parliament, through the Secretary of State,
has a role to play in this. Having set out the principle of redress
schemes in the Bill, it must ensure that they are established in
practice and within the context of the clauses on the standards
expected of the schemes.
It is worth emphasising that we
have no reason to believe that at least one suitable scheme for each
sector will not be established by industry. However, we need to cover
all eventualities, and in the highly unlikely event of a scheme not
being established by industry, the clause contains provision for the
Secretary of State to establish one. That is also critical, as it is
Parliament’s role. There is all-party consensus on establishing
redress schemes on behalf of the consumer. Therefore, we must take
responsibility in extreme circumstances—and they would be
extreme—to make sure that a redress scheme is established. Hence
clause 47(1)(b) allows for the establishment of a redress scheme
administered by the Secretary of State or by a person appointed by him.
That will provide an additional guarantee that a qualifying redress
scheme will exist for regulated providers in the energy and postal
services sector, to comply with an order made by the Secretary of
State.
To be perfectly
clear, under these provisions, the term “redress scheme”
holds the same meaning regardlessof whether it is established
under clause 47(1)(a) by industry and approved by a regulator, or
underclause 47(1)(b) and administered by the Secretary of
State or by a person appointed by him. Hon. Members can rest assured
that, if it were necessary for the Secretary of State to use the
fall-back provisions contained in clause 47(1)(b), there would be no
compromise over the need for the independent person to be independent.
It would still be possible for consumer complaints to be made to, and
investigated and determined by, an independent person. That would be
based on the principles set out in the legislation.
Clause 47(7) provides that, in
designating a scheme in relation to regulated providers under clause
47(1)(b), the Secretary of State must be satisfied that the scheme
meets the same criteria for approval by a regulator as those set out in
clause 49. The important assurance that the hon. Gentleman wants is
that, if the Secretary of State were to establish a scheme in extreme
circumstances, it would not be—in popular parlance —a
Mickey Mouse scheme; in all respects, it must at
least be compatible with a scheme established under
clause 47(1)(a). Therefore, I can say with certainty that this
provision is not a stop-gap to fulfil in practice what is set down in
the Bill. The clause
will not provide the Secretary of State with the power—if ever
it had to be exercised—to provide a second-class or third-class
scheme, or a scheme that complies with the law but not with the spirit
of the law. It is very important that, if we have to do this in
extremis, we do it on the basis of fulfillingthe commitment in
the legislation to ensure that all consumers in those sectors are
covered by a redress scheme. I hope that, given that assurance, the
hon. Gentleman will be minded to withdraw his
amendment.
Mr.
Prisk:
I am grateful to the Minister for his remarks. I
would not imagine for a moment that the current Secretary of State
would organise a Mickey Mouse redress scheme, and I am delighted that
the Minister has confirmed that.
The main point is the use of
the word “administered”. If the word
“established” had been used, there would have been no
concern in my mind. I agree with the Minister that, quite
understandably, if we wish to have redress schemes, we must ensure that
the Government can put them into practice if they exist. Therefore, I
understand the use of the word “administered”, but I am
not entirely sure whether the Department would wish to run such a
scheme directly, although the Secretary of State reserves the power to
appoint someone else to run it for him That was the essence of my
inquiry.
However, I
was assured by the fact that the Minister made it absolutely clear that
the provision would be used only in the most extreme circumstances
where,for whatever unforeseen reason, such a scheme
wasnot available. Having wished it to occur, it would be
peculiar if the Government were unable to put that wish into practice,
having legislated for it. Therefore, on that basis and having had that
clarity put on record, I am more than happy to beg to ask leave to
withdraw the amendment.
Amendment, by leave,
withdrawn.
Question
proposed, That the clause stand part of the
Bill.
Lorely
Burt:
I want to probe the Minister a little and get one or
two assurances from him. Liberal Democrat Members are a little worried
about multiple redress schemes, which, among commercial entities, may
prompt a race to the bottom. Therefore, we are interested to know what
the rationale is and how the Government will ensure that, if there are
multiple redress schemes, they can adhere to a good minimum standard,
to ensure that there is no race to the bottom.
We would like to know
whether there will be an ombudsman scheme. We understand the logic in
having the scheme for gas and water supplies, but we have one or two
concerns about the Post Office, because the typical redress offered by
the Post Office is a bookof first-class stamps. Given that the
ombudsman or redress scheme will require evidence to
demonstratethe problem, we are stretching our imagination to
understand what the evidence might be in such small-scale complaints or
problems that might apply. For example, if the Post Office has not
delivered a
parcel, will someone need proof of posting? If the Post Office is
closed, must someone stand in front of the CCTV and wave an envelope
around before popping it into the post box as proof of
posting? If we are
promising a redress scheme, people have the right to expect a redress
scheme. We are getting rid of watchdogs, so redress schemes will have
to be really good. Can the Minister perhaps give an example of a
suitable redress scheme that might apply in the circumstances that I
have
outlined?
Mr.
McCartney:
I thank the hon. Lady for her question. I would
like to point out that we are not getting rid of watchdogs; we are
creating a new, more effective independent one. For the first time, all
sectors will have redress schemes. What is the point of having a
watchdog with no teeth?
The Liberal Democrats are
strangely wedded to maintaining the old system on the basis of
“Well, that’s what’s there”. Actually, we
believe that a great deal of improvement can be made in all the
sectors, and that is why, for the first time, there will be at least
one redress scheme per sector—a redress scheme and regulator
with teeth and a new body representing consumers, also with
teeth.
11.15
am
The Bill leaves
open the possibility of a regulator creating just one scheme for each
sector. Of course, we have set out and debated the high standards that
will apply, so no Mickey Mouse schemes will get in under the radar, as
I put it in the last discussion. No schemes will be set up in any of
the sectors that do not meet and operate to the standards set out. That
is important. Our policy preference is for one scheme per sector, but
we cannot prescribe that because it will be a matter for the regulator,
and rightly
so.
Circumstances
might change in years to come to facilitate more than one scheme in a
particular sector. Changes might take place in the market for which the
current arrangements are inappropriate and act as a barrier to other
entrants to the market. Amendments might, therefore, need to be made.
That is the reason for the flexibility—not to rush downwards, as
thehon. Lady said, but to ensure that, in a changing
marketplace, consumers’ rights are always paramount. Changes
made in the future will improve people’s rights, not undermine
them. That is
important.
Rest
assured, the clause will establish an essential means of ensuring
effective schemes covering all sectors in the Bill and, hopefully,
after 2008 and further consultation, the water industry as well. I hope
that, well before 2008, those schemes will be operating effectively. I
hope that those explanations have helped the hon. Lady with her
concerns.
Question
put and agreed
to.
Clause 47
ordered to stand part of the
Bill.
Clause 48
ordered to stand part of the
Bill.
Clause
49
Approval
of redress
schemes
Mr.
Prisk:
I beg to move amendment No. 35, in
clause 49, page 28, line 40, leave
out ‘relevant’.
This is a very simple probing
amendment focusing on the meaning of the word “relevant”.
My purpose is to clarify what a “relevant consumer” is.
To my mind, all consumers who use energy supplies are relevant where
redress schemes are concerned. Will the Minister tell us, therefore,
who are not “relevant
consumers”?
Mr.
McCartney:
I accept that this is a probing amendment, and
I hope to give a detailed response to help hon. Members.
Amendment No. 35 relates to
redress schemes under clause 49 and the matters that a regulator must
take into account prior to approving a redress scheme in its sector.
The interests of “relevant consumers” is one of the
aspects that a regulator is required to consider when approving a
redress scheme. By deleting the word “relevant”, the
amendment would require the regulator to have regard to the interests
of consumers in general when dealing with the regulator’s
regulated providers, instead of to those specified as “relevant
consumers” in the second column of the table in clause
42.
“Relevant
consumers” of the regulated providers listed in clause 42(1) are
defined in the Bill. For gas supply licences, it
is:
“A person
who is a consumer in relation to gas supplied by a gas supplier (within
the meaning of Part 1 of that
Act)”,
or, on
transportation
licences:
“A
person (other than a gas licensee) who is a consumer in relation to
services provided by a gas transporter (within the meaning of Part 1 of
that Act).”
I think that
the second definition was an amendment in another place following a
cross-party debate.
For
electricity supply licences, it
is:
“A person
who is a consumer in relation to electricity supplied by an electricity
supplier (within the meaning of part 1 of that
Act)”,
or, on
distribution
licences:
“A
person (other than an electricity licensee) who is a consumer in
relation to services provided by an electricity distributor (within the
meaning of Part 1 of that
Act).”
For postal
services, it
is:
“A person
who is a consumer in relation to relevant postal
services”
within the
meaning of section 41 in part 2 of the Postal Services Act 2000. For
water, it
is:
“A person
who is a consumer in relation to services provided by a water
undertaker, sewerage undertaker or licensed water supplier in its
capacity as
such.”
There is
no intention to attempt to limit or exclude any particular consumers in
the sectors to which the redress provisions are to apply—the
energy and postal services sectors. The main point to note is that the
provisions are to be applied by more than one regulator, so each will
be required to take account of the interests of relevant consumers in
relation to its regulated providers. The expression
“relevant consumer” refers to the consumers identified in
the table inclause 42, as I have just
explained.
Orders made
by the Secretary of State concerning membership of a redress scheme
introduced under clause 47 will be binding on regulated providers. It
follows that the consumers in a position to benefitfrom the
introduction of the redress provisions will be those who qualify by
virtue of the fact that they are
consumers of services supplied by those regulated providers. They are
the relevant consumers whose interests a regulator must take into
account when deciding whether to give approval for a redress scheme. I
hope that that explanation will provide clarification for the hon.
Gentleman and encourage him to withdraw the
amendment. We expect
that service providers will establish their own redress schemes, which
will be funded by their members. The members of the schemes will decide
and agree on their funding structures, but we expect that they are
likely to follow a pattern similar to that of existing redress schemes
whereby a subscription fee is levied, typically based on the size of a
firm or its turnover, coupled with a case fee payable by each member
for every case referred to the scheme. The scheme is then free to
consumers.
The redress
schemes are expected to operate on a cost recovery basis. General
practice is for fees to be set at a level that covers the costs of the
scheme, based on the anticipated number of complaints. Fees can then be
reviewed regularly and adjusted to reflect any differences between the
actual number of complaints received and the estimated level of
complaints.
Similarly, any scheme
administered by the Secretary of State would operate purely on a cost
recovery basis and could not be profit-making. Any subscription costs
or case fees charged to members of a scheme would be set and
periodically adjusted only to cover the costs of running the scheme. I
hope that that provides additional clarification. The schemes will not
be profit-making enterprises; fees will cover their costs to ensure
that they are free in all circumstances to the consumer who wants to
make a complaint and have it dealt with
effectively.
Mr.
Prisk:
That was a thorough, comprehensive exposition and
will be helpful. A number of people who are following our deliberations
wanted clarity on the matter, and the Minister was extremely helpful. I
beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Clause
49 ordered to stand part of the
Bill.
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