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1. Summary
1.1. Citizens Advice supports the Bill but calls for a stronger role for the new National Consumer Council (NCC). Our key points are as follows:
· The very welcome enhancement of doorstep selling regulations should be put in place at the earliest opportunity, so that all consumers buying products in their own home have the right to a cooling-off period.
· The welcome measures to require regulated suppliers to belong to a redress scheme, and provide appropriate compensation for consumers, should not exclude specific types of complaints. Further, there should only be one redress scheme in any one sector.
· The new statutory consumer body, the NCC's responsibilities are too limited and the opportunity to define a broader role should be seized. Primarily, the NCC's discretionary powers to protect consumers should be imposed as duties.
· Though we welcome the new redress schemes in providing backstop protection for consumers, there remains a need for NCC to have a duty to resolve disputes and problems experienced by vulnerable consumers. Government amendments in the House of Lords have expanded the type of complaints that the NCC must investigate. However, not all urgent problems will be included. We consider that a broader duty should be imposed on the NCC to require it to intervene on behalf of vulnerable customers.
· The powers of the new NCC should be strengthened to require regulators and the Government to consult with the NCC where relevant and to provide a reasoned response to issues formally raised by the NCC within a specified time period.
· Citizens Advice also recommends that the NCC should act at the earliest opportunity to gain powers to take class actions on behalf of groups of consumers and to make super-complaints. We would urge the Government to encourage the NCC to take on this role. In addition we consider that the NCC should have a duty to monitor the performance of regulators and should have the formal power to refer them to the Secretary of State where the NCC considers that responsibilities regarding consumer protection are not being met.
2. Introduction
2.1. Citizens Advice is the national body for Citizens Advice Bureaux (CABx) in England, Wales and Northern Ireland. The CAB service is the largest independent network of free advice centres in Europe, with 496 main bureaux in England, Wales and Northern Ireland. Bureaux provide advice from over 3,200 outlets, including courts, prisons, GP surgeries, hospitals, probation services and prisons. All CABx are registered charities.
2.2. The CAB service has twin aims: to ensure that individuals do not suffer through a lack of information about their rights; and equally to exercise a responsible influence on the development of policies and practices, both at a local and national level.
2.3. In 2005/6, Citizens Advice Bureaux in England and Wales dealt with 5.2 million enquiries, of which over 57,000 issues concerned utilities and approximately 45,000 issues related to fuel debt. In addition, close to 160,000 issues related to consumer goods and services.
2.4. This memorandum focuses on the issues of most concern to Citizens Advice in the Bill. These issues fall into three sections:
· doorstep selling; · redress schemes and complaints handling; and · the scope and powers of the new National Consumer Council.
3. Doorstep Selling
3.1 Citizens Advice strongly welcomes the provisions detailed in clause 59, which allow the Secretary of State to make regulations that will improve consumer protection where contracts are concluded away from business premises. We would oppose any move for exemptions.
3.2 Consumers need these changes to doorstep selling law, providing comprehensive cancellation rights, to be put in place at the earliest opportunity.
3.3 The enhancement of doorstep selling legislation will mean that consumers will have cancellation rights in all cases where goods and services are sold as a result of a visit to their home or workplace. At present unsolicited doorstep sales attract a seven day cancellation right, but where the consumer has solicited the visit, perhaps by responding to an advertisement, the cancellation rights are not a requirement.
3.4 The change proposed in the Bill reflects the evidence reported by CABx that all the same pressures to buy and lack of opportunity to shop around occur whether the doorstep sale was solicited by the consumer or not. In September 2002 we published a report, Door to Door, as part of our role as the UK European Consumer Centre and asked the OFT to investigate this market as a super-complaint under their Enterprise Act powers. In addition, Age Concern published a report in 2002, Sharp Selling Practices', revealing consumer experience of disability aids sold in the home. The OFT undertook detailed research and produced a report in May 2004. All these reports recommended that cancellation rights be extended to solicited sales.
3.5 CAB evidence suggests that this change is still needed:
A CAB in Hampshire saw an elderly client and her husband who had received a card through their door from a company selling solar powered heating. They contacted the firm and a representative made an appointment to come to their home. The representative stayed at their home for hours and the appointment culminated in the clients signing a Customer Order. The contract stated that there was no cooling off period. Shortly afterwards they realised they had made a mistake and wrote to the company to cancel the agreement. They received a reply stating that there was no cooling off period. They are now faced with paying over £4000 from their pension income.
A CAB in the North West saw a client whose elderly mother had purchased a vacuum cleaner from a door to door tradesman over a year ago. The company recently contacted the client's mother about servicing, to which she agreed. When the trader arrived he persuaded her to buy a new vacuum cleaner at the cost of over £1000. She paid by cheque during the visit and the company are refusing to cancel as there is no cooling off period.
4. Redress Schemes and Complaints Handling
4.1 The Alternative Dispute Resolution (ADR) proposals set out in the Bill are very welcome. Until now, many utility type problems have been lost in protracted negotiation, while specialist consumer bodies have lacked the teeth to draw cases to a close and to get consistent results. Cases in the utilities market, for example, need prompt decisions rather than months of delay. The following examples illustrate the time some cases have taken to be resolved and point to the need for redress schemes to be introduced to bring an end to unfair or poor practices.
A CAB in Norfolk Wymondham 38784128 report that their client bought a new property in December 2002. After a couple of months she chose to change energy supplier, and received a letter acknowledging the transfer and welcoming her as a new customer. Since then she has received no bills and made no payments, despite contacting the supplier on numerous occasions to request a bill. She has been promised that the company will look into the matter and get back to her but on each occasion they have failed to do so. Over three years after the initial enquiry she is now selling her house and wants to resolve the matter before moving but the company is still unable to provide a bill or deal with her calls.
A Hampshire CAB Romsey 39771704 reported that two energy suppliers had billed their client for the same period. After considerable research the CAB found that the client had been switched between providers on two occasions and had paid bills to two providers but had also received a bill from a third provider for the same period. It took the CAB 18 months and many letters and telephone calls to unpick this situation and sort out the problem because of the difficulty in getting information from the companies involved. While promising the CAB that the matter would be resolved, the company were simultaneously invoicing the client incorrectly and even threatening extra charges and legal proceedings if the account was not settled within 7 days.
4.2 Citizens Advice warmly welcomes measures in the Bill to require regulated suppliers to belong to a redress scheme and provide appropriate compensation for consumers. However, we would strongly urge Government to allow only one redress scheme in any one sector. Proliferation of redress schemes does nothing to improve consumer representation or advocacy, and serves only to create confusion. Giving suppliers choice over which redress scheme to belong to may also lead to firms choosing the scheme they think will challenge them the least.
4.3 Clause 47 leaves it to the discretion of the Secretary of State as to the kind of consumer complaints that would be included in any redress scheme. The energy industry has recently created the Energy Supply Ombudsman, but this scheme does not accept complaints relating to sales and marketing activities. Citizens Advice would urge that statutory redress schemes should not replicate this. The redress schemes in the Bill need to be capable of dealing with all complaints relevant to the sector. Excluding certain types of complaint would confuse consumers unnecessarily since many complaints cover a range of issues and it might not be readily apparent which type of complaints could be referred to a redress scheme. For example, if a billing problem results from mis-selling, the billing issue could be dealt with by the Ombudsman but not the poor marketing practice.
4.4 More generally, we are strongly supportive of measures contained in the Bill which bestow upon regulators the ability to prescribe standards for the handling of consumer complaints, and warmly welcome the Minister's proposed changes to clause 43, to create a duty rather than an option. Citizens Advice sees the prescribing of standards for complaint handling by regulators as essential. Given that much more emphasis will be placed on companies' internal complaints handling procedures as the first recourse for consumers to gain resolution of their complaints, it is essential that such procedures are robust, effective and swift.
4.5 In drawing up standards for complaint handling it will also be important to make best use of information about consumers' needs and experiences, to ensure these standards are robust and effective in delivering a good standard of customer service. To ensure this we believe that regulators should have a duty to consult the NCC and others in drawing up standards for complaint handling and in checking compliance with these standards.
4.6 At present, we do not consider that suppliers have such efficient and effective complaints procedures. CABx frequently detail large numbers of cases which reveal the inadequate processes that suppliers have in place for resolving difficulties and handling complaints:
A Merseyside CAB West Kirby 37783997 reported a case in which their client received a bill of £301.12 from his gas supplier after he had switched to another provider, despite the fact that the client had been using a pre-payment meter during all of this time (1999 - 2005). The client then became ill and did not manage to resolve the matter before the debt was handed to a debt collector. On 24 January 2006 the CAB adviser called the supplier in the presence of the client. After three attempts he spoke to a customer adviser who told him to ring another number. He called this number and after four attempts spoke to another customer adviser who informed him that she could not pass the query to someone who could help because they were too busy. They undertook to call the client back but had not done so after five hours so the CAB adviser called again and got through at the third attempt. This customer representative said that there was no record of any previous contact from bureau or even of the client's record. The following day the CAB adviser called again and at the fifth attempt managed to speak to an agent who explained that he could not discuss the account without the client being present.
A CAB in Yorkshire East Yorkshire reported that their client had received a bill for £653 after switching electricity supplier. She spent many hours and over £60 in telephone calls trying to resolve the problem, without success. The CAB adviser eventually got through to the supplier and they eventually accepted that an error had occurred and agreed to issue a revised bill.
4.7 Since standards and procedures of complaint handling vary greatly between companies, with energy suppliers' even having different perspectives on what constitutes a complaint, there is a need for companies to be required via the provisions in the Bill or through a redress scheme's conditions of membership to operate to a recognised minimum standard for complaint handling.
4.8 Advisers will need training in the requirements for customer service set by regulators, so as to help those consumers who have problems dealing directly with suppliers
5. Scope and Powers of the National Consumer Council
5.1 We welcome proposals for the rationalisation of consumer bodies into a new National Consumer Council with a statutory basis. We were therefore pleased to hear this statement from the Minister during the Second Reading debate in the House of Commons (column 591):
5.2 Mr McCartney: Let me say now that our objective in bringing these bodies together is to create not a mouse too meek to challenge us, but a lion who will, I hope, roar on behalf of consumers. We do not want to weaken consumer representation, but to strengthen it.
5.3 Citizens Advice considers that the creation of this body is potentially a huge boost to consumer protection. However at present we feel that the role of the NCC is too limited and that its discretionary powers to protect consumers should be imposed as duties.
Advice and advocacy in individual cases
5.4 We are pleased to note that the NCC will be endowed with powers of investigation and particularly welcome the Government amendments accepted in the House of Lords which expanded the type of complaints the new NCC must investigate to include threats of disconnection and problems with prepayment meters (clause 13). However, not all problems faced by vulnerable consumers may fall into these categories. We therefore consider that the obligation on the NCC to act on disconnection of gas or electricity and prepayment meters should be matched by a similar duty in reference to vulnerable consumers (clause 12).
5.5 At present, the Bill provides only that the NCC may investigate a complaint made by a vulnerable consumer against a supplier, despite the Minister's assurances during the Second Reading debate that the NCC 'will have a role specifically to tackle issues to do with vulnerable consumers, in terms of dealing with their initial problems and complaints and in assisting them through the process - all the way through, if necessary - of getting redress for their personal circumstances' (column 592).
5.6 Citizens Advice supports this vision of an end-to-end service. However, CABx evidence includes serious cases which, as the Bill stands, the NCC might not be under a duty to investigate.
A CAB in Hertfordshire Bishops Stortford 33801205 helped a client who is hard of hearing and doesn't have a telephone. He came to the CAB because his electricity meter had not been read for a number of years. The client is partially deaf and does not have a phone and so cannot send in his reading. The CAB called his electricity supplier and was told that they would send someone to read his meter in the next 10 days. Even though the client has no phone the company could not write to him to confirm the exact date. The client therefore stayed in for 10 days waiting for the meter reader but none came. The client returned to the CAB 14 days later and the meter had still not been read.
5.4 The proposals for a redress scheme, as set out above, may allow clients to gain compensation in such cases, and may also serve to encourage suppliers to improve their practices. But by its nature redress occurs a long time (up to 12 weeks) after the fact and there remains a need for the NCC to have a broader duty to act on behalf of vulnerable consumers, particularly since this may involve issues other than disconnection or prepayment meters.
Additional powers and duties of the NCC
5.5 If the NCC is to have influence and is to achieve real change it must be given the necessary tools for the job.
5.6 The Bill provides that the new body may pass information to regulators and to the Government (clause 8). However, there is no requirement that those with power must take note of this input. For the NCC to work there will need to be a requirement for those they are expected to influence to consult them and to respond. Citizens Advice recommends that the Bill is amended to include a specific requirement for regulators and the Government to consult with the NCC about their proposals for change and to provide a reasoned response to issues raised by the NCC, within a specified time period.
5.7 Citizens Advice also recommends that the NCC should act at the earliest opportunity to gain powers to take class actions on behalf of groups of consumers and to make super-complaints. We would urge the Government to encourage the NCC to take on this role.
5.8 We consider that the duty of the NCC to have regard to the interests of certain groups (clause 6(4)) should be expanded to include reference to a wider range of consumers who may experience discrimination on grounds such as age, race, sexual orientation, religion or gender. This duty should be at the heart of the NCC's work.
5.9 We also consider that the NCC should have a duty to consult with other consumer bodies, particularly those representing the needs of consumers who may not access Consumer Direct and whose interests may therefore be overlooked.
5.10 In addition we consider that the NCC should have a duty to monitor the performance of regulators. Where regulators are found to be failing to fulfill their responsibilities in terms of consumer protection the NCC should have the formal power to refer them to the Secretary of State. This additional power of last resort would considerably strengthen the NCC's position, enabling it to carry out its mandated role more effectively.
6. Territorial committees
6.1 We welcome the retention of territory specific policy input to the work of the new National Consumer Council and note the provisions for the Scottish Consumer Council, Welsh Consumer Council and Northern Ireland Postal Services Committee as territorial committees, for example:
· at clauses 1, including powers for delegation in schedule 1; · consultation on designated consumers at clause 4 (4); and · the inclusion of Scottish and Welsh Ministers as recipients for notices of the draft annual forward work programmes and consultation at clause 5.
It is important that the Territorial Committees have the appropriate resources to raise, and deal with, territory-specific concerns to devolved administrations
April 2007
[1] Citizens Advice is an operating name of The National Association of Citizens Advice Bureaux
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