Examination of Witnesses (Questions 60-79)
CONSUMER FOCUS
11 NOVEMBER 2008
Q60 Mr Bailey: I do not want to put
words into your mouth, but if I could summarise, you would not
be, if you like, a second tier of appeal. You would just assess
what has gone for somewhat indefinable future reference.
Lord Whitty: There are three different
issues here. One is that this round of closures has not yet finished
and there are some escalations, as we call them, rather than appeals
which are still to be heard and that is being dealt with by the
former Postwatch board members and Postwatch staff and will run
through to early new year. There is then the issue which I think
you were really alluding to, which is, where the Post Office has
made commitments on the alternative arrangements where there have
been closures, what is the monitoring process for ensuring those
are being delivered, and on that we do have a responsibility and
it is in our work programme to continue to look at that. We also
have a very clear, statutory explicit and individual role in the
Act setting us up for the Post Office network as a whole, and
were there to be, either directly or indirectly, another significant
tranche of post office closures presented we would have to negotiate
as to what our role would be. What I think Ed was saying, and
I know what I feel, was that Postwatch, despite the criticism,
did the best job they could in the circumstances but they were
put in the position of saying, "If you put up an argument
against that post office going we have to have another one down
the road go". That is not a situation we would want the new
organisation to go into. I think if we were looking at the totality
of the Post Office network then we would need to look at a much
wider role for the post offices in a much wider context of what
public services and other services are needed area by area. One
of the problems of the past two tranches of post office closures
is that it is as if they had been looked at through a narrow prism
of post office economics and a few criteria like access, which
are important, but the reality is that the communities which have
been most hit by post office closures are those where other services
have also been disappearing in the less prosperous suburbs and
in rural areas. There the post office is only one part of their
lack of access to service and I would want any further review
of the post office network to look at it in that wider context,
and the role we would play in that would relate to that wider
context.
Q61 Mr Wright: Just on this particular
point, you said you would be reviewing the results of the post
office closure programme. In my area they closed two post offices
very close to the main post office which has resulted in that
main post office having a queue 45 minutes to an hour long, which
in my opinion was a completely wrong decision, is against the
consumer's interest and will probably push more people away from
the Post Office. Would you be looking at that type of thing?
Lord Whitty: We have been looking
at it in general. We are required to look at it in general, and
particular examples will be helpful, so members of the Committee
and others may be feeding in information. Obviously, these new
arrangements have not in all cases yet been established and within
our work programme we are looking at it in general. We will not
necessarily do it in the same way as Postwatch, partly because
we will not have a regional structure and partly because we are
moving into a new era of post offices where, formally speaking,
the Government have effectively indicated that they are not looking
for a new big tranche of closures and the Opposition have said
likewise, so I am working on the assumption that the present network
ought to be preserved. Obviously, issues like the Post Office
Card Account may alter that, but if the current network is to
be preserved then we want to look at how effectively it is operating
both in terms of the alternative arrangements which were made
as commitments as a result of the last round and more generally.
Q62 Mr Bailey: I was about to say
the elephant in the room, of course, is the POCA decision and,
depending on how that goes, you could in certain circumstances
have a pretty heavy remit in the very near future.
Lord Whitty: We do. We endorse
what you have said about the process of the Post Office Card Account,
that effectively there is no serious consultation or assessing
of the experience of POCA card holders and potential POCA card
holders. There is to be no examination now of how the scope of
the POCA card could be increased and I therefore think DWP's conduct
of this contract is deeply flawed. I take heart from the letter
from Lord Mandelson, which is in the papers today, which indicates
that he has a vision for the Post Office which is somewhat broader
than a narrow look at the Post Office Card Account and that contract,
so I am hoping that is a positive indication that these wider
issues will be taken into account before any decision is taken
to move that away from the Post Office. I am hopeful that the
Government are now addressing these wider issues.
Q63 Mr Bailey: Just finally, changing
the subject slightly, why are you exploring "the scope for
a Community Services Advisory Group to take forward the successful
work of Postwatch Counters Advisory Group"? The obvious question
is, if Postwatch's Counters Advisory Group was successful why
was it not just transferred to Consumer Focus?
Mr Mayo: The Counters Advisory
Group has been a very effective way of getting the different stakeholders
together around the Post Office Counters network, and all we want
to do is widen that out so that we can look at community services
more widely. Postwatch was never able to look at that; the focus
and the agenda had to be purely on post offices rather than this
potential wider role that Larry has described. That is the shift.
As it happens, when we have talked to people in the Counters Advisory
Group they probably rather like the name so it may well be that
we keep the same name. That is important to us. I think we have
got a role in connecting through with a wide range of stakeholders
who have got an interest in the services that are provided to
consumers and communities, and that is one part of our forward
work programme.
Chairman: I just want to make the point,
and I used my position as Chairman in the introduction to make
this point, that there is no doubt the transition did have its
casualties in the last round of the post office closures. In my
own constituency I am quite clear we were unable to make the case
as effectively as we might have done because the staff has altered
so Postwatch were unable to attend the public meeting to discuss
the closure of Bengeworth Post Office because they could not produce
someone in time, so matters of fact remained in dispute about
the post office closures, matters of fact which should have been
resolved. Partly this Committee was concerned that the six-week
period for consultation, as I always said, was too brief and my
own constituency proved it to be the case. Having said that, we
are where we are and that is past history but it was an unhappy
period and I fear that if the card account does not go to the
right place you will have to face it all over again, so good luck.
Q64 Mr Wright: Just turning to the
Consumer Law Review, the Government has been looking at this particular
question since 2004. What does Consumer Focus want to get out
of the Consumer Law Review?
Mr Mayo: The Consumer Law Review
is a great opportunity to modernise and spread consumer protection
and consumer rights and to harness the power of consumers for
more competitive markets. I think if things are good for consumers
then they are good for the economy by and large. One example of
this, an example of an area that we would press on, is access
to redress because this is an area of relative weakness, if you
like, in the UK regime. We do not have some of the models of collective
redress that other countries have got. We have had a decision
with the coming in of the Consumer Protection Regulations and
the transposition of the Unfair Commercial Practices Directive
which denies consumers the right to enforce that individually
through the courts, which I think is a retrograde step and puts
us behind countries like Ireland. Also, I talked earlier about
the patchy nature of ombudsman schemes. Ombudsmen are a Nordic
import, by and large a very successful and welcome addition to
the consumer field and the economy, but you only get them in certain
services and there are major areas of consumer complaints where
we do not have ombudsmen services and it does not necessarily
reflect the structure of the economy where services are provided
across a range of professional services. If you are buying a house
it is estate agents and maybe banks and mortgages or accountants
and the like, so redress is one area for an advance. We are interested
in some of the opportunities that may be there to make it easier
for people to know what their rights are. In particular, in a
tougher climate economically the safety net seems to slightly
fall away. If you buy something on credit card you are covered
but if you buy something on debit card you may not be. If you
book a flight you do not know whether the airline company is going
to go bust or not and quite what that would mean, or if you book
a holiday, whether you are covered by the ABTA insurance or not.
There are a number of areas of consumer protection that I think
could be strengthened. The final area to look at is enforcement
because by and large you do not need new rules but we could do
a better job enforcing the rules that are there, and while we
have a very effective enforcement community at a local level I
think they would be the first to argue that it is both under-resourced
and patchy across the country, not really relating through to
consumer detriment but more to the circumstances of the funding
or recognition for individual local regulatory standards.
Q65 Mr Wright: Two of the areas that
they are looking at are whether or not to have a principle based
approach or whether it is going to be a prescriptive based approach,
and quite clearly it seems to be veering towards the principle
based approach. Will that create any difficulties for the various
consumer advice organisations, do you think?
Mr Mayo: I think there is a transition
issue there as people get to understand the new approach and try
to make that work. I think there has been some very effective
work done within the narrow constituency of trading standards
and BERR and some quite good involvement of the different stakeholders—the
Advertising Standards Authority or the CBI and the like. That
is very welcome. What there has not been is a wider public awareness.
People do not know that this new right is there for them to be
treated fairly, or rather not treated unfairly, so there is wider
work to do there. On the question around the principle-based versus
prescriptive-based approach, I think we are seeing that the principle-based
approach opens up new opportunities for dealing with new scams
that emerge that were loopholes, such as the Timeshare Directive,
that whole saga of protection and legislation and trying to catch
up with the latest problems and scams that have been emerging.
The principle-based approach is more future-proof in that way,
which is very welcome, but, just as there is a debate around the
limits of a principle-based approach in the financial services
market and the future of regulation, I think we need to take the
same look in terms of the consumer field. There is a lot of merit
in a principle-based approach but only and primarily if people
know that that is the principle that applies and that is what
their rights are and I think that is a gap in the current arrangements.
Q66 Mr Wright: In terms of the EU,
they are now looking at the possibility of a new directive in
terms of consumer rights and presumably you will be advising the
Government on that particular area, but quite clearly, for example,
at the present time if a consumer has a faulty good they can take
it back and get the money back in the UK whereas perhaps in the
future it may well be the case that the goods that are taken back
will be replaced or repaired and given back, so the UK consumer
may well lose an element of strength that they currently have.
How would you see that in terms of your advice to the Government?
Lord Whitty: Our view of the EU
level has been that we were in favour of the Unfair Commercial
Practices Directive, which was a principle based piece of legislation
and we would be in favour of principle based legislation in general.
However, we are not in favour of maximal European legislation.
In other words, if the European legislation harmonised, ie, made
uniform, the rights so that there was no ability for the individual
state to take it further, either in the case of pre-existing legislation,
which is the kind that you are talking about in terms of money
back, or in the future, then we would not be in favour of it.
There is a big argument going on in Europe as to which approach
you would take for future consumer legislation. We would favour
a European-wide definition so that everybody in Europe had the
same minimum rights but we would want to preserve the right, as
is done in a lot of environmental legislation, for the individual
country to go further.
Q67 Mr Wright: So what you want there
is for the standards to come up to our level rather than for us
to go down across the board?
Lord Whitty: Ideally, yes.
Q68 Mr Wright: There is another area
in terms of the rights of small businesses as consumers who get
products from larger organisations, such as with unfair contracts,
and one of the areas that we are going to be looking at is the
question of the pubs. Clearly there are some smaller organisations
that have contracts with larger organisations in the pub industry
and we will be examining that. Do you think that this should be
within your remit?
Lord Whitty: Normally business-to-business
relations are not within our remit. It is a question of whether
the business's contractual position is similar to that and it
is going back to the question of small businesses with energywatch.
Generally speaking, business-to-business would not be our concern.
Q69 Mr Wright: What we would be talking
about in this particular case is one individual having a contract
with a larger organisation. Although that would be regarded as
a business, they themselves would be a consumer dealing with other
consumers but also probably in many circumstances tied to a contract
which might well be seen to be unfair in an open market.
Lord Whitty: I am personally strongly
against that and we are trying to break that down in terms of
the supermarkets and the food chain, but I do not think that is
central to our business except insofar as it affects and limits
the choice of individual consumers, as in many cases it might.
Ed may take a wider view but my instinct is to say that supply
chain issues are not primarily our concern except insofar as they
have a knock-on effect.
Q70 Mr Binley: I think there is a
real impact upon the consumer, Lord Whitty, in the way that you
talked about post offices in suburbs and rural areas because bigger
companies now demand a shorter payment time for goods. They go
to their bank and their bankers are being really quite ungenerous
in their response in many respects. I met with the retail small
shops organisation yesterday and they brought this point particularly
to me because they are fearful that many of their smaller retailers
will go to the wall and that will impact upon consumers sizeably,
particularly in rural areas. Can you not take it on in that respect
because we need some urgent action?
Lord Whitty: That in a sense is
what I was saying. If it does have that effect or it has the potential
for that effect then it is our concern. What we would not do is
intervene in an issue which was solely a question between a supplier
and a customer. However, I would say that I do believe the competition
authorities, the OFT and the Competition Commission, should take
the monopsony/oligopsony dimension of their responsibilities rather
more seriously than has until very recently been the case, and
I just cite the food chain as being one such area. It is not primarily
for us to trigger it but I do think that that kind of imbalance
of power does need to be addressed in the system.
Mr Binley: I am grateful for that; thank
you.
Q71 Chairman: Monopsony and oligopsony
are not words you often hear in Parliament.
Lord Whitty: You got both in one
sentence there.
Q72 Chairman: I am impressed. You
were not playing a game with your Chief Executive to try and get
them on the record, were you? I have just one last area of questioning
briefly before we let you go unless there are things you want
to say to us we have not covered. Trading standards is another
whole area of consumer redress, consumer law enforcement, which
we have not talked about. You mentioned it briefly in answer to
one question. How will you interact with trading standards departments?
Lord Whitty: We have a very positive
relationship with the Trading Standards Institute and in some
cases with individual trading standards departments and we will
need to build on that both in relation to enforcement of the law
and in relation to general consumer information. We will want
as part of our intelligence gathering to build on what trading
standards departments would say. I should say that we think trading
standards generally speaking do a very good job. We are concerned
at issues that trading standards people may well be bringing to
you themselves about the resourcing and the priority given by
OFT and the Government to ensuring that trading standards are
up to the job.
Q73 Chairman: The lack of priority,
do you mean?
Lord Whitty: I put it neutrally
but their view will be lack of priority, yes. If that is indeed
the case that is something which needs to be addressed because
you can have as many consumer rights as you like in the world
but if you cannot enforce them, either through the courts or through
trading standards, then they are not worth the paper they are
written on, so our concern is that trading standards need to be
an effective force as well as a partner in various things that
we are doing.
Q74 Chairman: So you think the model
is basically not broken? The distinction between the Worker Consumer
Directive and trading standards, which I think I understand, is
a valid one. The local delivery of trading standards is a valid
approach but there may be issues around the resources available
to do it?
Lord Whitty: Yes, there are issues
about the structure of it and whether there should be regional
provision, but essentially that is a resource issue and the new
organisation does not have a view as to whether they should continue
to be local authority based or regionally based. That is a continuing
argument, but my concern is that there are adequate resources
deployed locally and any threat to that would be of concern to
us.
Q75 Chairman: Often the sharpest
and hardest consumer issues are ones that trading standards departments
have to address. Consumer safety, for example, is an essential
part of the consumer's rights.
Lord Whitty: Absolutely.
Q76 Chairman: Trading standards departments
always measure things. They do weights and measures as well. In
moving to a principle-based system would that pose particular
challenges for changing the mindset of officers in the trading
standards departments?
Lord Whitty: I think that is part
of the change that Ed was referring to. The old FCC did some useful
work on weights and measures. It is just the case that most consumers
did not understand either that they existed or that they were
of use to them. Principle-based legislation properly enforced
by trading standards would not necessarily mean the whole range
of minutiae of weights and measures would continue to exist in
that form. It does require both consumer information to be adequate
and trading standards officers to be able to enforce and be trained
and directed to resource principle-based legislation in that field.
Q77 Mr Binley: Trading standards
operated by local authorities are massively under cash pressure.
Are you keeping an eye on whether trading standards is not suffering
as a result of that especially and whether we are maintaining
at local level that resource that is so vital to consumers?
Lord Whitty: That was the reason
for my earlier comments.
Q78 Mr Binley: I thought so.
Lord Whitty: There are no very
up-to-date figures but the feedback from some trading standards
operations is that their areas are being squeezed, for one reason
or another, so we will continue to keep a close eye on that and
raise it with Government.
Q79 Chairman: There was a note of
urgency in your voice as you said that and I was slightly concerned
by that because trading standards work is tremendously important.
It may well be this Committee should take some views from representatives
of the trading standards sector and see what they feel about all
this.
Lord Whitty: I think that would
be sensible.
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