Consumer Rights Bill

The Committee consisted of the following Members:

Chairs: †Mr David Amess  , Sandra Osborne 

Baker, Steve (Wycombe) (Con) 

† Chishti, Rehman (Gillingham and Rainham) (Con) 

† Colvile, Oliver (Plymouth, Sutton and Devonport) (Con) 

† Creasy, Stella (Walthamstow) (Lab/Co-op) 

† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op) 

† Durkan, Mark (Foyle) (SDLP) 

† Flello, Robert (Stoke-on-Trent South) (Lab) 

† Gilmore, Sheila (Edinburgh East) (Lab) 

† Glindon, Mrs Mary (North Tyneside) (Lab) 

† Gyimah, Mr Sam (Lord Commissioner of Her Majesty's Treasury)  

† Harris, Rebecca (Castle Point) (Con) 

Kwarteng, Kwasi (Spelthorne) (Con) 

† McPartland, Stephen (Stevenage) (Con) 

† McDonald, Andy (Middlesbrough) (Lab) 

Munt, Tessa (Wells) (LD) 

† Newmark, Mr Brooks (Braintree) (Con) 

† O'Donnell, Fiona (East Lothian) (Lab) 

† Sandys, Laura (South Thanet) (Con) 

† Willott, Jenny (Parliamentary Under-Secretary of State for Business, Innovation and Skills)  

John-Paul Flaherty, Georgina Holmes-Skelton, Committee Clerks

† attended the Committee

Witnesses

Andy Foster, Operations and Policy Director, Trading Standards Institute

Gordon Ashworth, Director of Consumer and Markets Policy, Office of Fair Trading

Martin Lewis, Founder and Editor, MoneySavingExpert.com

Jenny Willott MP, Minister for Employment Relations and Consumer Affairs, Department for Business, Innovation and Skills

Public Bill Committee 

Tuesday 11 February 2014  

(Afternoon)  

[Mr David Amess in the Chair] 

Consumer Rights Bill

Examination of Witnesses

Andy Foster and Gordon Ashworth gave evidence.  

2 pm 

The Chair:  Welcome, witnesses, to this session. We will continue to hear oral evidence on the Bill. We will first hear witnesses from the Trading Standards Institute and the Office of Fair Trading. Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill, which is pretty broad, and we must stick to the timings in the programme motion that the Committee agreed. I am sure the Committee will work well together. 

We have two witnesses: Mr Foster and Mr Ashworth. Mr Foster, please introduce yourself and tell us briefly about your responsibilities, and then Mr Ashworth. 

Andy Foster: My name is Andy Foster. I am the operations and policy director at the Trading Standards Institute. 

Gordon Ashworth: I am Gordon Ashworth, director of consumer policy at the OFT. 

The Chair:  Colleagues, it is over to you to ask questions. 

Q 8282 Stella Creasy (Walthamstow) (Lab/Co-op):  Thank you, Chairman, and welcome. Welcome also to Andy and Gordon and thank you for coming. We heard a lot this morning about problems that consumers are facing, particularly at a local level. Many of the problems that people talked about were not necessarily outright illegal or criminal but might be defined as sharp practices or innovations in markets that nobody had thought of but were causing concern. 

Could you tell us about how your organisations deal with such issues both at local and national level? Perhaps you could tell us about the complaints you get that are on that blurred line. They might be causing consumer detriment and therefore require consumer rights to deal with them, but they are not necessarily straight-out crimes or fraud. 

Gordon Ashworth: From the OFT’s perspective, our general remit is to look at market-wide issues and try to make an impact across a particular market and do something that will affect a range of consumers. That is the role that we will pass on to the Competition and Markets Authority in a couple of months’ time. 

Over the past three or four years we have tended to move away a bit from the scams work and rogue traders work that we did in the past. We have looked more at things that consumers are probably less likely to observe easily themselves when they enter into a contract or

engage a trader. I suppose unfair terms make a good example of that, because consumers are not always well equipped to understand what they are signing and what they are getting into. If we get on to some of the unfair terms changes, that is an area where we have some interest and one or two concerns. 

The interesting thing about those issues is they do not always come up through consumer complaints. We used to run Consumer Direct, and now that responsibility is with Citizens Advice. However, just hitting the targets of complaints does not always tell you exactly what is going on. We try to look at a range of information and we do that through talking to other regulators, and through listening to MPs’ cases; we get a lot of MPs raising issues with us. And we try to get some intelligence on the ground, through research, as to what the problems are that consumers are facing. 

In terms of our case selection prioritisation, it encompasses quite a wide range of areas that we draw on. We are looking sometimes for straightforward breaches of consumer protection, but we are also looking for things that consumers may be deceived about, in that when the product was advertised to them they were misled at the start, in a way that was not obvious to them. So we are probably looking at some things that are not necessarily a straightforward breach, but we think business behaviour could be changed. 

If you look at the work we have done both in supermarkets and on children’s apps, where we are developing principles—well, we have got principles in both those cases. And we are trying to raise business behaviour and compliance, even when it is not necessarily obvious that there is a straightforward breach of consumer protection legislation, or if there was a breach there would be a pretty hefty court case that would go on for a while, which would not necessarily help anybody in the short term. So we look for different ways of achieving those results. 

Q 83 Stella Creasy:  Andy, from the other side, we know that most consumer problems occur at a local level, and Trading Standards is at the sharp end of that. If Gordon and the OFT’s role, and the CMA’s role, will be about the big national picture—I presume you have a threshold of the number of people affected by something that would be considered bad market practice—how does Trading Standards view consumer detriment at a local level? What sort of powers would you be looking for to tackle that, given that you are on the other side of that? 

Andy Foster: Yes, absolutely. A few things have changed in the last year or so. Members will be very familiar with the fact that the consumer law reforms have meant that Trading Standards is now delivering enforcement at a local, regional and national level, perhaps for the first time taking duties from the OFT, so we see that full picture as well. Of course, that also means some international work, particularly as more and more consumers are going online, and the growth of e-commerce means they are getting caught in consumer detriment traps, if you like, that take them overseas, and those are particularly difficult to deal with. 

At a very simple level, we obviously have a number of instruments available to us. The criminal breaches are perhaps the easiest to deal with; they are very clear. Generally, if we can identify who has committed the

breach, there are a range of instruments that local Trading Standards can deal with through the criminal courts. But of course, on the top of our areas that are most complained about are things such as home improvement-related issues—so, builders and anyone who is involved in improving people’s homes—but you will also not be surprised to hear that second-hand cars are there. These areas have been in our top 10 for a number of years, and we deal with them in a number of different ways. 

First, we have the Enterprise Act 2002, which enables us to use a number of measures—almost injunctions—that allow us to stop traders from trading unfairly. But to get to the heart of your question, more often we find that these issues are on the cusp of what is legal and what is unlawful. We used to use a lot of advice mechanisms and mediation mechanisms, almost to act as a mediator between the trader and the consumer, so as to come to some amicable arrangement about how these issues should be resolved. I think it is fair to say that Trading Standards is performing less of that, because of the budget cuts that are hitting Trading Standards at a local level, and there is more and more concentration on intelligence-led criminal enforcement. That is probably a fair reflection of where we are. 

I should say that there are other tools in the box that we use. Of course, there is education. You will have heard from Citizens Advice about its work in this area. However, there are also what you might call empowerment techniques. These are techniques that allow consumers to make better choices by giving them positive information. The institute—my organisation—approves certain codes of practice. We have a positive list of traders who agree to abide by not only a code of practice but dispute resolution mechanisms, should they fall into some kind of dispute. 

There are similar models to that one, such as Brand-i, which is a positive list of trademark holders. Consumers who use Google, for example, to look for genuine Gucci handbags will be met by thousands of sites, all claiming to be genuine stockists of that particular brand, and of course only a handful will be. Brand-i gives them direct access to the actual genuine e-tailer. That is just one example of how we are using slightly different tools in order to stop the detriment happening in the first place. [ Interruption. ]  

The Chair:  I want to say at the outset that obviously these are fairly lengthy responses, and I am anxious as many colleagues want to ask questions. I am trying to get everyone in. 

Q 84 Stella Creasy:  I just wanted to follow that up, not least because I wish for the days when I could afford a Gucci handbag and could go on Brand-i. Both witnesses seem to be talking about the importance and honesty of the cuts to Trading Standards, and the need for this to be national market-led work which the OFT and the CMA will take up. There is then the risk of an enforcement gap, which makes the role of mediation and redress systems all the more important. 

Should we therefore be concerned that this legislation does not deal with the EU directive on alternative dispute resolution? There will be a gap between the enforcers’ ability to deal with things at a local level

which are on the cusp of being criminal—the rogue traders, the dodgy builders, the second-hand car dealers—and the need for problems to be big, national and to span a whole market for the CMA to intervene. 

Andy Foster: Potentially, is my answer. I am told that the Government’s preferred solution for implementing the ADR directive is on its way, but right now I am not quite clear what that solution is. So, if it is not far away, then it deals with that gap. Having said that, in my view, if there is no clear instrument for implementing that, this would clearly be a good opportunity to do so. 

Gordon Ashworth: I don't think we expected that to be included in the Bill, but redress is absolutely crucial. Everybody has a limited amount of resource, but if that reduces then consumers exercising their rights to solve problems themselves is clearly important. I am not too sure whether that is a gap in the Bill, but it needs to be addressed. 

Q 85 Fiona O'Donnell (East Lothian) (Lab):  Good afternoon. I wonder if I could address a question to Andy on advanced notices and endorsement changes. Can you give us a brief idea of what proportion of cases TSI loses on technical issues, such as inadmissible evidence or procedures not having been followed? 

Andy Foster: I think I would be unable to give you an answer with any degree of certainty. However, if I may provide some anecdotal evidence from talking to colleagues, it is fair to say that gone are the days when we tended to lose cases on evidential grounds. Generally, cases are taken that are watertight, for want of a better word. The areas of cross-examination for defence solicitors or barristers tend to be on the technical side: is the officer properly authorised by their authority, are they properly trained, or are they competent to do what they do? One of our concerns is the provision to provide notice. Even though it provides us with quite a number of exemptions, it is another area where we could be questioned and challenged. We see little benefit for us in introducing such a requirement. 

Q 86 Fiona O'Donnell:  If you do have access to that information, it would be very helpful if you wrote to the Committee. Andy, you also mentioned the cuts to TSI, and I wondered how confident you are that you have the resources for the requirements under part 4 in schedule 5 to the Bill. Have you any estimate of what the costs will be for TSI to deliver those notices? 

Andy Foster: I think the impact assessment talks about a potential number of 70,000 notices, and there is some debate, shall we say, about what that might mean. There are a number of scenarios. One might be a simple administrative e-mail to a business, but that presumes that we know what the business is and who operates it. In more and more cases, the reason why we carry out routine inspections is that we do not know who owns the business or a new business has cropped up, so we are unable properly to risk assess it. 

In future we will have to visit the premises to serve the notice, come back and then carry out the exercise, potentially more than two days later. That is a good number of hours, given the geography involved. So for us, the impact assessment is a little conservative. I think a fair estimate would be anywhere from 70,000 x £50 an hour, and typically an hour to three hours each time. 

Q 87 Fiona O'Donnell:  Can you give us any examples where serving a notice would be either impossible or counter-productive? You touched on how you were not really sure about this aspect. 

Andy Foster: Well, I am sure on the aspect of the exemptions to this. There are two exemptions in particular which I think we will use quite often. One talks about “reasonable suspicion”, so we have to serve a notice unless we reasonably suspect a breach might occur. We have done some work on what that might mean, and there definitely needs to be some kind of link between the suspicion—in other words, where we have spotted something on the street, such as counterfeit goods, tobacco or alcohol—and a particular business. Unless we are able to make that link, our legal advice is that we will be unable to make out that exemption. 

The much wider exemption is the one that states: “unless this would defeat the purpose of the exercise”. That exemption is broader in its interpretation. For example, were we to go into a shop for the sole purpose of detecting whether that particular shop is selling counterfeit tobacco—which is a big, common problem in many communities—we could probably make out the exemption that giving a notice will defeat the purpose, because obviously the tobacco would be gone. Many of my colleagues are talking to me about the times when they go to a shop for another purpose—they might be inspecting a retail establishment that has food risks, fair trading risks or intellectual property risks—and they find evidence that intellectual property rights are being infringed when they are there looking at something else. In that case, they probably would not be able to make out the exemption that it would defeat the purpose because the inspectors are not there for that purpose. 

The measure allows an officer to think quite broadly, but it creates confusion. More importantly, it creates legal risks if a case were to lead to a court of law. That might mean either that the authorities are risk-averse and do not take the case or that they lose the case, and in that event, of course, everyone loses. 

Q 88 Stephen McPartland (Stevenage) (Con):  Do the witnesses believe that this is a good Bill that will help them and their organisations to do their job better? 

Andy Foster: Yes. Let me try to explain that further. A single Bill cannot remedy all the consumer ills that my colleagues and I have been dealing with for the past couple of decades, but nevertheless we welcome the provisions, particularly the aspects that inject clarity into consumer contracts. The clearer that consumer rights are in a world in which we spend less money on education, the better that people can understand those rights. It is not just about consumers; it is about businesses, too. Businesses regularly call us saying, “I just don’t know what my obligations are in this scenario.” The 30-day rule on the earlier right to reject is interesting, and in our view it is very welcome, because it leaves both consumers and businesses with little ambiguity on what their obligations are. 

The enhanced consumer measures are another welcome tool. Enforcement resources on the ground, however, might mean that the measures are less effective. The enforcer has to go through and demonstrate a number of tests before they can put forward an enhanced consumer measure. For example, they have to work out the costs and benefits to ensure that they meet the requirement

that the cost of implementing the redress is not greater than the cost of the detriment itself. Those things require different skills among the enforcement community, and the enforcer has to overcome a number of hurdles. My basic standpoint is that the higher the hurdles, the less chance there is of those hurdles being used. There is a bigger issue there. 

Q 89 The Chair:  Do you want to comment, Mr Ashworth? 

Gordon Ashworth: We welcome the Bill, which we think is overdue in simplifying consumer law. For us, the Bill does two things. First, it takes elements of our toolkit—for want of a better word—on the unfair contract terms legislation, and it develops the enhanced consumer measures that Andy has mentioned. The Bill can move those things forward, which is good. 

Less directly, and perhaps less obviously from our interest, making consumer rights clear and simple for goods, services and digital content, so that consumers can exercise their rights, helps us to do our job. One way of getting the markets to work well is by taking enforcement cases; another way is by getting consumers to exercise their rights and influence businesses to comply by knowing and demanding their rights. We have a particular interest in those things as much as we do in the ones that relate to our enforcement toolkit. Yes, the Bill is overdue, and we think it is covering the right areas. 

Q 90 Oliver Colvile (Plymouth, Sutton and Devonport) (Con):  Thank you very much for giving up your afternoon to come to speak to us. How can we eradicate rogue traders? As it happens, I am having my loft converted at the moment, and I am always concerned about whether the guy I have doing the work for me is going to do a decent job. That is difficult to ascertain without doing an enormous amount of research. What do you think the Government, and more importantly Parliament, can do to try to strengthen the powers to ensure that rogue traders are eradicated? Secondly, do you think the local authorities have a bigger role to play? Can they be given more powers as well? 

Gordon Ashworth: Rogue traders are less of an area for the OFT and the CMA going forward, but getting the law right around goods and services is absolutely crucial. In terms of services, one of the issues is whether, if someone does a piece of work for you and you do not like it or you find that it is unacceptable, you should be able to give them another go to put it right or you would like to move on. That is one area the Bill does try to address. We have not been convinced that everybody would want to give someone who has done a really bad bit of work another opportunity to have a go at it and potentially make an even bigger mess of it the second time round. 

If you go away from that—you might want to start again and you might need to seek damages—it is questionable whether the Bill, in terms of services, addresses that fully. Getting the law right is one issue; joining up enforcement across the enforcement community is another element of that. Although rogue traders are more likely fall to local enforcement than the CMA and the OFT, we now have the Consumer Protection Partnership, which is a new organisation that brings together all the key enforcers and is linked into the sectoral regulators as well. In terms of joining up the

information and understanding where the issues are across all types of detriment, whether local, regional or national, there is an opportunity to do it a lot better than we have done in the past. 

Andy Foster: If I can contribute to that, I think it is partly about powers but also, and more importantly, about resources. Anyone in the public sector, I am sure, will make the same case for their own particular professional service, but this is genuinely a case of the more we put into mediation or resolve and redress, the better outcomes we get for consumers and businesses. We spend about £180 million on consumer law in this country, but this is a £6.5 billion problem we are trying to deal with. The two figures are totally mismatched in my view, and unless we resource this properly, we will never really get to the bottom of it. 

There are some other things that we can learn from other countries around the world. Australia and New Zealand have a licensing regime for their home improvement industry. We have talked to previous Governments about that, but at the end of the day, they have declined to introduce a similar licensing system. The biggest problem that consumers will have is that they will not be able to understand how somebody can come in and—for want of a better word—rip someone off for thousands and thousands of pounds and have no action taken against them, other than perhaps a civil court suit, and then there is nothing stopping them from going into a neighbour’s house or anybody else’s house. That is the sort of issue about which consumers regularly come to me saying, “How can that happen?”, and I have to agree them. 

Q 91 Oliver Colvile:  You said that attempts had been made to introduce things that happen elsewhere. Why has that failed totally? 

Andy Foster: I guess we are into the burden-on-business type debate and the deregulatory agenda. For whatever reason, the Government of the day have not had the appetite to implement such a regime. It is the same with other areas of detriment, such as will writing, where the evidence was quite compelling that something stronger needs to happen; nevertheless, the Government declined to introduce something and relied instead on redress measures and dispute resolution. Hopefully that will work, but perhaps it will not. 

Oliver Colvile:  Bring back “That’s Life” I say. 

Q 92 Andy McDonald (Middlesbrough) (Lab):  Mr Foster, you have already talked about the trading standards service being reconfigured with regional, local and national responsibilities. Do you think there is a case for minimum standards within TSOs? Otherwise, we might get a postcode lottery creeping in, with different services being delivered in different parts of the country. Is there an argument for that? 

Andy Foster: There are two issues here. One is around minimum standards of competency for officers: what does “a competent officer” mean? At the moment, we have only two areas of law that require a minimum standard of competency: weights and measures law—legal metrology—and food law. For everything else—everything we have been talking about today around rogue traders, for which we might use the consumer protection regulations more often than anything else—there are no competency

requirements, as long as they are authorised properly. Government consulted on the possibility of introducing such a standard. They wanted to introduce a general requirement to be competent, backed up with a voluntary code of practice. We were prepared to work with the Government on that, but for whatever reason, they felt that it was perhaps a matter for local government—not central Government—to introduce, so they declined to put it into this Bill. 

The other issue is around standards of service delivery. Members who remember the Public Accounts Committee hearing on consumer protection two years ago will remember one of the recommendations, which was to allow ways in which consumers or citizens could hold their local authority to account if they believed they were spending too little on consumer protection. There is a lot of discussion around what that might mean, but I have not seen anything that suggests how it would be implemented. 

It could be around minimum levels of expenditure per head of population; it could be around levels of inspection and sampling, or general consumer protection provision. I agree that that would be most welcome, but there is nothing like that at the moment. When you have 197 Trading Standards services across the country—32 across London alone—with just one or two officers in each authority, you can imagine how stretched resources can be. 

Q 93 Andy McDonald:  Would the same argument about maintaining standards obtain for the ombudsman’s services as well? 

Andy Foster: I’m not sure I understand. 

Andy McDonald:  There are different ombudsmen across consumer affairs. Anybody can be an ombudsman. There are no standards that apply to them. Should there be? 

Andy Foster: No, that’s correct. The ADR directive might deal with that. A competent authority will be created, which will select who can provide dispute resolution, and I imagine there will be criteria that the dispute resolution organisations will have to meet. 

Gordon Ashworth: It will also depend on the sector’s own OFT-approved estate agents redress schemes. I believe Ofcom and Ofgem have their own schemes, so there is a variation. We established our own criteria, but we looked across the piece to see what was generally acceptable across other ombudsmen. There is some relationship there, but not in the way I think you are looking for. 

Q 94 Robert Flello (Stoke-on-Trent South) (Lab):  My constituents—and, indeed, the people of the potteries—would never forgive me if I did not raise the issue of misleading back stamps. On consumer awareness of existing rights, if a consumer does not immediately realise that they have been ripped off, it becomes even more of a problem. Do you think the Bill deals adequately with such problems? 

Somebody goes along, picks up a mug, turns it over and it says “England” on the back, so they think it must have been made in England. Or they turn it over and it has the name of one of the Stoke-on-Trent six towns on the back, and they think it must have been made in

Stoke-on-Trent, so initially they have been misled into buying something that they think was made in the potteries and is therefore of the highest quality. They then have two problems. They have bought something that is not what they thought they bought, or they have bought something that they think is food-safe, so they put their tea or coffee in it, which they happily drink, but they then find that it has not met the UK’s product safety standards. Does the Bill deal with that situation? If it does not, what areas should be tightened up in terms of consumer awareness of rights and their safety? 

Andy Foster: I think you are probably going into an area that the criminal law currently deals with. Breaches of product safety law would be a criminal matter, as would breaching a trademark. 

Q 95 Robert Flello:  If you knew it was not the real thing. 

Andy Foster: Absolutely. This is one where prevention is better than cure, and this is where investment in generating the next set of competent consumers is so important. That is why we will constantly articulate the case for a much more widespread provision of consumer education in the national curriculum. At the minute, it is a little patchy in terms of its delivery, with some welcome introduction of financial inclusion and literacy, but not so much on the consumer side. The Bill does not deal with that. 

Of course, it is an issue that we face every day. In some ways, it is very similar to the issues that we deal with in fake goods. Consumers go along, think they are getting a bargain and get something different. It is not simply a question of their losing a few pounds; they have also exposed themselves to some serious safety issues as well. We see the same in car parks, in medicines and in food, right across the board. It is not a question of redress, but of avoiding the situation in the first place. 

Q 96 Robert Flello:  But this is not actually fake; this is misleading. 

Andy Foster: In terms of provenance, yes. 

Q 97 Mrs Mary Glindon (North Tyneside) (Lab):  Do people ever complain to you about the public sector? Do you think that the rights should apply there? 

Gordon Ashworth: I do not think that going into that area in this Bill would add any particular value, because what the Bill is trying to achieve is already extremely ambitious. If you want to deal with consumer rights and the public sector, there is probably a different way to go. This is a simplification and consolidation Bill that is trying to ensure that consumer rights are clear and in one place. From there, as Andy has touched on, we can advise consumers on their rights and allow them to deal with things rather more effectively than they do at the moment. To expand the Bill beyond that remit could be quite difficult. 

Andy Foster: For me, goods and services are goods and services, and it does not matter where they come from or who the provider is. We live in a mixed economy of social enterprises, private organisations and public sector delivery, and consumers have the right to expect

minimum rights across all contracts. As Gordon says, however, I am not quite sure where that would fit in this Bill. 

Q 98 Rehman Chishti (Gillingham and Rainham) (Con):  You have touched on rogue traders, redress and mediation, but much of the time it is about prevention in the first place. Some local authorities have a fair trader scheme, for example, to which traders can sign up and then be recommended for work. Anyone can check whether a trader is registered with a local authority. The problem with rogue traders is that if they have carried out work on your house and you then take them to court, you will often find that they do not turn up. You may get a decision in your favour, but you will not get any money, because the person cannot be found, unless you go to the High Court and get some money via bailiffs. Irrespective of the court process, local authorities should create initiatives in the first place to make residents aware of whether someone is a rogue trader or is okay to work with. 

Andy Foster: There is much merit in investing in strategies that make consumers think and choose more wisely, rather than getting into a dispute in the first place. You are absolutely right that local authorities do a lot of work around the fair trading scheme. For us, there is an issue around brand recognition, because 200 services delivering slightly things can be confusing not only for traders, who may trade across boundaries, but also for consumers, who are constantly looking in The Times for certain organisations that claim to have a directory of vetted traders, when perhaps the truth is slightly different and some are perhaps better than others. We are doing some work with private and public sector providers to join that up, which will complement our approved code scheme, so that “trading standards approved” means the same wherever you are in the UK. 

The other point is that our schemes come with compulsory alternative dispute resolution mechanisms, so that if something were to go wrong between trader and consumer, there is an end result and the consumer can get the redress that they perhaps deserve. 

Gordon Ashworth: On rogue traders, the interest from a markets perspective is that they do damage not only to individual consumers, but to confidence across the market as a whole. When one end of the market is performing really badly, that impacts on other businesses. Quite often, at the end of an OFT market study, one of the outcomes might be that we need to do some more enforcement or work with Trading Standards to ensure that more enforcement is done. It might be a package. There might be guidance for the compliance end of the sector. You still need to take out the rogues, however, because otherwise it will just go through the whole sector. 

Andy Foster: May I make one final point on that? One of the undesirable consequences of budget cuts is that fewer local authorities are investing in such schemes. In fact, some are switching them off as we speak. That is obviously undesirable, because there will be fewer schemes about, which means that consumers have less access to redress. Private sector schemes therefore become important, because they are not going to go away. If we can get them to observe the same kind of rights to redress, standards and values as the public sector schemes, the consumer does not lose out. 

Q 99 Laura Sandys (South Thanet) (Con):  Picking up on that point, you have talked about prevention, consumers being empowered, information and education, and so on. This Bill in many ways offers a whole new set of tools for you to use when it comes to redress. What sort of tools do you have now that you did not have before? What sort of redress mechanisms would you use? How would they assist and promote greater understanding of what rights are and that there are enough penalties to ensure that companies know it is a painful exercise? The reason why I ask this is that, frequently, with Trading Standards, the companies get the penalty, but it is really petty cash for a lot of them. How do we ensure that the information gets out there? Do you see that as part of your redress mechanism? 

Andy Foster: There is no doubt—there is some academic research on this—that very carefully chosen prosecutions and convictions tend to have a preventive effect across particular sectors, so that people know something is being taken seriously. Obviously, we made the point in the consultation exercises around our disappointment that some of the obstruction offences—where officers are obstructed from doing their job—had the penalty reduced from level 5 on the standard scale to level 3. We could not work out the rationale for that, even though we accept that in all the legislation we provide for the penalty to be between levels 3 and 5. We felt, however, that that reduction sent out the wrong message. 

In terms of what is in the new set that was not in the old set, this is around redress, so there are some really useful provisions in terms of the enhanced consumer measures. Currently, all we can get is an injunction to stop the trader from behaving unfairly. In future, we will also be able to couple that with refunds for consumers, where we can identify them, or anything that is within the scope of the measures, such as introducing a complaints management system or insisting that staff are trained, as long as it meets the test. 

Q 100 Laura Sandys:  Something brought up with me is whether you can ensure that a company, on its website, has a big banner saying, “Trading Standards has taken us to court and we have been fined x, y or z”. That then becomes a very big deterrent for companies, because the customer is more important to them than the petty cash that they can find in the bottom drawer. I do not know whether that might be one of your things. Do you use such things? 

Andy Foster: If there has been a conviction in a public court, that is public information, so local authorities can use that to best effect. 

Laura Sandys:  For the company’s website to have that on. 

Andy Foster: Oh, to insist that they put that on. 

Laura Sandys:  Yes. 

Andy Foster: I am not aware of any legal instrument that could require them to do that, unless they undertake it voluntarily. 

There is a slightly bigger issue here. The judiciary themselves obviously play a key role in making sure that adequate sanctions are brought into place when we do bring a case through to conviction. In the food industry, with the horsemeat saga, low levels of fines are being implemented, which means that this is a lucrative revenue stream for producers in the food sector. The non-food

sector, which we are talking about here, is no different: if the penalties are not sufficient, they are no deterrent. The reputational sanction, however, is very powerful—I agree. 

Q 101 Laura Sandys:  And you have no tools in that field. 

Andy Foster: Not that I am aware of. 

Gordon Ashworth: Well, under the enhanced consumer measures, if a company is putting together a redress programme in which they will actually be returning money to consumers, then they will need to find those consumers and to advertise the fact that they are doing that. So that is one way of doing that. The broader deterrence that comes out of enforcement is crucial. One of the things that we have tried to look at over the past couple of years is getting more deterrent effect out of the work that we do. We do not simply issue a press release on the day, so that some people see it, but some do not; we try to build it into ongoing compliance programmes, to ensure that people are aware that these are offences and that they could be caught. 

Q 102 Mark Durkan (Foyle) (SDLP):  The Bill sets out measures in respect of where consumers come forward with faults in products in respect of repair or replacement, but it does not address the situation in which the consumer is not aware of the fault, but a manufacturer or supplier might be, in terms of instances that would be the subject of product recall. Why should the Bill not do more in the area of recall when the Electrical Safety Council is telling us that only 10% to 20% of recalls at the minute are fully successful? 

Andy Foster: There is a number of reasons for why that is the case. I am not sure that the Consumer Rights Bill is necessarily the best instrument to deliver this. One of the great challenges of buying anything, such as an electrical product, is that you are faced with a range of registration cards to fill in, and consumers are very sceptical about filling those in. They think they will be spammed with all kinds of information, so they choose not to fill them in, so manufacturers that want to contact their customers find it difficult to understand who they are. In the car sector, there is a much more successful track record of finding consumers, because cars have to be registered by law, but that is not true for other goods. There are issues with registration and with trust—consumers do not necessarily trust the trader with that information—and that has to be dealt with if you are going to introduce or improve effective recall mechanisms. 

Q 103 Mark Durkan:  Do you agree with the Electrical Safety Council on the low rate of successful recalls? In some circumstances, the faults in these products can lead to health and safety risks and threats to life and to property through, for example, fire. Is the onus on manufacturers? In many circumstances, the manufacturers are not known, because people are buying the products from chains that have sourced them elsewhere. Who, for the purpose of recall obligations, is the manufacturer in those circumstances? 

Andy Foster: Product safety law is a Europe-wide mechanism. The first person that imports the goods into the EU is the manufacturer for these purposes. In

the UK, the person who sells the product shares that responsibility. It is important that we do not focus a lot of effort on product recalls and getting them right, because that almost lets the manufacturer off the hook for not producing safe goods in the first place. The onus is on the manufacturer to get it right in the first place. If the manufacturer is outside the EU, that onus is on the retailer that sells the product within the EU. 

The Chair:  Mr Foster and Mr Ashworth, we have three minutes left and three colleagues who want to ask questions. I ask those three colleagues to put those questions briefly, but you have not got a lot of time to respond. 

Q 104 Fiona O'Donnell:  Andy, just focusing on what you said about equality of service across the country, how do we ensure that that happens? Do we not need some minimum standard of product delivery? 

Oliver Colvile:  Last week in the House of Commons, as you might know, there was a debate on energy companies and direct debits. Likewise, some companies are seeking to charge for paper billing. How will we set that right? 

Stella Creasy:  Why do you think more consumers in Britain do not switch their services? Would it not be a good idea if we did things to encourage them to do so? 

Andy Foster: Let me start with the first question. On minimum standards and trading standards, the principle is that there should be minimum standards of product delivery, but we all accept within our profession that one size does not fit all. A very urban service has a very different set of needs and demands from its citizens than a service in a very rural setting. It has to be loose enough and flexible enough to allow local government to meet the demands of its local businesses and citizens, but something can be done and nothing with a statutory backing is being done at the moment. 

I will come back to the energy company question, unless Gordon wants to jump in, but on switching there is a huge amount of what we might call “sticky switchers”. A huge amount of people just do not switch, and my grandmother is one of them. She would stick with a well known gas company, and that is it. There is no motivation for her to switch. 

The Chair:  Can I interrupt you for a second, Mr Foster? This matter is not strictly within the scope of the Bill. 

Stella Creasy:  Yes, it is. 

The Chair:  Well, I have been advised by our learned Clerk that it is not. 

Stella Creasy:  Consumer prices and fair and reasonable prices for services are part of the Bill. Switching is about whether you are being offered a fair and reasonable price. 

The Chair:  Subsection (8) of clause 2 states: 

“‘Goods’ means any tangible moveable items, but that includes water, gas and electricity if and only if they are put up for supply in a limited volume or set quantity.” 

Andy Foster: Perhaps I can make a general comment about this, which will deal with that point. Consumers will be able switch if they can compare apples with apples. One of the general problems is the complexity of

tariffs in the energy market and other markets. As long as there are 30, 40, 50 or 100 different options for consumers to choose from, they have little chance to make an effective switch. We should make it easy for consumers to switch. 

The Chair:  Order. Mr Foster and Mr Ashworth, you have generated so much interest from colleagues, including a little controversy at the end on the scope of the Bill. I am grateful to our Clerk for directing me on the line of questioning. On behalf of the Committee, I thank both of you for the time that you have given us this afternoon and for the valuable evidence with which you have provided us. Thank you very much. 

Oliver Colvile:  Will you write to us? 

Q 105 The Chair:  Mr Foster and Mr Ashworth, will you write to the Committee about any further points on which you feel you have not been given adequate time? The 45 minutes have whistled by. 

Andy Foster: I am very happy to do so. 

Gordon Ashworth: Yes. 

The Chair:  Thank you very much indeed. That is very helpful. 

Examination of Witness

Martin Lewis gave evidence.  

2.46 pm 

The Chair:  Welcome, Mr Lewis. Could you explain who you are, who you represent and why you are here? 

Martin Lewis: My name is Martin Lewis. I am from MoneySavingExpert.com, which is the UK’s biggest money and consumer website. I do not represent anybody; that is your job. I am here to give an opinion on how consumers think about consumer rights and where the new Bill will take us. 

Q 106 Stephen McPartland:  I am interested to know whether you think this is a good Bill and whether you think it will help consumers more than the different sets of legislation that we currently have in place. 

Martin Lewis: First, it is wonderful that we are discussing consumer rights. That does not happen very often, and there are many problems out there. The Bill goes some way to addressing them. Yes, it is a good Bill; yes, it is good that we are doing it. However, we need clarity and we need to help people understand what is going on. I have to be honest, I have not read every line of the Bill’s 120 pages, nor will every consumer. Although there is some way further to go to make it a perfect Bill, there are many things in it that are a step change for consumers. But overall, yes, good, wonderful. 

The biggest problem that I have, which I may as well start with, is that it does nothing to address what I call the toaster problem. The toaster problem is this: I am a man who knows my consumer rights; I have had many arguments with shop staff when they have given me incorrect information—we also need to address the fact that many people who work on the other side do not understand their rights—and I buy a toaster that costs

me £35. I get it home and the light is faulty; it flickers on and off. It is definitely faulty; we all know it is faulty. I take it back to the store and say, “It is faulty.” They say, “You have to take it to the manufacturer.” I say, “No I don’t. My right and responsibility is with you. I would like you to fix it.” “We don’t think it is faulty. It is still working; you can still put toast in it.” “Well, of course it’s faulty. The light is flickering. It goes on and off.” “Well, we don’t think it is.” 

I have a £35 toaster, and I have to take them to court. My court fees are higher than that. Yes, I will get it back when I win, and I will win in this case because it is clearly faulty under the current law and the new law, but I am not going to do that because going to court is too scary for most people out there. It is a very big thing, and there are risks. If you go to the small claims court—it is important that you address this—you are not guaranteed to have a small claim, because complex cases can be put on to the normal court schedule. 

The reason I am going into that is because when I explain it to people it is a brown trouser moment—if you will forgive me—for most members of the public. Although it is very unlikely to happen, as someone trying to help them I have to say, “It is possible. You are not guaranteed that your no-cost small claim will be no-cost, because it could be escalated.” Instantly, in a case such as the example of my toaster, that is very big thing putting me off. I have never been to court before, and it is already difficult for me to have to write the court particulars, and now I do not know what is going to go on. In a way, the problem is that the court system is not fit for purpose, certainly on small consumer rights claims. The public are not willing to use it. I know that we are looking at ADR coming in in a Bill in 2015, but I think that unless you join the two you are going to have a wonderful Bill that gives people many new rights that they are never going to be able to use. 

Q 107 Sheila Gilmore (Edinburgh East) (Lab):  One issue that is still a big question for people is whether services are dealt with as well as goods. The legislation does not really change the definition of what is a satisfactory service. Do you think it should, and if so, how? 

Martin Lewis: In some ways, I find the idea that we should differentiate between goods and services rather difficult. Of course there is the different nature of the product and the way that you operate it, but I would think that what you want to do as much as possible is homogenise the rules. Even though they have relatively similar phrasing, we still have different sets of rules—my colleague Wendy, behind me, is the one who has had to read 129 pages—for goods, services and digital content. If I were doing this for consumers, I would want one set of rules with some addendums for each different type at the back, because I have to be able to teach people what their rights are. At the moment, I use what I call the SAD FART rules for consumer rights—it stands for “Satisfactory quality, As Described, Fit for purpose And last a Reasonable length of Time”. That is a good way to remember it—go and be a SAD FART and make sure that your consumer rights are enacted—and you know what? People remember it. 

My problem is that under the new Bill you have gone closer to bringing service rights nearer to goods rights —I am still not quite sure on the definitions—and then you have digital content rights. But in a way, what

the consumer needs is to be told, “Here are your rights when you deal with a company. You must be treated reasonably and fairly; if goods are involved they must be of satisfactory quality, and the services that you get must be of satisfactory quality too.” 

I will give you an example that I tried to come up with before—I have written it down. Someone buys a DVD-ROM to install software on their PC—that is a good. It comes with a year’s licence agreement to provide technical support—that is a service. It includes downloadable updates to the software in that time frame—that is digital. I am confused about what my rights are under the new Bill, and where it applies, because each one has a different category of rights. Is it that I have bought a DVD, so it comes under the goods rights? But if the software update that I was guaranteed does not happen, and then it breaks and causes a virus on my computer, where does it fit? 

Again, I want to put this in a positive light. I am not sitting here saying, “What on earth are you doing?” I am sitting here saying that it is still overly complex for me, and having gone through the explanatory notes I am not 100% sure that I understand it. This might sound slightly arrogant, but if I do not understand it, I do not think that many members of the public are going to be fully empowered with their rights. The most important thing I would like to say to you is that you need to be able to give people something very simple, which you could teach children in schools when financial education starts next September, that says, “These are your rights when dealing with a company.” At the moment I am not quite sure you are there. You are nearer, but I am not quite sure you are there. I am not sure that that fully answers your question. 

Q 108 Stella Creasy:  Martin, all the arguments you are making are for intermediaries who can help you with what your rights are—someone who could resolve that question about whether something is a good or a service, for example, on digital issues. That leads to questions about ombudsmen, and I know you feel very strongly about ombudsmen. Will you tell us a little about your concerns are about the Bill and the role of ombudsmen, and the fact that the Bill does not really cover the issue of alternative dispute resolution? What problems might remain when you are trying to enact those rights? 

Martin Lewis: First of all, it is not just intermediaries; it is simplicity, as well—having a really clear understanding, when you are drafting the Bill, of how you explain it to members of the public. The Bill is about consumer rights, not business rights, and these are people who do not have lawyers and are not necessarily educated on terms and conditions. You have to make the Bill something that you can, if you will forgive me, SAD FART. There needs to be something that you can take away and carry with you. We have a little wallet gift that we give people—I carry one, and you can have one to take home—that says, “Here are your consumer rights.” We print it so that you can put it in your wallet and carry it whenever you are dealing with a shop. It is very powerful, and people like it. We have to be able to do that for all of these things: goods, services and digital. It should be able, in the main, to fit on that card, for it to be powerful for the consumer. It has to be under-drafted—I am not saying we want a one-page Bill, but the base rights must be consistent. 

In terms of intermediaries, the work that Citizens Advice is doing now on Trading Standards is very useful. It was a shame for me to see it moved away from Consumer Direct, but that has happened. The problem I have, again, is that I can go to Citizens Advice and it can tell me what my rights are, but still, how do I get the company to agree to that? At the moment, you are right, the only remedy, certainly in retail, is primarily going to the courts. 

I am a big fan of ombudsman systems. I think they have worked particularly well in finance. It is a lot easier to get somebody to go to the free financial ombudsman, the independent arbiter of financial justice. If they rule against you, there is no cost and the company cannot do anything negative to you. That is compared with having to fill in your particulars of claim and put a cheque in. The difference, psychologically, between the ombudsman and the court process is huge. 

We do have to think about alternative dispute resolution. However, there is one problem we have had with the financial ombudsman that policymakers need to learn from. I will take payment protection insurance as a classic example. I started talking about PPI problems in, I think, 2002 or 2003. I started my “reclaim” campaign in 2006-07. It was 2010 before the regulator intervened. Already by 2008 we were having something like a 90% uphold rate at the ombudsman. In other words, banks were deliberately rejecting consumers’ claims in the knowledge that the vast majority of consumers would not go to the ombudsman, but knowing full well that, if they did go to the ombudsman, 90% of cases would be upheld against them. But it did not matter, because the maths was simple: say no now and it is far cheaper if 10% of people go to the ombudsman, even though they will all win. 

What must be done with alternative dispute is to make it joined-up both on the individual case—Joe Bloggs and his broken kettle, which is a one-off—but also on the systemic level. Ombudsmen have to be able to look at the systemic problems that are going on with consumer rights, and then be able to empower it. I spoke to the ombudsman at the time, and I know it was a frustration for them, too. We had a very obvious systemic failing that was not being picked up by the regulator. So I believe in ombudsmen, but I think we have to be able to pick it up there. 

If you are not going to have an ombudsman for consumer rights, we have to ensure that there is a system for when companies deliberately reject claims from members of the public because it is cheaper to do that, even though they know the public have a fair claim. There needs to be some penalty in the courts, so that for the few people who do push it towards the courts, there is a penalty added on top for the company. 

I am not saying that if a company loses a consumer rights claim it is automatically fined on top. I am saying that in those cases where it is clear-cut that under consumer rights law there was no discussion of fact—it was faulty, and you deliberately sent the person away and did not deal with it because you expected they would not enact their rights—there needs to be an additional penalty. That should discourage companies from mistreating consumers at the first point of complaint. 

I am sorry for taking so long to answer your question. However, this also stems from the education of company staff in consumer rights and good information at point

of sale and transaction. That is absolutely dire at the moment. I would put a form of compulsion in the Bill about consumer rights. It could be drafted as standard wording—I will write it for you, if you like, and would be delighted to do so—that could go everywhere. We would get that out so that consumers know what their rights are. 

This the biggest complaint about consumer rights in shops that I have at the moment: “I bought a jumper. It was the wrong size when I got it home. They won’t allow me to change it.” My answer: “They are quite correct. It was not faulty. Unless you bought it online, you have no right to change it.” The fact that consumers get it wrong as well means that we have a real problem, because they are not empowered. 

When I went into a shop to buy a jacket and my wife cleverly spotted a faulty button on it, we decided to get a discount. I went and haggled, as I do, as it was a very nice jacket. I haggled for a discount and the lady said, “We will give you a discount, but you can’t then bring it back for any faults.” I said, “I’m afraid my statutory rights say I have accepted the fault with the button. I am not accepting any other faults with the jacket. If there are any other faults with the jacket, I will be bringing it back.” She said, “Our shop policy doesn’t allow that.” I said, “No, but the statutory rights do, and they overcome your shop policy.” There are not that many consumers like me out there. 

What you are doing is good. Make it clear. Make it simple. Give an easy and free way for people to go and get help, and make sure that if companies are playing silly devils when people go in, they cannot get away with it. That last point is my worry. You can give people all the rights in the world, but if they are not empowered to use them because the process is too complicated, this is all slightly flaccid. 

Q 109 Laura Sandys:  Do you feel that the legislation offers the opportunity to put a spotlight on companies when they are found by Trading Standards to be exploiting their market or not delivering products in the right way, and so give a lot of publicity to those companies? You talk about redress. Trading Standards has a range of different tools, and if we could have started to shine a light on these companies, with you as a very important stakeholder within this, payment protection insurance would have unravelled much quicker. 

Martin Lewis: I am not sure it would. I was doing national television programmes about PPI in 2007. Our problem was that everyone in the industry knew about PPI but, if you will forgive me, no politician was brave enough to take up the issue. We knew that there were billions of pounds out there. I am not sure that publicity is enough. We can handle publicity. The problem is rights. Collective redress, which is in the Bill, is very important to enable under-resourced people to gang together, whether with a lawyer or with a consumer group, or whether with Trading Standards or with Government help. 

If you contrast CPP with PPI for a second, PPI has been going on for years and years. While it was systemically mis-sold, it was not mis-sold in totality in the way that CPP was, which is the difference. But with CPP, in the next few weeks people will be getting a letter that they just have to fill in, and then in the main they will get the money back. That is because the company did something wrong. It sold a product that was primarily worthless. 

We have to look at easier and quicker ways to get redress for people both in collective and individual action. Publicity is always helpful, but there are rights and expectations when you deal with companies. You have to be in charge of the rights. You have to make sure that the rights are strong enough and can be enacted. People like me can help to deal with expectations by shining a spotlight when a company is not breaking something by law, but is breaking the pact that a company and consumers have together. One of the advantages of the ombudsman system that Stella mentioned a moment ago is this, if I can tell a story. I was talking about PPI, I am now going to talk about PIP breast implants. How that worked and the difference between an ombudsman and the court system is quite significant. 

When the breast implant tissue went wrong with PIP, many people went to the medical centres that had implanted them. These medical centres were small companies that knew that if they had to give serious payouts—I was going to say they would go bust, but that is probably not the most appropriate expression—they would go bankrupt, and so they fought tooth and nail. People were not getting their money back. But I wrote something at the time and suggested that anybody who had paid for these on their credit card—section 75 means they have a joint right with the credit card company, and they can go to whichever they want—should go to the credit card company. First, the credit card company has deeper pockets and secondly, if they reject them, instead of going to court they can go to the financial ombudsman. 

One of the differences between the financial ombudsman and the courts is that the financial ombudsman can look at three things. It can look at the law, same as the courts. It can look at standard industry practice, which means that if everybody else is paying out, you have to too. It can look at fairness. It can look at the basic call for equity—is this fair, and has the customer been dealt with fairly? You do not get that in the courts in the same way. So an ombudsman system gives the consumer far more rights to fairness than a court system. If it is basically, “Well, I haven’t broken the law,” but we all know that it is out of order, the ombudsman can say, “It is out of order. Give them their money back.” 

It is very interesting that I would far rather go to the financial ombudsman. I would tell a consumer: “If you have a problem with your mortgage, rather than relying on consumer rights laws, go to the financial ombudsman, because you have a right to fairness.” Fairness is not a bad principle to have within consumer rights, too. I am sure it is very difficult to draft, but it would be slightly better to have a redress system which includes the ability to look at fairness on a case by case basis, as an ombudsman can. 

On the point about publicity, of course there is a small opportunity here. If a company is breaking the law that makes it very easy for a journalist, because then they are not libelling them—“We’re know you’ve broken the law, and we’re not libelling you, because the court said that you had broken the law, so we can call you whatever names we want.” In my forum, we get more legal notices than could be imagined when people say that a company has dealt with them badly. We have to try to get a balance, and this is quite difficult to deal with because we do not know the exact case. I think it will help, but I am far more concerned about people

having rights and being empowered to put them into practice than I am about driving publicity on bad practice. 

Q 110 Mark Durkan:  On payment protection insurance, there is a sense that, when people buy consumer goods, there is the equivalent of product protection insurance—extended warranties and all those sorts of things that are put in front of people, particularly at the point of sale. People think that they are buying more rights. If they had the experience that you described the last time they bought a toaster, they think that buying a warranty the next time they buy a toaster leaves them better protected. Of course, that raises the issue that this is a service: someone is buying a service related to the purchase of a good. Are there areas there that we should look at? Increasingly, people seem to report being subjected to something of a racket. 

Martin Lewis: Extended warranties are a known racket that has been going on for a long time. If a purchaser looks at the likelihood of product breakdown and the cost of repair and does a simple assessment to compare that to the cost of insurance, it is very rarely worth getting. If someone is going to get one, it is generally better to buy a standalone policy or a multi-appliance policy, which is a bit more like general insurance. 

I absolutely agree that one problem is the two big confusions people have at the moment about consumer rights, which go back to buying products and goods in store. One is the idea that they should be covered by the warranty. Well actually, no, your great relationship is with the store. A product not lasting a “reasonable length of time” is a terribly difficult phrase to explain to people. In case this is helpful, I usually say to people, “If you bought a 10p plastic whistle and it broke after three months, is that reasonable? If you bought a £2,000 plasma TV and it broke after three months, is that reasonable?”. You might say that the first one is and you would definitely say that the second one is not, but this is quite nebulous. 

One confusion is the interaction between when something is a warranty and when it is a statutory right, and that depends on the good. The other one is the terrible myth about the European consumer regulations. Everybody says, “Ah, you have an automatic two-year right to take back goods, because of Europe.” Actually, that is not right. The statute in Europe is a minimum of two years, and we have six years here, so we are far better off here, but there is still a big urban myth about it. 

On extended warranties—sorry, I tend to drift off topic—there is certainly a real knowledge clash. If we could make it simpler and improve people’s understanding of what consumer rights they have when they buy goods, that would deter people from buying unnecessary warranties. They would then know that they were protected for the first year or year and a half—possibly longer depending on the product—and if it breaks down it is not their fault. 

There are so many of these problems out there, from extended warranties to the other issue that is getting bigger and bigger at the moment—unofficial websites. I know that is somewhat covered in the Bill, and I commend you for looking at it. People go to a passport website that they think is the official Government site and pay £70, or they go to a European health insurance card or driving licence website, or to tax self-assessment websites

that are not official and only provide processing. People should at least have a right to get their money back if that happens to them. We have been lobbying and campaigning and trying to warn about that. I must get 20 or 30 tweets a week from people about these various sites. I am not asking for them, but people just tell me that they have been caught by these sites. 

We need consumer rights and the simple clarity of getting what you pay for—“You have to tell me, and if you didn’t tell me clearly then I deserve my money back.” I would think that would be another issue for collective redress. You should go to these companies and tell them they have to give everybody back their money who did not get an additional, added service from them. The problem is that it does not happen. This is what I keep coming back to, if you will forgive me. My big point—I am not quite sure that I know how to address this either, so I am not berating anyone—is how you give people the rights that they can then use. I keep going back to the same thing. 

Q 111 Rehman Chishti:  On the question of redress and the small claims court, which you started with, we know that in April last year mediation was introduced in small claims courts, meaning that before someone’s claim can go any further they have to go through a mediation process, which helps them to resolve matters before they go into a court process. Picking up on your point, yes, even if a case is listed as a small claim, if a judge deems it to be too complex, it has to go to a higher level. We know that the small claims court, out of all the courts we have in our country, is supposed to be the most informal process, with no rules or evidence as such. For clarity, mediation helps with that. I agree that we need to look at the issue whereby, if it starts there it should stay there, rather than go elsewhere. What else would you want in a small claims court to make it more user-friendly? 

Martin Lewis: We need to improve the language a little bit, such as “particulars of claim”. Let us contrast it with the financial ombudsman. The financial ombudsman is not without its faults. It takes far too long to deal with things, but it is something that people have found they can do by themselves. What the financial ombudsman says is, “What is the problem and what happened to you?” When people ask, “What can I write?”, I always say, “It’s not high-falutin’ language; tell me what the problem is”, and they say, “Well, I signed up for this PPI and the company told me I had to have it. I’ve now found out I don’t have to have it. What should I write?” I say, “Well, that sounds pretty good. I would put that down on your piece of paper, if I were you, because that is a pretty clear example to me that you were mis-sold it”. 

The court needs to be a little bit closer to that in the small claims provision. I am very glad that you picked up on my point about the very small number of cases where there is the psychological impact of me not being able to say to someone, “You won’t have to pay costs—you will not go”. It is a huge deterrence factor. I just think that there needs to be a little bit more clarity about how it works if, for example, you are taking back a £50 toaster. It is difficult. 

As well as language, there is ease of access. It is great online, but it is far more difficult for people who do not put forward a claim online and get help. The problem is

dealing with anything legal. I will be plain with you: I have the same issues myself. When we are doing stuff on the website we tend to be petrified of anything that tells people to go to the small claims court, because we are worried that it will come back on us, and if it goes wrong, people will say, “You mis-advised me legally”. So our lawyers want to put big lines at the top of any article which has an ultimate resolution of going to court, saying, “This cannot be construed in any way—”. 

I do not want to do small print, because I hate it. But anything that becomes quasi-advisory in this nature becomes very difficult. So there is a bit of a vicious circle as well. 

Q 112 Rehman Chishti:  On that very point, do you have research saying how many cases listed at the small claims court then get transferred out, which then increases the risk? Is it a large or a small percentage? 

The Chair:  Mr Lewis, just before you answer, we have only two minutes left and Mary Glindon has been waiting to ask a question. 

Mrs Glindon:  Do you think there is a case for giving ombudsmen the regulatory powers not just to deal with problems but to report to Government any emerging bad practice in the industry, so it can be stopped? 

Martin Lewis: Yes—until the very end bit, I agreed. That is, I am not necessarily sure it is to Government, but if we say, “Should an ombudsman have a right and responsibility to report to an appropriate regulator or Government”—to somebody who has the power to enact something across the system—very definitely that is needed. 

One other point about ombudsmen is very important. I hope I can tell you this because I am here to give evidence, but you need to make a law that says that an ombudsman has to be a proper ombudsman. There is no protection of the term “ombudsman”. I could set up an ombudsman tomorrow if I chose to do so. For me, an ombudsman should be something that is appointed either by statute or delegated legislation by the Government. The furniture ombudsman is not, in my eyes, a real ombudsman. It does not have official governmental power in the same way as the financial ombudsman. If we are going to set up an ombudsman system that has real veracity, then we should not allow the term to be debased by other companies using it when it is not appropriate. 

So I think Government need to get a handle on the question of what is an ombudsman, and anyone calling himself an ombudsman who is not one needs to have the term taken away from them. The furniture industry “dispute resolution process”, fine; but “ombudsman”? That should be something where I know I have statute-driven independence from the people I am complaining about. 

The Chair:  Did you want to answer Mr Chishti? 

Martin Lewis: The very quick answer is no. My problem is not the numbers; my problem is that, to be fair to you as a consumer, I just have to tell you, because it could happen. But you would have to ask the court system. 

Rehman Chishti:  Sure, I am just trying to get the scale of the problem—[ Interruption.].  

The Chair:  Order. Mr Lewis, on behalf of the Committee, thank you very much indeed. I sense that the Committee enjoyed listening to your evidence and it is a shame that we had such a relatively short time. 

Now we move to our final evidence session this afternoon. 

Examination of Witness

Jenny Willott MP gave evidence.  

3.16 pm 

Q 113 The Chair:  Minister, may I ask you first to introduce yourself? Would you then make a brief opening statement for the Committee to reflect on about the Bill and its purpose? 

Jenny Willott: My name is Jenny Willott and I am the Minister for employment relations and consumer affairs. The Bill, as the Committee clearly knows—they have been asking good questions today—is designed to simplify the consumer rights framework and make it much clearer both for business and consumers what their rights are and what business’s responsibilities are with a set of rights that relate to goods, services and digital content. It brings together the enforcement powers of regulators in one place, rather than having them sprinkled around in 60 sets of regulations. It also has measures on improving the redress system within the competition part. 

The Chair:  Thank you. 

Q 114 Stella Creasy:  We have learnt quite a lot today about the difference between having a right and the possibility to exercise that right. Would you give your initial feedback on what came up in the discussions with the witnesses? 

I think three things came out of that strongly. The first is the concern that, as I said, it is one thing to have a right but another to practise that right. There is also the question of redress and why the Government have chosen not to work on the EU ADR directive in parallel with the Bill. A number of witnesses had real concerns about that and said that those need to fit together, so there is a risk that we could be making legislation that will need to be revisited once the directive is implemented next year. 

Secondly, there is the enforcement gap and the question of whether there are issues at a local level. I think we were all struck by the honesty of what Trading Standards said—that the cuts to its services mean it has to focus on criminal issues, and local, emerging sharp practice may therefore be getting a free ride. What can we do on consumers’ rights to mitigate that? 

Thirdly, if we are to have rights in any sector of life—the man from Trading Standards made a powerful point about this—why are we confining them? Why does the Bill not at least nod to what such rights might mean in the public sector? Will you reflect on that as a starting point? 

Jenny Willott: First, the question of alternative dispute resolution, ombudsmen and so on came up in the evidence of a number of witnesses. We probably all

agree that if we are to have a consumer rights system that works, ombudsmen and ADR will be critical parts of it. 

We are working on implementing the EU directive in parallel with the Bill. We will shortly be launching the consultation document, which will look at the options that are open to us. At the moment, parts of the economy have excellent ombudsmen services—Martin Lewis mentioned the Financial Ombudsman Service—but other areas have nothing. We are looking at the best way to ensure that ADR is available to consumers of whatever goods or service. There are a number of ways that could be done, which is why we are consulting. It is incredibly important to get it right. The rights in the Bill depend, as everybody has said, on having effective enforcement. Part of that is ensuring that have we the right ombudsman and the right ADR process. 

A number of the ways that we could ensure that ADR is available across the market do not need legislation. Some of the options can be done through regulation and so on. Some would require legislation. It is important to identify the best way to do it—to fill the gaps and provide that service—so that consumers have confidence in it and it is effective. We need to ensure that the rights the Bill gives consumers are enforceable. 

On the second issue, enforcement and the role of Trading Standards, we are doing a couple of things at the moment that make a difference. The Government have set up the National Trading Standards Board to co-ordinate the activity of Trading Standards across the UK. A lot of the examples given today by witnesses show clearly how many issues go across local authority boundaries. The National Trading Standards Board is pulling together all the intelligence from that and ensuring that we are co-ordinating much better the enforcement activity across the country. The Government have also put a significant amount of money into that. That is helping Trading Standards to operate much more effectively. Rather than separate local authority trading standards officers working on their own, they are being much more effectively co-ordinated, which is a much more efficient use of resources. 

The other thing in the Bill that will make a difference to how they can use their resources better is the enhanced consumer measures, which have come up quite a few times in evidence. That will enable trading standards officers to negotiate and work with businesses that are in breach—to agree a way forward and agree a programme of redress and action that the business will take. If both sides agree, it does not have to go to court. That not only makes the process a lot quicker; it makes it significantly cheaper for Trading Standards as well. 

To link to a point that Laura made earlier, one thing Trading Standards could do with the enhanced consumer measures is require a company to put on the front page of its website that it has been prosecuted and found in breach. The sorts of things that could be included as part of the package of enhanced consumer measures are extremely broad. Some examples were given earlier by the Trading Standards Institute, but it could be things like that as well, which could make a real difference to the deterrence impact on other businesses’ behaviour. The enhanced consumer measures save money for Trading Standards by reducing the number of cases going to court. 

On the third issue, I disagree with you, in that a lot of the witnesses clearly said that there is an issue with consumer rights in public services. However, I think they all said that the Bill is not the right place for it. The Bill is talking about business to consumer relationships. One thing that came through clearly in Martin Lewis’s evidence and a lot of the others’ is that simplicity is critical to making this work. The more things that we try to ram into the Bill, the less simple and the more complicated it is for consumers and businesses to understand their rights. A number of witnesses said that they did not think that this Bill was the place to discuss consumer rights within public services, and I agree with them. 

Q 115 Stella Creasy:  Thanks for that; it is quite interesting. I would come back on two things. The first is your point about the EU ADR directive. You said clearly that you felt that there were things you could do that were not legislative. Quite a few of the witnesses talked about ombudsmen and the variation and the capacity of ombudsmen. That is a concern for those of us who would like to see a standard for ombudsmen—to see them have real statutory powers and guaranteed independence, so that any consumer who goes to an ombudsman knows that it is an independent organisation; it is not like the furniture ombudsman. Are you ruling out giving those powers? 

Jenny Willott: No. 

Q 116 Stella Creasy:  Given that the Bill has several clauses that relate specifically to powers of redress, it is not clear, if we are talking about simplicity, how that will fit in for consumers. Which mediation process will they go to? Which will have the real teeth? Are we cutting off our nose to spite our face by not putting these processes together? We as a Bill Committee do not have the consultation document to see how you envisage that working. 

Jenny Willott: There are requirements laid out in the EU directive about what makes an ombudsman. The service has to be independent and so on, so that will be part of it. I did not say it would not be legislative; I said it would not necessarily require legislation. There are things we can do through regulations. Various powers are already set up. Some of the options that we are looking at would not require primary legislation; they can be done through other routes. I am not saying that whatever comes out of the consultation would not have strong independence and statutory backing. There are a range of different things that we could do to implement the directive. I am sure that you will respond to the consultation when it comes out, and I would encourage others to do so as well. 

There are different alternatives that we are looking at, some of which would require primary legislation and some of which would not, but there are things around independence, for example, that are laid out in the directive that are absolutely critical to having a system that consumers can trust and in which they can have faith. We want to make sure that the system is relied upon and well used by consumers to back up the rights that they will have under the Bill. 

Q 117 Stella Creasy:  There is a concern about this piece of legislation and how it will fit with that process, particularly if you are talking about primary legislation and the timetable we have been looking at, because that

EU directive has to be implemented by next year. As we have all learnt the hard way in this place, legislation is not a speedy process, so there is a concern that we will need to know what that implementation will be for this piece of legislation to work. 

Secondly, there is a difference—I want to tease this out—between witnesses saying that if we talk about consumer rights, they are rights that people would have in their lives and they would not specify a good enough service, as the man from Trading Standards said, and whether this is the right piece of legislation to look at how that will have an implication. Have you made an assessment of whether any of the rights for, say, goods and services in this Bill would have an implication for the public sector? 

Jenny Willott: Sorry, I do not understand. Are you talking about business to consumer contracts? 

Q 118 Stella Creasy:  Yes, but have you made an assessment of the reverse of that question? “A consumer” is not a protected term in terms of the public sector, so would there be implications for people who would be consumers within the public sector? 

Jenny Willott: No, but this Bill specifically relates to business to consumer contracts. There will be some areas—for example, in health care—where I would assume that if somebody was purchasing a service from a private health care provider, that would be a business to consumer relationship. When it relates to public sector— 

Q 119 Stella Creasy:  What about the personal care payment? 

Jenny Willott: To be honest, this does not relate to that. The Bill is specific on the terms of contracts. It has laid out all the different terms in the first few chapters. I am sure we will debate that when we go through the Bill clause by clause. The purpose of the Bill is to look at the rights that consumers have in their relationships with business; it is not to look at any rights that consumers have when it comes to public services. As all the witnesses who were asked that question made clear—I do not think a single one of them said that they thought otherwise—this is not the right legislation for that area. 

Q 120 Stella Creasy:  But can you confirm that you have done that piece of work? For example, on the personal care payment, if you as an individual commission a business to provide a personal care service for you, would that be covered in the scope of the Bill? 

Jenny Willott: I can write to you to confirm the details, but the Bill relates to business to consumer contracts, not public sector contracts. If you are purchasing services from a provider, my initial thought would be that it would be covered by this, but I can write to you and clarify the details. 

Q 121 Laura Sandys:  I know that this Bill has been welcomed right across the whole consumer spectrum. It really is a great way of simplifying and clarifying what our rights are. Another form of simplification that has been proposed—I do not know whether it has ever been under consideration—is to have just one ombudsman, so just one address when you have a problem, rather than having this distinction between different products. There are issues around these not-quite phoney ombudsmen—certainly not the ombudsman that I, and I am sure you, would like to see. Have you ever considered that? 

Jenny Willott: It is one of the things that we will be looking at as part of the consultation on the EU directive. It is one of the alternatives. However, it is complicated, because at the moment the picture around ombudsman services is varied. Some are set up in statute and some are not; some are genuine, some are in a slightly different category and some are effectively ADR services that are provided by a trades body or an umbrella organisation. A very broad range of services is provided at the moment. 

It is not as simple as wiping the slate clean and starting again with one new ombudsman to cover the whole thing. That may well be the best option, but in itself it is a complicated process. It would require primary legislation and we would need a huge amount of consultation to ensure that we got it right. It is one way that we could implement the EU directive, but there are other ways in which we could do it, which is why we are consulting. It is important that we get it right, because it will make a massive difference to consumers. We want to ensure that we come up with the right conclusion, rather than do it in a rushed way and possibly make a mistake. 

Q 122 Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op):  To follow on from that, there is a balance to be struck between voluntarism and statute. Given some of the weaknesses that there have been with voluntarism around payday lending, logbook loans and so on, do you think that the Government should step in more practically in those cases? If so, do you think the Bill will make the structures for dealing with those things strong enough? 

Jenny Willott: If you are referring to the ombudsman service and the ADR, as I have said, we will consult to ensure that there is an ADR back-up for every area of the economy. One of the requirements in the EU directive is that consumers must have an alternative dispute resolution that they can turn to, and we are going to consult on the best way to ensure that that happens. That will be in place by next summer. 

Q 123 Stephen Doughty:  But do you accept that there has been a problem with voluntarism in the area of consumer protection in the past? 

Jenny Willott: It is clear that the provision at the moment is patchy. In some areas the service is extremely good. We have heard that the Financial Ombudsman Service and a number of other ombudsman services are extremely good and well used. In some areas trades bodies operate services, and in other areas there is nothing. It is clear that it is extremely patchy and that there are different set-ups in different parts of the economy, so it is important that we get the system right. That is why it is important that we consult carefully on it. 

Q 124 Stephen Doughty:  Do you recognise the scenario that Martin Lewis was describing—the toaster challenge and the issue of how off-putting small claims courts can be for constituents seeking redress? One of the unique things about the Bill is that we have all got an insight into it because we have dealt with these cases. In your casework, do you often refer constituents to the small claims court? Do you sympathise with that view? 

Jenny Willott: I think everybody would have sympathy with the fact that the idea of going to court does not encourage people to take action. We need to find ways

of ensuring that people can enforce their consumer rights. One of the big problems, which was highlighted by a number of the witnesses, is that neither consumers nor businesses know what their rights are. For the Bill to work, it is critical that people know what their rights are and businesses know what their responsibilities are. 

Running alongside the passage of the Bill, we have an implementation group up and running, which includes the enforcers, consumer groups and business groups, and MoneySavingExpert and others are involved in it. It will identify the best way to communicate and teach people about their rights. It could be point of sale, the wallet cards that Martin Lewis suggested or apps and things like that. That group is looking at a range of different ways of ensuring that business and consumers know what the law is. That will be critical to making the Bill work. 

The overwhelming majority of businesses want to keep their customers happy. As we heard this morning, they want them to be repeat customers. It is in no one’s interest for consumers to have to fight a lot of legal cases. The best thing for businesses is to know what the consumer set-up is and what rights they have to give to their customers, so that they are in a position to deliver that. At the moment, the uncertainty—the fact that it is complicated and people do not know what it is—is one of the problems. By simplifying it and getting the education and information right, we will hopefully reduce the number of cases that end up going to court and make it a much easier system for consumers to get redress in without having to take the legal route. 

Q 125 Stephen McPartland:  I have two very specific questions. The first is about the evidence of the Office of Fair Trading and Trading Standards about rogue and cowboy traders, and the suggestion that they would be entitled to put right the damage before the consumer can get their money back and whether the consumer would want that. The second is about the evidence from a number of witnesses about digital and the concept of defects. How that would work in a digital market? A range of software is often sold with bugs in it. 

Jenny Willott: On the first issue, about rogue traders, at the moment you do not have any rights for redress other than taking it to court. We are introducing the right to ask for it to be done. It is not going to be compulsory at all, because we recognise that if someone has had a really bad time with a rogue trader or a cowboy builder, they will not necessarily want to let that person back in their house. However, there are situations when someone might want to get that person back to finish it off, to correct whatever the mistake was, so we are introducing, for the first time, the right to ask for that. It is important, because the rights you have at the moment to take a legal case will still be there in parallel, but you will have the right to ask for the job to be redone, which is a significant new right. 

The issue of minor defects and so on is quite important, because as you said, digital content comes in many different forms. There are some areas where it is absolutely reasonable to expect that there would be no defects. There are other areas where it would be perfectly reasonable to expect some minor defects. For example, if you are downloading a film—or a music track or something like that—you have the right to expect to be able to watch that film without it stopping halfway through. However,

if you are talking about software on a computer, it is very common practice to have updates, patches and so on. Quite often with Microsoft, you turn your computer off in the evening and it will say that it is downloading an upgrade. That is very common. It is very important that the law recognises that there are different categories. 

With remedies, the different nature of the products needs to be taken into account. The Bill says that they can be assessed. When you are looking at the quality and the service, you can assess for minor defects where it is relevant. It is very important that we can take that information into account when looking at the different nature of some of those products. 

Q 126 Sheila Gilmore:  Two things: one, would it be better to provide that statutory rights should be made clear to people at the point of sale? That has been suggested by some witnesses. Secondly, the definition of when a service has not been satisfactory remains much as it has been for some time. It has caused problems over years, so why did you not take the opportunity to change it at this point? Would you still be open to looking at it again? 

Jenny Willott: On the first one—the point of sale—that is something that the implementation group is looking at. What we want to avoid—this came out in some of the evidence earlier—is that at the moment you quite often have on your receipt, “Your statutory rights are not affected.”, but no one knows what it means. We need to look at how we can ensure that it is in a meaningful form and it helps people know what their rights are. Point of sale is one of the things being looked at by the implementation group, alongside other ways that we can ensure that people know what their rights are. It may be that that is an element of it, but it will not be the only route. It is important that we look at other ways that people can identify what their rights are. I am not sure about the second issue. Can you expand a little? 

Q 127 Sheila Gilmore:  The issue about services has always been that the definition appears to look at what a reasonable degree of skill— 

Jenny Willott: The “reasonable care and skill” thing. 

Sheila Gilmore:  Yes, which has obviously given rise to differing interpretations over time. There have been suggestions—from the Select Committee on Business, Innovation and Skills, for example—that it could be defined for some services in terms of very clear outputs. 

Jenny Willott: This is an area we looked at in a lot of detail and we consulted on it as well. The issue is that “services” is very broad and a lot of different things are covered by it. There are some areas where having a quality standard would be fairly easy and fairly objective, and you could apply it. There are other areas where it just does not make any sense at all. With French classes, for example, the service could be delivered in an absolutely fantastic way, with reasonable care and skill, and by the end of it you still do not speak any French. How do you assess the quality? The quality is not down to the teaching; it is down to the pupil. There are other issues —haircuts, for example. They can be done extremely well, but if you do not like it, that is a very subjective decision— 

Q 128 Sheila Gilmore:  Is that not rather like taking the jumper back when it was the wrong size? It would not be that there was not a good quality of service. 

Jenny Willott: That is the whole point. By having “reasonable care and skill” as the requirement, if that job has been done well and as it should have been, those are the parameters. If it has been done very badly, then clearly it is a different thing, but the quality is very difficult to measure in a lot of these services areas. The assessment we did showed that it would impose potentially significant burdens on business, but with very little benefit to consumers. The evidence that the Business, Innovation and Skills Committee looked at was the same as the evidence we saw. It did not see any new evidence; it just interpreted it differently. That illustrates how this is quite a difficult area to assess. 

We are fairly sure that the framework in the Bill would cover many of the examples that have been given by the consumer organisations where they say that quality might have assisted, such as where there has been a breach of contract or something has not been done with what would be considered reasonable care and skill. This is about the simplicity of making sure that people have a clear set of rights. When we consulted, people made it very clear that “reasonable care and skill” is a phrase that has good authority. It is the current wording and it is accepted that people generally understand what it means when it comes to delivering the service. That is quite important. We do not want to make it so difficult that people cannot get remedies. There is a phrase that is well understood by businesses, enforcers and consumers, and we need to make sure that we keep that simplicity. 

Q 129 Rehman Chishti:  On the point about redress and the small claims court, I know that the Government have done a lot of good work to ensure that matters are resolved before they come to court. For example, at the moment in the small claims court—as a result of a provision that was introduced last April—you have to have compulsory mediation between the parties before something goes to court. In the light what has been said today, can there be further discussions with the Ministry of Justice to see whether anything else can be done to make the process a bit simpler and clearer, so that those who want to go to a small claims court get redress and are not put off by the whole process? 

Jenny Willott: I am sure that is something we can do. The main aim of the Bill is to avoid people getting to that stage—making sure that businesses know what their responsibilities are and that consumers know their rights and are better able to enforce them, and then having an effective ADR scheme. The whole purpose is to try to ensure that people do not have to get that far. There may be cases that end up in court. By having enhanced consumer measures, we are trying to ensure that there are routes that do not involve the court process. It is much cheaper and much less scary for consumers, and is often a much more effective way of getting redress for people. 

Q 130 Rehman Chishti:  I totally agree with you about that, but it is an option that is available. If somebody has to go, they would want to know that the process is as simple as possible, because normally they will be representing themselves. 

Jenny Willott: Yes, that is true. It is often intimidating for people, particularly those who do not have much contact with the courts on a regular basis, which has the effect of putting people off taking the previous steps as well. Yes, we need to try to ensure that people are aware of all the other alternatives as well, so that they are not put off taking action against either rogue traders or when there is a dispute with a trader. 

Q 131 Andy McDonald:  Minister, what steps will you take to ensure that Trading Standards can adequately undertake their statutory functions under the Bill? 

Jenny Willott: We have had a lot of discussions with Trading Standards. They are broadly supportive of the measures in the Bill; I think they are quite happy with a lot of them. I mentioned previously that one area where we are ensuring that they can operate more effectively is by improving co-ordination with the National Trading Standards Board. That can play an important role in co-ordinating activity. The intelligence and information gathering function is really important to Trading Standards. 

The other thing is that by having the citizens advice bureaux as the main port of call for consumers to contact them when there is a dispute, they are filtering things. For example, they identify a rogue trader where action needs to be taken and are then able to report back to Trading Standards. There is an effective line that people take when they have an issue, which makes things much simpler for Trading Standards. 

There are other areas where I know Trading Standards have some concerns, and one reason we are doing this is to make things a bit easier for them. One area is the requirement of notice of routine inspections. At the moment, I think in some areas it is just under a fifth where they already give written notice. The feedback we had from business and Trading Standards was that they often had a more productive visit if the business knew they were coming. They were able to ensure that the paperwork was ready and the right person was there. 

That was particularly so for small businesses where not all the staff are necessarily there all the time. To know that someone is coming and to be ready for them makes much more effective use of the time, both for the business and the trading standards officer. There is not the case of turning up to discover the person is not there and having to wait for hours. That will help Trading Standards to make better use of their resources and time when undertaking routine inspections. 

Q 132 Andy McDonald:  Can I drill down a little into that? If an action is to be brought under the enhanced measures, a cost-benefit analysis is required. What assessment have you made about the resources required to produce that analysis? That is going to be quite intensive? 

Jenny Willott: To be totally honest, I cannot tell you the answer now, but I can write to you with it. 

Q 133 Robert Flello:  I want to take you back to a couple of points for clarification. You said earlier that you thought that Martin Lewis had suggested that if the scope of the Bill were widened, that would cause a problem with simplification. I don’t think that is what I heard him say. Obviously, we can go back to Hansard. Ensuring that the Bill is widened where it needs to be will not affect the simplification. Could I ask you to think again about your answer to that? 

Jenny Willott: I don’t think I said that he said that the scope should not widen because it would impact on simplicity. I think we are looking at different areas. The Bill relates to business-to-consumer contracts and the rights people have in those circumstances. As the Consumer Minister I get letters on every subject under the sun—everyone thinks that the issue that concerns them is a consumer issue, because we are all consumers. 

It is important to ensure that we do not do what has been done in the past and end up with extremely complicated legislation that is impenetrable for a lot of people. It is important to have the simplicity of the rights that are laid out. We have a set of rights for goods, a set of rights for services and a set of rights for digital goods. That is important to the functioning of the system. If we can ensure that is laid out, that it is very simple and clear, and that we get the education and information right, that will help consumers access their rights. The more complicated it gets and the more we add, the more difficult it is to keep that message simple. 

It is to the benefit of all of us—businesses and consumers—for it to be easily understood and enforceable. One thing that struck me this morning, when the CBI, the Federation of Small Businesses and the British Retail Consortium gave evidence, is that good businesses want this as much as consumers do. They are all disadvantaged by the rogue traders and those who are undermining the system. If it is not a level playing field, the good businesses do not benefit. It is in the interests of both consumers and businesses to make sure that we have a system that is simple and easy to understand and that people know about, so that they can enforce their rights. That is the main thing I would say about the real importance of the scope of the Bill. 

Q 134 Robert Flello:  Just before I go on to my second point, I will go a little more into that. If I understood him correctly, what he was saying was that there are areas—for example when you buy a piece of software and you physically buy the disc and so forth, and you have the updates and the service that comes with it—where it actually crosses over all three. So the Bill, as it stands, is not simple and does not particularly do that job. 

Jenny Willott: Actually, that part of the Bill is much clearer than the current set-up. 

Robert Flello:  That doesn’t mean it is the best it should be, though, just because it is better. 

Jenny Willott: It may well be. If you have better suggestions, I am all ears. 

Robert Flello:  That is why we are on the Committee. 

Jenny Willott: The Bill as it is actually clarifies it. At the moment, it is not very clear who has the responsibility where you have that mixed contract with different elements. The Bill makes it very clear that the goods rights apply to the goods element of it, the services rights apply to the services element and the digital contents rights apply to the digital content. That makes it clear. On the whole, I think consumers would generally know through common sense which bit has gone wrong. 

If the digital content in your washing machine, the programming, isn’t working and the washing machine still works, you know which bit is not working. Or if it stops going round, but the display is still working fine, you generally know in your heart of hearts which bit

it is. That clearly is not going to be the case in every instance, which is why it is laid out in the law, but there is less confusion in that particular area. 

Robert Flello:  I suspect that the washing machine example has probably created even more confusion, but with your generous offer I look forward to your accepting the amendments that come forward from the Committee. 

Jenny Willott: Oh, I didn’t say that! 

Q 135 Robert Flello:  My second and final point is that, with the greatest respect, I am not sure I am clear about your answer on the public-private bit. If you are a patient in Stoke-on-Trent and your local GP refers you to the private provider of chiropody services, then as far as you are concerned, you are having a service through a public contract, but actually it is a private provider who is coming in to provide it. Again, could you clarify your answer in terms of why you do not think that this would necessarily come under the Bill? 

Jenny Willott: In the circumstances that you have laid out, you would not have a contract of sale with that particular provider. It would be a service that was contracted through your GP, so you wouldn’t have a consumer-to-business relationship with that organisation. 

Q 136 Robert Flello:  So you would have no entitlements. 

Jenny Willott: You have entitlements through the NHS system and so on, but the relationship with the business is through the NHS. You do not have a contract of sale. You are not paying for the services if it is being provided through your GP. 

Q 137 Robert Flello:  Well, you are through your taxes, but in terms of the provision of service, even though the person in front of you is providing the service, that lengthening of the relationship can surely only make things worse from a consumer’s point of view. 

Jenny Willott: If you are accessing those services through your GP, whether you are being referred to the NHS chiropodist or a chiropodist in a private practice, the relationship that you have with that individual is the same, because it is through your GP. The relationship that the GP and the contactors may have is a different issue, but this is to do with having a contract of sale—I think the jargon is a “consideration”—involved in accessing the services. 

Q 138 Robert Flello:  I would repeat my point that you are paying your taxes and buying that service. 

Jenny Willott: You don’t have a contract of sale if you are not directly paying for a particular service. It is a totally different relationship. 

Robert Flello:  You are indirectly paying for it. We will have to beg to differ on that. 

Q 139 Mark Durkan:  I want to ask about the whole area of unfair terms in relation to contracts, the interpretation of those terms as often as not resting with the provider, and the question of unilateral —or arguably unilateral—variations in those terms. The Bank of Ireland mortgage tracker issue is maybe

one representation of that question. There are others. Do you think that this is adequately addressed in the Bill, or could we usefully improve the Bill? 

Jenny Willott: One area in which I think the Bill really helps is that currently, terms can be assessed for unfairness if they are not transparent. We are increasing that test, so that terms have to be transparent and prominent in order not to be assessable for fairness. The fact that they have to be prominent makes a really big difference: it has be obvious to the consumer. If it is not, and if it is hidden away in the small print, then the Bill would make it clear that it would then become assessable for fairness by the courts. If a term is made transparent and prominent, then people would sign up to a contract knowing that those were the terms and conditions. If it is hidden away in the small print, they might not realise and therefore it would become assessable for fairness. 

Q 140 Mark Durkan:  Do you think the Bill is up to speed with the changing shape of a lot of the car deals that are now being done? There are different forms of hire contracts and all the rest of it, and people are not sure whether they have bought the car and own the car or whether it is hire-purchase, and things rely on assumed value. Often the same dealers and manufacturers offer people variants of different types of packages. This seems to me to leave people quite confused about what position they will be in when a judgment is made in a few years’ time on whether they have the deal they thought they were leaving the showroom with. 

Jenny Willott: One of the reasons why some of this was included in the Bill is because what should be included in the definition of price and what should not was tested in the Supreme Court. We are making sure that the ruling of the Supreme Court is clear in the Bill. It is clear that the different forms of the different contracts people have and the different ways that people buy things can often be quite complicated. That is why the requirement for terms to be transparent and prominent makes a real difference, because that is easy to understand. If there is a lot of small print and it is all hidden away, and there are a lot of different rules about how much you have paid at various different points and what stage you are at—if that is to your detriment and it is all hidden away in the small print—then that would be assessable for fairness. It would only not be assessable if it were transparent and prominent. That is quite important, because it is easy for people to understand what it would cover. 

The Chair:  There are only three minutes left, and I know at least two colleagues want to ask questions. Perhaps I could now ask them to put their questions, and then the Minister to answer. 

Q 141 Stephen Doughty:  I will be very quick. There is just one other point of clarification on the public-private issue. I apologise for pressing the Minister on this, but I am still slightly confused, particularly when it comes to hybrid situations, perhaps when there is a top-up to an NHS-provided service, for example at an optician or a dentist. Someone might have a base service provided for glasses and pay on top of that from their own private money, and there would be a bill of sale. There are also cases such as personal care budgets. I wonder whether the Minister could provide any further clarity. 

Stephen McPartland:  Minister, earlier we had a cautious welcome for the Bill from the business community. It gives consumers clarity and a whole range of new rights. Do you think that the Bill is good for the economy overall? 

Jenny Willott: On the first issue, as we are running out of time I will write to you and to the Committee to clarify that area. As for whether the Bill is good for the economy: yes. We have done an assessment that shows that over 10 years it would be worth about £4 billion to the economy. Part of that is a reduction in court costs and things like that, but a lot of it is that businesses will know what their responsibilities are, and consumers will know what their rights are and be much more able to access redress. 

The Bill also has a really big impact on consumer behaviour. If someone knows what their rights are and how to get redress if there is a problem, they are more likely to try out a smaller business with which they have not had dealings before. Someone is more likely to take a bit of a risk on a supplier, because they know that they have good rights and they know how to access redress if there is a problem. 

This means that the Bill drives consumers to be able to branch out into new areas and buy new services that they would not otherwise do. That is particularly the case and particularly important on digital content, which is a really booming part of the economy. A lot of those businesses are very small, as we heard earlier. Consumers would have confidence, because they know that there is a statutory basis behind them that gives them rights. I think that will help drive behaviour and encourage people to purchase from new, smaller business, which will help create more jobs and more growth in the economy. 

The Chair:  Minister, I would like to thank you for the evidence you have shared with the Committee this afternoon. Obviously we will hear a lot more from you over the following weeks, but I would like to thank you again for the time you spent with us this afternoon, and indeed thank all the witnesses. 

Ordered, That further consideration be now adjourned. —(Mr Gyimah.)  

4 pm 

Adjourned till Thursday 13 February at half-past Eleven o’clock.  

Written evidence reported to the House

CR 01 Law Commission 

CR 02 Scottish Law Commission 

CR 03 Andrew Tettenborn 

CR 04 Association of British Insurers (ABI) 

CR 05 Which? 

CR 06 Finance and Leasing Association 

CR 07 Trevor Mayes 

CR 08 Citizens Advice