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

Public Bill Committee 

Tuesday 4 March 2014  

(Morning)  

[sandra osborne in the Chair] 

Consumer Rights Bill

Clause 48 

Contracts covered by this Chapter 

Question proposed, That the clause stand part of the Bill. 

8.55 am 

Stella Creasy (Walthamstow) (Lab/Co-op):  Good morning everyone, and what a wonderful, sunny morning it is. Let us hope that the warmth of the sun shines on our debate today—I really do mean that. 

I know that people will be unable to contain their delight as we move into the chapter of the Bill dealing with services. Clause 48 concerns the service contracts that will be covered, about which I have a number of general questions for the Minister before we move on to the more substantive clauses dealing with which services the consumer might expect and how they might seek redress if those services are not quite as they would wish. 

The issue is incredibly important, not least because two in five British consumers have made a complaint about a service in the last year alone. That is across a range of services, with 58% complaining about trade services and 56% complaining about airlines and holiday operators—as we look at the sunshine, we can tell that people will be thinking about their holiday and perhaps starting to worry about whether it will be a source of relaxation or resentment. Clearly, if we get this part of the Bill right, it will be the former, rather than the latter. The third category among the top concerns is cars and vehicle repairs, and, as we all remember, we expressed a number of concerns last week about how people might access redress in that regard. 

Clause 48 is important because it covers which aspects of services consumers can complain about and in what context. Given that most complaints from the two in five people complaining about services are about circumstances they feel are outside their control, it is even more important that people have clear rights and a good sense of which services they can, and cannot, complain about. 

I particularly want to ask the Minister how she sees the clause being enacted, because subsection (5) says that the Secretary of State may by order disapply the provisions in relation to a particular service. I want to set out the services that we need to clarify will be covered, because such a caveat in a clause could be quite significant. The consumer may think these are standard rights—we have all agreed we want the Bill to standardise rights so they are clear and people can remember them—but if they find out they do not apply to the service they

might want to complain about, that would be a real concern. For example, Passenger Focus has raised with us the idea that the Secretary of State may or may not wish to make provision for transport users, because they have their own dedicated rights and redress system under the National Rail Conditions of Carriage, passenger charters and various EU passenger rights obligations. However, our concern is that those are not as strong or consistent as the service requirements in the Bill. Therefore, we might see a weakened level of coverage for passengers if the Secretary of State excluded passenger services from this legislation. I am pleased to report that I had no problems with my journey this morning, but I am afraid that is not always the case. 

Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op):  This is a particularly important point, given the disruption that many constituents will have experienced to train journeys in particular as a result of the recent adverse weather. I experienced disruption on a number of occasions, and had quite some trouble making compensation claims for some of the journeys that were cancelled. 

Stella Creasy:  My hon. Friend is absolutely right and I know hon. Members across— 

Oliver Colvile (Plymouth, Sutton and Devonport) (Con)  rose—  

Stella Creasy:  I will happily give way to the hon. Gentleman, whom I know is raring to go, in the light of the conversation we had earlier. 

Oliver Colvile:  It is a delight to serve again under your chairmanship, Mrs Osborne. May I raise what is a very big issue in the south-west? A couple of weeks ago the line at Dawlish was totally washed away. As a result, West Devon and the whole of Cornwall are totally cut off from travel by rail. Nevertheless, we are most certainly open for business, and I hope the Secretary of State understands the importance of making sure that we are, especially given the upcoming tourist season. It is a fair point to ensure that compensation is given to passengers who need to get to London and back again, and who do not want to experience intercontinental flight times. 

Stella Creasy:  I thank the hon. Gentleman for his contribution. He is a dogged campaigner for ensuring that Plymouth is open for business in transport and holiday terms. He raises the point we are seeking to make this morning and seeking to clarify. The Bill will give consumers a series of rights regarding the kind of service they might expect from a holiday provider or travel agent, in order to see Plymouth’s wonderful holiday delights and destinations. I have yet to experience that pleasure, and I am sure that when this morning’s sitting is concluded, the hon. Gentleman will tell me what I will miss out on if I do not holiday in Plymouth. 

Andy McDonald (Middlesbrough) (Lab):  I am sure my hon. Friend will enjoy the delights of the south-west. It is absolutely vital that those rail services are restored urgently. On the quality of the services we provide and the rights of consumers and passengers, may I point out

to her that £2,731 is spent per head of population in London, compared with £5 per head in the north-east of England? In the north-east, it can take 95 minutes to do a 40-mile journey on ancient rolling stock. The time has come to look at the quality of the services that our transport system provides. 

Stella Creasy:  The message is that other holiday destinations are available, including Middlesbrough, and I will add Middlesbrough and Plymouth to my list of places for relaxation. My hon. Friend is right to raise a concern about the quality of our transport infrastructure. All of us recognise there are areas in the country that need support so they can offer not just holidays, but business. My point is that although consumers have a series of rights to complain about the service when organising their holiday—and we are encouraging consumers to learn about those rights—we are concerned that those may not apply to transportation facilities. We are seeking comfort—comfort is the right word—from the Minister that passenger services will not be excluded from the Bill. 

Let me set out our concerns. We know that most passengers are largely unaware of their rights. According to a study by the Office of Rail Regulation, 75% of those using Britain’s railways did not know enough about claiming their money back. It would help terribly frustrated passengers when they are on a journey that has not worked out if they knew they could get their money back. In addition, the regulator found that 74% of passengers felt that train operators did not do enough to inform people about how to claim compensation for problems with their journey. If passengers are not getting information from the train operators, is there an issue for us? We want to make sure that it is as simple as possible for consumers to know their rights. Surely, the rights that consumers have understood in other areas should read across to passenger services. 

Stephen Doughty:  My hon. Friend is making a crucial point. I recently tried to claim back for a cancelled journey that was booked though a secondary ticketing site, trainline.com. I had great difficulty getting compensation for that journey, which the ticketing site had to check had been cancelled by the train operator. This is the type of bureaucracy and problems that passengers often experience when trying to claim compensation from secondary ticket operators, or indeed from the train operating companies themselves. That exemplifies why these rights need to be clear and as strong as possible. 

Stella Creasy:  My hon. Friend expresses his first-hand experience of the problems many people have with passenger services. That is why we think it important to be confident that these rights will apply to all services, or at least for the Minister to say on the record why particular services might be excluded. 

Laura Sandys (South Thanet) (Con)  rose—  

Stella Creasy:  I happily give way to my future wife. 

Laura Sandys:  It is a new week. When we look at how to implement this element of communicating rights, it is important that we consider not necessarily primary legislation but how different Departments manage different sectors, particularly regulated ones. I have just been

looking at the National Rail app, and there is nothing there that tells customers anything about their rights. It would be interesting for the Minister to ask Ministers across all Departments where services need prominently to present their rights. Dealing with this issue through legislation will not necessarily offer the necessary flexibility. Such information needs to be in front of the consumer, rather than in regulations or in a back-office document. 

Stella Creasy:  I thank my hon. Friend for her intervention. I know she is still thinking about that 30-day right to return her offer of marriage, but I am holding on to the idea that I can persuade her not to. She is absolutely right, and I am sure that the now infamous implementation group will look at how people get information about their rights in relation to services. However, rather than looking at how information is provided, we are looking at a slightly different point, in that the clause includes a provision to exclude specific services from the Bill. 

Let me give an example. If the Bill applied to passenger services, there would be a legal right to redress for a bus journey that was not of satisfactory quality. However, if passenger services are excluded by this provision, that right might not apply. We need to understand whether the provision allows the Secretary of State to exclude particular services. Passenger services in particular will be excluded because they already have a separate system of rights—rights that are not as strong as those provided by the Bill. That is not fair to consumers who, when they want to make a complaint, may think they have one set of rights only to find that they have another. 

Stephen Doughty:  My hon. Friend is absolutely right. As I am sure she is aware, the EU regulation on bus and coach passenger rights only covers journeys over 250 km, so it does not apply to most domestic bus services. It is important to understand whether the Bill will strengthen bus and coach passengers’ rights if they are not satisfied with journeys under that particular distance. 

Stella Creasy:  My hon. Friend yet again hits the nail on the head. The point is that if people have one set of expectations, based on services in other areas of their lives, why would they not extend those to transport services? Their confusion is then added to by the point made by the hon. Member for South Thanet: that people’s rights are not always advertised on apps, or are completely different, so the read-across is not clear. 

Fiona O'Donnell (East Lothian) (Lab):  Does my hon. Friend agree that this issue could sit neatly alongside the previous Government’s Equality Act 2010? For people with disabilities, accessing bus and rail services often entails severe problems, restrictions and issues with the quality of service experienced. 

Stella Creasy:  It is a pleasure to serve on the Committee with Members who are so insightful about how the Bill might work in the real world and why we need clarity on this issue. 

As I said, we are particularly concerned about passenger services, for which there is a series of requirements. It would be helpful if the Minister set out whether the Secretary of State intends to exclude any areas of service

provision and, if so, why. In particular, will she explain why passengers would not be offered the same level of protection as people booking their holidays in, for example, Plymouth or indeed Middlesbrough? It is more complicated and confusing for consumers to have two different systems of redress and compensation for two services. As my hon. Friends the Members for East Lothian and for Cardiff South and Penarth pointed out, there are real examples where the rights in the Bill could apply to passenger services in a helpful way and challenge some of the problems that passengers have to put up with. 

I look forward to the Minister confirming that our fears are mistaken and that the Bill will apply to passenger services. Will she say also whether there are any other services that the clause has been drafted to deal with? Perhaps she could set out why this particular element of the clause exists and why there is an exemption. If the Government were so minded to exclude a service from the Bill, how might that notion be put before Parliament so that we can test it and make sure it is appropriate? 

We recognise that there might be stronger systems of redress, although I have not yet seen one in the Bill, which does offer some simple, clear rights. However, will the Minister set out why the clause is drafted in this way and what services the Government had in mind when the Secretary of State was given this power? That would be incredibly helpful. I look forward to hearing what the Minister has to say. 

Fiona O'Donnell:  It is a pleasure to see you on this bright morning, Mrs Osborne, and I am grateful for the opportunity to make a contribution to the debate on clause 48. I am sure the Minister can understand that there are always at least questions to ask when a Secretary of State seeks to give away powers or to get new ones. There must be a reason for this provision, and it is right that Members on both sides should ask under what circumstances it might be used. 

I want to reinforce what my hon. Friend the Member for Walthamstow said about the possible application of the Bill in the provision of bus and rail services. My constituency is served by the east coast main line, which has made great improvements in customer care under public ownership—long may that model continue. We also have ScotRail services, which First runs through the county into Edinburgh. 

In the main, however, people in my constituency use bus services. I receive many complaints about those, which, under the terms of devolution, I have to pass to the MSP for East Lothian. However, responsibility for consumer rights sits with me. The Bill is an opportunity to give better rights to many people in rural areas. My constituency is mainly rural, and people rely on sometimes very limited bus services to travel into the main towns in the county and to access services there. Is the Minister averse to the clause applying to the provision of those services? 

My hon. Friend the Member for Walthamstow kindly allowed me to intervene on the issue of people with disabilities. I am concerned that bus operators sometimes use it as an excuse. They say that if they give someone, perhaps with an electric wheelchair, time to manoeuvre

into the space on the bus, that impacts on their ability to provide the service to the timetable. We need to strengthen consumer rights in that area so that we drive up standards. 

Andy McDonald:  My hon. Friend is making an excellent point. Does she agree that the consumer rights framework provides us with an opportunity to make sure that those who are blind or partially sighted have access to good and full information through audio-visual systems on buses, so that they have the same rights and information as fully able passengers? 

Fiona O'Donnell:  I thank my hon. Friend for his intervention, and I support what he says. That information is not just for people with visual impairments or hearing loss, but for tourists. When I come to my place of work here in Westminster, it is of great help when I get on a bus to have an audio indication of where I am—not that I am often lost in this city. 

On rail services, there is also a complete lack of awareness among consumers, and I, too, am guilty of that in part. I have experienced significant delays when using the east coast main line to travel to and from work. I have not taken advantage of any compensation, and I certainly do not remember ever being informed about it by an announcement on the train, or being handed anything that told me I had a right to any kind of compensation. 

9.15 am 

Sheila Gilmore (Edinburgh East) (Lab):  Will my hon. Friend give way? 

Fiona O'Donnell:  I gladly give way to my hon. Friend, who has such an excellent record on defending the east coast main line. 

Sheila Gilmore:  I have no personal interest in the east coast main line—I have no relatives working on it or anything else—but I have to say that my experience has been different. Announcements have been made, and forms have even been given out at the end of journeys. In fact, the offer East Coast makes is reasonably substantial: it refunds half the fare if the train is half an hour late and the full fare if it is more than an hour late. It does so promptly and without a great deal of argument. It is not quite so straightforward to claim a refund from other companies. 

Fiona O'Donnell:  I am grateful for that intervention from my hon. Friend. I am pleased to hear that. I clearly just had a bad day, or maybe I tuned out of the rights that were being offered to me. However, that makes me wonder how much money would be due back to the Independent Parliamentary Standards Authority and the public purse if every Member in this place exercised their rights. That money would be welcome. As well as having rights, we have a duty to exercise them, especially when it involves the public purse. 

I look forward to the Minister explaining why it is necessary for the Secretary of State to have this power, under what circumstances she sees it being used and how she sees it sitting alongside existing measures that apply to the provision of bus and rail services. 

Mark Durkan (Foyle) (SDLP):  It is a pleasure to be here under your chairmanship, Mrs Osborne. Like my hon. Friends the Members for Walthamstow and for East Lothian, I have particular concerns about the clause, which centre on subsections (5), (6) and (7). Subsection (5) allows the Secretary of State to 

“provide that a provision of this Chapter does not apply in relation to a service of a description specified in the order.” 

Such an order would therefore remove a particular service from a provision of the chapter. It is not clear whether that relates to particular circumstances, or whether it would be done on the basis of alternative and clear existing rights. It is not clear whether those alternative provisions would have to be equal, adequate and clear. If we are talking about transport services being excluded, for instance, the issue is whether that is because there are other provisions, such as European directives already in existence or to come. There is no requirement under the Bill for consumers to be assured that the alternative provisions they are told to rely on would be adequate or equal to the provisions in the Bill. That seems to me to be dubious. If the Minister knows exactly which services will not be included, surely that should be set out in the Bill for people to understand. We should not raise expectations that consumer rights will apply in respect of those services, if the first thing that is done is that they are effectively deleted from the provisions and effects of the Bill. 

There is also the peculiar provision in subsection (6), which states: 

“An order under subsection (5) may contain transitional or transitory provision or savings.” 

What do the Government intend by that? If they are going to remove a service from the provisions, what transitional or transitory arrangements will there be? Will the Minister also explain the reference to savings? What will happen at the end of the transition period? Will passengers or consumers of other services be left in a worse position? The Government might say they are trying to leave people in a better position. The Minister might suggest that a new directive is coming along that will be effective, and we might have some parallel running until the new directive or rights under some other provision take effect. If that is the case, the reference to savings in subsection (6) is not clear. 

If, as my hon. Friend the Member for Walthamstow asked, the power in subsection (5) is there to deal with particular circumstances that might arise, why is it purely a terminal power? It is a power to remove provisions and exclude them, and they will then be annulled. There is no power to revive them. In other provisions in other Bills, the Secretary of State has been given the power to rescind the effect or extent of a particular clause on a particular service. There is often the power to reinstate a provision, but there is no power whatever in subsection (5) to revive a provision. 

Subsection (5) is clearly not a response to circumstances that might be affecting a particular service at a time perhaps of major infrastructural investment, with major service disruption, when the normal guarantees around times, standards and services may not apply. In such circumstances, people would accept exceptions to the standard rights that would otherwise be available to them. However, that is not provided for in the clause, and that raises serious questions about whether we will end up with a Bill that makes a lot of claims and raises a

lot of expectations, but leaves a “Now you see it, now you don’t” consumer rights experience. “If you do have it here, you don’t have it there”, or. “Go find it somewhere else.” 

People’s rights should be clear, as the hon. Member for South Thanet said. People should be able to know that they have rights, under what provisions they have them, and what clear recourse they have to exercise them. 

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott):  I, too, welcome everybody, on such a beautifully sunny day, to what I am sure will be a gripping sitting of the Committee. As the hon. Member for Walthamstow said, the clause relates to services. The service sector accounts for two thirds of our economy, so it is really important that we get the rights correct in this part of the Bill. It has massive implications throughout the economy. 

Current consumer protection when purchasing services does not reflect the value of the sector to the economy at the moment. The Supply of Goods and Services Act 1982 sets out rights for recipients of services provided under contract, which makes a solid foundation for this chapter of the Bill, but it is not in line with the extra protection that consumers get with respect to other products. For example, the Act applies only to England and Wales, and, unlike similar provisions for goods, it does not include remedies, so we are bringing consistency across the board, and we are extending rights and remedies, as they relate to services, to Scotland. 

The aim behind chapter 4, which the clause introduces, is to update the law when a consumer contracts with a trader for the provision of services, so it will benefit both consumers and traders. That is the general framework of the chapter. As the hon. Lady highlighted, the clause includes a power, exercisable by a statutory instrument, to disapply the provisions to a particular service or services. There is a similar power in existing legislation, which has been used to disapply provisions to the services provided by an advocate in a court or tribunal, a company director, a director of a building society and the management of a provident society, and to services rendered by an arbitrator. It is likely that the power in the Bill will be used to exclude the same sorts of services. 

Most Members have raised the issue of travel. Services such as passenger air travel and bus travel are normally provided under a contract, and therefore the “Services” chapter of the Bill would apply. My officials have been in close contact with the Department for Transport to ensure consumer protection for passengers using rail services, which was the issue that a lot of Members raised. The existing national rail conditions of carriage already provide a significant level of consumer protection for the provisions covered, and those conditions are also about to be refreshed to include stronger provision relating to compensation for consumers, in line with the requirements in the Bill. The hon. Member for Cardiff South and Penarth raised that issue. 

We propose to exclude rail passenger services, which are covered by the national rail conditions of carriage. The national rail conditions are very similar and will be excluded only when they offer equivalent protection to that in the Bill. The concern that has been raised with us

is that train operators will increase fares for passengers if they have to comply with two separate sets of regulations. By disapplying them when they offer the same protection, we are trying to ensure that passengers will have a level of protection equivalent to that offered in the Bill. 

Mark Durkan:  Should that condition not be stated in the Bill, then? That would create a lot of assurance. 

Jenny Willott:  The point is that the provision in the Bill is very similar to the existing legislation. Also, as I said, various other groups will be disapplied that are already excluded under the current legislation—advocates in court and so on—and we are trying to ensure that the situation is clear. 

Fiona O'Donnell:  The Minister is making it even less clear. She says that some of the rights in question are being refreshed, but if they do not meet the same standard as in the Bill, will she assure us that she will re-examine the matter? Or, to save any room for error, why not put the provision in the Bill, as my hon. Friend the Member for Foyle suggested? 

Jenny Willott:  My understanding is that rail passenger services will be excluded only when the conditions of carriage offer equivalent protection. To put that in the Bill would make it more confusing. 

Mark Durkan:  If there will be no difference to the consumer, and the situation will be as good as under the Bill, why do we need subsection (6), containing, 

“transitional or transitory provision or savings”? 

Jenny Willott:  I shall come back to the hon. Gentleman on that point. 

Hon. Members also raised the issue of bus services. Buses will be covered by the Bill because they are not covered by the conditions of carriage. There is no intention to exclude bus services. They will remain under the remit of the Bill and the rights under the “Services” chapter will apply. 

On the issue of disabled access, I have to confess that since I have had small children and often travel with a pushchair, I have a much greater appreciation of the difficulties for people with mobility issues of using public transport. It suddenly opens one’s eyes. I have discovered all the streets near my house that have massive tree roots that someone cannot get past with a pushchair, and how many tube stations have no lifts and are impossible to get into and out of. I appreciate that that is not the only issue that people with disabilities face, but sometimes things happen in our lives that give us a better understanding of the issues that people with disabilities face. 

I appreciate that using public transport can be very challenging for people with disabilities, depending on the operator, the services and so on. Under the Bill, if a consumer asks about services for disabled people and relies on the information they are given when deciding to go on that particular train, bus or whatever, clause 50 will apply. If they rely on that information, buy a ticket

on a particular service and discover that it does not have audio announcements, or that someone was not there to help them get on and off the train carriage, or whatever it might be, having been told that that service would be provided, clause 50 would be breached, because they had relied on that information. So there are protections in the Bill. My understanding—I will check this—is that the Equality Act 2010 will apply, and that provides rights and remedies for people with disabilities to access services, including transport. The broader protection is probably under that Act, but parts of the Bill relate to the circumstances of those people too. 

9.30 am 

The hon. Member for Foyle asked about being able to revive provisions that have been disapplied under this part of the Bill. The power to revive does not have to be in the Bill; we would just need to revoke the statutory instrument. We can reapply the Bill to services under the same power; it is straightforward. The matter is not a one-way street. 

Mark Durkan:  I am at a loss to understand why the power to reinstate is specifically included in some pieces of legislation and not others. The clause states: 

“A statutory instrument containing an order…is subject to annulment in pursuance of a resolution of either House of Parliament.” 

Once something is annulled, it is annulled. The Bill would benefit from having the power to revive stated clearly in it, as happens in other Bills. 

Jenny Willott:  I cannot comment on why some legislation has it and some does not. That is an issue for parliamentary counsel, and that is way above my pay grade. However, I reassure the hon. Gentleman that it is clear that it is not difficult to revive—we can just annul the SI, and it is perfectly straightforward. There is no intention for it to be a one-way street. 

The hon. Gentleman raised a point about subsection (6). My understanding is that it is likely to be used extremely rarely. The provision is in the 1982 Act, which I have mentioned, and it has been used in few instances since then. However, we want to future-proof the Bill. We do not want to list where the provision would be used, but we want ensure that it is in the Bill, as it is in current legislation. The subsection means that the Secretary of State may make changes to ensure a smooth transition, which is normal for any statutory instrument. The provision is included even though we do not expect it to be used often. 

Transitional arrangements are often included in Bills. There is a general clause to ensure that, because they are always needed. It makes it clear what it will happen between the two regimes. For example, if a contract is entered into before the Bill comes into force, we must keep some of the current provisions and not revoke them with immediate effect. That allows for transitional protection. 

Mark Durkan:  I am still not quite clear. On the one hand, we are told that we have this provision in the Bill because it tends to be in other legislation, and on the other hand, we are told that some things tend not to be in other legislation. 

I have another question. If an issue arose in relation to some of the devolved areas—I know that the Bill covers the UK, subject to legislative consent—would the disapplication of some of the provisions in respect of, say, Northern Ireland, be covered by the clause? 

Jenny Willott:  I am afraid that I do not know the answer to that. Northern Ireland is the only part of the UK that requires a legislative consent order for the Bill to come into force. Scotland and Wales are covered. I will write to the hon. Gentleman to clarify that point. 

My hon. Friend the Member for South Thanet raised an interesting point about the access to information about how a person can complain and claim compensation. The hon. Member for Edinburgh East highlighted the example of when she was given complaints forms easily. I think the situation varies significantly from operator to operator. However, my hon. Friend raises a valid point about the importance of ensuring that passengers and consumers have access to the information that they need. I am happy to talk to some of my colleagues in other Departments to ensure that they are considering those issues. 

As we have discussed many times in this Committee, ensuring that consumers have the information that they need to know what their rights are and how to exercise them is critical to making the system work. That applies in this area as much as in others. 

Laura Sandys:  The issue is particularly about regulated industries. We have Network Rail’s website, but the rights should be front-of-house and accessible. I thank the Minister for taking the issue forward. 

Jenny Willott:  I am happy to speak to colleagues in the Department for Transport about that matter. I hope I have answered the questions that hon. Members raised. 

Stella Creasy:  I thank the Minister for setting out the issues. She said helpful things clarifying that bus customers will now have the protection of the Bill, which means that the issue should be about not the length of the journey taken but the provisions in the Bill. It is worth going through them, because if we are saying that rail passengers should not have equivalent rights, or if there are concerns that they might not be equivalent, there will be confusion. 

The Bill requires the information the trader provides to be binding. For most people on buses and trains, that would include the timetable. Those are the times we can expect a service to be provided, and it provides information about where the service will go. We are concerned by what the Minister said—that the Secretary of State will use the provision to exclude passenger services, but the Minister hopes there will be equivalent services. What will that mean for binding information in a timetable, for example? If a service is advertised, is there a right to money back if that service is not provided? Will there be flexibility, as there is currently? 

Fiona O'Donnell:  It is important that my hon. Friend raises the issue, especially considering the debate that is going on about the provision and funding of bus services.

In rural areas, where perhaps a service is only once an hour or less, is it not even more important that people can rely on a timetable? 

Stella Creasy:  My hon. Friend is absolutely right. That is why it is important that bus passengers are aware that the Bill will give them rights to complain if the information is not binding. I am concerned by what the Minister said. We need more assurances that that same provision will be available for train passengers. 

The Bill talks about services being 

“performed with reasonable care and skill.” 

Woe betide the bus driver who goes for the potholes, I hope. Again, there is a question about “care and skill” for train travel and the level of expectation. Anybody who has ever travelled on a train for which clearly more carriages should be provided or had a long-distance train journey standing the entire way, or sat next to the toilets, will have concerns about whether such circumstances are covered by “care and skill”. 

Critically, the Bill talks about supply at a future time. We are concerned that consumers have a say in any equivalent provision for train transport. I am sure that the hon. Member for Plymouth, Sutton and Devonport would say that his constituents are concerned to know that the train service will be restored, so that they can travel to London if they want to without having to drive. 

Oliver Colvile  rose—  

Stella Creasy:  The hon. Gentleman doubtless wants to say that people in Plymouth want their train service back. 

Oliver Colvile:  The hon. Lady is right to say that they want the train service back, but we also do not want our train line to be swept away again this time next year. That is why I welcome fully the Government’s commitment to producing a report by July on what alternative routes could be provided while also protecting the Dawlish and south Devon economy. 

Stella Creasy:  I thank the hon. Gentleman for that intervention, because he raises the concern the Opposition have. In the scenario he describes, would season ticket holders on the train journeys he talks about have a say in those alternative routes without the protection the Bill gives to passenger services? I am sure that he would be a diligent campaigner for his residents to have that say, but under the Bill, would a consumer have influence over service provision? We are concerned to ensure that the equivalent rights the Minister says will come from the refreshing of the carriage transport rules will be put in place. 

On the question of services being provided in a “reasonable” time, anyone who has experienced a delay to a service will want such protection, but what does it mean? It is worth looking at the current carriage transport rules, because they are not as strong. Getting a refund in the form of vouchers is frustrating. If someone is not particularly confident in the service being provided, the last thing they want is to have to travel on it again. The legislation will allow consumers to seek a price reduction

and their money back, rather than having to accept vouchers. It is fair to ask whether the Minister intends to ensure that, under the legislation, train companies cannot give someone vouchers rather than their money back. 

Fiona O’Donnell:  Often, the people making such journeys are making a once-in-a-lifetime journey, as in the case of constituents of mine who travelled from Dunbar to London for a funeral. They are not planning to make that journey again, so they are unlikely to use such vouchers. 

Stella Creasy:  My hon. Friend is absolutely right, although, having visited the area around her constituency, I have to say I would make that journey many times. I would want to have confidence that I could complain if my journey was not satisfactory. 

The Minister is absolutely right to say that there are instances where we might want to exclude certain things—advocates in court are a pertinent example. However, we want to hear from the Minister, preferably before the Bill is debated on Report, more about the concept of equivalent rights and where the refreshing to which I referred will come from. The service legislation will give consumers simpler and clearer protections in a number of areas. Not giving rail passengers those protections could be problematic in a number of ways. 

Jenny Willott:  Just to clarify, passengers will have the right to their money back for substandard rail travel. We have a written agreement with the Department for Transport that changes will be made before this power is used, to ensure that equivalent protection is given. 

Stella Creasy:  The Minister is talking about the power being exercised as opposed to the legislation coming into force. The ability to get refunds and the length of delay that a passenger has to experience are already covered under the current national conditions. It would be helpful to set out equivalence before the Bill comes into force, rather than before the power is enacted, which could be some considerable time in the future. 

All our constituents who use rail transport will be concerned—rightly—to hear that the Government are seeking to exclude a particular service from the legislation. They will want to know that the assurances given by the DFT to the Minister will appear. Will she commit to clarifying what “equivalent” means before the Bill is enacted? That would be welcome, because it would give people confidence that the Bill will not be undermined in respect of rail passengers. 

It would be very welcome if the Minister undertook to provide that information to the Committee, as we could then be confident that we will have certainty before the legislation is enacted, rather than when the power is used, which, as I said, could be months if not years in the future. We could then tell our constituents that, although they might not be covered by this Bill, “equivalent” means “same” rather than “similar”. That is where disparities can arise—for example, people receiving vouchers rather than a refund, and not having an accurate understanding of what constitutes a delay. [ Interruption. ]

I hope that the note the Minister is being given is a positive one, saying that we will get that information ahead of the Bill coming into force. 

Jenny Willott:  These are two separate issues. When the Bill is enacted is a separate issue from when the provision could be used to disapply the Bill from particular services. I am afraid I do not know what the time frame is. In theory, we could be talking about years away; I simply do not know when. However, the time when the statutory instrument is introduced is the time to debate whether the provisions are equivalent, what the information is, and what the SI will disapply. It would be more appropriate to have that debate when a decision is made on that. The whole point of debating statutory instruments is to raise those points. 

9.45 am 

Stella Creasy:  I appreciate the Minister’s point but if, as she says, the power is not enacted for several years, we could be in a limbo position whereby consumers are not quite sure which legislation applies to their rights. If she does not use the power at the point at which the legislation is enacted, National Rail will be covered, by default, because it is not excluded from the Bill by these provisions. As she says, the Government’s intention is to disapply National Rail conditions, so consumers might be unsure. It would be helpful to clarify the situation, because that would give guidance to the train operators about what conditions they are expected to adhere to under the old or the new system. I appreciate she will not be able to do that today, but I urge her to think about it ahead of Report or ahead of the Bill becoming law. 

We need the information and we need to have confidence, especially as the Minister said that the power could not be exercised for several years. [ Interruption. ] She says she does not know from a sedentary position. That makes the case all the more powerfully for setting out exactly what we expect the national conditions of carriage to contain. What is “equivalent”? What does that actually mean for passengers? Anybody thinking about taking a journey in the next couple of years would not know whether, if there was a problem with it, they would have to get a refund via vouchers, whether they could demand their money back, or what the concept of “reasonable care and skill” is. There is even the question about the timetable. 

I am sure, having heard today’s debate, Passenger Focus will be full of ideas about what to do, and I am sure it will be writing to members of the Committee. Having heard the Minister’s words today, I am sure our inboxes are already filling up. I hope she will recognise there is genuine concern, and that she will think about how she can get us the information ahead of the Bill’s completing its legislative passage. We have put on the record our concerns and our request for more information. I hope that has been noted. 

Question put and agreed to.  

Clause 48 accordingly ordered to stand part of the Bill.  

Clause 49 

Service to be performed with reasonable care and skill 

Stella Creasy:  I beg to move amendment 38, in clause 49, page 30, line 8, at end insert— 

‘(1A) In assessing whether the service has been performed with reasonable care and skill any claim made by the trader as to the outcome the service will achieve must be taken into consideration.’.

Clause 49 is about the first conditions that we would expect to apply to services. It contains the word that for all of us over the past three weeks has come to be loaded with meaning: “reasonable”. The clause is about services being provided with “reasonable care and skill”. The concept of reasonableness is something we have all become intimately acquainted with over the past couple of weeks, because it is so paramount in the legislation. The definition of “reasonable expectation” is loaded with meaning. 

We have already debated in Committee the concept of reasonable quality of goods, and we have talked about reasonable quality for digital content. The clause now applies the same test of reasonableness to services, and it applies the concept of “skill” to the concept of reasonableness. Is it a good service and is it performed in a good way? That is how I would interpret it. There is no general definition of reasonable care and skill, so case law will set out what will be taken into consideration when judging whether a service has been performed in that manner, or, if it has not, when a consumer might be able to exercise their rights to a remedy, and whether they will have the service performed again or receive some money back. 

Members will be familiar with the intent behind the amendment from our previously expressed concerns about the concept of reasonableness, and from the amendments we tabled on how we can help consumers understand what is a fair expectation. This is an incredibly important point when it comes to services—perhaps more so than with goods—because the concept of what is a reasonable service is very much in the eye of the beholder, so providing clarity about what people can and cannot expect to complain about is even more important. [ Interruption. ] The hon. Member for Braintree is looking vexed. I hope I can convince him with some examples. I see he is raring to go, so I will give way. 

Mr Brooks Newmark (Braintree) (Con):  I feel as though I am sitting in a philosophy tutorial. I wait with bated breath to hear what the hon. Lady says about the definition of reasonableness and what one person’s reasonableness versus another’s is. 

Stella Creasy:  I thank the hon. Gentleman for his intervention. I am a little disappointed that he did not ascribe to himself the definition of reasonableness; that would be a truly philosophical endeavour. I did not study philosophy, so I cannot not prove why he is quite so reasonable, but I know that that was his intent in asking that question. 

I will explain the amendment and why we have set a test. We recognise the Government’s case that, particularly when it comes to some services, what one person might consider reasonable would not be considered reasonable by other observers. Therefore, having a purely outcomes-based approach to what is reasonable, specifying that a particular effect has to be achieved by that service, is not practical in terms of the concept of reasonableness—it is, indeed, unreasonable. However, we do listen to the lessons from the Business, Innovation and Skills Committee and from consumer groups such as Which? and Citizens

Advice, which have been concerned that, without some recognition of the role of outcomes in judging what is reasonable, consumers may experience very poor levels of service and have little redress because the trader would argue that they felt that the service was reasonable. 

How, then, shall we strike a balance? Our amendment, as did our amendments to the goods and digital content elements of the Bill, tries to do so by looking at what information the consumer might draw on when commissioning a service, and what information it might be fair to take into account when judging whether a service has been performed with reasonable care and skill. The Government rejected the notion of an outcomes-based approach because of such examples as French lessons and hairdressing. I raise the issue of hairdressing with some caution, because some members of the Committee were concerned about whether our past conversations about hairdressing could apply to them. I can assure them that this is an issue we all recognise—a good level of service is always best. 

The question of whether a haircut has been done with reasonable care and skill can often be in the eye of the beholder, so a trader may act with a reasonable intent and may give somebody a haircut that they decide they do not like. Is that not being done with reasonable care and skill? I think we all recognise that that could be disputed. However, what if a trader claims that a particular haircut will make someone look the spitting image of, shall we say, Jennifer Lawrence? She has beautiful hair—many of us would kill to look like Jennifer Lawrence—and if a trader were to say, “I can give you a haircut that will make you a doppelganger of Jennifer Lawrence”—[ Interruption. ] My hon. Friend the Member for Middlesbrough queries that. I can assure him that in my eyes, he looks like a film star all day. 

Rehman Chishti (Gillingham and Rainham) (Con):  The hon. Lady says that some hairdressers say they can make someone look a spitting image of another person. From her research, how many hairdressers in the country offer to make someone’s hair the spitting image of another person’s? I think that that is a wild assertion, like many others she has made today. 

Stella Creasy:  I presume that the hon. Member for Gillingham and Rainham is asking that because he would like the phone number of that hairdresser. Can I assure him that I personally think his hairdresser has given him a wonderful haircut with reasonable care and skill, and that he does not need to seek the Jennifer Lawrence haircut? Members may feel that haircuts are not such a good example: let me give them other examples of where outcomes-based claims are made about what a particular service will achieve. 

Sheila Gilmore:  The example given might seem somewhat extreme— 

Fiona O'Donnell:  No! 

Sheila Gilmore:  Well, some of us are struggling with who that person is. Leaving that aside, if I were to ask for a particular style of haircut and come out with something completely different, however good it was, it

would still not be what I intended. If I want it to be a particular length and it is cut very much shorter, surely that is not the outcome that I desired. 

Stella Creasy:  May I do my hon. Friend the Member for Edinburgh East a service and encourage her to watch “Silver Linings Playbook” and “American Hustle”? They are both fantastic films in which Jennifer Lawrence has beautiful hair. I can see that the hon. Member for Braintree wants to question whether “American Hustle” should have won a Oscar. I feel that that is not an appropriate debate for this room, but I agree with him. However, my hon. Friend the Member for Edinburgh East is absolutely right about the situation in which someone asks for a particular haircut and that haircut has been agreed with the hairdresser. If someone asks for a trim and gets a bob or a page boy cut—[ Interruption. ] I see the hon. Member for Braintree looking confused. They are very short haircuts that would be severely different from the trim that had been asked for. Would the customer have a right to say that the haircut had not been performed with reasonable care and skill because the outcome, although it might be a beautiful haircut, was not what had been sought? That is a fair question. 

I will give some other examples of outcomes-based claims on which we think it would be fair for consumers to rely in seeking redress for services that are not performed with reasonable care and skill. There could be a weight-loss class that claims consumers will lose a specified amount of weight in a specified amount of time; a dry cleaner who promises to remove all stains from any garment—I have seen dry cleaners who make such claims; a personal trainer who promises to get the service user running a marathon within eight weeks; or a driving instructor who promises that someone will pass their test within a certain number of lessons. Those are the sorts of outcomes-based claims that some service providers will make. 

There is a reasonable balance to be struck between giving consumers stronger protection from traders who simply say, “I’ve decided that this haircut will be better for you” or “You could not pass your driving test under any circumstance” and consumers who make an unreasonable demand on a trader’s care and skill. When deciding whether something is reasonable, there is a balance to be struck between traders who, in their advertising or communications with service users, make a specific claim for what a service will achieve and the outcome that the consumer has a right to expect. 

Rehman Chishti:  The hon. Lady talks about offers that state that a personal trainer will have someone running a marathon or half-marathon in eight weeks. I run half-marathons, so how many such offers are out there? A lot depends on the physique and fitness of the individual, so the assertion that that individual will be fit in eight weeks is bizarre. 

Stella Creasy:  I thank the hon. Gentleman for his concern on both haircuts and fitness. I am relieved that he did not ask whether I could run a half-marathon, or indeed whether I could claim to be ready to run a half-marathon within eight weeks. He is missing the point, which is that there are circumstances in which

service providers will make outcomes-based claims. All my examples are real-life examples, so the question is not whether the claims are appropriate, although I agree that anyone who suggests that they could get me running a half-marathon in eight weeks would clearly be as fanciful as the coalition agreement. [ Interruption. ] As my hon. Friend the Member for East Lothian says, eating half a Marathon would be more likely. I could certainly do that within eight minutes, let alone eight weeks. 

My point is that people will make claims when providing services, and consumers should therefore be able to rely on those claims in the reasonableness test. I hope that Government Members can see the distinction. When traders make exaggerated claims and a consumer buys into a service on that basis, that should be taken into account when considering the reasonableness of that service. [ Interruption. ] The hon. Member for Braintree is ready and raring to go, so perhaps he will tell us whether he could run a marathon in eight weeks; I certainly could not. 

Mr Newmark:  I ran the Los Angeles marathon and ended up being very ill afterwards. I made a bet with someone, unfortunately. I agree with one part of the hon. Lady’s argument, which is the dry cleaning example. If someone says that they can remove a stain, they should remove the stain. There is only one party in that relationship that can deliver that claim—the dry cleaner. However, in the case of losing weight, for example, two parties are part and parcel of the contract. It is difficult for the provider to prove that the person on the other side of the contract, whether they are being trained to run a marathon or are trying to lose weight—I probably need to lose about a stone—has contracted to do that by doing exactly everything that the supplier of the service provides. I will buy one part of the argument, the dry cleaning part, but the other two examples are a little difficult to support. 

10 am 

Stella Creasy:  I thank the hon. Gentleman for that intervention. I cannot see why he needs to lose a stone, especially since he can run marathons. [ Interruption. ] A Government Members says 3 stone; that is most unfair. I have heard some stories about Whips being tough, and clearly my understanding of what goes on in the Government Whips’ office is well founded. 

The hon. Member for Braintree is absolutely correct: when traders make claims and consumers buy a service on that basis, but the claims do not bear merit, surely a consumer has a right to challenge the provision of a service. Simply to argue, “The trader made a claim that they could not possibly substantiate. That is your fault and you have lost your money, whatever the circumstances,” reinforces our argument. If the amendment were made, it would act as a disincentive to service providers to make such silly, unrealistic claims and would give the consumer protection from them. 

I am sure we could find a personal trainer who would argue that, helped by their grit and determination, both myself and my hon. Friend the Member for East Lothian could run a marathon within eight weeks. That would not necessarily be beyond the realms of possibility. It is beyond the realms of what either of us would desire to

do with our time, I suspect, but it is a claim that could be made. If the trainer were not able to deliver on such a claim, whatever we had done ourselves, they made that claim to secure our custom. That is the point. 

Fiona O'Donnell:  In an age when there are so many pressures about body image—to which I am clearly immune—does my hon. Friend agree that the good providers of services will state that, in her example, the claim is conditional on a healthy diet or a regular exercise regime, making the consumer aware that they have a part to play in the contract? That is fine, and we can understand that. It is when the outcome is guaranteed and the provider of the service makes no indication that any commitment is needed from the consumer that the consumer should have rights. 

Stella Creasy:  I said that the Committee could become a little like therapy for people; I fear we are getting into therapy now. I assure all members of the Committee that as far as I am concerned, despite the unhealthy lifestyle we all lead with our long hours and stresses, they all look in fine form to me. That is not simply a way of trying to persuade them to support the amendment. 

I will move on, but I want to put it on record that it is not simply the Opposition who are concerned that an outcomes-based standard needs at some point to be made part of the Bill. 

Kwasi Kwarteng (Spelthorne) (Con):  Will the hon. Lady give way? 

Stella Creasy:  If the hon. Gentleman wants to challenge the idea that members of the Committee look in fine form, woe betide him. 

Kwasi Kwarteng:  No, I am not going to do that. This is the first time I have spoken in the Committee, but I have heard a lot of the arguments, and some of the Opposition’s arguments frankly seem absurd. Clearly there is a distinction between situations such as my hon. Friend the Member for Braintree mentioned, where the producer, shopkeeper or supplier of the service has all the obligation, and situations where, for example, a driving test instructor might say, “You will pass your test within 20 days,” or another trader might say, “If you follow this diet you will lose a stone.” In those situations there is clearly an obligation on the part of the consumer. To pretend that the two types of situation are the same does not make any sense whatever. 

Stella Creasy:  I thank the hon. Gentleman for his introductory contribution to our discussions. The Opposition would co-sign his request for a refund from charm school for his suggestion that our arguments are absurd. He is being a little disingenuous about the point that we are making. 

Traders will make claims that are absurd. Therefore, when we are testing the concept of whether a service has been provided with reasonable care and skill, consumers should be able to say, “This is the promise I was made by this trader; however absurd, it has an outcomes-based focus and I therefore wish it to be taken into account in judging whether the service has been provided with reasonable care and skill.” The flip side of what the Bill

will do, and the reason why groups such as Which?, Citizens Advice and the Business, Innovation and Skills Committee are concerned—[ Interruption. ] I do recognise the concerns of the hon. Member for Braintree. I know he feels that perhaps my argument is not strong enough, but let me tell him what the Committee said, because it might help. It stated: 

“One of the risks of creating a statutory right that services must be provided with reasonable care and skill is that this is seen by traders and consumers as a standard to meet to ensure compliance, rather than as a statutory minimum...We recommend that the draft Bill should apply an additional outcomes-based liability standard to services that requires service provision to achieve the stated result, or one which could reasonably be expected, as well as to any product resulting from the service.” 

So it recognises that where a stated result can be achieved by a particular service, it is surely right and proper for a consumer to be able to rely on that in the test of what is reasonable. It is not about an unreasonable expectation, such as whether we could run a marathon in eight weeks or whether a certain amount of weight loss could be achieved, but a stated result. That is the distinction we are trying to draw. 

Fiona O'Donnell:  Will my hon. Friend probe Government Members to see whether they think that, when a product or a service makes a claim and the consumer fulfils all that they are required to do on their side, but they do not see the outcome promised, the consumer’s rights should be covered by this part of the Bill? 

Stella Creasy:  My hon. Friend is absolutely right. The presumption that Government Members are making is the argument that traders will make: “You obviously did something wrong, and that is why the service hasn’t met the stated result that we had said it would achieve for you.” The concept of reasonableness will therefore rely on the trader’s assumption, without some reference to the outcome that the trader had suggested. That is the loophole we are trying to close with the amendment. 

Our question is, if someone does not lose weight, even though they have followed the diet to the letter and been out and exercised—they have not even sniffed a bar of chocolate—does the consumer have the right to say, “It was guaranteed. That is the reason I spent a lot of money on these weight-loss pills. I saw the advert’s claims, I did everything right, and yet still I haven’t secured that outcome”? I do not think it has met that reasonable care and skill test, because a claim has been made that cannot be substantiated. I therefore think that the test of reasonableness should be able to include stated results. 

Kwasi Kwarteng:  Will the hon. Lady give way? 

Stella Creasy:  I will give way one more time, and then it would be helpful to hear from the Minister. She probably recognises that advertising claims and information that consumers might be given about what a service will do should be considered as part of the reasonableness test. The issue is whether a consumer will have that protection in the Bill. 

Kwasi Kwarteng:  I am grateful to the hon. Lady for giving way. Clearly, this idea of consumer protection relies on finding out what the consumer has done. Many

of us know of instances where people will say to us, “Oh, I followed the diet to the letter. I ate salad every day”, but they forget about all the other things they ate—the salad dressing, for instance. That is material in a diet. People get their little salad and forget about going to McDonald’s in between meal times. They will turn round and say, “I followed this diet to the letter. Give me my money back.” Surely that is not the situation the hon. Lady wants to defend. 

Stella Creasy:  I am delighted that the hon. Gentleman has decided to start contributing to the Committee. He has an eye-opening perspective. I would love to know at which point he forgot he went to McDonald’s. I will wager it was rather late at night. 

If the example of the diet is causing confusion, let us return to the example of the dry cleaner who says that they will be able to remove any stain—[ Interruption. ] I see the hon. Member for Braintree agrees about the dry cleaner. If a dry cleaner says, “Tough. I think this is clean, so you will just have to deal with it”, does the hon. Gentleman think that that is reasonable care and skill, or does he think the consumer has the right to say, “Hang on a minute. I came to your dry cleaners rather than somebody else’s, because you made that claim. My family has held this beautiful divan for generations. There has always been a brown mark on it. I brought it in to you”? [ Interruption. ] Yes, or scatter cushions. We must return to the scatter cushions. Someone might say, “You have not removed the stain. I have paid for this service, and I would have paid for another service had you not made that claim.” The trader says, “Well, I have done a good job.” That is the loophole that we are trying to close. If Government Members can see that that can occur—[ Interruption. ] Goodness, I see the hon. Member for Braintree slamming the desk. 

Mr Newmark:  If the hon. Lady was just trying to deal with dry cleaners, I would agree with her, because there is only one part of that relationship that can deliver on that part of the bargain. What she is trying to do is conflate something where only one party can deliver that with something where two parties are part of the contract, such as going on a diet or running a marathon. That is what she is trying to do. I cannot agree with her on that, but if the amendment were just to do with dry cleaners, I would be tempted to support her. 

Stella Creasy:  The hon. Gentleman needs to look carefully at the amendment, because it is about not any specific service but the principle. Let me provide another example that might strike a chord with him. If he employed someone to paint or decorate his property, and they went over the edges of the bits at the top of his walls—I am such a bad decorator myself that I do not even know what they are called—that would not be reasonable care and skill. However, they had promised that they would make his house look beautiful and that it would be perfect. Should he be able to rely on their claim—if they had made such a specific claim—that their decoration would be perfection, in terms of what is reasonable care and skill? 

If the hon. Gentleman accepts that, under the Bill, there are examples of where a trader could challenge his assertion that, “I don’t think that is reasonable care,

because you have gone over the lines when you claimed specifically that you would be accurate with the painting”, does he accept that there will be instances where traders could use the Bill to avoid responsibility for not performing a service with reasonable care and skill? That is what the amendment is designed to take account of. It is not intended to create a series of unreasonable expectations from a consumer, but to ensure that, where a consumer has been given a pledge of assurance about a particular standard that a service will meet, they will be able to take that into account and challenge a trader who says, “It doesn’t matter if I said to you I would be perfect. What I meant by perfect isn’t what you meant by perfect. Therefore, them’s your apples. I am not going to give you your money back.” 

We can all look at the weight loss and driving school arguments, but if the hon. Member for Braintree accepts that there is an issue with those types of services, surely he accepts that it is right to look at the issue, as the Select Committee on Business, Innovation and Skills, Which? and Citizens Advice did, and say that there needs to be some recognition that outcomes matter in judging the quality of a service. The Bill, as currently drafted, does not have that. The amendment is seeking to probe how a consumer can have that confidence. 

At this point, it is probably a good idea to hear whether the Minister has any comments, and how we might resolve the hon. Gentleman’s concerns about dry cleaners and decorators, if not weight loss merchants and driving instructors. 

Sheila Gilmore:  In some of the perhaps rather light-hearted exchanges this morning, we may be losing sight of the fact that this an important part of the whole issue of consumer protection and the need for such protection. For many years, this has been a problematic part of consumer law. Unlike the law that has developed regarding goods, there is a great deal of uncertainty over the concept of reasonable care and skill. There are still many complaints about services, and consumers are often left with the feeling that their complaints are not being fully resolved. Which? suggested that as many as two in five people who purchase services have complaints about the nature of that service. Clearly, there will be a wide range of complaints, but it is an important issue. 

Somehow, over all these years, defining reasonable care and skill has proved to be difficult. The opportunity should be taken in the Bill to see whether we can arrive at a better conclusion. That was the thrust of the recommendations from the Business, Innovation and Skills Committee, for example. 

The difficulty for the consumer here is that, unlike something that is more tangible, it can be harder to be clear about what “reasonable” means in this context. “Reasonable” has a long pedigree in legal disputes. Lawyers standing up in court undoubtedly have a clear grasp of what they consider to be reasonable, and they use the term constantly. The problem for the individual consumer is that they do not have that background in legal argument and precedent. They are asked by the trader to agree a definition of reasonable, in effect, which they may feel they really do not accept and they are made to feel that it may be them who is being unreasonable. 

10.15 am 

We have had a number of examples here, but quite often the response given by a trader is that, somehow, somebody else is at fault; either the purchaser of the service or some other party to the contract. Somebody did not bring the paint that gave the right shade, or they did not give them some part of the jigsaw of service that should have been given. However, the person who purports to provide a service is the one to bring all that together, not the consumer. 

The example that came to my mind is floors sanded and sealed. This was very fashionable a good few years ago, at least in my part of the world, where a lot of people took on older properties and decided that they wanted to restore them to their late-Victorian or Edwardian origins. Indeed, I think that people still do, although my husband’s grandmother, who was in her 80s when we were doing this, told me, “I never liked those marble fireplaces and bare floorboards,” and could not fathom for one minute why we were stripping all this back to its origins. It just shows how things go in generations. It could well be that the nature of the floor is such that getting a good result is genuinely going to be quite difficult, but this should be made clear at the beginning. 

So I go to a firm who will, no doubt, show me photographs of beautifully shiny, smooth floors that will enhance my home and make me live in an edition of Ideal Home magazine—at least until I start living in it, when it will turn into something quite different. However, my floor may well be so old and hard to restore to its former beauty that that is not going to happen. When I see the result I say, “I don’t like this. This isn’t what I expected to get. I expected to get something far better than this.” Yes, the floor has been cleaned up, but all the little grooves and so on have certainly not been removed. 

Just the other day, I noticed that someone—I cannot imagine that it was me—must have been standing on one of my floors in stiletto heels, because there are lots of little indentations in it. I very rarely wear those heels, so it could not have been me. However, it is an old floor, so if it is not perfect, or as perfect as I had hoped it would be, has the trader not used reasonable care and skill? He may argue that he has used reasonable care and skill: he has done the best possible job that he could to my floors and has done the job that he thought he should do. It looks okay, but it is not perfect. 

Perhaps the trader should have been clearer at the outset and told me, “This is what I can do for you. I cannot turn this into this picture because your basic floorboards are not going to come up to that standard ever again. They are too old; they have moved apart in various ways; and we are not going to cure that.” Providing that we have entered into a very clear contract as to what can be achieved, that is fine, but if we have not and if I have gone away with the notion that I am going to get a perfect floor that will look like the pictures in his showroom or in his brochure, the question of care and skill does come into play. From his perspective, he has used reasonable care and skill, as he has done the best that he possibly could in the circumstances, but I do not have the outcome that I thought I would get. Perhaps it could be argued that to imagine that such a transformation was going to take place was rather idealistic and I should have been more realistic, but people find themselves in that situation with various kinds of work on their homes. 

Tiling is another example. Somebody may do their best to apply tiles to walls that for one reason or another in their history are imperfect in their shape. That is likely given all that can happen to a house. My house, for example, is getting on for 150 years old—not the oldest ever, but it has clearly been much lived in. A tiler might have used exceptional care and skill, but when the tiles start to fall off because they cannot adhere to the bumpy wall, is that his lack of reasonable care and skill, or has the home owner simply not had the outcome that they thought they would get? 

Fiona O'Donnell:  Does my hon. Friend agree that a professional tradesperson should be aware of such factors and advise what a reasonable outcome will be as a result, to give the consumer the opportunity to change their mind? 

Sheila Gilmore:  In many circumstances, we would hope that that conversation would take place, but clearly individual consumers do not always enter into such detailed conversations and nor, necessarily, do traders who are trying to sell a service. 

Mrs Mary Glindon (North Tyneside) (Lab):  All this talk of tiling and smoothing has made me think about what would happen if I went for a beauty treatment, having read that it would make me look younger—I would love that—but after the treatment, I did not feel that I looked younger. My skin might look refreshed for a couple of hours, but I would come away disappointed. It had not lived up to my expectation, but the treatment had been offered with the claim, “You will look younger after this.” 

Sheila Gilmore:  I can assure my hon. Friend that the day of the cult of youth has gone. We are now, I hope, in an age when people recognise that maturity has many assets and the roles of people of a much wider range of ages are taken into account—not least, I hope, in the House. 

Leaving that aside, the trader or the person providing the service, as a professional, will have a view of what is reasonable care and skill, which will understandably develop with their years in the job. Consumers buying services such as hairdressing—since, alas, hair has the distressing tendency to keep growing—have to go back repeatedly, but there are some jobs and services that we do not get experience in judging. We do not necessarily have, for example, major works done to our homes or book certain kinds of travel arrangements all that often. Our ability to judge as consumers is therefore rather more limited, but when we buy something, we expect a certain outcome. 

Although the amendment does not cover all the points about outcomes and levels of care and skill, it highlights situations in which we have entered into a contract in good faith, thinking that a certain outcome will be achieved. If the amendment were to make those offering services more circumspect in describing what they offer us and make them take more care before getting a consumer to sign up and spend what are sometimes considerable sums, that would not be a bad thing. 

The Chair:  Before I call Mr Newmark, may I point out that we are drifting into too many philosophical and personal examples, rather than studying the Bill? I would be grateful if Members were mindful of that. 

Mr Newmark:  I hear clearly what you say Mrs Osborne, but unfortunately the way the amendment is worded demands a somewhat philosophical approach because it is so broad. I was not going to speak at all, but I want to pose my questions to the Minister, having listened carefully to the hon. Member for Walthamstow. My concern covers two words: “reasonable” and “service”. I found her reasonable, but she may not find my arguments reasonable, even though I think that I am being reasonable in what I am saying. That goes for the provision of services, too. A lot of this is about perception. 

The hon. Lady talked on two different points, and that is what I want to ask the Minister about. Is the amendment too wide-ranging for what the hon. Lady is trying to achieve? In two examples—hairdressing and dry cleaning—only one person is part of the bargain and can deliver it: the spot is removed, or the actress looks like Jennifer Lawrence, or not, but I could say that it does look like Jennifer Lawrence’s hair, while the hon. Lady could disagree. Who is the arbiter? Putting that aside, I am willing to buy into the argument that if only one party to a contract is responsible for delivering that service, they should abide by it. I have a problem, however, when there are two parties to the contract: the diet and marathon examples. 

I shall give a classic example. I could follow the diet that the hon. Lady gives me to a T and lose a stone. My hon. Friend the Member for Spelthorne could follow an identical diet, so that we ate and drank exactly the same things. Unfortunately, he loses not a stone but three-quarters of a stone. As the contract provider, the hon. Lady could argue as a precedent, “The hon. Member for Braintree did exactly what I asked and he has lost a stone. Therefore, I was reasonable in providing that service. I have done everything that I said I would and here is an example: the hon. Member for Braintree has lost a stone. Unfortunately, for some reason that I do not understand, the hon. Member for Spelthorne has not.” I think that my hon. Friend would be unreasonable if he sued the hon. Lady for not providing the service that she said that she could provide. 

Rehman Chishti:  On my hon. Friend’s point about where one has complied with everything in relation to what the provider had said about training and eating the right food, fair enough. But how is the provider or trainer to know whether the other individual has eaten that food? He does not know. If at the end of the period, the person has not achieved the level of fitness sought, there may be an issue whereby the provider cannot be satisfied that anything has been complied with at all. 

Mr Newmark:  I hear what my hon. Friend says. I am applying a form of reasonableness to both sides of the contract. Both people have abided by the contract and both parties have been reasonable. That is where my concern lies. 

Oliver Colvile:  Does my hon. Friend think that this is a matter of genetics? After all, I have a brother who is, frankly, as skinny as a rake while I, as hon. Members

may tell, am a little more well sorted, as they say. Therefore, it is not possible to legislate on the issue of genetics. 

Mr Newmark:  I am going to be reasonable with the hon. Member for Walthamstow. Yes, this has been a great therapy session, so I thank her for bringing this matter to the Committee’s attention, but I want to go back to the issue. 

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Stella Creasy:  In having the debate that Government Members are having they are proving the point that this amendment makes, which is about the situation where a claim has been made. If I were to claim that I could make someone lose weight, that would be one thing; if I were to claim that I could make someone lose at least a stone, that would be another. That is why the amendment says that when we assess whether a request for a right to redress or for a repeat performance is reasonable, it is done on the basis of any claims that might have been made. The fact that this debate is taking place rather proves the point that where a claim is made, the question of what information it was based on should be part of the assessment process. 

Mr Newmark:  I am afraid that I have to disagree with the hon. Lady, because in that case, she is being unreasonable—in addition to which, having just seen a picture of Jennifer Lawrence’s hairdo, I do not think it is very good at all. On the question of perception—what one views as reasonable or attractive—all the Opposition members of the Committee are far more attractive with their hairdos than Jennifer Lawrence. 

I shall finish by asking whether the Minister agrees that using the word “reasonable” is, unfortunately, too vague. The word itself is too vague and leads to difference in perception. Secondly, by conflating two forms of service—in the first, only one party can deliver the service, but in the example I gave of weight loss and marathon running, two parties form that contract—it is far too difficult to define whether that service has been provided or not. Therefore, my instinct is to oppose the amendment because it is far too vague and wide ranging. 

Jenny Willott:  We have had a very interesting debate this morning. We have discussed how important the service sector is. The debate has shown how broad it is, what a huge range of different things fall under the umbrella of services and how difficult it is to define that and bring it all together. However, in showing how important it is, it is all the more important that we get the framework right. We must have a proper framework that gives consumers confidence to buy, and traders confidence to provide services. We agree that if a trader says it will achieve a certain outcome that it does not then achieve, that can be incredibly frustrating for the consumer. That is why the Bill introduces a new statutory right. Members need only to look to clause 50, which makes it clear that where a trader gives information about itself or the service it provides and the consumer takes that into account, the trader must comply with that information and if not, the consumer has statutory remedies available. 

The hon. Member for Edinburgh East highlighted the example of not receiving the haircut that was asked for—a haircut that was too short or too long. We have heard similar examples from a number of Members concerning dry cleaners, weight-loss classes, personal trainers and so on. If those services were provided under a contract—if the hon. Lady asked for a particular haircut and was given a different one from the one she had requested—the hairdresser is likely to be in breach of the “reasonable care and skill” requirement and of the new right whereby, where the trader gives information and the consumer takes that into account when deciding to enter into the contract, they have the right to have it complied with. If the hon. Lady requested a particular haircut, made that agreement with the hairdresser—that is why she went to them—and did not get that haircut, the trader would be in breach of clause 50. 

We debated at length this morning the ability of someone to learn to drive after a certain number of driving lessons, or to lose a certain amount of weight. Those are good illustrations of why the Government do not want to introduce a quality standard as such. Instead, clause 50 will be a much better way of addressing the concerns hon. Members have raised. If a trader wants to make a guarantee without an obligation from the consumer—except the obligation to pay, obviously—for example by saying, “It doesn’t matter what you do, you can eat as much chocolate as you want and do no training whatsoever, but I guarantee that, in eight weeks, you will be able to run a marathon”, it will be perfectly fair for the consumer, if the guarantee is why they went with that personal trainer, to be protected under clause 50 if the promise turns out not to be true, which I suspect it would. 

Rehman Chishti:  The key point is to ensure that there are clear terms at the outset, known by both the consumer and the provider. Expectations will therefore be in line with those terms, which is what we must aspire to. 

Jenny Willott:  My hon. Friend is absolutely right. If there is an agreement under which both parties have to do something—“I will get you running a marathon in eight weeks, as long as you train for an hour a day and you eat this particular diet”—and if both parties breach the contract, there will be different circumstances, and obviously they need to be taken into account. 

The hon. Member for Edinburgh East gave the examples of sanding floors and tiling walls. The information that is shared pre-contract is critical, so that the expectations in the contract are well understood by both parties. That is one of the reasons why we are introducing more requirements regarding the need for information to be shared pre-contract. Traders cannot be held to unrealistic and uncommunicated consumer expectations. If the hon. Lady was having her floors sanded and she did not say to the trader that she wanted them to look exactly like those in a particular picture—if those expectations were not communicated—they cannot be taken into account. If they have been communicated, and the trader said, “Yes, absolutely no problem”, clause 50 would apply and remedies would kick in, including repeat performance, unless it would be impossible. 

On the example given of the dry cleaner, if the trader says that they will get a particular stain out of the clothes that the consumer has taken into them, and the

promise that they will deliver that service is why the consumer chose that dry cleaner, if the trader does not deliver, they will breach clause 50, as that was information given about the service and why the consumer went to that dry cleaner. Therefore, there are already provisions in the Bill that cover cases where information about the service is given by the trader before the consumer takes up the contract, on which the consumer bases their decision to go with that trader. 

The Bill already covers this issue without needing to change the reasonable care and skill test, which is already in the Supply of Goods and Services Act 1982. It is well known and well understood, and, as the hon. Member for Walthamstow said, there is plenty of supporting case law. Changing it would reintroduce complexity into the Bill when we are trying instead to simplify the law in this area. 

We consulted extensively on clause 50, which was included in the draft Bill that was published in June 2013. Since then, we have listened to stakeholders and made changes to it to clarify matters. It now better represents a balance, giving consumers the confidence that they can rely on important information that has been given and claims that have been made, while building in safeguards for traders. 

I hope I have answered the concerns raised on both sides of the Committee and have explained how the Bill will apply to the different examples that have been given. With that, I hope the hon. Lady feels able to withdraw her amendment. 

Stella Creasy:  I thank the Minister for her answer. I am slightly concerned that the hon. Member for Braintree might be upset, given that he had said that the concept of reasonableness was not appropriate and was too broad. 

I welcome the Minister’s saying that the provisions in the amendment are already included in clause 50. For the avoidance of doubt, given that Hansard can be used in court if people want to develop case law, will she confirm that her understanding of clause 50 is that in assessing whether a service has been performed with reasonable care and skill, any claim made by the trader as to the outcome that service would achieve must be taken into consideration? Will she say explicitly that the amendment is in the spirit of clause 50, so that a consumer could make use of that when making a claim in a court of law? If that is the Government’s intention and she said that, so that forms part of the legal framework, that would be helpful. 

Jenny Willott:  Clause 50 states that if the trader gives information about himself or the services he is providing and that is the basis on which the consumer decides to enter into the contract, and the trader does not comply with the information he has given, that would be a breach of the clause. 

Stella Creasy:  I thank the Minister for that. The amendment is just about the outcome and we tabled it so that the trader’s claims about an outcome can be taken into consideration. We wanted that distinction between general information and claims of a specific outcome if a consumer bases their decision on that. If she would clarify that that outcome-based claim is included in clause 50, that would be incredibly helpful. 

Jenny Willott:  It is slightly different from clause 50, but the amendment is within the spirit of that. “Reasonable care and skill” relates to how the service was performed rather than its outcome, but the clause does relate to the information that the trader gives about the service provided. 

Stella Creasy:  I thank the Minister for that assurance. On that basis that there is an outcomes-based test in the legislation, I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Stella Creasy:  I beg to move amendment 46, in clause 49, page 30, line 8, at end insert— 

‘(1A) For the purposes of this Act every contract to supply a service by those traders who are ring-fenced bodies providing financial services as defined under section 142A (Ring-fenced body) of the Financial Services and Markets Act 2000 shall—

(a) be subject to a fiduciary duty towards its consumers in the operation of core services to provide these with reasonable care and skill as well as in the management of any individual contract to provide services; and

(b) be subject to a duty of care towards consumers across the financial services sector.’.

We now move on to financial services, an area that many of us are concerned about because we have seen some poor levels of service. This is an example of where the concepts of reasonable care and skill and what is considered reasonable come to the fore. The amendment is based our concern that evidence shows that the behaviour of a service provider towards some of its customers may directly impact on other customers’ experience of a service. The question is, therefore, how to determine what is reasonable care and skill in that context. 

The amendment follows attempts made by my colleagues in the shadow Treasury team to amend the Financial Services (Banking Reform) Act 2013. It would extend this Bill’s general duty of acting with reasonable care and skill to the financial services sector. The first part of the amendment would set out a fiduciary duty that would demand a higher standard of care for direct consumers. The second part would extend the general duty of care to all consumers across the sector. We recognise that banks play an integral role across the financial services sector and that their actions could impact on not just their own consumers, but everyone. 

Whether or not people want to argue about the nature of the banking crisis, we all recognise that it has had implications for consumers. The amendment would test the concept of reasonable care and skill. That is needed because, while we all recognise that there was a huge outcry about the behaviour of banks and its impact on consumers five or six years ago, we are concerned that some of the lessons from that for everyday customers have not yet been learnt. Even though there has been a great deal of banking reform, it has mostly related to bank structures and has not necessarily dealt with the everyday interactions people have with their banks and the resulting implications. 

In March 2013, a survey by Which? found that banks’ safeguarding of customer interests remains inadequate. For example, it found that banks are failing to give the right advice on transferring and managing cash ISAs—something many people are doubtless considering as we

come to the end of the financial year. Some 180 calls were made to 15 leading banks and building societies to assess the quality of advice given to people who want to transfer their cash ISAs. 

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It said that HSBC, Yorkshire Bank, RBS, First Direct and Barclays all failed to give correct answers to three simple cash ISA questions in more than 50% of calls. Nearly two thirds of banking customers no longer trust their lenders to look after their money, according to a YouGov poll. Some 49% said that high-street banks were dishonest and a further 45% described them as incompetent. Just 1% of respondents believed that senior executives of the biggest banks had improved their behaviour since the financial crisis began. There is clearly a lack of confidence in our banking society among consumers, which directly impacts on their assessment of whether their banking services are being provided with reasonable care and skill. 

This amendment tries to address that; it would enter into law a concept that would add greatly to consumers’ confidence in their banking services and to ensuring that their best interests were being served. It would also encourage those providing financial services to act in a prudent and ethical manner. In that sense, it would require a ring-fenced body not to act contrary to their customers’ interests while carrying out core activities. We recognise that, if this was applied more generally to banks, it could potentially create problems in areas where banks have their own competing interests or, indeed, where customers have competing interests but, by specifying that it would apply to core services, it is right that consumers would then be able to be confident that reasonable care and skill would be applied to their basic core services. 

Andy McDonald:  I congratulate my hon. Friend on tabling this amendment. We hear many complaints by customers and sometimes it is difficult, when we see surveys, to know whether there is any basis to it or whether it is a perception, but the Which? survey bears that out: the perceptions are based in reality. It is incumbent upon us to ensure that that fiduciary duty between bankers and customers is absolutely at the heart of the relationship, as it should always have been. 

Stella Creasy:  My hon. Friend is right and, in fact, some similar duties already exist in common law, but they have been developed piecemeal. We think that creating both a specific duty and a general duty—which the second part of what the amendment does—is absolutely right, as it gives clarity and can be applied within a legal framework. Such provisions are not just about current accounts and the stability of banks but about issues around mortgages, for example. Many hon. Members and media commentators have been concerned about mortgaging and remortgaging markets; we think stronger safeguards need to be pursued, especially in protecting customer interests and in providing a mortgaging service with reasonable care and skill. This is, after all, what this legislation will require banks to do. For example, mortgage customers on a standard variable rate might be persuaded that remortgaging is their only option and could end up accruing significant costs through surveying and legal fees. In many cases, because those costs are

simply added to the mortgage, the customer does not necessarily feel that they are being made to pay for a remortgaging product, but they will pay the price at some point. I think that all of us, in that instance, would be right in querying whether that was providing a service of reasonable care and skill, especially when it comes to the consumer’s interests. 

This amendment would tackle some of those issues and assure consumers that banks would always have to act in their interests because it would be how the test of reasonable care and skill was being applied. It would also follow some of the best examples of the use of fiduciary duties in other countries, such as when the US Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gives the Securities and Exchange Commission the authority to impose a fiduciary duty on brokers who give investment advice. When we are dealing with our finances, we all know the fear that we could make bad decisions that may haunt us, not just for a couple of months, like a haircut, but for several years and that may fundamentally and negatively affect our families financially for years to come. Giving these duties in respect of financial services would give consumers stronger protection and stronger forms of redress when it comes to whether financial services have been delivered with reasonable care and skill. We think that this would both enhance confidence in financial services generally and clarify consumers’ expectations of how a financial service is provided. It would require a broker to have a fiduciary duty towards consumers––not just towards an individual consumer but to a range of them. It is no good working with a broker who might offer one person a good deal but in their behaviour with others takes such risks that it would undermine the possibility of the deal being realised. That is what we are trying to get at with this amendment. 

In this area of service provision, there are real concerns that previous incentives and behaviours, as the Which? survey shows, have yet to be fully addressed. We believe that they could be addressed those through having these additional protections in the legislation. I look forward to the Minister’s explanation of how she sees the legislation affecting the financial services sector, and whether she sees our case for a stronger duty of care, because of the interaction among financial services. How does she envisage that working? 

Jenny Willott:  As the hon. Lady said, the amendment attempts to revisit a subject that I understand was extensively considered during the passage of the Government’s legislation on banking, in particular the Financial Services (Banking Reform) Act 2013, which introduced the concept of the ring-fenced bank, which was one of the recommendations of the Independent Commission on Banking chaired by Sir John Vickers. 

No one would disagree with the proposition that customers need a better deal from their banks. As constituency Members, we have all had casework relating to concerns about banks from constituents, whether small businesses or consumers. The Government have been keen to see more competition between banks precisely for that reason. We also want better standards in the banking industry and a return to the days when the customer relationship mattered and the customer came first. I am sure all hon. Members agree with that. 

Other measures in the 2013 Act implemented the recommendations of the Parliamentary Commission on Banking Standards about the conduct of individuals in banks and will be an important step forward in that respect. It is perhaps worth noting that the parliamentary commission did not, in its comprehensive report, recommend the introduction of either a fiduciary duty or a duty of care for banks. The Government continue to take the view that the introduction of either a fiduciary duty or a duty of care in legislation would not help to drive up standards within ring-fenced banks, or assist consumers. 

Andy McDonald:  Does the Minister accept that a fair and accurate assessment of the mood of ordinary customers would be to expect that financial advisers from banks and life assurance companies behaved in a way that looked after people’s interests? That would be a simple statement of the obvious and the expectation of most people. 

Jenny Willott:  I agree with the hon. Gentleman that customers assume that they have the right to expect their best interests will be taken into account in a relationship with banks and so on. I will come to explain why that is not needed in the Bill. 

The ring-fenced banks are already subject to duties to their customers under general law—they are a normal part of acting on behalf of a customer—as well as obligations in their contract with the customer. Where they hold funds or other property on behalf of the customer, they will be subject to fiduciary duties. There are also regulatory obligations imposed under the Financial Services and Markets Act 2000. There is, therefore, nothing to be gained by adding a fiduciary duty in statute here, especially when it cannot be as precise or readily enforceable as the specific obligations in the regulator’s rules or the terms of the contract. 

The hon. Member for Walthamstow said that a fiduciary duty represents a higher standard of care. I do not believe that is the case. A fiduciary duty is a different kind of duty. It is appropriate when someone acts on behalf of another person, but it is not appropriate to a contractual relationship of the kind we are considering here. It would cut across the duties under financial services law. Banks are already subject to a wide range of legal duties, including obligations under Financial Services and Markets Act 2000 and the rules of the Prudential Regulatory Authority and Financial Conduct Authority. 

As I said, banks also have contractual obligations to their customers. Any banking relationship or transaction is subject to a contract between the bank and the customer. I am sure that many Members are familiar with the FCA principle according to which the traders it regulates must treat customers fairly. Martin Lewis raised this matter when he gave evidence at the second sitting of the Committee, and said that the Financial Ombudsman Service has extensive powers of redress for consumers if that principle is not complied with. 

Stephen Doughty:  On a wider point of principle, I believe that Consumer Focus found that the average loss a consumer incurs from a problem with a good or service is £196, but that that rises to £464 when the

problem relates to professional services and financial services sectors. Does the Minister agree that with the greater level of damages comes greater responsibility? I have certainly seen that from my casework of problems that consumers have experienced with financial services and banks in particular. 

Jenny Willott:  It is certainly clear that the loss incurred in terms of financial services can be significant. I am sure that we have all dealt with cases of mis-selling, hedging and so on, where the amounts involved have been massive. That is why we have lots of sector-specific regulation to make sure that such sectors are tightly regulated, and why we have the PRA, the FCA and the Financial Ombudsman Service. Martin Lewis said in his evidence that the Financial Ombudsman Service is an extremely good and effective organisation at obtaining redress for customers. We recognise that the potential loss is particularly great in terms of financial services and that the particular circumstances of that sector require specific legislation and regulation. 

Given the wealth of sector-specific regulation, imposing the fiduciary duty as proposed in the amendment would not give the consumer any additional remedies. It is not clear what the wider duty of care proposed in paragraph (b) would add to the existing obligations or the regulatory requirements to which the ring-fenced body is subject. A ring-fenced bank is subject to duties to those who use its services under its contract with them. The Bill clarifies the existing rights under service contracts, so imposing a duty of care towards a bank’s customers adds nothing to those rights. The Government therefore firmly believe that it would be better for focused, specific requirements and standards of business to be imposed on banks and other regulated businesses by regulators. Rather than relying on high-level generic concepts such as a duty of care, banks can comply more easily with specific requirements and customers and regulators can hold them to account more effectively when the banks fail to comply with those requirements. In those circumstances, it is much easier for the banks to know what they have to do and for customers to know when they have not received a service to which they are entitled. 

In the light of those comments, I hope that the hon. Member for Walthamstow will agree to withdraw the amendment. 

Stella Creasy:  It is welcome that the Government seem to accept the principle behind the amendment: we expect a particular level of care from our financial services because the potential consequences for consumers when services go wrong are so detrimental in terms of their long-term financial security. 

The Minister argued that the amendment would not provide any additional protection. The legislation refers to the concept of reasonable care and skill, and we believe that there is an issue in terms of skill and the provision of financial services. We do not want to supersede or cut across other legislation, but we believe it is right to marry it up through this amendment. 

In particular, we would like the Minister to comment on the concept of the skill of managing investments, because that it is what the amendment is driving at. We

continue to see poor advice provided in our banking sector, which seems to us to be a good example of reasonable care not being taken. An example is people not being given the right information about their options regarding cash ISAs and so missing out financially. On the management of a financial service, how does she see the Bill, or indeed other legislation, offering consumers an opportunity to challenge a financial services provider who is not managing investments with reasonable care and skill, and what would the consequences be for them? That is distinct from whether a trader makes a cautionary claim about what can be achieved. 

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If a trader does not act in a reasonable manner towards the money that someone invests with them, does that person have a right of redress? The Minister says that it is better to have specific requirements, which gets us into the concerns that Committee members have expressed about bureaucracy. Surely when a person commits to a financial services contract with a service provider, they can expect them to act with a duty of care. The fiduciary duty is about setting out what that looks like; it is about reasonable care and skill being applied to how providers manage people’s money and investments. 

The Minister says that the spirit of the amendment is already covered in legislation. It would be helpful if she set out where she sees the concept of skill being taken forward, because that is what we are looking for through the amendment. I appreciate that we have debated this in other parts of the House, during consideration of the Financial Services (Banking Reform) Act 2013, but it is important to get clarity on the concept of skill, which is what the Bill brings to those conversations. I am happy to give her time to get the answer from her officials, because this is an important point. 

Stephen Doughty:  I want to reinforce what my hon. Friend says. I served on the Financial Services (Banking Reform) Bill Committee, as other members of this Committee did, and these issues were discussed then, but her point on clarifying the issue is absolutely right. The issue of skill is one that we ought to clear up, because many consumers, and many of our constituents, have experienced challenges around the financial products that we are talking about, and around banks and other financial services providers. 

Stella Creasy:  My hon. Friend is absolutely right, and when we discuss ombudsmen, I will give an example in which someone who received a financial service felt that the ombudsman was not able to apply a test of skill, so there was a gap. There are concerns for consumers trying to understand where skill comes into play, as opposed to outcomes; this is the reverse of the debate that we have just had about outcomes versus what is acceptable. I think that the Minister now has the answer in front of her, and it would be great to hear it. 

Jenny Willott:  I do indeed. Banks are subject to a duty to use reasonable scare and kill—that was a slightly worrying spoonerism for this time of the morning. They have a duty to use reasonable care and skill, as well as having duties under financial services legislation,

so there is a requirement generally, and in financial services legislation, that covers the phrase that the hon. Lady highlighted. 

Fiona O'Donnell:  On a point of order, Mrs Osborne. This does not relate to the spoonerism or anything else that has happened in our debate. The room is freezing. I should think that the Minister will come back this afternoon in tin foil. Is it possible for you to address that, so that we do not have to seek recourse from our trade unions? 

The Chair:  Yes, I did notice that Members were availing themselves of extra clothing. I have asked for the heating to be turned up. 

Stella Creasy:  I thank my hon. Friend the Member for East Lothian for that point of order, as I did not bring as many items of clothing with me as this room merits. 

Mr Newmark  rose—  

Stella Creasy:  If the hon. Gentleman is about to offer me his jacket, that is incredibly gallant, but I suspect that he would then feel even colder. 

What the Minister says about recognising the fear regarding how financial services providers will deal with questions of care and skill is very welcome. We tabled the amendment to probe the Government. I am happy to withdraw it on the basis of her assurances, but I think that we will return to this issue, not only in the Bill but in the House more generally, because evidence is strong that, daily, people still do not see the care and skill that they expect from financial services. It is right that we look at the consumer protection legislation, because it is the first port of call for most consumers when dealing with a service. It will be the first port of call showing whether the rights they have in other areas of their lives apply to how they manage their money. It is right therefore that we ask such questions about the Bill, but on the basis that the Minister says that the issues are covered by the legislation, I beg to ask leave to withdraw the amendment. 

Amendment, by leave, withdrawn.  

Stella Creasy:  I beg to move amendment 47, in clause 49, page 30, line 8, at end insert— 

‘(1A) This requirement shall apply to all activities associated with providing a service including—

(a) the management of information held by the trader about the consumer gained in the course of this contract,

(b) the communication with the consumer regarding the contract including activities by the trader designed to induce the consumer to purchase further goods or services from the trader,

(c) for the purposes of this Act this shall be taken to include a requirement for traders to prove they have the direct consent of a consumer to share information on consumers gathered for the purposes of providing a service with any third party including, but not limited to, marketing and communication purposes, and

(d) the trader will be liable for compensation for any distress caused by such activity undertaken involving communications with the consumer via either themselves or a third party without this consent.’.

The amendment goes to an issue that many hon. Members have personal experience of, but enough about the phone calls or text messages we might get from our Whips. It is about nuisance calls and how we deal with the information that companies collect about us as part of providing a service to us. All of us know the frustration, irritation and, frankly, distress that unwanted phone messages and text messages cause not only us but our constituents. The amendment tries to address the problem. 

Members on both sides of the House have campaigned on, and people feel strongly about, nuisance calls and unwanted messages. The amendment covers the things that a trader might do in the course of providing a service, but which are not directly related to carrying out that service. As we all know, when we contract to a service, a trader will collect a lot of information about us. They collect our personal details, bank information and other information. They will then use those details to market other services. The amendment looks at the things that might be called ancillary to a service and asks how a service provider will use reasonable care and skill in the management of the information. 

I know that hon. Members will say that there are requirements under the Data Protection Act and privacy laws that cover how businesses handle and process sensitive data, but we argue that they are not clear. Nuisance calls are allowed to proliferate by how data might be used by service providers. The amendment seeks to bridge the gap and say that traders should adhere to the spirit of the Data Protection Act as well as hold data accurately. In particular, current legislation is not clear whether a company using personal details, such as phone numbers, to send messages—or sharing details with another company for the purpose of marketing further services—breaches consumer rights. Many of us will have seen people who get hundreds of messages from such companies. Would the Bill enable a consumer to seek redress through legislation? With the amendment, we are trying to make that explicit in the legislation. 

We want to learn from the best evidence about what works in the market and what good traders are doing. I am sure that the hon. Member for Braintree is about to pop up and say, “This will be a terrible burden on business.” It should not be. 

Mr Newmark  rose—  

Stella Creasy:  I am sorry if I have mis-sold the hon. Gentleman. I am happy to take an intervention. 

Mr Newmark:  As always, I am listening attentively to the hon. Lady. I agree with her. I object to what she describes. We get nuisance calls, nuisance texts and nuisance e-mails. I do not think that anybody should provide information to a third party unless positive consent has been given by the consumer to the initial provider. I see on a lot of contracts, “Please tick this box to affirm that you wish to.”, not “that you don’t wish to.” It is an important nuance. 

Stella Creasy:  I thank the hon. Gentleman for his attention and for the point he makes. If I recall correctly, the Minister herself said how frustrated she was by some of those tick-boxes and the wording used, because it has to be read so carefully to see whether it means

passing on information or not. I will come on to the point about passing on information and how the amendment will affect it. 

Stephen Doughty:  I also recall that the Minister made that point. The particular point she made was that companies often mix the affirmative and negative boxes, attempting, essentially, to trick people. That clearly results in a lot of detriment for many of our constituents. I recall recent conversations at the Earlswood club in Rumney in my constituency. It was the topic of the night among the attendees while they were enjoying a drink. They were all receiving unwanted texts, e-mails and phone calls and it was a real cause of distress to them. Many of them were elderly pensioners and so on. It is a real problem and we need to find a solution. 

Stella Creasy:  My hon. Friend is absolutely right. We have tabled this amendment because, given this information was provided in the course of providing a service, it is right to look at how that provision is affected and whether a trader is using reasonable care and skill in the way in which they manage data. 

Mr Newmark:  On that point— 

Stella Creasy:  I wonder if I could make a little progress, because I think that would help. I hope that this time round—I do not know which amendment, fifth time lucky—I can convince the hon. Member for Braintree of the merits of this case. 

Some 75% of landlines in this country are registered with the Telephone Preference Service. The vast majority of us have said that we do not want these phone calls, we do not want this information, and we do not want to be marketed to. Something is clearly not working in the current system of regulating this problem. Even when people are ticking the boxes, there is not the appropriate management of the information that is gathered as a result. 

In one six-month period in 2012, Ofcom found that 71% of landline customers said that they had received a live marketing call, and 63% had received a recorded marketing call—something most of us find even more frustrating because we cannot even register our dissent that the company has contacted us when we have said we do not want to be contacted. The Information Commissioner’s Office receives about 2,500 complaints a month from people sent unsolicited text messages, usually for a debt or a PPI mis-selling claim. These messages are a clearly unwanted nuisance, and I think we all know people in our communities who find them distressing. 

Sheila Gilmore:  For many of us, they are annoying and people probably have different methods of coping with them. However, for some people, particularly older people, they are extremely distressing. My father is now in his 90s and his marbles are all there, but he almost stopped answering the phone because he got so many marketing calls. I sometimes tried to phone him at an unexpected time and he would not answer, at which point I panicked and thought that something was wrong. That was how distressed he felt by it and he is not someone who is particularly easily distressed. 

Stella Creasy:  My hon. Friend makes a powerful case that it is not just about the irritation: it is a serious problem for a number of people who feel their telephone—their communication services—are directly affected and their use of them is therefore restricted. 

Mr Newmark  rose—  

Stella Creasy:  I want to make a little progress, because I am conscious that many Members have very strong feelings about this debate. If we can make progress in resolving this issue through the Consumer Rights Bill, it would be right to do so. We know that since an online reporting tool was set up in March 2012, more than 240,000 complaints have been made to the Information Commissioner about unsolicited text messages and calls. Which? found that registering with the Telephone Preference Service might reduce the number of calls, but it does not stop them, because those people registered with the TPS still receive on average 10 unwanted marketing calls a month and six in 10 people registered with the TPS system are not satisfied. 

There is a rather wonderful story about a gentleman from Leeds who was so fed up with receiving cold calls that he paid for his own premium rate line for contacts with banks and other service providers. In November 2011, this gentleman paid £10 plus VAT to set up his own personal 0871 number line, so now calls to him cost cold callers 10p a time, from which he receives 7p a time. So he makes companies pay for calling him. 

Fiona O'Donnell:  Does my hon. Friend agree that this can also mean a real and significant cost to small businesses whose time and phone lines are tied up by having to respond to—or create the space for—cold callers? 

Stella Creasy:  My hon. Friend is absolutely right, from both sides. The problem is not just the fact that small businesses are receiving these calls—although, as we know, the Bill does not at present cover small businesses—it is that appropriate marketing services are being diminished by people’s sense that all calls are not welcome. So where people are seeking to market and offer services in an appropriate way, they are being undermined by the sense that all calls are not welcome. 

11.15 am 

Mr Newmark:  I am curious about whether the hon. Lady’s amendment takes in the fact that many political parties do the same thing. All parties make unsolicited phone calls and text messages to constituents at election time. Does her amendment include political parties as well? 

Stella Creasy:  I find it interesting that the hon. Gentleman suggests that political parties send unsolicited messages. When occasionally I receive calls from other political parties, I try to talk to them at length—partly because it stops them talking to anybody else. I have often had long and philosophical conversations, which I am sure the hon. Member for Braintree would enjoy as well. 

Members will be familiar with attempts to deal with this problem. Ofcom can issue a fine of up to £2 million for persistent breaches on silent and abandoned calls,

which are mainly caused by faulty automated marketing systems. For the last couple of years, the Information Commissioner also has had the power to issue fines of up to £500,000 on breaches of the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011. So far, £1 million in fines has been imposed, most recently—and satisfactorily for me—on a payday loans firm, which was fined £175,000 for bombarding people with spam texts that were supposedly from a friend offering them a loan. 

The ICO’s powers are set out under the Data Protection Act, but the challenge here is that it has had fines overturned on appeal, on the argument that not enough distress has been caused to consumers for the fine to be merited. We still see the volume of marketing and texts taking place because the onus is on consumers to prove that they did not want the messages. They might sign up for generic marketing, to hear from a financial services provider about other products, but not wish to get it over the telephone. That is why they have signed up for the Telephone Preference Service and stated clearly that they do not wish to receive calls, but would be happy to get, say, letters about services. However, to make a challenge consumers would have to prove they were then bombarded by their bank or a financial services provider on behalf of a bank, insurance company or whatever, as we have all experienced. Consumers would have to prove that they did not consent to those calls. 

That is the challenge. It is not at the moment a consumer-friendly process and it is why the Information Commissioner’s Office would itself like to see a change in this way. There is an all-party group on nuisance calls which has been making recommendations about third party consent and lowering the threshold for the Information Commissioner’s Office to take enforcement action. Ofcom also supports the all-party group’s proposals. This amendment tries to learn from that. 

Let me give the Committee an example of where the problem is, how enforcement currently works and why we think the amendment would make a difference. In a recent case, the ICO sought to take action against a firm which had issued hundreds of thousands of texts to mobile phones. They had made no effort to check whether the owners had given permission for anyone to make such contact. The decision to issue a £300,000 fine was overturned on appeal. The appeal tribunal fully accepted that the text messages were in breach of regulation 2(2) of the Privacy and Electronic Communications Regulations, because they were unsolicited and did not have any relevant consent. The firm was in breach of that regulation because it withheld its name and address. The actions were deliberate and designed for financial gain. It used unregistered SIM cards, which aided the concealment, and there was no effective method of screening a number to prevent a person receiving further texts. 

However, the tribunal overturned the ICO’s fine on the basis that it did not believe the messages constituted substantial loss or substantial distress, as required under the current legislation. This amendment would bring into scope that concept of reasonable care and skill when managing an individual’s data. It would require the trader to prove that he had the consumers’ direct consent to share their information. Members might be aware that people will sign up for information from a direct provider, but if that provider shares their information

then, even with the greatest will in the world—and after people have read through those boxes and tried to decipher the confusing information—their information has been shared with a third party. 

People might well have seen a programme on TV recently about a direct marketing company; in fact, when I was student I earned money through making calls for a direct marketing firm. We were always clear that we had to have the consumer’s consent to contact them. The system has now changed quite substantially regarding people being able to share data with third parties. 

The amendment tries to address that issue and say that, if someone is going to sell on consumer data, which, after all, are an incredibly valuable commodity, the consumer’s direct consent should be sought. The amendment would place the onus of the management of data back on the company rather than on the consumer. That would give consumers a stronger protection. If a consumer gives information as a part of a service contract, they should be able to expect that information to be handled with reasonable care and skill. 

Mr Newmark:  I am sorry to press the hon. Lady. I am still interested to know whether an unintended consequence—or perhaps an intended consequence—of her amendment would be an impact on political parties, which engage in cold calling and texting constituents. 

Stella Creasy:  That would be very much about from where political parties, or indeed any trader, secured data to make those contacts. People are clearly passing on information. Under the current regulations, they may be challenged for doing so, but the way in which the current regulations are set up has not allowed the Information Commissioner to act as effectively as he wanted to. 

Under the amendment, if the hon. Gentleman was to buy a list of phone numbers of people in Braintree but did not have the consent to contact them, he could be challenged by people saying, “I did not wish for you to contact me. You are breaching the law.” The focus of the amendment is on whether a person has the consent to make contact with someone else. 

I would hate to see the hon. Gentleman oppose the amendment on the basis that it is about political campaigning. On the whole, because most political parties recognise that it is not a sympathetic thing to do, they do not spam-text people. 

Mr Newmark:  As with all legislation, the question is about the unintended consequences of whatever Act or amendment is being proposed. It is perfectly legitimate for me to ask whether the unintended consequence of the hon. Lady’s proposal is an impact on political campaigning, by all parties. 

Stella Creasy:  It is not an unintended consequence. I would hope that the hon. Gentleman, as an MP who probably signed up to the Data Protection Act, is managing his data appropriately and is seeking consent to share data and to contact people, because that is what the current law says he should be doing. The amendment is aimed at traders who are not behaving under the current law, and would put the onus on the

trader to prove that they are acting within the law, rather than on the consumer to prove that traders are not acting within the law. 

Rebecca Harris (Castle Point) (Con):  Presumably, as political parties are not traders, but are offering people a conversation about their democratic rights, they would not be covered by the Bill. 

Stella Creasy:  That would depend on whether a contract was being offered. I agree with the hon. Lady that the Bill is designed for businesses and services. One could have a philosophical argument about whether political parties offer a service, but they would probably not come under the Bill. Political parties are already covered by the DPA. The issues about miscommunication that we are talking about now—spam text messages and cold calls—come from people abusing the DPA. What the Information Commissioner is struggling to do now is to take the consumer’s perspective into account when seeking prosecution, because of the way in which the tribunals and the case law are developing. 

The amendment seeks to build on what came out of the all-party group discussions about the work that the ICO has done, saying that the onus should be on the

trader to prove that they had the consent to contact the person, rather than on the consumer to prove that they did not. That has arisen because of the grey area between signing up for a general “I don’t want to receive calls” and signing up for someone else’s calls in a specific context. Which is the right one to do? 

I think that there is general support and sympathy across the House about the need to tackle nuisance calls. We think that the issue is absolutely about consumer rights, as the information is given out in the course of securing a service contract. I hope that Government Members will be sympathetic to what we are trying to do here on data management, especially because it is rooted in cross-party work. 

Rehman Chishti:  I agree that we must do everything we can to address the issue. Regarding what the hon. Lady said earlier about tribunals and the criteria applied to a decision, where it was said that no substantial distress was caused— 

11.25 am 

The Chair adjourned the Committee without Question put (Standing Order No. 88).  

Adjourned till this day at Two o’clock.