Business, Innovation and SkillsWritten evidence submitted by RSVP Introductions Ltd

Summary of Our Response

1. Summary of our response:

(a)My response relates solely to Services.

(b)Approve of the draft legislation not imposing a “satisfactory quality” or “fit for purpose” requirement for services.

(c)Draft bill reads as though the author(s) had the property services industry in mind; bill needs validating to check it still works for (say) professional services.

(d)Section 52 exposes traders to claims from consumers that:

(i)The trader said something pre-contract of which there is no evidence

(ii)The consumer relied on that alleged statement to enter into the contract—again with no evidence.

(e)Section 52 therefore seems open to abuse. The unforeseen consequence will be that traders will have to record everything.

(f)Sections 57/58 may not work reliably in industries where repeat performance is impossible.

(g)No guidance in Sections 57/58 on what price reduction is appropriate.

(h)Unlikely that Sections 57/58 will increase consumer confidence or reduce trader costs. Disputes about services centre on whether or not the contracted service has been provided: the trader says it has; the consumer says it hasn’t. Draft bill does nothing for such situations.

(i)Sections 57/58 may have the unintended consequence of making traders even more determined not to admit contract failure because they know the consequences of doing so.

(j)Approve of the right to a price reduction being limited; repeat performance is often a better outcome for both parties.

(k)Approve of the right to terminate because the consumer has “lost faith” being omitted.

(l)Approve of shifting compliance action towards civil law.

(m)Remedies and redress mechanisms seem ill-suited to the 99% of micro businesses and their customers; can’t see that this will increase consumer confidence.

(n)How about a bigger/better role for Small Claims Mediation Service?

Background and Reasons for Submitting Evidence

2. I am Marketing Director of RSVP, an off-line dating agency and singles club established in 1992, with some 20,000 lifetime members across the UK. I am also Treasurer and a Council Member of the Association of British Introduction Agencies, so have a good overview of the “traditional” dating industry in the UK.

3. The dating industry has been the cause of some dissatisfaction amongst consumers in the past. Thankfully, most of the operators who attracted that dissatisfaction are no longer in the market. However, the services provided by traditional dating agencies are relatively costly, complex and highly personal. Fees in the dating industry are a charge for time spent working on a consumer’s behalf. But the relationship between the consumer and trader is unusual, in the sense that the consumer may or may not achieve what they expect as an “outcome” (ie they may or may not find a partner). Problems sometimes arise where a consumer is disappointed with the outcome; the promised service usually has been provided by the agency, but the consumer has not achieved the outcome they envisaged at the outset.

4. Complaints about the service in our industry are usually of the “you haven’t done what you said you would” type—ie breach of contract or misrepresentation. Because of the personal and protracted nature of the service, such complaints require thorough and time-consuming investigation. Traders in our industry are also reluctant to make refunds to complainants because such refunds represent a real and significant financial loss to the business; you cannot re-sell time.

General Comments

5. My response is about the Services aspects of the legislation.

6. I am very pleased that the draft legislation has stepped back from imposing a “satisfactory quality” or “fit for purpose” requirement for services, because, in some service industries, this would represent a complete nightmare of accusation and counter-accusation.

7. Reading the draft legislation feels like the author(s) had an industry in mind (services to property, maybe, from the consultation examples?). I know the minister talks a lot about “rogue traders” and these are often property-related. I think it would be worthwhile the author(s) or the Select Committee re-reading the bill with another service industry in mind at the opposite end of the spectrum—say legal services, accounting or similar.

Section 52

8. I have difficulty with some aspects of Section 52 (Information about the trader or service to be binding). I have no problem with a trader being bound by what is written, emailed or on the website (ie evidenced). But, in high-value transactions, the pre-contract discussion and exchange can easily extend to hours or even days. I cannot see how it is reasonable for traders to be bound by everything that is spoken, when there is no subsequent evidence of what was or was not spoken). Neither can I see how it is reasonable for a consumer, ex post facto, to determine unilaterally what he/she did or did not take into account when deciding to enter into the contract or when making any decision about the service after entering into the contract; again no evidence will be available. This Section 52 puts traders at significant risk of attempts by consumers to win refunds based on false accusations.

9. The obvious consequence of Section 52 is that traders will have to record everything. Is this really the future? I can’t imagine consumers being too happy at every pre-contract discussion being recorded, certainly in our industry (dating) where confidentiality underpins everything. I’m not sure the consequences of Section 52 have been thought through.

Sections 57/58

10. I struggle to see how Section 57 (right to repeat performance)/Section 58 (right to price reduction) will work reliably in the context of, say, accounting or legal services—or indeed our own industry of dating or singles events services. It is just not feasible to require repeat performance of legal representation or preparation of a set of accounts—especially “within a reasonable time”. So, these more complex services are going to move to a “price reduction” scenario. The debate will then be about what price reduction is appropriate. And what price reduction is appropriate? The draft bill offers no insight. It feels as if by creating such specific rights, the legislation has been made less relevant for many services. The cases will still end up in the small claims track, but the debate will be about quantum rather than liability, which is, I guess, at least easier to deal with through mediation.

11. I think it is tenuous to believe that the remedies in Section 57 (right to repeat performance)/Section 58 (right to price reduction) will either increase customer confidence or reduce trader costs. Disputes about services are not black and white and the principal debate in such cases centres on whether or not the contracted service has been provided: the trader says it has; the consumer says it hasn’t. The draft bill does nothing for such situations. Indeed, I imagine what will happen in most circumstances is that the consumer will expect and demand repeat performance (a few)/price reduction (the vast majority), but the trader will decline by declaring that the contract has been performed. The draft bill may even have the unintended consequence of making traders even more determined not to admit contract failure because they know the consequences of admitting liability.

12. I am pleased that the right to a price reduction has been limited; in our industry, consumers sometimes “manufacture” complaints to claim a refund; a spookily high proportion aren’t interested in repeat performance, which the trader will now have the right to provide.

13. I am also pleased that the right to terminate because the consumer has “lost faith” has been omitted. Again, I think this is used by less scrupulous consumers as a fishing opportunity.

Consumer Law and Enforcement Powers

14. Shifting compliance action towards civil law makes a lot more sense than heavy-handed cases brought for relatively minor (yet often summary) breaches of CPRs.

15. That said, the remedies and redress mechanisms seem ill-suited to the 99% of micro businesses and their customers. I can’t see how customers of such businesses will gain any greater confidence in buying from them as a result of those remedies and redress mechanisms. Since the numbers of customers of micro businesses will be relatively small (and thus to total consumer detriment relatively small), it seems more likely that enforcers will pursue the big boys.

16. Maybe it’s too late to suggest it but giving consumers more obvious access to an extended Small Claims Mediation Service—and one that didn’t just slice claims 50:50—would provide a more direct and reliable route to resolution.

Roland Stringer

9 August 2013

Prepared 20th December 2013