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This, as various noble Lords on both sides of the House have indicated, comes at a time of continuing threat to the post office network and significantly increasing energy prices, and there is a danger that opposition and co-ordinator responses in the face of these challenges will be muzzled by a long period of uncertainty and unnecessary upheaval. In substance, there is a significant argument for merging all existing bodies to provide simplicity for the consumer, but that is not what is happening. We are getting simply the merger of two existing major bodies—Postwatch and the energy bodies. If the argument has now been lost for one consumer council, one of two things will happen. Either a lot of the expertise in Postwatch and the energy watchdog will be lost through redundancies and staff leaving, or if that does not happen, bearing in mind that there will not be one consumer watchdog, what is the point of doing it in the first place?

I turn now to the estate agency provisions. We are all well aware of the myriad unfortunate practices by rogue estate agents which bring the estate agency profession into disrepute. I shall take just two obvious ones: what is called “managing expectations”, where an estate agent invents a lower offer which actually was never made so that the vendor thinks that the higher offer he or she has received looks rather good; and the practice which I believe is known in the West End as “simmering”, where documents relating to similar properties are doctored in order to persuade buyers to pay more for the property they are seeking to buy than it is actually worth. There are many other such practices by rogue estate agents and no doubt something should be done about those.

But looking at the proposals being brought forward by the Government, it is clear that only very limited changes are to be made to the existing legislation. In summary, the Bill requires estate agents to belong to a redress scheme for the purposes of all complaints relating to estate agency work involving residential property. The Bill requires estate agents to make and keep records, including records of offer letters, for a period of six years. It will give the Office of Fair Trading and trading standards officers additional powers when they require access to premises to look at the

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production of records and so forth, and it expands the circumstances in which the Office of Fair Trading can consider the fitness of an estate agent to practise, and consequently to take regulatory action against him.

However, the Bill does not include any of the following: a requirement for estate agents to have a qualification, a point touched on by the noble Baroness; a requirement for estate agents to have any experience; a direct requirement for estate agents to follow a code of conduct, although that probably would be included in the rules of an approved redress scheme; a requirement for estate agents to be members of a professional body; or any protection for customers engaging in rental or property management contracts, a point touched on by the noble Baroness, Lady Hanham. I suspect that the Bill does not include that for the reasons she gave in her speech. If the Government are not going to take any of the more radical steps outlined in lobby material, letters from representative bodies we have received and points already made by a number of noble Lords today, why does the legislation not simply extend the existing ombudsman scheme?

The noble Lord, Lord Borrie, gave the game away in his speech. On matters such as these we all listen to the noble Lord above almost everyone else. After all the heat and detail of this legislation, the most likely result will be that the DTI will approve the ombudsman scheme as the standard for redress, in which case do we really need the complication we see in the Bill? Why not start from there rather than add the significant potential for further complexity with little practical result?

Lord Borrie: My Lords, in answer to the question put by the noble Lord, it is in order to get universal adherence to the code instead of adherence of only about two-thirds of estate agents.

Lord Razzall: My Lords, I appreciate that, but the point is that if the Bill goes through in its present form, unless the ombudsman scheme is the one uniformly adopted for redress we will have several schemes being approved. Surely, as the noble Lord, Lord Borrie, indicated, it would be better for the existing ombudsman scheme to be the one approved by the DTI and with which everybody will comply?

I shall touch on two further points. I mentioned that the noble Baroness referred to letting arrangements. As she indicated, there will not be many opportunities for legislation on this topic. While I know that the inclusion of provisions on residential letting would not necessarily fit that easily into the framework of the Bill, there is no reason in principle why the practices that need to be regulated, and which apply equally to residential selling, should not also apply to residential letting. As the Bill passes through this House and another place, I hope that the Government will take the opportunity to address that.

The second point of detail I want to mention is one that nobody has referred to: the Government need to reflect on the case of new-build properties. Many of them are sold directly by the main developers in this country and not through estate agents. The developer

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will put up a show house on the site and will employ Sharon or Tracy to sell properties from that show house. However, all the practices deemed necessary to enshrine under protection in this Bill apply equally to residential developers, but I do not think they are currently caught by the provisions because they are not estate agents. The Government need to look at that.

In conclusion, this is a well-meaning Bill, but in the case of consumer protection it seems to have been emasculated by rather typical Whitehall turf wars, and in the case of estate agents, while it is high in aspiration, it is handicapped by timidity.

5.57 pm

Lord De Mauley: My Lords, this has been an interesting debate and I thank my noble friend Lady Wilcox for her opening speech, which set out our approach to the Bill. I also express our gratitude to the Minister for so kindly arranging to brief us with his team last week. It was a helpful meeting and was much appreciated. As my noble friend said, while we support much in this Bill, it is an unusual one and seems to be something of a patchwork of issues and initiatives that the Government have hitherto allowed to fall by the wayside. While estate agency, consumer communication and doorstep selling are all related through the consumer, my fear is that the Bill is something of a reaction to recent events rather than a carefully thought-through, clear and positive statement for the consumer.

I shall start with estate agents. The creation of an estate agent redress scheme is broadly welcomed on these Benches, as my noble friend has explained. However, it is clearly an afterthought following the narrow scope of the Housing Act 2004. The noble Lord, Lord Rooker, attempted to add a redress scheme in the course of our debates on that, but was unable to do so due to its scope, so we are pleased to see that such a scheme is being implemented in this Bill.

It is a concern that the Bill makes no mention of provisions for those transactions where no estate agent is involved, an issue just referred to by the noble Lord, Lord Razzall. Has the Minister considered extending the Bill to include property developers in order to ensure that there will be redress for consumers who buy direct from developers? If not, perhaps he could explain why that was not considered appropriate. Similarly my noble friend Lady Hanham, and indeed the noble Lord, Lord Razzall, referred to letting agents. Again, we would be grateful if the Minister could respond.

Under the Bill, there will be two systems of redress for home buyers: redress relating to home improvement packs and redress regarding estate agency under the Bill itself. Do Her Majesty’s Government plan to press ahead with HIPs? If so, will the redress systems be run by one or a series of different organisations? How will it be possible to ensure consistent standards? I would be grateful if the Minister could explain how he envisages this working.

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We welcome the requirement for estate agents to keep records—even if, like my noble friend Lady Hanham, we are rather surprised that they do not keep them already—allowing trading standards officers to inspect those records and expanding the circumstances in which the Office of Fair Trading can take regulatory action against estate agents. It is worth pointing out that the vast majority of estate agents are both respectable and regulated by membership of one of the professional bodies. It is the rogues, as always, that need controlling.

What we are seeing are clearly moves in the right direction but, having listened to the speeches of my noble friends Lady Oppenheim-Barnes, Lord Caithness and Lady Hanham, perhaps the Minister will respond to the legitimate question that they have raised, which merits close attention, of whether consumer protection in this area should be extended further than the Bill provides. I shall also be interested to hear from the Minister whether the existing £25,000 cap on redress, to which the noble Lord, Lord Borrie, referred, will still exist under the Bill.

Having said that, I am sure that consumers will be pleased that the Bill seeks to extend redress in the gas and electricity industries, in postal services in the United Kingdom and, potentially in due course, in the English and Welsh water industries. The new power to make regulations which require providers to belong to a redress scheme is good news for consumers, who can be vulnerable to energy providers in particular, and will, we hope, encourage best practice in the industry. However, there are concerns that additional cost implications may arise from the new regulation requirements. I know that the industry, and in particular Postcomm, as well as other interested parties, is concerned about this. I hope the Minister’s response will address this concern.

My noble friend Lady Wilcox and the noble Lord, Lord Razzall, have reserved judgment on the merger of the NCC. My noble friend has aptly reminded your Lordships of the Government’s record in the creation of non-departmental public bodies. It is not a promising one. My noble friend Lady Oppenheim-Barnes has expressed specific concerns about the adequacy of staffing for the NCC, and referred to the danger of erosion of the independence of consumer bodies such as the NCC and their effective subjugation to the will of government. Although the noble Lord, Lord Borrie, rejected this, it would be good to hear the Minister’s response. The options for merger set out within the regulatory impact assessment and the wording of the clauses dealing with the merger are, as my noble friend Lady Wilcox said, in need of greater clarification.

While the merger is intended in some respects to simplify things for consumers, it creates the potential for some old-fashioned confusion. Why, as my noble friend Lady Byford asked and the noble Lords, Lord Whitty and Lord Razzall, mentioned, should the public assume that post and energy consumer issues are dealt with by one body, but transport, financial services and, for a while anyway, water dealt with by others? Other noble Lords have expressed their anxiety that the new Consumer Voice should not turn

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out to be a hotchpotch that takes the wide-ranging expertise of the NCC, merges it with the relatively new experiences of Energywatch and Postwatch and, as a result, fails to give consumers the fair deal they deserve.

I hope we can ensure that the new body is as effective as it can be, which is why it is important to highlight the potential pitfalls at an early stage and try to avert them. I hope that we will be able to look in greater detail at the definitions of “consumer” and “consumer matters”, as well as the proposed funding provisions for the new NCC body. I should also like to probe the Minister on the descriptions of vulnerable people and to look at whether those can be refined and clarified. These are all matters that I look forward to addressing in Committee and the subsequent stages of the Bill.

I hope I have made it very clear that we are in support of transparent and efficient consumer communications. Yet it is not only the public’s understanding of the role of Consumer Voice that is in need of clarification but the internal processes of its counterpart, Consumer Direct. While Consumer Direct seeks to simplify the complaints system, I have a concern that simplifying it in the way the Bill does could create new complexities. The noble Lord, Lord O’Neill of Clackmannan, referred to the potential for confusion and my noble friend Lady Byford referred to the difficulty that some people will have in accessing support and assistance. We think the new system may seem simple in concept but could be complex for the consumer, being process-driven rather than consumer-driven. I should be grateful if the Minister could inform your Lordships which kind of questions will be answered by Consumer Direct, which will be referenced and by whom.

According to Energywatch, consumers are at risk of becoming stranded between the instant advice offered by Consumer Direct and the redress offered by the ombudsman schemes. Again, the noble Lord, Lord O’Neill, has referred to these concerns. It is my understanding—other noble Lords have also referred to this—that where energy is concerned, the ombudsman will begin to investigate a complaint only after three months from the original letter. Is that correct? If so, does the Minister agree that consumers who need more than simple advice, or who cannot wait for the ombudsman to begin, will lose out under the new system?

Above everything, as several noble Lords have said, it is vital that the NCC maintains the expertise it has built up as a standalone consumer champion. Importantly too, while we await with interest the details of the merger of Postwatch into Consumer Voice, we recognise that the postal services market is undergoing wide-ranging and rapid change. My noble friend Lady Byford has quite rightly brought the question of post offices, especially but not only rural post offices, to the attention of the House. This is an issue right at the heart of consumer affairs in the postal service. Post offices are the keystone of communities in towns in the countryside and, as we have done in the past, we will seek to ensure that the consumer’s voice is not diminished in this merger. Postwatch, like Energywatch, has been the

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point of contact for sector-specific expertise since its foundation. There is much work to be done in ensuring that Consumer Voice continues to represent consumers and businesses that depend heavily on the postal services.

We are told that the cost of implementation of Consumer Voice is £8.7 million. That assumes some redundancies. Could we please see a detailed breakdown of that figure and know how many redundancies are involved? Ongoing savings for the industry are put at £8.9 million. Again, could we please see a detailed breakdown of this figure?

Turning briefly to the matter of doorstep selling, I have one question for the Minister. Most of the goods and services that are the subject of doorstep selling are accompanied by offers of credit. The Consumer Credit Act was passed in the last Session; I suspect that the Minister will confirm that doorstep lending is covered by that legislation rather than the Bill but, in view of the very close relationship between doorstep selling and doorstep lending, can he explain how consumers will understand the difference and how to deal with it?

We have had a concise insight into the Bill this afternoon from noble Lords with great expertise in their respective fields. I look forward to analysing it in greater depth in Committee, to supporting measures that we believe to be constructive and to improving those that we believe need improvement, in order to get the very best possible deal for both the consumer and business and, consequently, the industry as a whole.

6.08 pm

Lord Truscott: My Lords, I have greatly enjoyed the highly constructive debate that we have had today and I am grateful for the many incisive contributions that have been made. I welcome the noble Baroness, Lady Wilcox, to her position on the Opposition Front Bench and thank her for her acute observations. I will try my best to answer as many of the questions that were raised as possible. It may be more appropriate for some of them to be dealt with in Committee but I shall do my best in the time available.

At the outset, the noble Baroness, Lady Wilcox, referred to indebtedness in society. The Government are looking at this matter with the cross-government approach set out in the Tackling Over-indebtedness Action Plan 2004. A number of associated activities deal with this area, including implementing the new Consumer Credit Act 2006 by looking at illegal moneylending, loan shark pilots and various other initiatives. It is fair to say, though, that the vast majority of credit contracts are honoured, and it is only a minority who get into trouble. The principal drivers of personal insolvencies are obviously economic.

It is also interesting to look at some of the statistics. Sound domestic economic fundamentals have underpinned the growth in personal debt, but when we look at, for example, average mortgage rates, which were 5.22 per cent in September compared with 11 per cent between 1979 and 1997, mortgage holders have been saved approximately £4,000 a year on average. That is all underpinned by low interest rates delivered by greater macroeconomic stability, which have ensured

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that households are paying a significantly smaller part of their income in interest. We are now in a situation where unsecured consumer credit is growing at its slowest rate for 12 years.

A number of noble Lords referred to the proposals for setting up Consumer Voice and to queries about whether it is just a cost-cutting exercise. The noble Baroness, Lady Wilcox, referred to that issue, as did my noble friend Lord O’Neill of Clackmannan and the noble Baroness, Lady Byford, among others. Although it is true that there will be net cost savings of around £8.9 million per annum, it is not a cost-cutting exercise. There will be savings from shared central functions, but not a reduction in those functions. Government funding will not be reduced.

A number of noble Lords referred to the retention of sectoral expertise. I assure your Lordships’ House that this is an integral part of our reforms. The new NCC will need to ensure that it is an effective advocate for consumers in all markets, and therefore that it has at its disposal sufficient sectoral expertise.

The noble Lord, Lord De Mauley, asked how many staff will be made redundant. We are not prescribing the exact structure of the new body in terms of staffing levels. That will be determined in conjunction with the existing consumer bodies to ensure that the new body is fit for purpose and able to undertake its new functions effectively and efficiently. The KPMG analysis itself did not assume any reduction in the number of complaints from the 2005-06 level, a point referred to by the noble Baroness, Lady Wilcox. In practice, we anticipate that the number of complaints being resolved outside the company will fall, due to the cost of the onward referral of complaints to the redress scheme.

With regard to estate agents’ redress, the noble Baroness, Lady Wilcox, questioned the number of non-frivolous complaints that may go forward to an estate agent and the number of complaints that will be dealt with. The view on the Government’s side is that residential issues are at present widely defined, which will exclude certain types of complaint so that the number of complaints will be defined in such a way that only the borderline cases for further consideration will be excluded. All legitimate complaints concerning any acts or omissions committed by someone in the course of estate agency work affecting sellers and buyers of a residential property will be covered.

A number of noble Lords spoke of the scope of the devolved Administrations, including the noble Baroness, Lady Wilcox, and my noble friends Lord O’Neill and Lord Whitty. It is the position that the new National Consumer Council will operate across Great Britain and in respect of postal services in Northern Ireland, but there will be no carve-outs. The new NCC is empowered by the Bill to represent consumer interests in all markets, including public services. In practice, the new NCC will need to take account of the existence of other sectoral consumer bodies.

The Consumer Council for Water will be merged with the new NCC, and a new redress scheme for water consumers in England and Wales will be established. The Government have announced that the position of

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CC Water will be reviewed in 2008 after public consultation. However, the Bill requires the new National Consumer Council to set up a Scottish Consumer Council and a Welsh Consumer Council, which will replicate the current arrangements. Those bodies will have their own chairs and members appointed by the Secretary of State after consulting the Scottish and Welsh Ministers as appropriate, so there will be an effective voice for the Scottish Consumer Council and the Welsh Consumer Council referred to by noble Lords, including my noble friend Lord Whitty.

The noble Baronesses, Lady Wilcox and Lady Oppenheim-Barnes, and my noble friend Lord Whitty asked about the independence of the NCC. I assure your Lordships that the new NCC will be an independent statutory body, underpinned by statutory functions that will enable the new body to conduct research, make inquiries, undertake investigations and make reports and representations to any party. The new body is empowered to determine its own work programme.

Baroness Oppenheim-Barnes: On that point, my Lords, the Bill clearly states that the new National Consumer Council will investigate and then report to the relevant government department, not to the public. When the noble Lord is as old and wise as I am, he will know that each department has its own fish to fry. It is not at all the same thing as first making this type of report public and then reporting to a Minister for consumer affairs who has an overall view of the situation. That is what I am concerned about.

Lord Truscott: My Lords, I am grateful to the noble Baroness for that. She made a point earlier about there being no Minister for consumer affairs. There is currently such a Minister; it is my right honourable friend Ian McCartney, Minister of State at the DTI with responsibility for consumer affairs. The point she has raised in her intervention is a valid one, and something we ought to look at in Committee.

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