Clause 8 - Promoting good consumer practice
Enterprise Bill
6:00 pm
Mr Nigel Waterson (Eastbourne, Conservative)
I do not want to detain the Committee for long because we think that the clause is a thoroughly good idea–that is why we have not tabled any amendments to it. The Minister referred to the Fair Trading Act 1973. She slightly understated its relevance because in that provision the director general had a general duty to encourage the preparation and dissemination of codes of practice.
I often think that one can go through an entire Committee stage with no one referring to the explanatory notes to a Bill. That must be frustrating for the officials who prepare them, so I thought that I ought to make at least one foray into them. The notes make the point that the existing power, function or duty–or whatever it might have been in 1973–supported the development of codes by 42 trade associations in 24 sectors.
As the Minister said–it bears repetition–codes are attractive to the good companies and businesses who want to do only the best for and by their consumers. The motive is to help consumers identify reliable suppliers. Indeed, the booklet ''Empowering Consumers in the Enterprise Economy'' published in January, states:
''codes are more flexible than regulation, as they can be changed more quickly in response to the development of new business practices.''
The Minister makes the same point. This is a good illustration of how a simple provision will probably have a more practical effect for the average consumer than any panoply of powers and duties that may be imposed under the Bill . It will have a limited cost to business, and the good businesses will sign up in any event. Indeed, some are already signed up; it has already made a difference.
Unsurprisingly, codes are welcomed by the various consumer bodies. The CAB Service says that it welcomes the proposed functions to enable the OFT to approve and withdraw approval for consumer codes of practice, but, with a sting in the tail, it then says that the OFT should be able to monitor the effect of the codes of practice. I hope that that is inherent in clause 8. The OFT says that the provision should result in much more consumer confidence in trade associations' codes of practice. A similar point is made by the Consumers Association, which particularly welcomes the powers given to the OFT in respect of industry codes of practice. Consumers often rely on logos and their codes as a reassurance that they are selecting a reputable firm. Unfortunately, some codes of practice are purely cosmetic and offer little consumer protection. We all know from our duties as constituency Members how elderly folk can be taken in by the flamboyant logo on the side of a van that purports to say that the firm is a member of an organisation–an organisation probably set up by the company. In fact, such practice carries no guarantee of competence or honesty.
The CBI, too, welcomes the new powers in principle. It said that self-regulatory codes can play a key part in giving consumers confidence when purchasing goods and services. It looks for further discussion with the OFT on the framework and the principles by which the codes will be judged, and says that it is essential that the scheme is well resourced and promoted.
On a final note, and expressing slight caution, given that the OFT also has the power to withdraw support for the codes, I assume that a practical system will need to be worked out–it is not a matter for the Bill–whereby due notice is given and due discussion will take place before it happens. Nevertheless, the provision is thoroughly useful and helpful, and it has our full support.