Clause 202 - Domestic infringements
Enterprise Bill
8:15 pm
Mr Nigel Waterson (Eastbourne, Conservative)
The hon. Member for Twickenham rightly said that, for many, this is one of the most important parts of the Bill. For that reason, I make no apology for developing my arguments at some length. If I can develop our arguments in sufficient detail, the need for a clause stand part debate might be obviated, which would be desirable only because of the time constraints under which we find ourselves.
Our amendments are by no means perfect. They are a reasonable attempt to tackle a problem. I am indebted to the National Consumer Council for its input and drafting, and to that extent these are probing amendments. I accept immediately the problems of definition involved. The proposals are a fairly significant departure in English law, although not one that other countries have found particularly difficult. We have at least tried to plug a gap in legislation in good faith and with the limited resources available to us and the consumer organisations. At the first hint of the Under-Secretary accepting the principle, I would with alacrity relinquish the task of drafting to the Wykehamists and the double firsts from the civil service who whisper in her ear on a regular basis.
We give a broad welcome, as do the consumer groups, to the extension of stop now orders and the attempt to make the remedies available for obvious and serious breaches of consumer protection more relevant and immediate. Having said that, it is not all good news. We think that the Government have missed a historic opportunity to give real help to consumers. It is a sad fact, as we have discussed before in this Committee and on Second Reading, that we revisit consumer law only about every 30 years or so,
so it seems a shame to waste the opportunity when it comes around.
The Government have set their face against a new duty not to trade unfairly, even though it is supported by all the major consumer organisations. As I will go on to describe, that new duty would offer to the most vulnerable, such as the sick and the elderly, a broad measure of protection from a whole new range of scams. Because the Government have turned down the chance to close some major loopholes in consumer protection legislation, the result of the new provisions will be that the tricksters will stay one step ahead of the enforcement authorities. In short, the Government have let consumers down.
Only the other day, the ''Stop Shark Practices'' campaign was launched in Portcullis House by several leading bodies, in particular the National Consumer Council. The NCC chairman, Deirdre Hutton, and representatives from the Consumers Association, the National Association of Citizens Advice Bureaux and the Trading Standards Institute were present. They were trying, in a nice, friendly way to keep up the pressure on the Government. The hope is that, while there is the opportunity, the Government will grasp the nettle, whether through our amendments or in some other way. Such opportunities do not come up very often in the legislative programme.
The aim is to introduce a general duty not to trade unfairly. We have set out in proposed subsection (10) a non-exhaustive list of the types of activities that may be regarded as unfair. To those lawyers or non-lawyers to whom the word ''unfair'' sounds a bit vague, I would point out that the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1999 already establish the concept of unfairness.
The NCC makes a particular issue of oppressive doorstep selling. The organisation told the story of an elderly lady who was visited, without invitation or appointment, by doorstep salesmen. They sold her a bed for £3,000—with various gadgets—which was entirely inappropriate to her medical condition and far too complex for her to use. They stayed in her home for five hours, until she signed the contract. I do not think that many elderly, frail ladies would be able to resist signing, if only to get rid of such ghastly people.
The amendments would provide some way of taking action against businesses that systematically adopt an unfair commercial activity against the collective interests of consumers. The enforcement body, whether or not it is the trading standards department or the OFT, could obtain an undertaking from such a business to stop the practice voluntarily. If the business did not do so, the enforcement body could bring civil proceedings for a stop now or enforcement order under the provisions in the clause.
Amendment No. 47 is drafted in negative terms. In an ideal world, the consumer bodies would have produced a general duty to trade fairly, and it sounds a touch Irish to impose a duty not to trade unfairly. However, as a matter of drafting, that is the right approach. Examples are drawn from the Unfair Terms in Consumer Contract Regulations 1994, which came
into force in July 1995. The regulations updated in 1999 include a non-exhaustive list of indicative terms that may be regarded as unfair.
A recent example of the OFT taking action was its investigation of fitness clubs. It stepped in and took action under the regulations to prevent those clubs from treating their members unfairly. Clubs were trying to exclude liability for death or personal injury. There was a lack of clarity about membership periods and cancellation charges, among other things, and a question over allowing clubs to make unrestricted changes to facilities.
We shall address the Government's amendment in more detail later. With some prompting from us, they have produced a draft exhaustive list of legislation and common-law duties to be covered by stop now orders, on which there will be further consultation. The NCC makes the point, with which we agree, that an exhaustive list will be prone to loopholes that could be exploited. It thinks that the Bill's wording merely needs illustration and that a non-exhaustive list would be more appropriate. We agree with that. The NCC refers to the fact that only certain sections of key consumer legislation are listed. For example, only sections of the Sale of Goods Act 1979—a large piece of legislation—that deal with implied terms are listed. The Under-Secretary may be able to shed some light on that matter. The NCC goes on to say that the Government measures do not go as far as it would like. Amendments No. 47 would provide an indicative list of unfair practices, which would cover unfair, innovative practices not currently caught by specific legislation.
Subsection (10) of amendment No. 47 sets out concrete examples of problems occurring at the moment. One danger of consumer protection legislation has always been that a practice or abuse is dealt with somewhat ponderously and laboriously, only to discover that the con artists have moved on and found a new activity from which they can make money from gullible and vulnerable consumers.
During the half-term break some weeks ago, I went to the Canary Islands with my family. As we strolled down a street, we were accosted by an English person who offered us something that said, in large letters, ''This is not timeshare''. Timeshare is a thing of the past, and con artists are now into something called holiday clubs. Those are a major abuse, and some of the briefings that we have received discuss them in detail. People used to make a fortune from timeshare, although one leading exponent has just been ordered to pay £36 million in compensation for his activities over a number of years—