Clause 43
Consumers, Estate Agents and Redress Bill
10:30 am
Ian McCartney (Minister of State (Trade & Investment), Department of Trade and Industry; Makerfield, Labour)
Good morning, Mr. Weir. I shall make comments on the amendments tabled by the hon. Member for Hertford and Stortford (Mr. Prisk) and my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) and I shall explain in detail the purpose of amendment No. 60 and the consequential amendments Nos. 61 to 66. I hope that members of the Committee will first permit me to reiterate the intentions behind parts 1 and 2 of the Bill to set in context what the amendments are about.
The Bill is intended to introduce new measures to strengthen and streamline the current system of consumer advocacy and redress. Our vision of how that new model for consumer representation will work is centred on the case for the new National Consumer Council, which we debated at great length last Tuesday and Thursday, as a strong, independent consumer champion in a position to take a cross-sectoral approach to consumer representation across all markets.
Consumer Direct is an existing telephone and online advice service and has enjoyed considerable success in providing help and advice to consumers with inquiries and simple complaints. The service will be extended alongside the measures in the Bill to act as a first port of call for consumers in all sectors. It will help consumers in the energy and postal service sectors to progress their complaints about their service providers.
When a service provider is unable to resolve a complaint to the satisfaction of the consumer, redress schemes in those sectors will ensure complaint resolution, as decisions made in the redress schemes will be binding on providers. The schemes will also be able to offer compensation or other forms of redress to consumers if they are warranted. The measures in the Bill are therefore about empowering and protecting the consumer.
The Government amendments will ensure that the regulated providers in the electricity, gas and postal service sectors have in place and operate appropriate and effective internal complaint handling procedures. Consumers will be assured of an approved standard of complaint handling by the regulated providers in the energy and postal services sectors, whoever those providers may be.
Under the new arrangements for consumer representation to be introduced as a result of the provisions of the Bill, there will no longer be a sector-specific consumer body with a complaint handling function for the energy and postal service sectors. Regulated providers in those sectors will be required to take full and proper responsibility for handling their own complaints, which means that service providers will need to take better ownership of complaint handling. It is important that the right incentives be put in place to enable that to happen. Regulated providers are, of course, entirely free to improve standards beyond the level prescribed by the regulator if they so choose.
Consumers will therefore benefit from getting their complaints handled effectively by the regulated service provider to an approved standard, but the regulated providers can also benefit. Recent research undertaken by Ernst and Young found that the retailers that are best able to resolve customer complaints quickly, satisfactorily and with the minimum of fuss are more likely to retain customers than those that do not.
Complaint handling standards have been debated extensively, and I believe that there is no difference between us on it. However, while we understand the intention behind hon. Members’ amendments, they would not fully achieve their desired affects. The Government amendments will place a requirementon the regulators to make regulations prescribing standards for complaint handling. Regulators are best placed to determine what is appropriate and necessary for their sectors, and they must be able to exercise a degree of flexibility in determining what standards should be set, to which complaints they should apply and how they should be enforced.
Amendment No. 61 allows for future changes in the energy and postal service sectors. It provides for the Secretary of State to make an order prescribing a date on which the duty on regulators to prescribe complaint handling standards will change to a power to do so. Before making such an order, the Secretary of State must consult the regulator, the new council and other persons as appropriate.
The amendment is required to allow for future changes in the energy and postal services market that may make the requirement for regulators to prescribe complaint handling standards obsolete. Any decision by the Secretary of State to remove the duty in question will be informed by representations madein the consultation and in particular the views ofthe regulator on the continuing need or otherwiseof the standards. For example, in the postal services sector the UK’s mail market was opened to competition only recently, on 1 January 2006. Over time, stronger competitive pressures might result in greater incentives for firms to deal effectively with consumer complaints in order to win or retain a larger share of the market. When all firms in the market meet or exceed the prescribed standards, the prescription of complaint handling standards might no longer be necessary. I am sure that hon. Members will recognise that that is in line with better regulation principles.
Amendment No. 73, in the name of my right hon. Friend the Member for Coatbridge, Chryston and Bellshill, raises a reasonable point: the need to ensure that regulated providers
“collate information on the number of complaints received by subject-matter of a complaint, or the description of a person making a complaint.”
I hope that I can reassure my right hon. Friend that that is provided for already in the Bill.
Clause 43(2) provides for the regulator to
“prescribe standards in relation to all consumer complaints, or...complaints of a kind specified”.
Clause 43(3) states that, complaints can be specified
“by reference to the subject-matter of a complaint, or the description of person making a complaint.”
Let us assume that standards prescribed apply to all complaints received. In order to comply with the relevant requirements detailed in schedule 5, and to provide the regulator with information regarding compliance, providers must record all complaints received and standards relating to them.
Schedule 5 to the Bill amends the ElectricityAct 1989, the Gas Act 1986 and the Postal ServicesAct 2000, to require regulators to collect information on compliance with standards, and gives the regulatornew powers to direct its regulated provider to do that. Clause 45 also places a duty on the new council to publish appropriate statistical information about levels of compliance by regulated providers with the prescribed complaint handling standards. For that reason, amendment No. 73 is unnecessary.
On complaints, in a previous sitting of the Committee, my hon. Friend the hon. Member for Ealing, North, raised the question of how complaints about the activities of the new council would be dealt with. The parliamentary health service ombudsman investigates complaints about Government Departments, their agencies and certain other public bodies in the UK accused of having not acted properly or fairly, or of having provided a poor service. The Bill makes provision for complaints about the activities of the new national consumer council to be subject to the same procedure. That is set out in paragraph 37 of schedule 1.
On the basis of my explanations, I hope that hon. Members, including my right hon. Friend the Member for Coatbridge, Chryston and Bellshill, will be minded to withdraw their amendments, in favour of the Government amendments, which have been designed to address all the issues raised in another place and this Committee.