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Consumer Rights Bill — Commons Reason

– in the House of Lords at 3:08 pm on 24th February 2015.

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Lords amendment

12: After Clause 32, insert the following new Clause—

Secondary ticketing platforms

Secondary ticketing platforms: seller profiles and ticket information

(1) Secondary ticketing operators must, on the website on which tickets are offered for sale or transfer, provide information concerning the sellers of tickets so that sellers may be easily identified.

(2) Information provided by virtue of subsection (1) must include, but is not limited to—

(a) the name of the seller;

(b) if the seller is an undertaking, its registered number, jurisdiction of registration, registered office address, and if registered outside the United Kingdom, a valid address for service; and

(c) the VAT registration number of the seller, if applicable.

(3) Information provided under subsection (1) must be—

(a) accurate; and

(b) prominently displayed before a buyer is able to complete the purchase of the ticket.

(4) Secondary ticketing operators must disclose clearly and prominently where the seller of a ticket is—

(a) the secondary ticketing platform or a subsidiary undertaking or parent undertaking of the secondary ticketing platform;

(b) a person or persons employed or engaged by the secondary ticketing platform;

(c) other persons connected to employees, directors or shareholders of the secondary ticketing platform, or any of its subsidiary undertakings or parent undertakings;

(d) the event organiser or an agent acting on its behalf;

(e) any other party connected to the organisation of the event.

(5) Where a ticket is offered for sale or transfer through a secondary ticketing platform—

(a) the seller must provide all relevant information about the ticket;

(b) the secondary ticketing operator must publish all relevant information about a ticket in a prominent and clear manner; and

(c) the secondary ticket operator must immediately remove the ticket from sale when it is informed by the event organiser that the information provided is inaccurate or incomplete.

(6) Information to be provided by the seller and published by the secondary ticketing operator for the purposes of subsection (1) must include, without limitation—

(a) the face value of the ticket;

(b) any age or other restrictions on the user of the ticket;

(c) the designated location of the ticket including the stand, the block, the row and the seat number of the ticket, where applicable; and

(d) the ticket booking identification or reference number.

(7) Where tickets are being resold in contravention of the terms and conditions agreed to by the original purchaser, this must be stated prominently by the secondary ticketing platform at every stage of the purchasing process.

(8) Information provided by virtue of this section must be—

(a) accurate; and

(b) prominently displayed before a buyer is able to complete the purchase of that ticket.

(9) For the purposes of this section—

“secondary ticketing platform” means an internet-based facility for the resale of tickets to events in the United Kingdom of Great Britain and Northern Ireland, regardless of the jurisdiction in which the owner of the service is registered;

“secondary ticketing operator” means, in relation to a secondary ticketing platform, the person (whether incorporated or not) operating that secondary ticketing platform;

“ticket” means anything which purports to be a ticket, including any item, tangible or intangible, which grants the holder the right to entry to an event;

“event” means any sporting, music or cultural activity taking place at a specified time and place for which tickets are issued and required for entry or attendance;

“event organiser” means the person responsible for organising and holding an event and receiving the revenue from the event;

the term “undertaking” has the meanings given in section 1161 of the Companies Act 2006 (meaning of “undertaking” and related expressions);

the terms “subsidiary undertaking” and “parent undertaking” have the meanings given in section 1162 of the Companies Act 2006 (parent and subsidiary undertakings);

the term “person” refers to a natural person or a body corporate.

(10) This section will come into force no later than six months after this Act is passed.”

Commons Disagreement and Reason

The Commons disagree to Lords Amendment No. 12 for the following reason—

12A:Because it would be inappropriate to require the provision of information relating to all categories of sellers when a ticket is resold, and because the amendment raises issues of compatibility with existing European Union law.

Motion A

Moved by Baroness Neville-Rolfe

That this House do not insist on its Amendment 12, to which the Commons have disagreed for their Reason 12A, but do propose Amendments 12B to 12H in lieu—

12B: After Clause 86, insert the following new Clause—

“CHAPTER 3B

SECONDARY TICKETING

Duty to report criminal activity

(1) This section applies where—

(a) an operator of a secondary ticketing facility knows that a person has used or is using the facility in such a way that an offence has been or is being committed, and

(b) the offence relates to the re-sale of a ticket for a recreational, sporting or cultural event in the United Kingdom.

(2) The operator must, as soon as the operator becomes aware that a person has used or is using the facility as mentioned in subsection (1), disclose the matters specified in subsection (3) to—

(a) an appropriate person, and

(b) an organiser of the event (subject to subsection (5)).

(3) Those matters are—

(a) the identity of the person mentioned in subsection (1), if this is known to the operator, and

(b) the fact that the operator knows that an offence has been or is being committed as mentioned in that subsection.

(4) The following are appropriate persons for the purposes of this section—

(a) a constable of a police force in England and Wales,

(b) a constable of the police service of Scotland, and

(c) a police officer within the meaning of the Police (Northern Ireland) Act 2000.

(5) This section does not require an operator to make a disclosure to an organiser of an event if the operator has reasonable grounds for believing that to do so will prejudice the investigation of any offence.

(6) References in this section to an offence are to an offence under the law of any part of the United Kingdom.

(7) This section applies only in relation to an offence of which an operator becomes aware after the coming into force of this section.”

12C: Insert the following new Clause—

“Enforcement of section (Duty to report criminal activity)

(1) A local weights and measures authority in Great Britain may enforce the provisions of section (Duty to report criminal activity) in its area.

(2) The Department of Enterprise, Trade and Investment may enforce the provisions of section (Duty to report criminal activity) in Northern Ireland.

(3) Each of the bodies referred to in subsections (1) and (2) is an “enforcement authority” for the purposes of this Chapter.

(4) Where an enforcement authority is satisfied on the balance of probabilities that a person has breached the duty in section (Duty to report criminal activity), the authority may impose a financial penalty on the person in respect of that breach.

(5) A local weights and measures authority in England and Wales may impose a penalty under this section in respect of a breach which occurs in England and Wales but outside that authority’s area (as well as in respect of a breach which occurs within that area).

(6) A local weights and measures authority in Scotland may impose a penalty under this section in respect of a breach which occurs in Scotland but outside that authority’s area (as well as in respect of a breach which occurs within that area).

(7) Only one penalty under this section may be imposed on the same person in respect of the same breach.

(8) The amount of a financial penalty imposed under this section—

(a) may be such as the enforcement authority imposing it determines, but

(b) must not exceed £5,000.

(9) Schedule (Secondary ticketing: financial penalties) (procedure for and appeals against financial penalties) has effect.”

12D: Insert the following new Clause—

“Duty to review measures relating to secondary ticketing

(1) The Secretary of State must—

(a) review, or arrange for a review of, consumer protection measures applying to the re-sale of tickets for recreational, sporting or cultural events in the United Kingdom through secondary ticketing facilities,

(b) prepare a report on the outcome of the review or arrange for such a report to be prepared, and

(c) publish that report.

(2) The report must be published before the end of the period of 12 months beginning with the day on which this section comes into force.

(3) The Secretary of State must lay the report before Parliament.

(4) In this section “consumer protection measures” includes such legislation, rules of law, codes of practice and guidance as the Secretary of State considers relate to the rights of consumers or the protection of their interests.”

12E: Insert the following new Clause—

“Interpretation of this Chapter

(1) In this Chapter—

“enforcement authority” has the meaning given by section (Enforcement of section (Duty to report criminal activity))(3);

“operator”, in relation to a secondary ticketing facility, means a person who—

(a) exercises control over the operation of the facility, and

(b) receives revenue from the facility,

but this is subject to regulations under subsection (2);

“organiser”, in relation to an event, means a person who—

(a) is responsible for organising or managing the event, or

(b) receives some or all of the revenue from the event; “secondary ticketing facility” means an internet-based facility for the re-sale of tickets for recreational, sporting or cultural events.

(2) The Secretary of State may by regulations provide that a person of a description specified in the regulations is or is not to be treated for the purposes of section (Duty to report criminal activity) as an operator in relation to a secondary ticketing facility.

(3) Regulations under subsection (2)—

(a) are to be made by statutory instrument;

(b) may make different provision for different purposes;

(c) may include incidental, supplementary, consequential, transitional, transitory or saving provision.

(4) A statutory instrument containing regulations under subsection (2) is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

12F: Clause 91,page 48, line 18, at end insert—

“(1C) Chapter 3B of this Part comes into force at the end of the period of two months beginning with the day on which this Act is passed.”

12G: Schedule 5, page 72, line 8, at end insert—

“section (Enforcement of section (Duty to report criminal activity))(1) or (2) of this Act.”

12H: After Schedule 8, insert the following new Schedule—

“SECONDARY TICKETING: FINANCIAL PENALTIES

Notice of intent

1 (1) Before imposing a financial penalty on a person for a breach of the duty imposed by section (Duty to report criminal activity), an enforcement authority must serve a notice on the person of its proposal to do so (a “notice of intent”).

(2) The notice of intent must be served before the end of the period of 6 months beginning with the first day on which the authority has sufficient evidence of the person’s breach, subject to sub-paragraph (3).

(3) If the person is in breach of the duty on that day, and the breach continues beyond the end of that day, the notice of intent may be served—

(a) at any time when the breach is continuing, or

(b) within the period of 6 months beginning with the last day on which the breach occurs.

(4) The notice of intent must set out—

(a) the amount of the proposed financial penalty,

(b) the reasons for proposing to impose the penalty, and

(c) information about the right to make representations under paragraph 2.

Right to make representations

2 A person on whom a notice of intent is served may, within the period of 28 days beginning with the day after that on which the notice was sent, make written representations to the enforcement authority about the proposal to impose a financial penalty on the person.

Final notice

3 (1) After the end of the period mentioned in paragraph 2 the enforcement authority must—

(a) decide whether to impose a financial penalty on the person, and

(b) if it decides to do so, decide the amount of the penalty.

(2) If the authority decides to impose a financial penalty on the person, it must serve a notice on the person (a “final notice”) imposing that penalty.

(3) The final notice must require the penalty to be paid within the period of 28 days beginning with the day after that on which the notice was sent.

(4) The final notice must set out—

(a) the amount of the financial penalty,

(b) the reasons for imposing the penalty,

(c) information about how to pay the penalty,

(d) the period for payment of the penalty,

(e) information about rights of appeal, and

(f) the consequences of failure to comply with the notice.

Withdrawal or amendment of notice

4 (1) The enforcement authority may at any time—

(a) withdraw a notice of intent or final notice, or

(b) reduce the amount specified in a notice of intent or final notice.

(2) The power in sub-paragraph (1) is to be exercised by giving notice in writing to the person on whom the notice was served.

Appeals

5 (1) A person on whom a final notice is served may appeal against that notice—

(a) in England and Wales and Scotland, to the First-tier Tribunal;

(b) in Northern Ireland, to a county court.

(2) The grounds for an appeal under this paragraph are that—

(a) the decision to impose a financial penalty was based on an error of fact,

(b) the decision was wrong in law,

(c) the amount of the financial penalty is unreasonable, or

(d) the decision was unreasonable for any other reason.

(3) If a person appeals under this paragraph, the final notice is suspended until the appeal is finally determined or withdrawn.

(4) On an appeal under this paragraph the First-tier Tribunal or the court may quash, confirm or vary the final notice.

(5) The final notice may not be varied under sub-paragraph (4) so as to make it impose a financial penalty of more than £5,000.

Recovery of financial penalty

6 (1) This paragraph applies if a person does not pay the whole or any part of a financial penalty which, in accordance with this Schedule, the person is liable to pay.

(2) In England and Wales the local weights and measures authority which imposed the financial penalty may recover the penalty or part on the order of the county court as if it were payable under an order of that court.

(3) In Scotland the penalty may be enforced in the same manner as an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

(4) In Northern Ireland the Department of Enterprise, Trade and Investment may recover the penalty or part on the order of a county court as if it were payable under an order of that court.

(5) In proceedings before the court for the recovery of a financial penalty or part of a financial penalty, a certificate which is—

(a) signed by the chief finance officer of the local weights and measures authority which imposed the penalty or (as the case may be) issued by the Department of Enterprise, Trade and Investment, and

(b) states that the amount due has not been received by a date specified in the certificate,

is conclusive evidence of that fact.

(6) A certificate to that effect and purporting to be so signed or issued is to be treated as being so signed or issued unless the contrary is proved.

(7) A local weights and measures authority may use the proceeds of a financial penalty for the purposes of any of its functions (whether or not the function is expressed to be a function of a local weights and measures authority).

(8) In this paragraph “chief finance officer” has the same meaning as in section 5 of the Local Government and Housing Act 1989.”

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Business, Innovation and Skills 3:09 pm, 24th February 2015

My Lords, we are coming to the final stages of the Consumer Rights Bill—an important reform of consumer law. I am looking forward to it receiving Royal Assent so that consumers have new, simplified rights when they buy goods, services or digital content and businesses can plan with certainty for the legislation to come into force.

The one remaining issue to resolve is the proposals for the secondary ticketing market. I would like to start by thanking those who have engaged in a really constructive dialogue with us over the past few weeks: the noble Lord, Lord Moynihan, and his team, other noble Lords, clerks of the House and the long-suffering departmental teams, both ministerial and official. It has been a long two months since we last debated the issue and I thought it would be helpful to give a summary of the issue and the Government’s proposals. Before I start, it may be helpful to make clear to noble Lords that I intend to support the amendment tabled by the noble Lord, Lord Moynihan, to facilitate the smooth passage of this important Bill.

The amendment to the Bill made by noble Lords at Report stage demonstrated the House’s concern about some aspects of the online secondary ticketing market. A range of issues were raised. The noble Lords, Lord Moynihan and Lord Grade, and others drew our attention to the level of fraud in the market, which was suggested by the National Fraud Authority to be £1.5 billion per year. The Baroness, Lady Grey-Thompson, and other noble Lords gave heart-wrenching examples of fans arriving at a venue looking forward to a wonderful evening only to be turned away because they had bought counterfeit tickets. They argued that the current rules in place to protect consumers were not effective enough.

The noble Baroness, Lady Heyhoe Flint, the noble Lords, Lord Clement-Jones and Lord Deben, and others had done their own research into tickets available on the secondary market and expressed concern about the lack of transparency. The noble Lords, Lord Holmes and Lord Moynihan, and others were concerned that alleged profiteering might be taking funding away from sports or cultural activity and reducing opportunities for genuine fans who could not afford high prices.

The noble Lord, Lord Stevenson, the noble Baroness, Lady Hayter, and the noble Lord, Lord Holmes, have been especially keen to resolve this issue as part of the Consumer Rights Bill, in order to allow fans to access events and have similar protection to that used for the London 2012 Olympics.

Of course, many of those who spoke, including the noble Lords, Lord Stoneham and Lord Borwick, the noble Viscount, Lord Younger, and the noble Baroness, Lady Wilcox, agreed with me about the importance of a thriving secondary ticket market and the need to ensure that the market remains open and competitive. I think that that sentiment is shared more widely across the House. The secondary marketplaces can provide a much safer environment for people to buy and sell tickets than other methods. If we can further increase confidence in the service that they can offer, I would hope to see their business flourish and grow.

The Government have been working hard to address the issues in the market. They are not easy issues, and we have been wary of unintended consequences at every turn. We have had to make some very difficult decisions, based on an uncomfortable evidence base. We have given the matter much attention and we now need to reach a conclusion.

The Government have tabled amendments to address some of these issues. The noble Lord, Lord Moynihan, has included our provisions in the most recent draft of his amendment. Our amendments are in two parts. First, we propose a statutory review of the secondary ticketing market. This will be a full review of consumer protection measures in the market. It will be independently led and it will be presented to Parliament. It will start this summer and must report within a year of the start date.

We need time to consult stakeholders and the individual leading the review before deciding on the detailed terms of reference and I know that noble Lords will want to express opinions on the matter. However, I can say that the review will broadly cover the following areas.

First, there will be an assessment of the current law and the changes we are making today. Noble Lords have rightly asked which laws apply to online ticket sales, and how effectively they are enforced. Secondly, it will cover business models in the market. Speakers in our debates have asked whether the market is dominated by consumer sellers or by traders; whether those in the market are seeking profits or mainly seeking to recoup their original costs; and whether national interests are supported. Thirdly, on access to tickets, I fully understand how frustrating it can be for tickets to sell out suspiciously quickly after release. The review will look at this, including the possibility that event organisers might deliberately restrict access to tickets to inflate prices artificially.

Alongside the review, the government amendments introduce a mandatory reporting requirement on the online ticketing marketplaces. Where they are aware of criminal activity they must report it to the police and the event organiser. Fraud is an underreported crime, so it is crucial to encourage those who are aware of fraud to report it so that law enforcement can be improved. This is a crucial step in eliminating some of the fraud that the National Fraud Authority found in the online ticketing market. The requirement mirrors regimes such as anti-money laundering rules and product legislation, where those who become aware of an issue must report it to the police and the relevant organiser.

Those are the two elements of the government amendments. I now turn to the amendment of the noble Lord, Lord Moynihan. In general this amendment balances the need to introduce transparency while allowing the secondary market to continue. Let me again stress that we want the secondary market to continue and we accept this amendment on the basis that it allows this. Our original instinct was that this market would flourish best without regulation. However, I have been persuaded to agree to some light-touch regulation.

The amendment of the noble Lord, Lord Moynihan, has two parts. The first part deals with transparency. This clause requires those selling tickets, and the marketplace where the ticket is resold, to provide the buyer with some basic information: the face value of the ticket; the seat number, where applicable; and any restrictions on the person who can use that ticket. Importantly, “buyer” is defined in the amendment as the person who buys the ticket—a change made yesterday by the noble Lord, Lord Moynihan. This will mean that consumers have enough information before they buy to make an informed choice and the right choice for them.

In addition, where the secondary market event organiser or certain other connected person—such as the parent company—is selling the ticket, rather than a simple consumer, they must continue to disclose their status as such.

I should make an important point here. The amendment which the other place rightly rejected included a requirement for individuals to give their name online and provide other unique identifiers, bringing with it the risk of identity theft. These provisions do not appear in the revised amendment of the noble Lord, Lord Moynihan.

As we have discussed at length in the House, transparency in this market could have awkward implications. Some comments made during our discussions have understandably raised concerns that event organisers would use the information provided to cancel tickets which are put up for resale, or blacklist the seller, preventing them from buying tickets in the future. This is definitely not what should happen. Our reading of these provisions, and the basis on which we accept them, is that cancelling tickets and blacklisting sellers is not fair or the right way to treat consumers.

I am therefore very pleased to see safeguards for sellers of tickets that will give consumers confidence to use the market. An event organiser will not be able to cancel a ticket or blacklist a seller merely because a ticket is resold or offered for resale unless there is a term in the original sales contract that allows for this and, more importantly, the term is fair. It is our firm view that terms which prohibit resale are not always fair and therefore will not be binding on the consumer. This includes terms which seek to prohibit resale at or above a particular price. These too are not always fair and should not be thought of as binding.

I am glad that at the end of the day we have found a compromise in the drafting of this clause. It will allow the secondary ticket market to continue to flourish. Fans who cannot attend an event will be able to resell their tickets. This will ensure that we have a lively and active resale market with numerous sellers competing for buyers, which will help to keep prices down.

There will of course be guidance on the new provision before it comes into force. Let me reassure the House that some guidance already exists and that enforcers are taking action in this sector, using a range of legislation. In that context, I would like to inform the House that the CMA has been conducting work into transparency in the secondary ticketing sector, including into some of the issues covered by these amendments. I am glad to say that it has already secured changes from the largest secondary ticketing platforms and expects to make an announcement in relation to this in the coming weeks.

These amendments address many of the points that your Lordships have raised in this House. Many more such points will be considered in the review. I therefore beg to move.

Motion A1

Moved by Lord Moynihan

As an amendment to Motion A, leave out “Amendments 12B to 12H” and insert “Amendments 12J to 12S”—

12J: After Clause 86, insert the following new Clause—

“CHAPTER 3B

SECONDARY TICKETING

Duty to provide information about tickets

(1) This section applies where a person (“the seller”) re-sells a ticket for a recreational, sporting or cultural event in the United Kingdom through a secondary ticketing facility.

(2) The seller and each operator of the facility must ensure that the person who buys the ticket (“the buyer”) is given the information specified in subsection (3), where this is applicable to the ticket.

(3) That information is—

(a) where the ticket is for a particular seat or standing area at the venue for the event, the information necessary to enable the buyer to identify that seat or standing area,

(b) information about any restriction which limits use of the ticket to persons of a particular description, and

(c) the face value of the ticket.

(4) The reference in subsection (3)(a) to information necessary to enable the buyer to identify a seat or standing area at a venue includes, so far as applicable—

(a) the name of the area in the venue in which the seat or standing area is located (for example the name of the stand in which it is located),

(b) information necessary to enable the buyer to identify the part of the area in the venue in which the seat or standing area is located (for example the block of seats in which the seat is located),

(c) the number, letter or other distinguishing mark of the row in which the seat is located, and

(d) the number, letter or other distinguishing mark of the seat.

(5) The reference in subsection (3)(c) to the face value of the ticket is to the amount stated on the ticket as its price.

(6) The seller and each operator of the facility must ensure that the buyer is given the information specified in subsection (7), where the seller is—

(a) an operator of the secondary ticketing facility,

(b) a person who is a parent undertaking or a subsidiary undertaking in relation to an operator of the secondary ticketing facility,

(c) a person who is employed or engaged by an operator of the secondary ticketing facility,

(d) a person who is acting on behalf of a person within paragraph (c), or

(e) an organiser of the event or a person acting on behalf of an organiser of the event.

(7) That information is a statement that the seller of the ticket is a person within subsection (6) which specifies the ground on which the seller falls within that subsection.

(8) Information required by this section to be given to the buyer must be given—

(a) in a clear and comprehensible manner, and

(b) before the buyer is bound by the contract for the sale of the ticket.

(9) This section applies in relation to the re-sale of a ticket through a secondary ticketing facility only if the ticket is first offered for re-sale through the facility after the coming into force of this section.”

12K: Insert the following new Clause—

“Prohibition on cancellation or blacklisting

(1) This section applies where a person (“the seller”) re-sells, or offers for re- sale, a ticket for a recreational, sporting or cultural event in the United Kingdom through a secondary ticketing facility.

(2) An organiser of the event must not cancel the ticket merely because the seller has re-sold the ticket or offered it for re-sale unless—

(a) a term of the original contract for the sale of the ticket—

(i) provided for its cancellation if it was re-sold by the buyer under that contract,

(ii) provided for its cancellation if it was offered for re-sale by that buyer, or

(iii) provided as mentioned in sub-paragraph (i) and (ii), and

(b) that term was not unfair for the purposes of Part 2 (unfair terms).

(3) An organiser of the event must not blacklist the seller merely because the seller has re-sold the ticket or offered it for re-sale unless—

(a) a term of the original contract for the sale of the ticket—

(i) provided for the blacklisting of the buyer under that contract if it was re-sold by that buyer,

(ii) provided for the blacklisting of that buyer if it was offered for re-sale by that buyer, or

(iii) provided as mentioned in sub-paragraph (i) and (ii), and

(b) that term was not unfair for the purposes of Part 2 (unfair terms).

(4) In subsections (2) and (3) “the original contract” means the contract for the sale of the ticket by an organiser of the event to a person other than an organiser of the event.

(5) For the purposes of this section an organiser of an event cancels a ticket if the organiser takes steps which result in the holder for the time being of the ticket no longer being entitled to attend that event.

(6) For the purposes of this section an organiser of an event blacklists a person if the organiser takes steps—

(a) to prevent the person from acquiring a ticket for a recreational, sporting or cultural event in the United Kingdom, or

(b) to restrict the person’s opportunity to acquire such a ticket.

(7) Part 2 (unfair terms) may apply to a term of a contract which, apart from that Part, would permit the cancellation of a ticket for a recreational, sporting or cultural event in the United Kingdom, or the blacklisting of the seller of such a ticket, in circumstances other than those mentioned in subsection (2).

(8) Before the coming into force of Part 2, references to that Part in this section are to be read as references to the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083).

(9) This section applies in relation to a ticket that is re-sold or offered for re-sale before or after the coming into force of this section; but the prohibition in this section applies only to things done after its coming into force.”

12L: Insert the following new Clause—

“Duty to report criminal activity

(1) This section applies where—

(a) an operator of a secondary ticketing facility knows that a person has used or is using the facility in such a way that an offence has been or is being committed, and

(b) the offence relates to the re-sale of a ticket for a recreational, sporting or cultural event in the United Kingdom.

(2) The operator must, as soon as the operator becomes aware that a person has used or is using the facility as mentioned in subsection (1), disclose the matters specified in subsection (3) to—

(a) an appropriate person, and

(b) an organiser of the event (subject to subsection (5)).

(3) Those matters are—

(a) the identity of the person mentioned in subsection (1), if this is known to the operator, and

(b) the fact that the operator knows that an offence has been or is being committed as mentioned in that subsection.

(4) The following are appropriate persons for the purposes of this section—

(a) a constable of a police force in England and Wales,

(b) a constable of the police service of Scotland, and

(c) a police officer within the meaning of the Police (Northern Ireland) Act 2000.

(5) This section does not require an operator to make a disclosure to an organiser of an event if the operator has reasonable grounds for believing that to do so will prejudice the investigation of any offence.

(6) References in this section to an offence are to an offence under the law of any part of the United Kingdom.

(7) This section applies only in relation to an offence of which an operator becomes aware after the coming into force of this section.”

12M: Insert the following new Clause—

“Enforcement of this Chapter

(1) A local weights and measures authority in Great Britain may enforce the provisions of this Chapter in its area.

(2) The Department of Enterprise, Trade and Investment may enforce the provisions of this Chapter in Northern Ireland.

(3) Each of the bodies referred to in subsections (1) and (2) is an “enforcement authority” for the purposes of this Chapter.

(4) Where an enforcement authority is satisfied on the balance of probabilities that a person has breached a duty or prohibition imposed by this Chapter, the authority may impose a financial penalty on the person in respect of that breach.

(5) But in the case of a breach of a duty in section (Duty to provide information about tickets) or a prohibition in section (Prohibition on cancellation or blacklisting) an enforcement authority may not impose a financial penalty on a person (“P”) if the authority is satisfied on the balance of probabilities that—

(a) the breach was due to—

(i) a mistake,

(ii) reliance on information supplied to P by another person,

(iii) the act or default of another person,

(iv) an accident, or

(v) another cause beyond P’s control, and

(b) P took all reasonable precautions and exercised all due diligence to avoid the breach.

(6) A local weights and measures authority in England and Wales may impose a penalty under this section in respect of a breach which occurs in England and Wales but outside that authority’s area (as well as in respect of a breach which occurs within that area).

(7) A local weights and measures authority in Scotland may impose a penalty under this section in respect of a breach which occurs in Scotland but outside that authority’s area (as well as in respect of a breach which occurs within that area).

(8) Only one penalty under this section may be imposed on the same person in respect of the same breach.

(9) The amount of a financial penalty imposed under this section—

(a) may be such as the enforcement authority imposing it determines, but

(b) must not exceed £5,000.

(10) Schedule (Secondary ticketing: financial penalties) (procedure for and appeals against financial penalties) has effect.

(11) References in this section to this Chapter do not include section (Duty to review measures relating to secondary ticketing).”

12N:Insert the following new Clause—

“Duty to review measures relating to secondary ticketing

(1) The Secretary of State must—

(a) review, or arrange for a review of, consumer protection measures applying to the re-sale of tickets for recreational, sporting or cultural events in the United Kingdom through secondary ticketing facilities,

(b) prepare a report on the outcome of the review or arrange for such a report to be prepared, and

(c) publish that report.

(2) The report must be published before the end of the period of 12 months beginning with the day on which this section comes into force.

(3) The Secretary of State must lay the report before Parliament.

(4) In this section “consumer protection measures” includes such legislation, rules of law, codes of practice and guidance as the Secretary of State considers relate to the rights of consumers or the protection of their interests.”

12P: Insert the following new Clause—

“Interpretation of this Chapter

(1) In this Chapter—

“enforcement authority” has the meaning given by section (Enforcement of this Chapter)(3);

“operator”, in relation to a secondary ticketing facility, means a person who—

(a) exercises control over the operation of the facility, and

(b) receives revenue from the facility, but this is subject to regulations under subsection (2); “organiser”, in relation to an event, means a person who—

(a) is responsible for organising or managing the event, or

(b) receives some or all of the revenue from the event;

“parent undertaking” has the meaning given by section 1162 of the Companies Act 2006;

“secondary ticketing facility” means an internet-based facility for the re-sale of tickets for recreational, sporting or cultural events;

“subsidiary undertaking” has the meaning given by section 1162 of the Companies Act 2006;

“undertaking” has the meaning given by section 1162 of the Companies Act 2006.

(2) The Secretary of State may by regulations provide that a person of a description specified in the regulations is or is not to be treated for the purposes of this Chapter as an operator in relation to a secondary ticketing facility.

(3) Regulations under subsection (2)—

(a) are to be made by statutory instrument;

(b) may make different provision for different purposes;

(c) may include incidental, supplementary, consequential, transitional, transitory or saving provision.

(4) A statutory instrument containing regulations under subsection (2) is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

12Q: Clause 91, page 48, line 18, at end insert—

“(1C) Chapter 3B of this Part comes into force at the end of the period of two months beginning with the day on which this Act is passed.”

12R: Schedule 5, page 72, line 8, at end insert—

“section (Enforcement of this Chapter)(1) or (2) of this Act.”

12S: After Schedule 8, insert the following new Schedule—

“SECONDARY TICKETING: FINANCIAL PENALTIES

Notice of intent

1 (1) Before imposing a financial penalty on a person for a breach of a duty or prohibition imposed by Chapter 3B of Part 3, an enforcement authority must serve a notice on the person of its proposal to do so (a “notice of intent”).

(2) The notice of intent must be served before the end of the period of 6 months beginning with the first day on which the authority has sufficient evidence of the person’s breach, subject to sub-paragraph (3).

(3) If the person is in breach of the duty or prohibition on that day, and the breach continues beyond the end of that day, the notice of intent may be served—

(a) at any time when the breach is continuing, or

(b) within the period of 6 months beginning with the last day on which the breach occurs.

(4) The notice of intent must set out—

(a) the amount of the proposed financial penalty,

(b) the reasons for proposing to impose the penalty, and

(c) information about the right to make representations under paragraph 2.

Right to make representations

2 A person on whom a notice of intent is served may, within the period of 28 days beginning with the day after that on which the notice was sent, make written representations to the enforcement authority about the proposal to impose a financial penalty on the person.

Final notice

3 (1) After the end of the period mentioned in paragraph 2 the enforcement authority must—

(a) decide whether to impose a financial penalty on the person, and

(b) if it decides to do so, decide the amount of the penalty.

(2) If the authority decides to impose a financial penalty on the person, it must serve a notice on the person (a “final notice”) imposing that penalty.

(3) The final notice must require the penalty to be paid within the period of 28 days beginning with the day after that on which the notice was sent.

(4) The final notice must set out—

(a) the amount of the financial penalty,

(b) the reasons for imposing the penalty,

(c) information about how to pay the penalty,

(d) the period for payment of the penalty,

(e) information about rights of appeal, and

(f) the consequences of failure to comply with the notice.

Withdrawal or amendment of notice

4 (1) The enforcement authority may at any time—

(a) withdraw a notice of intent or final notice, or

(b) reduce the amount specified in a notice of intent or final notice.

(2) The power in sub-paragraph (1) is to be exercised by giving notice in writing to the person on whom the notice was served.

Appeals

5 (1) A person on whom a final notice is served may appeal against that notice—

(a) in England and Wales and Scotland, to the First-tier Tribunal;

(b) in Northern Ireland, to a county court.

(2) The grounds for an appeal under this paragraph are that—

(a) the decision to impose a financial penalty was based on an error of fact,

(b) the decision was wrong in law,

(c) the amount of the financial penalty is unreasonable, or

(d) the decision was unreasonable for any other reason.

(3) If a person appeals under this paragraph, the final notice is suspended until the appeal is finally determined or withdrawn.

(4) On an appeal under this paragraph the First-tier Tribunal or the court may quash, confirm or vary the final notice.

(5) The final notice may not be varied under sub-paragraph (4) so as to make it impose a financial penalty of more than £5,000.

Recovery of financial penalty

6 (1) This paragraph applies if a person does not pay the whole or any part of a financial penalty which, in accordance with this Schedule, the person is liable to pay.

(2) In England and Wales the local weights and measures authority which imposed the financial penalty may recover the penalty or part on the order of the county court as if it were payable under an order of that court.

(3) In Scotland the penalty may be enforced in the same manner as an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

(4) In Northern Ireland the Department of Enterprise, Trade and Investment may recover the penalty or part on the order of a county court as if it were payable under an order of that court.

(5) In proceedings before the court for the recovery of a financial penalty or part of a financial penalty, a certificate which is—

(a) signed by the chief finance officer of the local weights and measures authority which imposed the penalty or (as the case may be) issued by the Department of Enterprise, Trade and Investment, and

(b) states that the amount due has not been received by a date specified in the certificate, is conclusive evidence of that fact.

(6) A certificate to that effect and purporting to be so signed or issued is to be treated as being so signed or issued unless the contrary is proved.

(7) A local weights and measures authority may use the proceeds of a financial penalty for the purposes of any of its functions (whether or not the function is expressed to be a function of a local weights and measures authority).

(8) In this paragraph “chief finance officer” has the same meaning as in section 5 of the Local Government and Housing Act 1989.”

Photo of Lord Moynihan Lord Moynihan Conservative 3:15 pm, 24th February 2015

My Lords, I am very grateful to my noble friend the Minister for her careful consideration of the points that we made when we tabled the original amendment. We did so because we recognised that, based on the Government’s own figures, the level of online ticket fraud was of the order of £1.5 billion in 2012. That was of course a momentous year but that figure of £1.5 billion does not include the Olympic or Paralympic Games because, as your Lordships will recall, the opportunity was taken both in this House and in another place to criminalise the secondary market for that specific event. It is important to recognise that that figure of £1.5 billion was one where online ticket fraud occurred when victims purchased tickets for an event—such as music, sport, theatre or a performance—which did not materialise.

In the many hours of negotiation and debate, we have sought to address the causes of our concerns: that there is a very significant volume of counterfeit and invalid tickets sold to the public through the secondary sites. As 85% to 90% of resale now takes place through the four platforms, which are owned by three companies, the overwhelming majority of these invalid tickets come through those sites. The biggest problem in this day and age is not the old-fashioned tout. It is the wholesale harvesting of tickets by touts from their computers, with specialised software. They are incentivised by these four platforms, not least through power seller programmes. This harvesting is now out of control and volumes of tickets are acquired on such a scale that it is proving difficult, if not impossible, for genuine music and sports fans to purchase a ticket at face value for high-demand events. In the time when you are typing in your name, address and details, the specialised software is sweeping the volume of tickets available to the general public and within a matter of minutes, sometimes, those tickets are appearing on the secondary websites. The sheer number of tickets for high-demand events going on to the platforms is sufficient to facilitate price manipulation, to the detriment of the public.

Against that background, I would like to address a number of points that my noble friend the Minister has made. I say straight away that it is really important that anyone considering the position we are taking on this Motion recognises that there has been universal support throughout the proceedings in your Lordships’ House for a secondary market to thrive. But that secondary market needs to be effective; it needs to be transparent and accountable. That is the really important point. To use the words of my noble friend the Minister, we are seeking light-touch regulation to ensure that we can absolutely guarantee to individuals who want to go online the right level of information, from which they can then make a decision to purchase.

In the past, we have not had the legal support for consumers to have that information available. As the Minister rightly points out, the four key elements are information, face value, seat number and row number. It is absolutely right and proper that someone who is disabled or in a wheelchair knows that they can have access to that seat before they make that purchase. At the moment, that is not the case. Following this legislation, if your Lordships agree to the Motion in my name, all those details and information will be available before a decision is made and before the purchase takes place—not after the purchase has taken place. That is in subsection (8)(b) of the proposed new clause. It is an exceptionally important point for the secondary ticket operators to recognise when they implement this legislation, as I hope they do.

The second point is that for too long the terms and conditions set by the original event organisers have not taken full legal precedence. If you are the event organiser and you are putting on Glastonbury, for example, and request pre-registration to ensure that the person who is buying the ticket is pre-registered and, in the case of Glastonbury, that there is a photo—that is what the organisers want—it must be right that those terms and conditions take precedence. They do so because Glastonbury does not want touting. They do so because in many cases there are law and order issues. It should be right for theatres to decide whether they want children under the age of four, for example, to come to a performance when they might possibly disturb other people’s enjoyment of the evening. Those terms and conditions, however, must meet the fairness test and they must be legal. That is on the face of the Motion. That is vital, so that there is no avoidance of doubt: the action taken by event organisers in setting terms and conditions must meet the fairness test and must be legal.

The two Motions that were originally tabled by the Minister covered a duty to report criminal activity and the review. I am most grateful to her for her consideration of the many aspects of these tickets and the information that we wish to see provided on them. The matter has been considered in full by her team and, indeed, by her. I give one case in point. The movers of the original amendment were very keen to see a booking reference on the ticket. This would enable an individual to check with the event organisers whether that ticket was valid. Apparently, neither a booking reference number nor a ticket ID number falls within the “main characteristics” of a ticket and, therefore, under EU law, we cannot require that information to be provided. There are different legal opinions on that. There are many lawyers who believe that an essential characteristic —indeed, a main characteristic—of a ticket is its original ID number. We recognise, however, that government advice was that this is not the case. This is a compromise amendment and the result of many hours of negotiation. I hope that, when we come to the review, that issue will be looked at in more detail.

It is also important that, while we are putting the responsibility on the secondary market through this Motion to take a whole series of steps, at the same time we recognise that the event organisers need to reflect during the review on how they can improve the opportunities for resale. Resale is a difficult and sensitive subject, but to have good relationships with your consumers and your fans, looking at resale under certain circumstances is a very important priority for the event organisers. Wimbledon’s policy on non-transferable tickets is that, provided that the ticket is returned before the start of play, the buyer gets a full refund. The ECB allows face-value resale to family and friends; it will not cancel face-value on the secondary market. The Oval and Lord’s offer full refunds and ticket exchanges. The 2015 Rugby World Cup will have a full ticket exchange. So event organisers are very much aware of the importance of keeping good relationships with their fans and recognising that sometimes it is not possible to go to an event, maybe due to a family crisis, and that where possible resale policies should be put in place. I very much hope that, during the process of the very important review that the Minister has announced today, the question of resale will also be considered in detail.

It is right that when the Secretary of State at the DCMS, who has policy responsibility for this subject, appoints the chair of the review, he considers in detail the points raised in both Houses before proposing the final terms of reference. It has become clear from your Lordships’ interventions on all sides of the House, and from the excellent work of the all-party group on this subject led by Sharon Hodgson and Mike Weatherley, that a thorough investigation of the operation of the secondary market is essential. We need to understand why that £1.5 billion of fraud has taken place and to address it; we need to look carefully at the business models employed.

I also hope that the review will research the impact of touting on fans and events and the effect of excessive profiteering on the objectives set for event organisers. This is not just about sport and the arts; it is about the church, charities and events that reach out to the public, where anyone organising that event wants to ensure that the information is available to them. We need to research the impact on those individuals and what they may get if they have a counterfeit ticket. At the moment, if you have a counterfeit ticket, after much deliberation you may get back from the secondary site what you paid for it—but you have missed the experience. You may have travelled down from Glasgow with your family. Ultimately, many of the people who are reimbursed are reimbursed by their credit card companies, not by the secondary market. These are issues that need to be looked at carefully in the review.

Above all, we need to look at how technology is developing—how the website is being used to maximise the opportunity for touts to sweep tickets and then sell them at a high profit. We need to look at the effectiveness or otherwise of existing legislation and the ability of enforcement to tackle international platforms, working offshore in this sector. In this context, it is international co-operation by law enforcement officers and legislators that is important, as in the gambling market, and the co-operation undertaken in this context during the London Olympic and Paralympic Games would be a useful case study.

I hope that the review will look at the need for better enforcement of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, particularly in defining what constitutes a trader. We need to look at what non-legislative measures can be taken by event organisers to prevent the unauthorised resale of tickets. I hope that we will look at model terms and conditions for ticket sales, and then ticket sale arrangements by primary event organisers and the relationship between event organisers, the contractual relationships with primary organisers and ways of putting the interests of the consumers—in this case, the true fans—first. I have mentioned that I very much hope that the review will explore with the European Commission what precisely constitutes a main characteristic of a ticket; it is only recently that the directive has been published and implemented, and we need clarity on the issue. The review will give us the opportunity to look into it in detail. Above all, there are two case studies within the timeframe of the proposed review: we will have the chance of reviewing the Ashes test and the Rugby World Cup.

For those who are writing, or about to write, manifestos, it would be worth while reflecting on a Populus opinion poll on this subject. There has been a lively campaign of emails to many of your Lordships on the unpopularity of these measures. I can bring the House up to date: in that Populus poll, the question was put whether there should be more government regulation of ticket sales, and 68% of the public agreed while 8% disagreed. Then of course there were the categories of “somewhat disagree”, “strongly disagree” and so on. On the question of whether ticket sellers should be made to disclose the ticket row and seat number—basic information that any consumer should have before making a decision to purchase—76% of the public supported the intent of the Motion that we are laying before the House today, and a mere 3% disagreed. If noble Lords want a populist measure that is also the right one for consumers in their manifestos, whichever party they represent, I cannot imagine a stronger level of public support than they would find for the measures that we have worked so hard for. My noble friend Lady Heyhoe Flint has been second to no one in the amount of work that she has put in to secure the consensual agreement that we have reached with the Government today.

It will not have escaped noble Lords’ attention that the Secretary of State in the Department of Culture Media and Sport has clear views on this subject, which I very much respect. I want to thank him and his team for their engagement in the lengthy negotiations and their courtesy in staying heavily involved. When I was Member of Parliament for Lewisham East, as one of the only two Conservatives in the history of that seat—the other being Christopher Chataway, whose passion for sport knew no bounds—Sajid Javid was an impressive officer of that association, before he embarked on his successful career both inside and outside Parliament. I consider him a friend and I think very highly of him. I thank him again and wish him well with implementing in full the statutory review.

I have no doubt that the measures taken today will in due course strengthen the secondary market, address the excessive profiteering which has been the product of an unregulated, web-driven market, and consequently enable the Secretary of State to strengthen further his support for this industry. In the mean time, my thanks go out to the BIS team. As I have said, there are strong views on both sides of this debate and it is not without humility that, having recently seen the wonderful film “Testament of Youth”, I am reminded of the passage in Vera Brittain’s book Testament of Friendship, in which an epitaph on a gravestone erected by a certain Major Milner to his wife Dorothy in 1826 reads:

“What faults you’ve seen in me, strive to avoid. Search your own hearts, and you’ll be well employed”.

On this occasion, the faults that they have seen in me have dominated proceedings. They have been patient, professional, calm and understanding during two months of almost daily negotiation, either on the phone or in person, including every single day of last week’s recess. I offer my special thanks to them and to the Public Bill Office, and to Ashley Lumsden, the special adviser from BIS, who has commanded the highest respect from everyone who has been involved in these negotiations for his indefatigable work.

This Motion is only the beginning. I look to the Government, the secondary market and primary event organisers to make sure that it works. In so doing, I congratulate my noble friend the Minister on securing what I hope will be the safe passage of this excellent Bill. I beg to move.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat 3:30 pm, 24th February 2015

My Lords, as a signatory to the original amendment and a member of the All-Party Group on Ticket Abuse, I very much support Motion A1 and I am absolutely delighted that the Government do as well. To say the least, this has been a cliff-hanger. I hope that my noble friend Lord Moynihan, Sharon Hodgson MP, Mike Weatherley MP, and of course my noble friend Lady Heyhoe Flint, all get roles in a remake of “Chariots of Fire” for their efforts in securing this agreement, which will benefit music and sports fans immensely. My noble friend Lord Moynihan in particular has been incredibly tenacious in his pursuit of the right solution and I pay strong tribute to him. I also pay tribute to my right honourable friend Vince Cable, my noble friend Lady Neville-Rolfe, my honourable friend Jo Swinson and their adviser Ashley Lumsden, who have been instrumental in forging a deal in BIS and in convincing their colleagues in the DCMS to adopt the solution before us today.

When our amendment came before the House of Commons in January, my honourable friend Jo Swinson said:

“A careful balancing act is needed. We want to make sure that as many people as possible can access events, whatever their means. We want sports and entertainment in the UK to flourish. We … want to protect consumers and allow the ticket resale market to work as well as it can”.—[Hansard, Commons, 12/1/15; col. 657.]

I believe that these clauses will do all this. My honourable friend also criticised the previous amendment, which was passed by this House. She said that there were,

“difficulties involved in Lords amendment 12”.—[ Official Report , Commons, 12/1/15, 658.]

She said that it would require sellers to provide their name, that it would enable event organisers to cancel tickets put up for resale and that,

“more stringent information requirements would go beyond the provisions set out in the consumer rights directive”.—[ Official Report , Commons, 12/1/15; col. 660.]

Again, I believe that these clauses meet those objectives. These safeguards now set out in the Bill will be much more reliable than the assurances belatedly given by the secondary sellers or the information on their websites.

To be clear, this is not about closing down the secondary market. A secondary market that works in the interests of fans buying and selling tickets is reasonable; an opaque stock exchange with links to criminal activity is not. I hope that this amendment will ensure that the secondary market is the former. These transparency measures are good news for fans looking to buy tickets, and do not impose an unfair burden on sellers. It is also good to see that Ministers will support measures which uphold fair and reasonable ticket terms and conditions. Ticket terms and conditions must be fair in law, and the new Motion recognises this.

Just as a reminder, serious money is involved in ticket touting. A single Rugby World Cup final ticket is on sale on StubHub today for £59,000. No tax is being paid; the seller is anonymous, and may even work for the secondary platform; and the buyer has no guarantee about where the seat is. These amendments will introduce some much needed transparency, and then we will also have the statutory review, to which my noble friend referred, to ensure that the market is operating fairly.

I welcome that the review of the law and its effectiveness and what can be done to improve it, in particular as regards enforcement, is enshrined in today’s amendments. There are a number of questions for review, which my noble friend went through, such as: will this stop speculative sales? Rugby World Cup tickets were on sale on secondary websites before the organising body had even set the ticket prices and launched the application process. Is the £5,000 fine adequate? I hope that all this will include looking at how to tackle bulk-selling and how effectively to enforce the law against traders impersonating consumers to evade consumer law. However, that is an ongoing matter. We have come today to the right conclusion, and I congratulate all those involved.

Photo of Lord Pendry Lord Pendry Labour

My Lords, it gives me great pleasure to briefly say a few words on this good news day for sports fans. It is fair to say that it has been a long time coming, but in the measures that we are adding to the Bill today we are giving greater choice and information to sports fans to help in the fight against those who commit fraud or seek to exploit the pockets of hard-working families.

My own role in this battle dates back two decades to 1994, when I led from the Labour Benches in the other place a campaign to have the then Government extend the provisions they were introducing to ban ticket touting at football events to other sports in the Criminal Justice and Public Order Act 1994. We were partly successful in that we had reserve powers added to that Bill to allow the Home Secretary of the day to designate other sporting events.

Ever since then, together with other Members of both Houses, from all parties, I have called for more effective action as the problem has grown and grown, especially with the introduction of the internet, which created a fertile new environment for the problems we have heard explained so well by the proposer of this Motion. I therefore wholeheartedly endorse the measures being added to the Bill. Most of all, I pay tribute, as others have done, to the noble Lord, Lord Moynihan. He was battling 21 years ago in support of the kind of measure we have here now, and is still fighting as hard as ever to protect the sports that he loves.

I have spoken to some sports governing bodies today, and I know that they are hugely grateful for the enormous amount of time and effort that the noble Lord has put into this issue ever since the amendment was voted for by this House in November. There have been many hours of meetings with Ministers, Bill teams, lawyers and experts, and that shows in the well balanced and fair proposals that have addressed the concerns raised by the House. Certainly on this issue, I think that the House will respond favourably to the words of the noble Lord and the amendments. Through his grasp of how the sports sector works and of the way to get things done in this place, we now have an effective improvement in the law and, alongside it, a review that allows the matter to be considered in greater detail. I hope that the noble Lord’s expertise will remain on tap for the review; he will certainly add weight to it.

One reason why the noble Lord, Lord Moynihan, was committed to this cause was that he saw how the London Olympics benefited from a touting ban. He was determined that what was right for that showpiece event would work for other sporting events. It is an example of using the legacy from London for the wider good. I wish only that the Department for Culture, Media and Sport would put as much effort into securing improvements in participation in sport as a legacy as the noble Lord has—I could say “my noble friend”, because in this context he certainly is a noble friend of mine because of his love of sport.

That brings me to a final point and a question for the Minister. The Rugby World Cup 2015 starts in just six months’ time. Can she confirm that the measures that we are passing today will be operational for that event? If she cannot give that commitment today, will she work hard to see that that is brought about? I will end as I began, in saying that it is a good news day for literally thousands of loyal sports fans, and also for major sports organisations, which wish to sell tickets to real fans, not to investors who wish to make quick profits. These measures are all about putting limits on “Rip-off Britain” for the public benefit.

Photo of Lord Borwick Lord Borwick Conservative 3:45 pm, 24th February 2015

My Lords, this Bill, as the name suggests, is supposed to be about protecting consumers—indeed, most of it does. However, this recently tabled amendment, which places new duties on ticket sellers in secondary markets, could actually allow consumers to be ripped off under the guise of protecting them. All the tickets which the sports and music bodies are concerned about will now go back to being sold in pubs, clubs and car parks, where no consumer protection exists, so this amendment could increase fraud by forcing customers to buy tickets on the street. It is no surprise that the amendment is completely out of step with public opinion.

I am sure that I can trade polling statistics with my noble friend. Polling by ComRes shows that 80% of the public support the right to resell tickets, 64% believe that they should be allowed to pay more than the face value of a ticket to get into a sold-out event, and 66% believe that event organisers should not be allowed to restrict what happens to a ticket once they have sold it. We could see thousands of fans criminalised if they do not provide the right information on their listings. The reality is that a seller will not provide the right information if they think that their ticket could be cancelled. They could provide adjacent seat numbers, for instance, and other fans could then see their tickets cancelled, causing havoc at the event.

The treatment of the secondary market in ticketing is completely out of step with other online markets. Is there a need to declare where what you are selling comes from when you are selling goods on Amazon, for example? These proposed new clauses try to deal with an issue that does not exist. The wording of the amendment is clever in that it seems to provide a protection against ticket cancellation, but this protection is meaningless as it does not apply where there are terms and conditions which state that tickets will be cancelled if they are resold. The wording makes it clear that terms and conditions used to enforce cancellation should not be unfair terms under the Unfair Terms in Consumer Contracts Regulations. This is because certain restrictions such as terms and conditions which allow resale at face value have been judged as not in breach of these regulations. This means that event organisers will be able to impose a de facto price cap on resale. Event organisers will be able to use the law to enforce their own commercial terms and conditions. We are about to give event organisers total control over tickets after they have been sold. This is a carefully constructed legal monopoly. Will my noble friend the Minister assure me that one of the subjects to be looked at in the review is how the number of people employed in the secondary ticket market has changed, and how the market share of the ticket issuers has changed?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Conservative

My Lords, following the debates on the subject of secondary ticketing in Committee and on Report, which caused considerable polarisation of views across party lines, I am pleased that today there appears to be good agreement on the way forward. I know that my noble friend the Minister has worked assiduously to find common ground. Reaching this point today is an example not just of how effective this House can be in spending the necessary time discussing the detail, analysing the issues with all those concerned, reviewing and scrutinising the law and moving forward, but also of how many company boards work with much interaction on challenging issues, which takes place initially behind the scenes, enabling the final decisions to be made in situ with relative accord and rapidity. To that extent, it would have been interesting to have secured my ticket to be a fly on the wall at some of these discussions, in which case there would have been no pillar impeding my view and I would not have needed the guarantee of a seat number. However, I would have needed a guarantee from the event organiser that there were no spiders’ webs—real or political, perhaps.

Although I welcome the Government’s willingness to act to address many of the strong concerns expressed on the secondary ticketing market through their Amendments 12B to 12H laid today, and their agreement to the amendments tabled by my noble friend Lord Moynihan, this is the beginning of a journey, as my noble friend said. First, there were clarion calls from some quarters for the secondary ticketing market to be banned. It is pleasing that there is now a general view that the secondary ticketing market has a necessary place in allowing fans to purchase seats for cultural and sporting events. A corollary of this is that it makes it more likely that seats at events will be filled—a frustration often expressed by observers and would-be fans.

It is now also accepted that the issue under debate, described generically as secondary ticketing, is much more complex. However, there is a main concern over sharp practice at best and fraud at worst. The victims are those, of course, who buy bona fide tickets and find that they are invalid. Along with some other noble Lords, I am adamant that there is legislation in place to protect against fraud but that it has to be made to work, with prosecutions, recompense for victims in relation to detriment suffered and with deterrents to putative fraudulent activity. I have also mentioned the need for more transparent and detailed guidelines for ticket operators and consumers, which is very much in the spirit of the Consumer Rights Bill, but without creating any unnecessary new bureaucracy.

Therefore, I welcome the move to make it mandatory for online ticket marketplaces to have to report criminal activity to both the police and the event organiser. Many of the persistent secondary ticketing troubles emanate from illegal websites, so the Action Fraud initiative as a national reporting centre for fraud and internet crime is to be welcomed. Of course, with the emergence globally of millions of websites, the question of how to regulate, monitor and harness the web is a matter for all Governments in all countries across most sectors. Therefore, my first question to my noble friend the Minister is: how proactive will this Action Fraud unit be, or is it merely a reception centre for reporting such crime?

The House may like to be reminded of the success of PIPCU—the Police Intellectual Property Crime Unit. Deep in the City of London some highly effective work is being carried out to identify fraud proactively, to intercept and to prosecute the owners of websites who are effecting and facilitating the transit of counterfeit and pirated goods into this country. In terms of the work it does, to what extent could the Action Fraud unit link up with, or learn from, PIPCU’s experience?

My main question about the statutory duty to report is: how can we know if the online marketplace is not reporting crime? Subsection (3)(b) of the new clause proposed in Amendment 12B states that the duty to report applies when,

“the operator knows that an offence has been or is being committed”.

Surely it should additionally apply to operators who suspect that an offence might be committed. Do we not seek the early tip-off? How proactive a role is the enforcement authority expected to have? To borrow a phrase used in an earlier debate by my noble friend Lord Clement-Jones, “Not a clue, guv”. There is a danger that a market operator will be able to turn a blind eye to a criminal activity, where he can legitimately say that he was not aware or could not have known. The enforcement authority will have the leeway of needing to be satisfied that on the balance of probabilities a person has breached the duty—but will the onus of proof be too difficult to establish, and too costly to work effectively, to achieve prosecution and for a fine to be imposed?

Finally on the duty to report, I wonder whether the cap of £5,000 provides an adequate deterrent for failing to report. The Minister may reply that she thinks it proportionate. However, I suggest that the stakes could be raised by doubling the maximum fine—on the basis that a fine is payable only if a suspected crime, which turns out to be an actual crime, is not reported. Your Lordships may be interested to be reminded that, for example, a fine of up to £20,000 is payable by employers for not paying the minimum wage.

I turn now to the second, welcome, element of the Government’s amendment—the statutory review. I welcome it because it will start as soon as possible and will have a tight reporting period. The purpose of the review is to address many of the complex issues relating to ticket sales, but it is as yet unclear what the terms of reference will be, and what such a seemingly catch-all review will cover. I have heard that it should encompass some aspects of the operation of the primary market—such as the sensible and proportionate block-booking of tickets by the RFU or the ECB for rugby or cricket events where clubs or schools are the beneficiaries. The review should also cover unscrupulous block-bookers who seek to make an unhealthy profit by selling on.

As my noble friend Lord Moynihan said, there is the question of who is defined as a consumer and who as a trader. Conversely, there is also the need not to have a chilling effect on the secondary marketplace. There is the issue of guidelines for contracts for ticketing for myriad events, and also the question of how to protect UK sports, theatre or concert fans who choose to book tickets for UK events through operators or sites overseas. I am pleased to hear from the Minister that the CMA is playing an active role and is taking some action. I ask the Minister for reassurance that the Government know that the review needs to be particularly wide ranging, but also tightly worded, to be effective and useful for taking the several steps forward that are needed in 2016. I note her encouraging comments today.

Finally, in repeating my support for the Government in acknowledging the valuable role of the secondary market, I add that the amendment would have been improved by the inclusion of a sunset provision for the review, perhaps at the point when it reports its recommendations. I ask my noble friend to comment on that. There will always be persistent fraudsters, but I welcome the consensus today that the review, while not providing all the solutions that some seek now, does provide us with a sensible platform from which to establish some concrete facts and to analyse the different elements of a complex landscape.

Photo of Lord Stoneham of Droxford Lord Stoneham of Droxford Liberal Democrat 4:00 pm, 24th February 2015

My Lords, I do not wish to detain the House long, as I understand the real reason why everybody is here. However, I wish to make one or two points, particularly as I disagreed with the proposers of the amendment at earlier stages of the Bill.

First, I congratulate my noble friend Lord Moynihan on his persistence and cheerfulness as the long-distance runner on this issue. I congratulate both him and the Minister, my noble friend Lady Neville-Rolfe, on having worked so hard in the last few weeks to arrive at a workable compromise. I have enjoyed working on this

Bill with them, with my noble friends Lady Jolly and Lady Bakewell, and with the noble Baroness, Lady Hayter, and her colleagues on the Opposition Benches. I acknowledge the mutual courtesy and constructiveness that have been displayed at all times.

I accept that this compromise can provide more transparency in the marketplace in the interests of consumers, but we have always maintained that that must not be at the expense of the recognised and reputable operators in the secondary ticketing market. I am pleased that my noble friend Lord Moynihan acknowledged that these proposed changes have been designed to protect the reputable secondary ticketing market. He recognises that there is public support for greater regulation, but there is also wide public support for having a system of secondary ticketing. This proposal is better than encouraging people to go back to the ticket touts at events—or, indeed, using online and offline classified advertising.

On this side particularly we welcome the 12-month review of consumer protection issues relating to secondary ticketing. I reiterate the points that my noble friend Lord Moynihan made. I hope that the review will cover the wider issue of wholesale ticketing harvesting—the computer programs designed to circumvent procedures designed to contain sales to individuals, and how they can be best countered. I hope it will also examine and promote best practice techniques and the phasing of ticket sales, which maximise the chances of real fans obtaining the tickets.

There is, however, one final concern that should be expressed. I was glad to have the Minister’s reassurance on this matter; I hope that she can speak again on it without reservations. We welcome the compromise restricting event organisers’ ability to cancel the tickets that have been legitimately sold if they are identified in the secondary ticket market. However, the proposed new clause permits cancellation if the resale terms flout the terms and conditions of the ticket. That could cause confusion. I understand that it is right that the original seller should apply a cancellation if, for example, an adult was sold a child’s ticket. Can the Minister repeat that it will be completely unacceptable to have a blanket condition in ticket terms and conditions banning all resales—and, indeed, resale at a higher value? If either of these conditions prevailed it would drive a coach and horses through what we assume are the good intentions of this compromise. It would appear to be an unreasonable and unfair restraint for consumers in the ticketing market.

Apart from that, I welcome this compromise. I look forward to seeing it properly implemented.

Photo of Lord Holmes of Richmond Lord Holmes of Richmond Conservative

My Lords, the A1 is a beautiful road linking north and south. Motion A1 is a beautiful Motion, linking the sports fan back to the sport and the music fan back to the gig. It goes to the heart of a problem that has dogged sport, music and live entertainment for decades in this country. It is a great day for the sports fan and a fantastically bad day for the fraudster. Let the fraudster—the cyber, sheepskin-clad fraudsters—begone. This will make a tremendous difference to anybody who truly has sport, music, art, cultural and creative events in their hearts in this country.

There will be much to discuss in the review—many minutiae and details need to be bottomed out. I also believe there is still much that sport and music promoters can do to further protect their product and truly drive the primary market in tickets for their events. This is a great amendment and a great day across sport and music. It is testament to my noble friend Lord Moynihan, who has shown dogged determination over months to get us to this stage. The man from Monmouth has coxed this amendment to a successful and superb conclusion.

Photo of Baroness Heyhoe Flint Baroness Heyhoe Flint Conservative

My Lords, I thank my noble friend Lord Holmes for bringing such a smile to my face. I love the word “dogged” here; I know he has a beast of a similar persuasion at his feet. The vision of a sheepskin-clad fraudster outside Lord’s when it is 75 degrees in the summer trying to get rid of his tickets brought a wonderful degree of levity to the occasion.

As I have spoken at every stage of the Bill on this issue, I hope the House realises how strongly I have felt about seeking to establish a fair market for sport and entertainment. I hope by the time the Minister has stood up there will have been reassurance to my noble friends Lord Borwick and Lord Stoneham for the slight concerns they have in certain areas. Secondary selling has now had an enormous amount of scrutiny and I am convinced that we have got to the right point in the Bill, crafted with so much ability and long-life energy by my noble friend Lord Moynihan. He has worked so enormously hard that he deserves to sit down in a darkened room after this and have a break. It really has been quite remarkable.

I declare an interest as a board member of the England and Wales Cricket Board and I hope I do not offend any Scots when I say thank goodness that England managed to beat Scotland in the World Cup a few days ago. No disrespect to the Scots but I might not have been able to walk through the door had that not happened.

The amendment before the House is not as comprehensive as the one we voted for just before Christmas but after lengthy negotiations, as mentioned by my noble friend, it addresses the key concerns raised and introduces—in that wonderful phrase—some new light-touch regulation. Alongside this it introduces the statutory review which many of my noble friends have complimented, and it is hugely welcome.

I too thank the Minister for the enormous amount of time she has spent considering this issue with all of us championing the cause, and for making her officials so available. That is so important and they helped us to drive through and draft this Motion. It will benefit fans of sport and entertainment across the country and up and down the A1—this is an A1 Bill, we must not forget that—and it has been greeted with huge congratulations from hundreds and thousands of people within the worlds of sports and entertainment. I almost feel that we should break out into a Mexican wave when we reach the conclusion of today’s discussions.

As we have heard, the Motion protects the consumer on the reselling of tickets by introducing the basic information we have so desperately wanted. Crucially, it does not in any way prohibit or ban the resale of the tickets. Concern was voiced before during the passage of the Bill about what information should be required and it is clear that we have sought to protect privacy issues by neither the name nor the address of the seller being given.

The information reporting set out in the Motion is important. It provides a way of detecting fraud and misleading selling. Indeed only last week, as my noble friend Lord Moynihan mentioned, the DCMS acknowledged that it was important that information was provided at the point of sale so that both consumers and event organisers could be certain whether listings were of genuine tickets. This will help to eradicate the curious practice used by many sites of tickets being listed for sale before they have even gone on sale officially by the event organisers and the venues. It is quite remarkable. The review to be established will assess if any further information is required or whether we have got the balance right first time. I hope it is the latter.

When this measure becomes law, those who buy a ticket from a secondary seller will receive exactly the same information and protection when they make the purchase as they would expect to receive when purchasing directly from the event organiser. They will know the value that the event holder has placed on the ticket—its face value—and the exact location of the seat. They will also have the option of checking with the event organiser that it is a genuine ticket. It is simple and effective.

Let us reassure the House about how this amendment would work in relation to the rights of the consumer. It is clear that event organisers will be able to uphold only terms and conditions which are fair and which have been communicated to the public when they buy the tickets. Nothing will come as a great surprise to the purchaser of the tickets. It will not have an adverse impact on the ordinary fan who wants to sell on a ticket if he or she cannot attend. All major sporting events—and, we assume, entertainment—either have exchange mechanisms or allow some form of resale at face value. It is hoped that this will encourage the best practice already identified by my noble friend Lord Moynihan concerning the theatre ticket and the terms and conditions on the back of it. Presumably no four year-olds are allowed to go and watch “Fifty Shades of Grey”, as that might contravene the terms and conditions.

Nowadays, for example, the ECB has no intent to cancel tickets sold on at face value, and it already allows the transfer of tickets. This is a form of governance that should be imitated and copied by any event organiser or governing body. It will not cancel those tickets if sold on the secondary market, and why on earth should it? That would cause reputational damage and would no doubt lead to investigation and complaint, as well as turn away and turn off genuine fans.

With the security of this amendment, event organisers will be empowered to take action against the worst abusers of ticket terms and conditions, as has already been mentioned. This covers issues such as fraudulent sales, bulk ticket sales by professional touts—not always in sheepskin jackets—and the use of bots to purchase tickets. To the uninitiated, a bot is a computer program that repeatedly logs in to buy tickets automatically.

My noble friend referred to it as “harvesting” tickets; I refer to it as “hoovering up” tickets, but perhaps harvesting is more his scene and hoovering may occasionally be mine. It also covers the advance selling of tickets not yet on sale, as I have already mentioned, exploitative touting, and concession tickets sold to the wrong people in the wrong place, which can lead to embarrassment and discomfort.

The passage of this Bill will play a role in helping the UK to maintain our position as an open and honest showcase for international sports and entertainment events in this country, attracting millions of fans to our venues annually.

Cricket venues are doing everything they can to keep prices affordable, to encourage family audiences and not to overprice the market. However, visiting one or two of the websites referred to and looking at Ashes test match ticket sales, one can see that an averagely priced ticket costing £100 is currently on offer at at least £600. It is possible to get a ticket with a full hospitality package in one of the stands costing £1,950. I thought, “That must be a very expensive meat pie that they sell at Lord’s”, but it just shows what an amazing, incredible and dishonest mark-up is put on these tickets. It is completely unfair to supporters, who are denied the opportunity to attend major international events.

We have provided much needed protection to fans who spend their hard-earned money watching the sport they love. Those fans or consumers deserve our protection. I do not wish to sound triumphant but I know that there is a collective huge sigh of relief that common sense has prevailed. Now, hundreds and thousands—nay, millions—of fans can give a standing ovation to my noble friend the Minister and her team, as well as to my noble friend Lord Moynihan, for helping to protect the hard-working fan.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Cabinet Office) 4:15 pm, 24th February 2015

My Lords, I see no reason why the noble Baroness, Lady Heyhoe Flint, should not feel triumphant. I think that is the right approach, and I join her and others in thanking the noble Lord, Lord Moynihan, who has done so much to bring us here, and also, as others have said, the Bill team; the sports and arts bodies; my colleague Nicola Jayawickreme, who has seen us through this; my noble friend Lord Stevenson, who alas is in a jungle today and cannot be with us; my gig-attending honourable friend Stella Creasy, who fought this much more alone, I have to say, in the other place; and also, if rather at the wire, the Government.

However, given that this will affect some of our premier sports, perhaps that final spurt, the holding of our collective breath till the very last moment when the line was crossed, and the smiles and cheers at the Minister’s words are particularly appropriate. Indeed, had the Minister sung her speech, that would have reflected as well the arts world’s relief that sense has prevailed and that genuine fans of music or sports will have access to the best without having to witness only those with the deepest pockets being able to pay to see the best of British performers, whether on the track or on the stage.

Furthermore, the money paid by fans will now, we hope, go to the promoters or the performers but will not be skimmed off by those who buy tickets purely to make excess rent, in the economic jargon. This was never an issue of individual fans wanting to sell the odd ticket they could no longer use. It is, as has been said, about industrial-scale touting—the buying up of sheaves of tickets to make a quick bang—and it is that that Motion A1 seeks to address.

We know that the Government had strongly resisted until almost the very last moment Motion A1 and all attempts to tackle an industry that makes a few people very rich but sucks money not just from fans but from sports and arts bodies—those that want to keep prices within the reach of all, not just the rich, so that ordinary rugby club members can go to Twickenham, tennis players to Wimbledon and music fans to their favourite gigs.

I remember that some years ago Paul Hamlyn opened the opera house—I think to celebrate his wife’s birthday—simply to groups of young people or community groups. I took 20 people there who would never have gone into the opera house without this. I will remember their faces, I think, for as long as I live, and the delight they had. I think they paid £10 a seat. In today’s world, with today’s methods, all those tickets would have been hoovered up and all those people denied that wonderful chance to go there.

Today the Government have accepted that it is time to deal with that industry, and we are delighted. There are of course issues not yet covered by the Motion, but these can fall to the review to consider. I hope the Minister can assure us that both sporting and arts representatives will be consulted on the choice of chair as well as on the terms of reference so that we learn from other inquiries. To add to the mix that has already been mentioned, I also ask that the Government consider for the review research into the impact of touting on fans and events, the effects it has in terms of pricing out ordinary fans and the wider reputation damage to events. They should also consider actions on bots, which have been explained to us, and enforcement of existing legislation; also, what constitutes a ticket—is it a piece of paper or is it the right to attend an event? Finally, they should consider whether the ticket identification number needs to be added to those tickets where there is no block, row or seat number.

Today, as the noble Viscount, Lord Younger, suggested, shows a job well done by your Lordships’ House. This final change will strengthen the Consumer Rights Bill. I think it is a triumph for the rights of consumers, in this case in the guise of fans and supporters. We wish the whole Bill well as it gets its final sign-off from the other place.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe The Parliamentary Under-Secretary of State for Business, Innovation and Skills

Before the noble Lord, Lord Moynihan, responds, perhaps, rather than repeating them, I will say that I share the many tributes that have been made during this debate to and by the noble Lord, Lord Moynihan. They have been made by the noble Lords, Lord Clement-Jones, Lord Stoneham and Lord Holmes, the noble Baronesses, Lady Heyhoe Flint and Lady Hayter, and the noble Lord, Lord Pendry, with his deep knowledge of the football world. On his question, the

Bill provides for the measure to come into force two months after Royal Assent—so ahead of the Ashes and the Rugby World Cup, I hope.

I am also grateful for the points made by my predecessor, my noble friend Lord Younger, who did so much for enforcement of IP and the battle against counterfeiting. I will take away his various ideas, notably for dealing with fraud, and look forward to discussing his questions with him and feeding them into the review. I was also interested in his reference to sunsetting, which is one of the ideas that we look at in our Better Regulation work in the business department.

My noble friend Lord Borwick raised two important issues relating to how the amendments affect the secondary market in terms of employment and market share. As has been said, we have yet to set the terms of reference for the review, but I assure him that those issues will be considered for inclusion. He also expressed the concern that the amendment might criminalise consumers who give incorrect information. I reassure him that it will not introduce any criminal offences; the enforcement is but by civil penalties.

I can confirm that the blanket protection on ticket resale of the kind cited by the noble Lord, Lord Stoneham, is not provided for in the amendment. I reiterate what I said earlier on this important point: terms that prohibit or restrict resale above a particular price are assessable for fairness. They are not always fair and are not binding on the consumer if that is the case.

This is, of course, a compromise provision. The Government were not willing to jeopardise the passage of the Consumer Rights Bill. Therefore, while we share some of the concerns raised about how the industry could interpret the new legislation, it is up to it to show that it treats all fans fairly and to make these changes a success. We have a statutory review, which will be an opportunity to look at this matter and at many of the issues debated today. I know that this House will be very interested in the results of the review and that many noble Lords will feed in their thoughts and ideas. I should make it clear, as the noble Lord, Lord Moynihan, touched on the subject, that the review is a joint one between the DCMS and BIS—the reviewer is to be appointed jointly by the two Secretaries of State. I note the various points made by the noble Baroness, Lady Hayter, and will take them away to ensure that we have the right independent chair and the right terms of reference.

I thank noble Lords for their expert scrutiny of the Bill, and in particular for the provisions we are discussing today. I look forward to the Bill receiving Royal Assent.

Photo of Lord Moynihan Lord Moynihan Conservative

My Lords, I express my further thanks to all noble Lords who have participated in this debate on what is, as has been rightly pointed out, a compromise provision. For the avoidance of doubt on the part of one or two speakers who may not have fully appreciated it, all those who have spoken in favour of this Motion reiterated that it is very important for a secondary market to thrive. We are looking through this Motion for an effective, transparent and accountable secondary market. I appreciate in all humility the generous personal comments that have been made and ask the House to agree to the Motion standing in my name.

Motion A1, as an amendment to Motion A, agreed.