Amendment 7

Product Security and Telecommunications Infrastructure Bill - Committee (1st Day) – in the House of Lords at 7:00 pm on 21st June 2022.

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Lord Bassam of Brighton:

Moved by Lord Bassam of Brighton

7: Clause 7, page 5, line 24, at end insert—“(5A) For the purposes of subsection (5), a person who provides an online facility through which a distributor makes a product available in the United Kingdom is also a distributor.”Member’s explanatory statementThis amendment brings online marketplaces which allow relevant products to be listed for sale within scope of the security requirements outlined in the Bill.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Digital, Culture, Media and Sport) (Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy and International Trade)

My Lords, Amendment 7 is also in the name of my noble friend Lady Merron. This amendment, as the notes to the Bill’s amendments set out, brings online marketplaces which allow relevant products to be listed for sale within the scope of the security requirements outlined in the Bill. We wish to express again our gratitude to Which? and others for their work in relation to online marketplaces, including, but not limited to, Amazon and eBay, which facilitate the sale of many of these products.

Research suggests that a significant number of products listed on online marketplaces could have security and privacy risks. This is prior to the introduction of the new rules for producers, importers and distributors, but it does highlight the importance of ensuring that marketplaces are subject to at least some of the new measures. Following Second Reading, the Minister kindly wrote to noble Lords, as he promised he would, and suggested that in many cases these websites will fall under “at least one” of the categories and, even if they do not, earlier parts of the supply chain will be subject to the new duties. On that basis, the Government say they will not explicitly bring marketplaces within scope of these measures but will keep the matter under review. It is disappointing that the Minister decided to rule out this change without even having this Committee debate. I hope the Minister’s response will go into more detail than the letter, and he will outline exactly what this review process will look like. Importantly, if it becomes apparent that obligations need to be imposed on these businesses, can he outline the process for achieving this? Can it be done under existing powers, or would it require an additional, albeit simple, piece of primary legislation?

This may not be a gaping hole in the Bill, but it does feel like a gap that needs to be addressed. We hope the Government will be persuaded of that in the run-up to Report stage. It is important because we do not often get legislation on this subject and we do not often get the opportunity to deal with issues such as this. I say to the Minister that we need considerable reassurance on this point because of that very fact. The Minister may say that it is all going to be down to regulations. That is not really a complete answer but we look forward to hearing his response.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

My Lords, I rise to speak to Amendment 8 in my name and that of my noble friend Lord Clement-Jones. These are two ways of doing the same thing so I support the spirit of Amendment 7, about which we have just heard from the noble Lord, Lord Bassam.

This amendment adds the following wording to Clause 7:

“Any person who is a provider of an internet service that allows or facilitates the making by consumers of distance contracts with traders or other consumers for the sale or supply of a relevant connectable product is to be regarded as a distributor for the purposes of this Act, if not a manufacturer or an importer of the product.”

This amends the language that defines a distributor in the scope of the Bill. Online marketplaces are a mainstream form of today’s retail. Which? research in 2019 found that more than 90% of the UK population had shopped through an online marketplace within the month it was polling. That has increased during the pandemic. However, its research also consistently highlighted how online marketplaces are flooded with insecure products. It has previously demonstrated issues with the lack of legal responsibility of online marketplaces for the security and safety of products sold through their platforms.

The Government have recognised the problem, in their response to the call for evidence on product safety, that current safety rules were designed to fit supply chains as they operated before the world of internet shopping. In the realm of product safety, the Government have acknowledged that this can result in the peculiar situation where no actor is responsible for ensuring product safety. This has resulted in organisations such as Electrical Safety First repeatedly finding unsafe and non-compliant products listed on online marketplaces. Therefore, the traditional conception of actors in the supply chain is now outdated.

The Bill defines “distributor” as

“any person who … makes the product available in the United Kingdom, and … is not a manufacturer or an importer of the product.”

At present, it seems unlikely that certain online marketplaces, including eBay, Amazon Marketplace and Wish.com, will be included within the scope of that definition of distributors in the Bill. This will leave, without overstating it, a sizeable gap in the regulatory scope of this market.

Given the amount of insecure tech readily available on online marketplaces, it is paramount that these platforms are given obligations in the Bill to ensure the safety and security of the products sold on their sites, regardless of whether the seller is a third party. However, the Clause 7(5) definition of “distributor” in terms of making products available on the market is in line with existing product safety law, so we know that certain marketplaces are not classed as distributors and hence not obligated to take action. Amazon Marketplace, Wish.com and eBay are marketplaces where other people are selling; this is the issue.

This amendment seeks to expand the definition of distributors in Clause 7 to include appropriate online retailers, such as listings platforms and auction sites, including eBay, Amazon Marketplace and AliExpress. I feel sure that the Minister did not intend for the legislation to miss these marketplaces out; rather than risk this loophole going any further, we will work with the Minister and Her Majesty’s loyal Opposition to come up with some wording that absolutely iron-clads the Bill to ensure that these sorts of marketplaces are also included.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I am grateful to noble Lords for speaking to their amendments in this group, both of which seek to make online marketplaces a “distributor”. It is vital that all products offered to consumers are secure, including those listed through online marketplaces, and we want to ensure that this is achieved in the most efficient way.

The explanatory statement for Amendment 7 suggests that products listed on online marketplaces might not be protected by the security requirements set out in the Bill. I reassure noble Lords, particularly those who tabled Amendment 7, that the security requirements will need to be met for all new connectable products offered to consumers in the UK, including those offered through online marketplaces. These marketplaces often act as a manufacturer, importer or distributor and, in those cases, they are subject to the same duties and security requirements as those three types of economic actor. If, however, the online marketplace does not fall into one of these three categories, the manufacturers, importers and distributors of those products are all still fully responsible for complying with security requirements.

The Government recognise that no law is perfect and that malicious actors may try to exploit the difficulties of enforcement against overseas businesses. For this reason, the Bill provides the Secretary of State with robust enforcement powers to address cases of non-compliance. The powers enable the enforcer to monitor the market, warn consumers of risks and, where appropriate, seize and recall products.

I agree with noble Lords that consumers need assurance that the products they buy and use are secure. For the supply chain to provide that reassurance requires alignment across a range of policy areas, including product security and safety. The Bill’s new security framework will sit alongside the existing legislation for product safety. We have designed this legislation to work in a similar way. That makes it easier for both businesses and consumers to know their rights and responsibilities.

The Government are conducting a review of the product safety framework and intend to publish a consultation later this year which will include proposals to tackle the sale of unsafe products online. Officials will continue to liaise with colleagues at the Department for Business, Energy and Industrial Strategy to ensure that the product safety and cybersecurity regimes are coherent and offer similar levels of protection for consumers.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy) 7:15 pm, 21st June 2022

This has piqued my interest; how does this exercise relate to the Bill? This process of dealing with the online acquisition of unsafe products would seem to be what the Bill is doing front and centre, so what is that process? How do the two connect?

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

They are complementary; the new product security framework sits alongside existing legislation on product safety, which is why we want to conduct a review of the safety framework and publish the consultation. I am certainly happy to write and endeavour to explain.

The noble Lord asked whether products sold through online marketplaces fall into a gap in the Bill. The Bill requires in-scope products offered for sale through online marketplaces to customers in the UK to be as secure as in-scope products sold, for example, in physical stores. We are mindful of the variety of services offered by different online marketplaces. Some act only as advertising platforms, while others facilitate transactions and store and ship products on behalf of the seller. As noble Lords have noted, this changes all the time. This must be carefully considered to ensure that businesses can comply with their legal obligations and that any regulation is necessary, appropriate and proportionate to provide the best protection to consumers.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

I am sorry to keep popping up; being a practical person, I will try to give the Minister a scenario and, if he cannot answer straightaway, he can write. I have bought a product through an online auction that turns out to be unsafe; I go back to the auction site, which tells me, “Not my problem. You have to return to the international manufacturer which made this product”, which turns out to be a brick wall and nothing comes back. First, is that online auction site correct in handing me over to the international manufacturer, which turns out to be a dead end? Secondly, if that site is correct, to whom do I go? Do I go to my local council trading officer or to the person who, under Clause 27, has been mysteriously made the enforcer for the Bill? I may or may not know who they are. How do I seek redress, and from whom?

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I will try answer the noble Lord’s question, and I am happy to write with further detail. Products sold on online marketplaces are covered by the Bill. All products sold to customers in the UK will have to comply with the security requirements set out under this framework. Where a product is sold on a third-party online marketplace, the seller will be responsible for ensuring that it is compliant. Third-party sellers who sell new products directly to customers on those platforms will also be covered under the “distributor” definition. I will happily write to the noble Lord with further detail ahead of Report but I hope that, for now, that goes some way towards addressing his question.

Photo of Lord Lucas Lord Lucas Conservative

My Lords, I would be grateful if my noble friend included me in his replies and letters. Is he aware of the lamentable performance of Her Majesty’s Revenue and Customs when it comes to trying to enforce VAT in similar circumstances, and the enormous difficulty it has had with third-party sellers operating out of the Far East in particular? It is extremely difficult, and the volume of VAT lost runs into the billions. This is a large-scale enterprise and it will easily channel a large volume of unsatisfactory products into the UK if we do not take effective action.

I hope that the Government, in their new consultation, which I look forward to learning about, will be taking a robust attitude towards the platforms. For instance, it is entirely unsatisfactory that there should be a way in which unsafe toys can get into the hands of children at Christmas, and for which there is no effective means of prevention or redress. In other jurisdictions, these online marketplaces have proved amenable to a forceful approach by government. I very much hope that we will be joining in with that.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

I am happy to include my noble friend in the replies and the letter I send. This touches on work which falls under the Department for Business, Energy and Industrial Strategy, and the points he raised, of course, fall to Her Majesty’s Revenue and Customs. We will make sure that, having consulted officials there, we provide some details of the work those departments are doing as well.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Digital, Culture, Media and Sport) (Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy and International Trade)

My Lords, I am looking forward to the correspondence on this; I fancy that the noble Lord’s civil servants will have a tricky job on their hands. I do not think I quite got a response to what the nature of “being kept under review” really meant, but I await word in the future.

I have been reading the Explanatory Notes, as the Minister will probably be unhappy to hear, and I can see the difficulties. In trying to ensure that the legislation is focused, rightly, on the producers, manufacturers, importers and distributors, it is hard to work round that and not capture people who are simply installers of a product. On the other hand, there are circumstances where installers are primarily responsible for the effectiveness and working of the product, and if it was not for the way they install it, it would not be effective. The terms of the contract are such that it makes that difficult.

I can see the difficulty here, but for now I am happy to withdraw our amendment. In doing so, we are equally supportive of the amendment in the name of the noble Lord, Lord Fox, because the two are contiguous in their formulation.

Amendment 7 withdrawn.

Amendment 8 not moved.

Clause 7 agreed.

Clause 8 agreed.

Clause 9: Statements of compliance

Amendment 9 not moved.

Clause 9 agreed.

Clause 10 agreed.

Clause 11: Duties to take action in relation to compliance failure

Amendment 10 not moved.

Clause 11 agreed.

Clauses 12 to 18 agreed.

Clause 19: Duties to take action in relation to manufacturer’s compliance failure

Amendment 11 not moved.

Clause 19 agreed.

Clauses 20 to 23 agreed.

Clause 24: Duties to take action in relation to distributor’s compliance failures

Amendment 12 not moved.

Clause 24 agreed.

Clause 25: Duties to take action in relation to manufacturer’s compliance failure

Amendment 13 not moved.

Clause 25 agreed.

House resumed. Committee to begin again not before 7.47 pm.