Clause 47

Part of Consumers, Estate Agents and Redress Bill – in a Public Bill Committee at 11:00 am on 24 April 2007.

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Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office 11:00, 24 April 2007

I thank the hon. Gentleman for the spirit in which he moved his amendment. I accept that it is a probing amendment, and I hope that my response will explain fully the intention of clause 47. If he has any further questions to put to me, I will respond to them, and I hope that he will then feel able to withdraw his amendment.

The amendment relates to clause 47 and the redress provisions in this part of the Bill. The clause will introduce a power for the Secretary of State to require service providers in the energy and postal services sectors to belong to a redress scheme. It will, in effect, give consumers in those sectors greater assurance of  achieving certainty in the resolution of complaints. So that there is no doubt, I will explain how the measure will work in practice.

Under the Bill, the Secretary of State will be given the power to make an order that requires regulated service providers in those sectors to belong to an approved redress scheme. If minded to exercise the power, the Secretary of State can consult the relevant regulator and others who represent those with an interest in the matter.

The purpose of that consultation includes the need to obtain confirmation of sectoral redress requirements and to look at the appropriate scope of the redress schemes. The Bill stipulates that, before making such an order, the Secretary of State must be satisfied that there is at least one qualifying redress scheme that regulated service providers can join or that such a scheme will be in existence when the order comes into force. That is critical. Parliament, through the Secretary of State, has a role to play in this. Having set out the principle of redress schemes in the Bill, it must ensure that they are established in practice and within the context of the clauses on the standards expected of the schemes.

It is worth emphasising that we have no reason to believe that at least one suitable scheme for each sector will not be established by industry. However, we need to cover all eventualities, and in the highly unlikely event of a scheme not being established by industry, the clause contains provision for the Secretary of State to establish one. That is also critical, as it is Parliament’s role. There is all-party consensus on establishing redress schemes on behalf of the consumer. Therefore, we must take responsibility in extreme circumstances—and they would be extreme—to make sure that a redress scheme is established. Hence clause 47(1)(b) allows for the establishment of a redress scheme administered by the Secretary of State or by a person appointed by him. That will provide an additional guarantee that a qualifying redress scheme will exist for regulated providers in the energy and postal services sector, to comply with an order made by the Secretary of State.

To be perfectly clear, under these provisions, the term “redress scheme” holds the same meaning regardlessof whether it is established under clause 47(1)(a) by industry and approved by a regulator, or underclause 47(1)(b) and administered by the Secretary of State or by a person appointed by him. Hon. Members can rest assured that, if it were necessary for the Secretary of State to use the fall-back provisions contained in clause 47(1)(b), there would be no compromise over the need for the independent person to be independent. It would still be possible for consumer complaints to be made to, and investigated and determined by, an independent person. That would be based on the principles set out in the legislation.

Clause 47(7) provides that, in designating a scheme in relation to regulated providers under clause 47(1)(b), the Secretary of State must be satisfied that the scheme meets the same criteria for approval by a regulator as those set out in clause 49. The important assurance that the hon. Gentleman wants is that, if the Secretary of State were to establish a scheme in extreme circumstances, it would not be—in popular parlance —a Mickey Mouse scheme; in all respects, it must at   least be compatible with a scheme established under clause 47(1)(a). Therefore, I can say with certainty that this provision is not a stop-gap to fulfil in practice what is set down in the Bill.

The clause will not provide the Secretary of State with the power—if ever it had to be exercised—to provide a second-class or third-class scheme, or a scheme that complies with the law but not with the spirit of the law. It is very important that, if we have to do this in extremis, we do it on the basis of fulfillingthe commitment in the legislation to ensure that all consumers in those sectors are covered by a redress scheme. I hope that, given that assurance, the hon. Gentleman will be minded to withdraw his amendment.