Clause 49

Consumers, Estate Agents and Redress Bill – in a Public Bill Committee at 11:15 am on 24 April 2007.

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Approval of redress schemes

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

I beg to move amendment No. 35, in clause 49, page 28, line 40, leave out ‘relevant’.

This is a very simple probing amendment focusing on the meaning of the word “relevant”. My purpose is to clarify what a “relevant consumer” is. To my mind, all consumers who use energy supplies are relevant where redress schemes are concerned. Will the Minister tell us, therefore, who are not “relevant consumers”?

Photo of Ian McCartney Ian McCartney Minister of State (Trade & Investment), Department of Trade and Industry, Minister of State (Trade & Investment), Foreign & Commonwealth Office

I accept that this is a probing amendment, and I hope to give a detailed response to help hon. Members.

Amendment No. 35 relates to redress schemes under clause 49 and the matters that a regulator must take into account prior to approving a redress scheme in its sector. The interests of “relevant consumers” is one of the aspects that a regulator is required to consider when approving a redress scheme. By deleting the word “relevant”, the amendment would require the regulator to have regard to the interests of consumers in general when dealing with the regulator’s regulated providers, instead of to those specified as “relevant consumers” in the second column of the table in clause 42.

“Relevant consumers” of the regulated providers listed in clause 42(1) are defined in the Bill. For gas supply licences, it is:

“A person who is a consumer in relation to gas supplied by a gas supplier (within the meaning of Part 1 of that Act)”,

or, on transportation licences:

“A person (other than a gas licensee) who is a consumer in relation to services provided by a gas transporter (within the meaning of Part 1 of that Act).”

I think that the second definition was an amendment in another place following a cross-party debate.

For electricity supply licences, it is:

“A person who is a consumer in relation to electricity supplied by an electricity supplier (within the meaning of part 1 of that Act)”,

or, on distribution licences:

“A person (other than an electricity licensee) who is a consumer in relation to services provided by an electricity distributor (within the meaning of Part 1 of that Act).”

For postal services, it is:

“A person who is a consumer in relation to relevant postal services” within the meaning of section 41 in part 2 of the Postal Services Act 2000. For water, it is:

“A person who is a consumer in relation to services provided by a water undertaker, sewerage undertaker or licensed water supplier in its capacity as such.”

There is no intention to attempt to limit or exclude any particular consumers in the sectors to which the redress provisions are to apply—the energy and postal services sectors. The main point to note is that the provisions are to be applied by more than one regulator, so each will be required to take account of the interests of relevant consumers in relation to its regulated providers. The expression “relevant consumer” refers to the consumers identified in the table inclause 42, as I have just explained.

Orders made by the Secretary of State concerning membership of a redress scheme introduced under clause 47 will be binding on regulated providers. It follows that the consumers in a position to benefitfrom the introduction of the redress provisions will be those who qualify by virtue of the fact that they are  consumers of services supplied by those regulated providers. They are the relevant consumers whose interests a regulator must take into account when deciding whether to give approval for a redress scheme. I hope that that explanation will provide clarification for the hon. Gentleman and encourage him to withdraw the amendment.

We expect that service providers will establish their own redress schemes, which will be funded by their members. The members of the schemes will decide and agree on their funding structures, but we expect that they are likely to follow a pattern similar to that of existing redress schemes whereby a subscription fee is levied, typically based on the size of a firm or its turnover, coupled with a case fee payable by each member for every case referred to the scheme. The scheme is then free to consumers.

The redress schemes are expected to operate on a cost recovery basis. General practice is for fees to be set at a level that covers the costs of the scheme, based on the anticipated number of complaints. Fees can then be reviewed regularly and adjusted to reflect any differences between the actual number of complaints received and the estimated level of complaints.

Similarly, any scheme administered by the Secretary of State would operate purely on a cost recovery basis and could not be profit-making. Any subscription costs or case fees charged to members of a scheme would be set and periodically adjusted only to cover the costs of running the scheme. I hope that that provides additional clarification. The schemes will not be profit-making enterprises; fees will cover their costs to ensure that they are free in all circumstances to the consumer who wants to make a complaint and have it dealt with effectively.

Photo of Mark Prisk Mark Prisk Shadow Minister (Business, Enterprise and Regulatory Reform)

That was a thorough, comprehensive exposition and will be helpful. A number of people who are following our deliberations wanted clarity on the matter, and the Minister was extremely helpful. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 49 ordered to stand part of the Bill.