Clause 50(4) reads:
“A regulator may, in accordance with section 51, withdraw its approval of a redress scheme,” but goes on to say that it
“may do so generally or in relation to consumer complaints of a description specified by the regulator.”
The purpose of this probing amendment is simply to establish on what basis a regulator might withdrawits approval of a redress scheme. The wording of the subsection is a little unclear, and for the sake of the record it would be helpful if the Minister couldclarify it.
Our understanding is that the amendment is intended to remove the flexibility of the regulator to withdraw general or specific parts of a scheme. I have a deep and dark suspicion that the Minister will say that it is important to keep the flexibility so that the scheme might run as well as possible, and I have a great deal of sympathy with that. However, will he provide an example of how some of a redress scheme could work, but not all of it?
I thank hon. Members for their comments and questions.
Amendment No. 39 relates to the redress scheme approval provisions of clause 50, and the discretion available to a regulator in considering the withdrawal of approval for a redress scheme. Circumstances might occur that make it necessary for a regulator that has given approval for a redress scheme to operate to consider withdrawing that approval. The Bill allows for a regulator to have the option either to withdraw approval from a whole scheme or to do so in relation to a specific type of consumer complaint. The hon. Lady was right to say that it is the Government’s view that the regulator must have the flexibility necessary to protect consumers.
Those circumstances could include problems in the operation of the scheme, including processes, service standards, outcomes of cases or other issues affecting its effectiveness. Other circumstances might arise in future, such as the introduction of new regulations that guarantee automatic compensation in respect of certain types of complaint, resulting in less need for the redress scheme to focus on a particular class of complaint. That takes us back to a point made bymy right hon. Friend the Member for Coatbridge, Chryston and Bellshill in amendment No. 73. For the measure to work in practice, information is required on, for example, service standards; the outcomes of cases; the interaction between the processes and the individual consumer who makes a complaint; and, in later years, complaints of such a nature that they will be guaranteed automatic compensation. The redress scheme will then be able to concentrate on thedifficult, complex cases that need to be resolved in an effective way.
The effect of the amendment would be to removethe discretion to withdraw approval in relation to consumer complaints of a specified description. That would not be helpful for consumers, because it would remove the flexibility that regulators require to ensure that schemes operate effectively on their behalf. Redress schemes are about advocacy and achieving appropriate compensation—whatever it might be—for the consumer. Therefore, we have to be absolutely diligent in the way in which we operate schemes, and must be able to effect change if change is required.
I understand that the amendment is intended to be a probing measure, but I have to say that being obliged to take a blanket approach to the withdrawal of approval for a scheme would risk disadvantaging consumers in areas in which the scheme is operating satisfactorily. That goes to a point made by hon. Lady. On occasions, a scheme might not operate effectively in a specific area, and the regulator will decide that improvement is required. It would be nonsensical to have to withdraw that scheme in areas in which it operates effectively. That would mean that thousands of genuine complaints were not resolved effectively and the scheme would be brought into disrepute. In addition, it would be unfair on the companies that were paying for it to work; they would have a way of resolving disputes but would not be able to use it, so would become the butt, as it were, of complaints because complainants would have nowhere else to go to. Flexibility is important so that schemes can operate satisfactorily and the regulator can change anything that is unsatisfactory to resolve issues.
In deciding whether to approve a redress scheme, a regulator must consider a number of factors, such as the provisions of the scheme. We must ensure that those include the interests of consumers and generally accepted principles of best practice. Having given approval for a redress scheme covering complaints in a range of categories such as billing, customer service and metering, a regulator might need to withdraw approval in respect of just one aspect of it. For example, a change in technology might mean that the service being provided for a particular category of complaint no longer met all the conditions on which approval had been given. It would, therefore, have to change. This is about keeping up with changes in a way that is not detrimental to the consumer who has a legitimate complaint that needs to be resolved. The amendment could also result in putting members of that scheme who would have a statutory requirement to belong to an approved scheme at risk of being in breach of that requirement if they are unable to find an appropriate alternative scheme to join.
I hope that my explanation helps the hon. Lady and the hon. Gentleman to understand why the clause is so drafted.
The Minister has given us a comprehensive explanation of the clause. The key word is “flexibility” and he was right to emphasise it, particularly in some of his later remarks. It will be helpful to those who want to understand how the measure will work and the circumstances in which it will apply. On that basis, I beg to ask leave to withdraw the amendment.