Clause 256 - Right to cancel during cooling-off periods

Digital Markets, Competition and Consumers Bill – in a Public Bill Committee at 3:15 pm on 4 July 2023.

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Photo of Giles Watling Giles Watling Conservative, Clacton 3:15, 4 July 2023

I beg to move amendment 113, in clause 256, page 170, line 22, leave out “any circumstances” and insert

“circumstances where the consumer has not yet made use of the goods or service provided under the contract”.

I had intended to withdraw this amendment, because I received assurances from the Minister that the Government will take this issue seriously. I tabled it because of concerns about the length of cooling-off periods. People can join a service, binge watch an entire series, resign, and then go back again and again. The Minister assured me about that, but I look forward to hearing his comments.

Photo of Kevin Hollinrake Kevin Hollinrake Parliamentary Under Secretary of State (Department for Business and Trade)

I thank my hon. Friend for his amendment. He is absolutely right to draw attention to this issue.

The initial cooling-off period ensures that a consumer has 14 days to cancel after signing up if they change their mind or do not like the product. The renewal cooling-off period further strengthens consumers’ cancellation rights by giving them an additional 14-day window to cancel their contract later on in some circumstances.

My hon. Friend makes important points. Cancellation rights should be fair to businesses, of course. The aim of the measures in the Bill is to give consumers a window in which they can change their mind before taking on, or renewing, a contract for what can be a significant ongoing liability. We heard several examples of consumers who missed the end of their free trial by a short period, and were then committed to an expensive contract because they had not cancelled in time. However, my hon. Friend makes a good point because there are particular circumstances around the supply of digital streaming services that have to be taken into account to ensure the Bill is fair to businesses. We will engage with businesses, regulators and consumers to ensure that refund and return sales are fair and practical, and work across all sectors, including digital streaming. We intend to return to this issue in secondary legislation to ensure the provisions are fair to providers and the services they provide. I very much hope my hon. Friend feels able to withdraw his amendment. We will engage in further discussions in due course.

Photo of Giles Watling Giles Watling Conservative, Clacton

I thank my hon. Friend for his reassuring comments. He says we will deal with this issue later when we come to secondary legislation, so I will not press the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Maria Miller Maria Miller Conservative, Basingstoke

With this it will be convenient to consider clauses 257 to 259 stand part.

Photo of Kevin Hollinrake Kevin Hollinrake Parliamentary Under Secretary of State (Department for Business and Trade)

Clauses 256 and 257 set out an initial cooling-off period, and, in some circumstances, a new renewal cooling-off period. They provide that the consumer can cancel any time after signing up until 14 days after receiving goods, or 14 days after the date of the contract for anything else, such as services or digital content. The renewal cooling off period will apply when a free or low-cost trial ends and the consumer becomes liable for payments or higher payments. It will also apply when a contract auto-renews to a new term of 12 months or longer.

Clause 258 requires traders to give consumers a cooling-off notice whenever a renewal cooling-off period applies. This information confirms that the contract has renewed and informs consumers of their right to cancel.

As I mentioned in relation to amendment 113, clause 259 creates a regulation-making power. The regulations may provide for conditions or restrictions on the exercise of a cancellation right. They will set out detailed rules on the consequences of cancellation for the consumer’s refund rights and any arrangements for goods to be returned to the trader.

Clause 259 also gives power for a cooling-off period to be extended in specified cases. The regulations will set clear expectations on traders and consumers, so that they know their respective rights and responsibilities when a consumer cancels their subscription contract. Government will work with a range of stakeholders in developing the regulations. Where we intend to make regulations containing rules extending a cooling-off period, we have committed in clause 259(5) to consult.

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy) 3:30, 4 July 2023

The clause gives the consumer the right to cancel a subscription contract without penalty during the initial cooling-off period and any renewal cooling-off period. That right, exercisable in any circumstances, cannot be subject to any restrictions or conditions imposed by the trader. The definition and timescales of cooling-off periods are defined in later clauses.

The clause is important to give consistency to the consumer about what rights they should expect in both initial and renewal cooling-off periods. We welcome the clause enabling the consumer to stop the renewal of a contract that may have renewed without them realising. I am also grateful to the Minister, for his response to amendment 113 and the questions posed by the hon. Member for Clacton.

Clause 257 sets out the meaning of initial and renewal cooling-off periods, as well as the timescales for such periods. We welcome the clause and the clear definitions. Under clause 258, the trader would be required to give a consumer notice of each renewal cooling-off period. Again, we welcome that, the clarification of consumer rights in those periods and the provision of transparency to consumers.

Clause 259 provides a delegated power for the Secretary of State to make further provision, by regulations, on the exercise of a consumer’s rights to cancel a subscription contract. It specifically empowers the Secretary of State to make provision on the exercise of the rights of a consumer to cancel a subscription contract, the consequences that follow a consumer exercising such rights, and extending a cooling-off cancellation period in such cases and to such an extent as the regulations may specify. We recognise the need for flexibility in this new subscription contract regulatory regime, and thus the flexibility to future-proof the regime, dealing with circumstances as they arise. We support this clause as well.

Question put and agreed to.

Clause 256 accordingly ordered to stand part of the Bill.

Clauses 257 to 259 ordered to stand part of the Bill.