§ Mr. John MacKay
I beg to move amendment No. 65, in page 17, line 7, at beginning insert`Subject to subsection (2A) below,'.
Mr. Deputy Speaker
With this it will be convenient to take Government amendments Nos. 66 to 73 and No. 75.
§ Mr. MacKay
As drafted, clause 23 does not make it clear that a pawnbroker, who also acts as a secondhand dealer, requires a secondhand dealer's licence. The purpose of the amendments is to identify the activities which are exempt from the second hand dealing provisions rather than, as at present, the person engaged in the activities.
Amendment No. 65 is a paving amendment for amendments Nos. 66 to 69 and 72 which identify the businesses exempt from secondhand dealing requirements. Amendment No. 70 seeks to improve the drafting of subsection (2)(d), which was criticised in Committee, and amendment No. 71 is consequential. The amendments meet the Government's undertaking in Committee to reconsider the drafting of the clause. I also gave undertakings in Committee about considering the substance of Government amendments Nos. 73 and 75. The hon. Member for Glasgow, Garscadden (Mr. Dewar) criticised some of the provisions in subsection (3) and he successfully moved amendments to remove two subparagraphs. I undertook to consider whether subsections (3) and (4), as amended, were necessary and concluded that they were not. Therefore, amendment No. 73 deletes those subsections, which I am sure will delight the hon. Member for Garscadden.
Amendment No. 75 is consequential and deletes—this will again bring joy to the hon. Gentleman—the definition of pawnbroker, which is now incorporated in the body of clause 23(2), and of pawn receipt and pawn ticket.
I commend the amendments to the House.
§ Amendment agreed to.1138
§ Amendments made: No. 66, in page 17, leave out lines 13 and 14, and insert—
`(2A) A second-hand dealer' s licence shall not be required for carrying on—
(a) the business of a pawnbroker (that is to say, a person who, under a regulated agreement under the Consumer Credit Act 1974, takes an article in pawn);'.
§ No. 67, in page 17, line 15, leave out 'person carrying on'.
§ No. 68, in page 17, line 18, leave out 'person whose business' and insert 'business which'.
§ No. 69, in page 17, line 20, leave out 'person whose'.
§ No. 70, in page 17, line 21, leave out 'is incidental' and insert 'incidentally'.
§ No. 71, in page 17, line 21, leave out 'of his'.
§ No. 72, in page 17, line 24, leave out 'person engaged in the'.
§ No. 73, in page 17, leave out lines 30 to 36.
§ No. 75, in page 18, leave out lines 4 to 11.—[Mr. John MacKay.]
§ Mr. John MacKay
I beg to move amendment No. 74, in page 18, line 3, at end insert—
This matter was the subject of an interesting debate in Committee and I indicated that the Government had not closed their mind to including in the Bill a requirement on secondhand dealers of motor cars to record the mileage of secondhand cars when they acquire them for resale. I also pointed out that any amendment would be better made to clause 23 rather than to clause 25. The amendment requires secondhand car dealers to keep records of mileage readings on any secondhand car which they acquire for resale. It further provides for it to be an offence to fail to keep a record, and for a defence of due diligence.
- '(5A) A second-hand dealer acquiring a second-hand motor vehicle for the purpose of its re-sale in the course of his business shall keep a record of the mileage reading on the vehicle's odometer when he acquired it.
- (5B) Any person who contravenes subsection (5A) above shall be guilty of an offence and liable, on summary conviction, to a fine not exceeding £200.
- (5C) It shall be a defence for a person charged with an offence under subsection (5B) above to prove that he used all due diligence to prevent the commission of the offence'.
I am sure that the amendments will commend themselves to the House. They were argued strongly on both sides of the Committee and I am glad to fulfil the understanding that I gave to consider them.
§ Mr. Dewar
The Under-Secretary of State looked pleased with what he said at the end of his remarks. I shall try not to spoil the atmosphere. I am glad that he has been able to move on this matter. He was right to say that a good deal of anxiety was expressed in Committee. It is important that we try at least to include some safeguards. We cannot by any means include a fail-safe system that will eradicate the abuse, but we should at least include some bulwark against the widespread abuse of clocking, the turning back of odometers, in secondhand cars.
I do not wish to repeat all the arguments from Committee. It would be an exaggeration to say that that would weary the House, but it would weary the Minister and his gallant lieutenants who have stayed to support him. I believe that that would be unfair. When I introduced the probing amendment which led to the present proposals, I drew attention to some startling facts and figures, most of them culled from the impeccably respectable source of the Office of Fair Trading. It published a consultative paper in July 1979 which dealt with odometers and the fraudulent faking of the mileage covered by secondhand cars.
1139 The first fact which surprised me was the importance of the secondhand car trade. Perhaps that suggests that I come from a sheltered and secure financial background. I was surprised to learn that of the 11 million privately owned cars in the United Kingdom at that time—I do not suppose that the figures have changed much—about 10 million had been purchased on the secondhand car market. Therefore, about 90 per cent. of private cars are bought not new but second hand. That opened my eyes to the scale of the potential problem. Indeed, it was pointed out to me that customers buy only 300,000 to 400,000 new cars each year, while they buy about 3 million secondhand cars from the motor trade.
I do not wish to weary the House, but it is worth mentioning two other facts. First, the Office of Fair Trading has been alarmed by the enormous growth in the number of complaints about motor cars. I am not referring specifically to odometers but to the number of complaints about cars in general, particularly about used cars. There are now more than 50,000 complaints a year to local trading standards departments and citizens' advice bureaux. Of those complaints, a substantial number involve clocking back of one form or another.
I was started on this chase specifically by a survey carried out by the Office of Fair Trading. In the latter part of 1978 it asked 10 local trading standards departments to make inquiries into the problem. The local trading standard departments asked a number of companies which were selling off fleet cars to record the mileage as they sold them. They then checked the mileage after they had been sold. Of a sample of 1,614 cars, it was discovered that 874—almost 54 per cent.—had been clocked. I stress that those were fleet cars where, no doubt, the temptation for that type of dishonesty is greater than it would be in a balanced sample across the secondhand car trade. However, it is still astonishing that 54 per cent. of such a large sample had been tampered with in this way.
The Office of Fair Trading took a serious view of those results. Its report said:It is generally accepted that, when accurate, mileage readings are often a useful and readily apparent indication of the likely condition of a vehicle. The prevalence of clocking, however, means that the mileage readings of many used cars are valueless or are positively misleading. Our consultative paper suggested that a high proportion of used cars were being clocked and that large illegal profits were being made with only a limited risk of prosecution. The response that we have received confirms that each year, as a result of this fraudulent practice, many consumers are deceived into buying high mileage cars.There is a substantial abuse. I am grateful to the Minister that he has at least moved some way towards trying to combat it.
Having said that, and being suitably grateful for and appreciative of the Minister's efforts, I shall express some reservations and raise some queries about the specific form of amendment No. 74. The theory is that if one has an accurate record of the mileage at the time that the car is sold, it is possible to check to ascertain whether an offence has been committed. That in itself is a useful preventive measure. It is to be hoped that the fact that record has to be kept and the mileage has to be recorded by the dealer will be an inhibition, before the dealer sells the car on, to tampering with the odometer.
1140 The amendment consists of only three small subsections. Given the lack of definition and the lack of backing detail, I am suspicious about the working of the proposed machinery. I drew the attention of the Scottish consumer council and the Strathclyde regional council's consumer protection department to the Government's intentions and asked them for their comments. They provided me with a formidable list of questions which they thought were relevant and which are not answered by the amendment.
I am not clear about the material and records that will have to be kept. When a secondhand dealer acquires a secondhand vehicle for the purpose of resale, he will be required to keep a record of the mileage recorded on the vehicle's odometer when he acquires it. It is self-evident, but presumably he must record the registered number of the car. Does he have to keep details of the person from whom he bought it? That would be valuable in tracing a potential offence. The Strathclyde regional council's consumer protection department thinks that the dealer should record also the registered engine number, the name and address of the seller and the date of sale.
Perhaps that is all common sense but it is not spelt out in the amendment. It might be possible to include the requirement in the regulations that the person who is selling and handing over the car should sign the record of the mileage that is recorded. That would be a considerable safeguard because it would provide an independent check that when the record was made it was a correct record of the mileage at that time. That seems to be a simple and important further safeguard. Has it been considered? It has not been written into the amendment but I think that it is important.
The Scottish consumer council has argued strongly that that procedure should be carried out. It is important that the mileage data should be countersigned by the seller of the vehicle, as clearly that would go a long way to ensure that someone did not under-record at that point and then at leisure bring back the odometer to correspond with the false record that had been entered in the books on acquisition.
How long should the record be kept? This is another query that has been raised with me and on which the amendment is silent. It has been suggested that it should be kept for three years. The Minister might think that that is unreasonable but it has been suggested because it is the period that is set out in the Trade Descriptions Act 1968. It was thought peculiarly appropriate that that should remain in phase and that three years would be the right period for the preservation of the record.
I could sophisticate and proliferate these questions considerably. There is a great paucity of detail on exactly what is expected and on how the safeguards will operate. For example, are auctioneers to be included as dealers? The Minister will recognise that, when secondhand cars move from their first private owner, they often go through the hands of auctioneers. I am informed that, sadly, that is a point at which much abuse can arise. An auctioneer may not be a secondhand car dealer for these purposes.
In other parts of the Bill there are references to the status of auctioneers. The point that I am making is that, although there is a gesture in amendment No. 74, it is only a gesture—a skeleton of a good and useful safeguard that is being written into the Bill. I am not sure that we have sufficient flesh on that skeleton to make it an effective servant in the fight against abuse. Is it possible, for 1141 example, to make regulations adding to the proposals? There is no written provision for such regulations. Perhaps the Minister can help me on that point.
When I took advice about improving the position, it was suggested that the House of Lords should be invited to disagree with the amendment and to substitute another, perhaps in the same form but with the important addition that the details of the Bill could be regulated by order of the Secretary of State or by regulations. Such a possibility is provided for in other parts of the Bill.
My proposal is important. Those who are professionally involved in regulating secondhand car sales and the prevention of fraud have many unanswered questions that cannot be answered by the slim amendment that we are considering. I hope the Minister will respond later. I am not trying to be obstructive or in any sense ungrateful for what he has done. We both have the same aim. My anxiety is always for his reputation. If he has reached the point where he is prepared to make a concession, that concession should be an effective one and he should not be accused of making a token gesture, or of trying to get out of a difficulty when his hon. Friends in Committee were showing signs of restlessness about the Minister's lack of response and the fact that he could not implement the amendment that he has imported into the Bill. We have a common interest in ensuring that the amendment is effective. I am unconvinced that it is effective in its present form.
§ Mr. John MacKay
I thought that the first part of the hon. Gentleman's remarks were too good to be true when he seemed to welcome the amendment and leave it at that. I do not wish to be unreasonable, but the amendment before the House closely mirrors the amendment that he tabled in Committee. I am gently reminding him of that fact.
We are talking about the details of the records which, if authorities decide to license secondhand car dealers, will come within clause 23(5). The licensing authorities must make provision for the information to be included in the records. That answers some of the points. When they make decisions about licensing secondhand car dealers, they will decide what goes on the record, such as the car number. The ownership of a car and related matters can be traced back via the number and the log book. Clause 23(5) states that authorities' powers include the provision of information to be included in the records, such as the premises on which they are to be kept and the period for which they are to be kept. That point answers another query put to me by the hon. Gentleman about how long the record should be kept.
There is no power under which the licensing authority could oblige the seller of the vehicle to sign on the dotted line for the mileage. If the buyer is in any doubt, he can examine the record and, if he is keen on the car, but wishes to make some checks, he can ask the previous owner whether the mileage on the record was the same as when the vehicle was sold.
As we said in Committee, we cannot close all the possible loopholes. The amendment is an effort to make it more difficult for dishonest dealers to perpetrate that dishonesty and to make it easier for the bulk of the honest motor trade to conduct business openly with its clients. If the licensing authority holds the record, someone who buys a secondhand car can check the mileage. That is the 1142 protection that will be afforded to buyers of secondhand cars. I hope that I have answered the hon. Gentleman's points.
§ Mr. Hugh D. Brown (Glasgow, Provan)
Does that mean that those who sell their own cars at some self-appointed place are not obliged to produce a record and that the buyer of that car is not covered by the provisions of the clause or the amendment?
§ Mr. MacKay
I know of no qualifications about the place where an individual may sell his motor car without involving a secondhand car dealer, but I am not a secondhand car dealer and if I sell my motor car to the lion. Gentleman no record must be signed. The clause deals entirely with secondhand car dealers in an area where the local authority decides to register them.
It is an important step forward. I shall not outline the real problems that have arisen in the motor trade as a result of tampering with the mileage clock. The hon. Member for Garscadden reminded us of those problems. This is a useful amendment to the legislation and will be a considerable protection to consumers.
§ Mr. Dewar
With the leave of the House, may I tell the Minister that he sometimes says things with great coolness. He is right in saying that amendment No. 74 is similar to the one that I moved in Committee. That is the burden of my complaint, because what I moved in Committee was a brief probing amendment to force some discussion. If it found favour with the Committee, I intended to withdraw it so that the Minister could draw up an adequate blueprint that would satisfy our needs. The first part of that strategy worked excellently with his co-operation, but the second part has been something of a frost and I am not satisfied with what the Minister said.
There will be problems and I am not entirely satisfied that the powers of local authorities to regulate in the way that the Minister suggested will be adequate to meet the problem. The best thing that I can do is to withdraw from the field for the moment but to take further advice from those who are deeply involved in the problems and return to the Minister, if necessary. Whether I can do that before the House of Lords has considered the amendments, although it may be somewhat daunted by the number, do not know. However, I hope that the Minister will accept that the matter requires monitoring and that he will listen to representations in an effort to improve the position. It is an important matter and the Minister has done well in responding. I should be sorry if some inflexibility were to set in, given the substantial increase in complaints. I could weary the Committee with figures from the consumer protection department of Strathclyde regional council—I hope that the Minister will be prepared to consider the matter as it progresses. I see him nodding assent, as I expected that he would, so I shall leave the matter there.
§ Amendment agreed to.
§ Amendment made: No. 75, in page 18 leave out lines 4 to 11.—[Mr. John MacKay.]
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