§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Alastair Goodlad.]
12.17 am§ Mr. David Porter (Waveney)I shall start by thanking Mr. Speaker for giving me this opportunity to raise the subject of consumer protection. I also want to thank and pay tribute to Miss Susan Fleming, a third-year politics major student at the university of East Anglia. As part of her course she has been assigned to work on a project of my choice for one day a week this autumn term, and I am grateful to Miss Fleming for her research. I am grateful to my hon. Friend the Minister for giving me time to air some of my views. I also thank most warmly the staff of the National Consumer Council who have provided helpful assistance.
In order to make consumer protection a reality and not a pious intent, I call for the establishment of a CIA in Britain, a consumers' interests authority. Although I am reluctant to advocate more bureaucracy, I think that, parallel with the green revolution and in tandem with individual choice and responsibility, we need to go into the 1990s with strengthened consumer protection.
The proposals by the National Consumer Council for a consumer guarantee on cars and household goods costing over £50 go a long way towards providing the consumer with real choice and protection in the marketplace. That guarantee concept is at the heart of customer confidence.
Our trading standards service generally does a good job. Sometimes its members are limited by resources, and sometimes by their brief, the criminal side of the standards enforcement, which leaves a gap on the civil side, which has no protection.
An authority or agency such as the one that I propose would include the parameters of the trading standards service to some extent, some parts of the Office of Fair Trading, weights and measures, and the various schemes for independent arbitration and would reduce some of the work load of the small claims courts.
Local authorities should decide their priorities on trading standards. Consider the differences in spending per head on consumer protection last year—it ranged from £2.05 in Warwickshire to 64p in Lancashire. The projected range for the current year is from £2.62 in Warwickshire to 89p in Lincolnshire.
Local democracy apart, consumers are entitled to a more certain sign that local authorities, as enablers, are meeting their commitments. I accept that the figures could, to some extent, reflect the inefficiency of the statistical service. I do not want to go too far down that road, and talk about those figures, but they illustrate my point.
We hear daily about the rights of voters, the rights of women, the rights of workers and even the right to die. Surely, as consumers, we must expect a minimum agreed standard of manufacture and service. That is not too much to expect, is it? I do not think that an agreed standard that manufacturers of goods and suppliers of services have to meet is too much to expect.
Let us take the famous case of Mr. Bernstein. Some 27 days and 140 miles after he bought his Nissan Laurel car, the engine seized. He was forced to take the garage that sold it to him to court, but the judge told him that it was too late for him to reject the car, and that he was only entitled to compensation.
1286 The Supply of Goods (Implied Terms) Act 1973 gives the consumer the right of redress against the retailer if goods are faulty, but it is flawed, because the consumer is deemed to have accepted the car or the goods after an unreasonably short time. Therefore, the consumer loses the right to get his or her money back.
Let us take the case of Miss Cox and Mr. Flowerday, two of my constituents, who started a small business under the Government's enterprise allowance scheme. They bought a brand new Fiat for the business. From day one it was clearly a dud. Eventually, after endless repairs, an independent assessment and much citing of the Sale of Goods Act 1979, a solicitor advised them to accept £100 m compensaton, because they could not afford the court procedures. Why should they have had to go to the expense, the delay and the inconvenience of going to court? If they could have gone to a consumer interest authority, the court element might not have been necessary, but if it had been, the authority would have handled it on their behalf.
Under current legislation, a contract is established between the retailer and the customer. Last Session, I introduced a Ten-Minute Bill—the Public Servic:e Contracts Bill. I sought to lay down the right to compensation when public services such as British Rail, the Post Office, and local authorities failed to deliver an agreed minimum standard, if possible a legal minimum standard. I still believe that that is right, and that it should apply to the sale of goods in the same way.
The Retail Consortium hopes to be able to support the concept of consumers' guarantees, a subject on which much has been said lately. It wants satisfied customers. After all, business depends upon satisfied customers. In millions of daily transactions, best practice prevails, and can be demonstrated to do so. Of course there are cowboy sellers, and unreasonable customers, but retailers are keen to protect consumers' rights.
The Retail Consortium is part of a monitoring group on misleading prices, which was set up by the Minister, who, I think, prefers a code to regulation when there is detailed agreement within a trade and with enforcement agencies. Perhaps the role of the DTI in those matters needs defining.
The convention that the retailer is liable stems from the clout that he presumably has with his own suppliers and the difficulty of the individual taking on the large manufacturers. Consider the Philips fan-assisted oven that did not reach roasting temperature unless the fan was disabled. It was a straightforward design fault, but Philips denied responsibility and passed the buck back to the retailer. The customer was left out of that entirely.
We also have the case of the Honda motor bike, the brake of which would seize in snowy weather—with obvious consequences. Honda did not see it as a manufacturing problem, but blamed the British practice of salting roads in icy weather.
They may be isolated and extreme cases, but an enforcement agency could make even giant manufacturers more responsive to consumer demands. We should never under-estimate the power of consumer demand. The marketing of products in aerosol cans, for example, is being changed out of all recognition because of it.
I believe that there is a growing tide of demand for a legally enforced, reasonable minimum standard for goods and services. In Britain, up to 6 million people a year fail to get adequate satisfaction when something they have 1287 bought goes wrong. It is not just the purchaser who loses out. As consumers, we all pay for the production and marketing of shoddy, if not useless, goods.
A potential buyer looking at a line of washing machines or fridge-freezers has nothing to tell him or her how much faith the manufacturer has in the reliability of his product or how efficient the after-sales service will be. That means that British manufacturers are missing a vital element that would help them enormously.
The NCC consumer guarantee would cover the entire product for 12 months at least, and any fault would be repaired at no cost to the consumer, provided that the consumer had not caused it. If the item were not repaired within five days—three days for cars—the consumer would be loaned a similar one, or compensated for loss and expenses. A fault would be put right in three attempts and the product would not be out of use for more than 30 days in any 12-month period, or there would be a choice of a refund or replacement.
The idea is not to cause manufacturers to mark the goods with a guarantee, but to oblige those without it to be clearly marked "This has no consumer guarantee." What an incentive for improvement that would be. What an act of faith it would be for quality manufacturers. What a death sentence it would be for most of the cowboys.
Details are subject to debate, but what about the principle? Even then, things may still go wrong. We have independent arbitration schemes, and banks and building societies have ombudsmen. There is talk of the tourist industry having an ombudsman. Ombudsmen have the good will of the industry and the support of the public. We should have a high street ombudsman for the consumer in the street.
Sweden has an independent arbitration scheme in its Public Complaints Board. It deals mainly by post with civil claims, at very little public cost. The board gives an advisory judgment which, if not accepted, is sent to arbitration. Names and details are widely publicised, which has proved effective. Power of public embarrassment is an additional tool on the consumer's side. Sweden's system is less bureaucratic than our small claims court, and I hope that it commends itself to the Minister.
There is a model in the United States. Most states have a utilities commission with power to refer to the district attorney complaints of violation of legal service standards. In effect, the district attorney can prosecute on behalf of individuals, and most get compensation out of court as a result. It is a principle that can be adapted here—legal minimum standards without being too complex, expensive or off-putting.
A CIA would be customer-friendly and be seen as such. It would present not an obstacle course in the minefield of consumer legislation but a powerful ultimate sanction in a society in which the Government have given the individual choice and responsibility.
I ask two things of the Minister. First, he should give periodic remits to the NCC. It has independence written into its constitution, but it is funded by taxpayers. Will he ask it to explore the issue of redressing the high street and how it may be made more effective? Secondly, if the hon. Member for Clwyd, South-West (Mr. Jones) or any other hon. Member brings forward a consumer guarantee bill as 1288 a private Member's Bill, will the Government maintain benevolent neutrality or support the guarantee concept, even if they want to amend the details?
I shall end by paraphrasing Lord Palmerston who, you will remember, Mr. Deputy Speaker—from history lessons, not from memory—said in 1850:
a British subject, in whatever land he may be, shall feel confident that the watchful eye and the strong arm of England will protect him".I say that, in whatever high street, market stall, corner shop or out-of town shopping centre, and whatever service a consumer pays money for, he shall have the strong arm and watchful eye of the CIA—the consumers' interests authority—and the consumers' guarantee available to him.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth)I congratulate my hon. Friend the Member for Waveney (Mr. Porter) on securing the debate. The House should be grateful to him for giving us an opportunity to discuss an important subject that represents a major part of my portfolio and for drawing our attention to his constituents' concerns. I acknowledge the presence of the hon. Member for Clwyd, South-West (Mr. Jones), who has taken the trouble to be in his place, to whom my hon. Friend referred. Also present is my hon. Friend the Member for Great Yarmouth (Mr. Carttiss), who has shown an interest in these matters and who is with his parliamentary neighbour this evening to give him support.
I shall examine any proposals that come forward in the form of a private Member's Bill, or any other form, to give effect to the National Consumer Council's recommendations. I shall do so with a critical eye because I am concerned to ensure that any proposals are workable and not over-bureaucratic. My hon. Friend the Member for Waveney prays in aid the United States, and I admire that country more than most hon. Members. I am aware, however, of the differences between the United States and the United Kingdom. I would be reluctant to take this country down the rather litigious route that the United States has taken in many instances. The costs of remedy often exceed the benefits either to consumers or producers.
My hon. Friend the Member for Waveney rightly laid stress on the importance of giving protection to the consumer. That is a principle to which the Government and the Department of Trade and Industry have always been fully committed. I remind my hon. Friend of a passage in my Department's White Paper of January, 1988:
In consumer protection, the policy emphasis will reflect the Government's belief that the best form of protection comes fom consumers making well-informed choices and acting in their own interests. To achieve this, information can be more effective than regulation. However, where the case is made out for regulation on safety or other grounds, the Government will not hesitate to act.That remains our position.The consumer already enjoys the protection of a comprehensive and well-developed framework of legislation, backed by effective and equitable mechanisms for redress. The Government provide support to the National Consumer Council and the National Association of Citizens Advice Bureaux, which provides an important source of advice, information and research to consumers.
1289 Legislation, and even the new type of bureaucracy that my hon. Friend the Member for Waveney has suggested, is not necessarily the answer to every perceived problem. New legislation takes time and can often be over-bureaucratic, and that is a danger that exists with my hon. Friend's suggestion. Voluntary response by industry is often quicker and more effective. Consumers have benefited considerably from industry initiatives to develop codes of practice and to provide mechanisms for the resolution of disputes, driven, as ever these matters are, by the need for it to compete in the marketplace and to attract and retain the confidence of consumers in the products that it is offering. An effective consumer policy is a combination of statute law, self-regulation and information.
My hon. Friend the Member for Waveney has spoken about the importance of protecting consumers' rights when goods are bought. The Sale of Goods Act 1979 sets out what the consumer is entitled to expect and provides him with remedies if things go wrong. The Act is one of the most fundamental pieces of our statute law, covering everything, as has been said, from a box of matches to a nuclear submarine. I do not know how many claims have been made under the heading of the second item, but it is one that we like to quote.
No statute can have been more frequently effective—it is usually unseen in its operation—in everyday life. If the average shopper made only three purchases a day, for example, the number of daily transactions governed by the Act would be over 100 million. Under the Act, traders are required to sell goods which are of merchantable quality, which are fit for the purpose and which correspond to their description. Traders cannot exclude these provisions from their contracts with consumers. The Act allows the buyer, if he acts within a reasonable time, to reject goods which are not of merchantable quality and to receive back the purchase price.
If a latent defect comes to light later, after the goods have been in use for some time, the buyer is still entitled to claim damages and this right is not subject to any time limit except the normal rules which apply to the limitation of actions. In awarding damages, the courts would take into account the use the consumer had had from the goods.
§ Mr. Martyn Jones (Clywd, South-West)This is crucial to the idea of the consumer guarantee mentioned by the hon. Member for Waveney (Mr. Porter). The problem with the Sale of Goods Act is that rejection is the immediate remedy. In the case of a product that is not repairable, which the Minister mentioned, there is only action at law for repair. If a consumer guarantee were enshrined in law, the product would carry a guarantee for replacement or a refund within a statutory period. That would provide a right for consumers that they do not currently enjoy under the Act. The Minister is missing the problem with the Act in dealing with a rogue product.
§ Mr. ForthI am aware of the hon. Gentleman's interest in and knowledge of the matter. He and I discussed it recently, and no doubt will do so again, as I am sure I will also discuss it with my hon. Friend the Member for Waveney. I do not claim that the Act is perfect. The hon. Gentleman knows that for some time we have wanted to update it. Neither do I claim that all is perfect with guarantees. However, I am not yet convinced that the 1290 National Consumer Council proposal is workable or ideal. I hope that, between us, we can find the best way forward. I shall strive to do so, and I am sure that the hon. Gentleman will do so.
The Law Commissions' review of legislation governing the sale and supply of goods, published in 1987, made a number of recommendations that have been accepted by Government. The main recommendation is that the old requirement of merchantable quality should be replaced with an up-to-date term that recognises the aspects of quality—something dear to the hon. Gentleman's heart —which are important for consumers as end-users of the goods in question. The new Act will spell out that the relevant aspects in determining satisfactory quality include fitness for purpose, the appearance and finish of the goods, their freedom from minor as well as major defects, their safety and their durability. The Government have announced their intention to introduce legislation to implement those changes, which will clarify and strengthen consumers' rights.
Some have argued that consumers' rights should go further. The hon. Gentleman and my hon. Friend both said as much. The argument is that the right to reject and to obtain a refund should be a long-term one and should not necessarily expire after a reasonable time. They also argue that latent defects may come to light only afer some time in use. My hon. Friend referred to the famous—some would say notorious—Bernstein case of the motor car that broke down after a limited period.
The House should be aware that the Law Commissions gave very careful consideration to all the arguments when they considered this issue, but they recommended against creating a long-term right of rejection. They argued that such a right would create major commercial uncertainties and be extremely unfair to sellers. Consumers who bought a defective product would, in effect, get free use of it until the defect appeared. The seller would then be obliged to take back a used product and to refund the purchase price in full. Suppliers would be obliged to hedge against the commercial uncertainties of such a regime and the unwelcome implications for consumer prices. I should want to avoid that, and so, I suspect, would other hon. Members.
My hon. Friend welcomed the National Consumer Council's recommendations on consumer guarantees. He urged me not just to consider them, but more or less to adopt them. I have already given them careful consideration, and there is much in them that I want to think about positively. I agree that guarantees should state their terms clearly and in plain English and I could support legislation that would make such guarantees legally enforceable. I fully endorse the view that any guarantee must be additional to existing statutory protection.
But I do not accept that it is necessary to lay down detailed terms or procedures which would attach to specific products covered by consumer guarantees. To do that would be needlessly bureaucratic and would constrain rather than encourage competition on the terms of individual guarantees, and it may result in some manufacturers withdrawing existing guarantees which offer different terms, which could have the effect of leaving consumers less protected than before.
The Sale of Goods Act provides the consumer with a clear right of action against the supplier, who is normally a retailer. The NCC proposals would involve the manufacturer, who is not normally a party to the contract. 1291 There is a risk that that would result in confusion in some disputes, which might undermine the consumer's rights against the retailer under the Sale of Goods Act.
I would welcome measures that would promote greater transparency of information about guarantees and wider and more open competition in their terms, but the NCC proposals would need more development along those lines before they would attract Government support.
My hon. Friend raised the issue of legal redress in consumer disputes and the problems associated with seeking that redress in some circumstances. Earlier this year, the Lord Chancellor announced, in response to the civil justice review, the introduction of a programme of reforms, designed to improve access to justice by speeding up, simplifying and reducing the cost of civil proceedings.
The Courts and Legal Services Bill permits the Lord Chancellor to replace the present system of jurisdiction with more flexible criteria for allocating business between the High Court and the county courts. This will enable more cases of higher value to be handled and tried in the county courts. Procedural changes, such as a requirement for early exchange of information, the introduction of new pre-trial rules covering more informative pleadings, interrogatories and admission of facts, and the creation of a new system of court control could and should also assist smaller plaintiffs to pursue claims more effectively.
A further development arising out of the civil justice review is the raising of the upper limit for small claims proceedings from £500 to £1,000. I appreciate that that may not be relevant in the case that my hon. Friend cited, but it will be a substantial increase in the facility given to consumers to benefit from the simplified proceedings.
My hon. Friend referred to the problems that his constituents had with the purchase of a motor vehicle. The code of practice for the motor industry is an important supplement to the general law covering the sale of motor cars and it is a good example of self-regulation by the responsible sector of an industry. It provides consumers not only with minimum standards in the sale, repair and 1292 servicing of motor cars, but also with a mechanism for resolving disputes that does not entail having to go to court.
The code has the support of the Director General of Fair Trading, who also has a role in monitoring it and keeping it under review. Any proposals for changing the code are a matter betweeen the director general and the trade associations concerned, and any complaint about a member failing to abide by the code should be directed to the trade association and also to the Office of Fair Trading.
A code of practice is not intended to be a substitute for legislation, and it does not act as such. Nor is it designed to be enforced in the same way as legislation is, but codes of practice have distinct advantages over statutes. Because they are voluntary, they represent a genuine desire on the part of the traders concerned to go beyond the letter of the law in their dealings with consumers. Codes are also more flexible than statutes and can be interpreted more liberally and modified more readily. Furthermore, codes such as the motor code provide consumers with valuable alternative facilities for resolving disputes, which may be quicker, cheaper and less intimidating than going to court, particularly in the case of larger claims.
I have tried to answer most of the points raised by my hon. Friend. I have also tried to deal with some of the matters that have been considered by others, including the hon. Member for Clwyd, South-West. I hope that my hon. Friend the Member for Great Yarmouth, who has been listening, has been persuaded that the Government are aware of the concern shared by many hon. Members in this most important area. We shall always look positively at suggestions that may come forward in the shape of legislation or in any other form. But, above all, our concern is to ensure that we combine what is effective and practical while resisting what may be bureaucratic. In striking that balance, we shall provide the best and most effective protection for the consumer.
Question put and agreed to.
Adjourned accordingly at seventeen minutes to One o'clock.