Trade Descriptions (Amendment) (Hansard, 4 May 1994)

I beg to move,

That leave be given to bring in a Bill to amend the Trade Descriptions Act 1968 to harmonise liabilities for misdescription of services and of goods; to impose strict liability for misdescription of services; and for connected purposes. The Trade Descriptions Act 1968 forms one of the cornerstones of the United Kingdom consumer protection legislation and, by and large, the Act has been successful in promoting higher standards of truthfulness in describing goods and services. However, it has long been recognised that an anomaly—some would say a loophole—lies at the centre of the 1968 Act. Whereas section 1 of the Act creates an offence of strict liability in the case of misdescription of goods, a lesser form of liability attaches to the misdescription of services by virtue of section 14 of the Act. The simple purpose of my Bill is to bring section 14 into line with section 1.

In any case relating to false description of services, the prosecution needs to prove that the person making the false statement knew that it was false or made the statement recklessly—in other words, there is a requirement of mens rea which is absent in the case of false description of goods. This extra requirement contained in section 14 has made it extremely difficult for trading standards officers to bring successful prosecutions in these cases.

The figures from the Office of Fair Trading confirm the scale of the problem. In 1992, there were 1,441 prosecutions for false descriptions of goods, but in that same year there were only 171 prosecutions relating to false statements about services. The discrepancy in the figures cannot be justified or rationalised by the argument that there were fewer false descriptions relating to services. I think that the experience of most hon. Members in the House is directly contrary to that.

In recent memory, there was the fiasco over the Hoover air flight tickets promotion, and all our constituents experience continuing problems with false statements made in holiday brochures. Many people also experience difficulties in getting their motor vehicles repaired in garages. Those examples confirm that there is a genuine problem that the Trade Descriptions Act 1968 is presently failing to address.

I do not believe that the distinction in the Act between liability for false descriptions of goods and false descriptions of services can be justified any longer. In many individual cases, the distinction between goods and services is not always clear—as in the provision of meals in restaurants, for example. In numerous circumstances, the provision of goods and services always goes together, as in the case of car repairs where replacement parts are supplied as part of a garage's service. In such cases, the distinction between the treatment of goods and of services has little common sense from the consumer perspective.

722 In addition, all the major consumer organisations, including the Consumers Association, the National Consumer Council and the Institute of Trading Standards Administration, support the case for reform of the Trade Descriptions Act. Indeed, that support for reforming the 1968 Act goes beyond the scope of the consumer protection organisations. The Department of Trade and Industry, back in 1990, in a consultation document on reforms to the Trade Descriptions Act, commented: there would seem to be a logical case for this reform, meaning the harmonisation of liability. Four years after that consultation paper was published, we still await the DTI's conclusions on what reforms are appropriate to the Trade Descriptions Act. The Act was reviewed in the Methven report in 1976, which recommended that strict liability should apply to offences relating to the supply of services.

There is a further case for the reform that I propose. The developing case law under section 14 has highlighted a specific problem with that section of the Act. I think specifically of the decision of the House of Lords in 1984 in the case of WINGS Ltd. v. Ellis. That case has confused the issue of when liability can arise under section 14, creating the possibility that already strict liability might pertain. The purpose of my Bill is to clarify liability under section 14 once and for all.

My Bill will not, however, impose impossible burdens on traders. It will simply require them to be honest.

It should also be remembered that a general defence under section 24 of the Trade Descriptions Act is always available to a defendant, and the section 24 defence allows a trader to argue in the court that he made a genuine mistake of fact and took reasonable steps to avoid the commission of any offence under the Act. In other words, there is a guarantee—a safeguard—in the Act to protect the genuinely innocent trader.

My Bill would enhance consumer rights and ensure fairer competition between businesses. There should be no place in the market for cowboys and conmen. My Bill proposes a modest but important change to the 1968 Act. That change is long overdue.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Hutton, Ms Diane Abbott, Mr. Robert Ainsworth, Mrs. Barbara Roche, Mr. Kevin Hughes, Mr. Geoffrey Hoon, Mr. Alan Milburn, Ms Janet Anderson and Mr. Peter Mandelson.