§ Lord ORAM rose to move, That the draft Consumer Transactions (Restrictions on Statements) Order 1976, laid before the House on 14th June, be approved. The noble Lord said: My Lords, in moving the first order that stands in my name on the Order Paper, I hope it will be for the convenience of the House if we discuss both orders together. I shall of course formally move the second order at a later stage.
§ Part II of the Fair Trading Act enables the Secretary of State or any other Minister or the Director General of Fair Trading to refer to the Consumer Protection Advisory Committee the question whether a consumer trade practice adversely affects the economic interests of consumers in the United Kingdom. If the Director General considers that a consumer trade practice misleads, confuses or is otherwise unfair to consumers, he may include proposals to remedy the position. The CPAC then reports to the Secretary of State whether it agrees with the proposals. If the Committee reports that it considers the Director General's proposals, broadly speaking, to he necessary, practicable and fair, the Secretary of State may make an order, subject to Parliamentary approval, banning or regulating the practice in question. These two orders are the first to be laid under these provisions of the Fair Trading Act and arise from the first references to the Consumer Protection Advisory Committee made by the Director 98 General. They deal with rights of consumers and mail order advertisements.
§ The first reference, made on 24th April 1974, covered three practices concerning the purported exclusion of consumers' inalienable rights and the failure to explain the existence of those rights. Until 1973 it was open to parties in a sale of goods transaction to agree that certain rights implied by the Sale of Goods Act 1893—such as description of goods, fitness for purpose and merchantable quality—should not apply to the transaction. The Supply of Goods (Implied Terms) Act 1973 made such exclusion clauses void but not illegal. The effect was that although certain statements became legally void they might nevertheless be used by traders and thus mislead or confuse consumers as to their rights under the civil law. A common example has been the notices in shops stating, "No money refunded" which is inconsistent with the rights granted to consumers by the Sale of Goods legislation.
§ The three practices referred were, briefly: first, the use of void terms in notices, advertisements, catalogues, invoices, et cetera: second, furnishing written statements to consumers about their rights against the shopkeeper or other supplier without advising them of their statutory rights (if, for example, the goods are not of merchantable quality); and, third, furnishing written statements relating to the consumers' rights against third parties or the obligations to them of such third parties (such as manufacturers' guarantees) without advising them of their statutory rights.
§ The Committee reported in September 1974, and agreed that all three practices adversely affected consumers' economic interests in that they misled consumers about their rights or otherwise confused them about the terms of the transaction. It generally endorsed the Director General's proposals for controlling these practices although it drew attention to the limitation that the order would inevitably not bite on statements such as "No goods exchanged" which are not void under present civil law.
§ The Consumer Transactions (Restrictions on Statements) Order implements the Committee's recommendations. Its purpose is to ensure that consumers are not 99 misled about their statutory and inalienable rights, and accordingly prohibits the use by traders, when dealing with consumers, of notices or documents which purport to exclude those rights. The order also protects consumers from being misled about their statutory rights by the appearance on goods, containers or documents of statements about their rights against the supplier, or about obligations accepted by the supplier or manufacturers, should the goods prove defective, and it requires such statements to be accompanied by a further statement that consumers' statutory rights are not affected.
§ My Lords, I know that certain sectors of trade and industry are concerned about certain aspects of this order, and I therefore propose to deal in some detail with two particular issues: manufacturers' guarantees, and the possible effect on finance houses. The Food Manufacturers' Federation and other associations have represented strongly that manufacturers of prepacked foodstuffs would be discouraged from offering their existing guarantees of satisfaction if they had to accompany them with a further statement reminding consumers of their rights against the supplier. This point was considered carefully by the Committee which however concluded that, since guarantees had a strong promotional purpose and provided manufacturers with a valuable method of quality control, manufacturers would be unlikely to discontinue them. Moreover the Committee concluded that it was reasonable that the reminder about consumers' statutory rights should be added.
§ I would emphasise that I, for my part, certainly have no desire to discourage manufacturers' guarantees of satisfaction which are useful both to the purchaser of the goods and to the recipients of gifts such as boxes of chocolates. I would nevertheless accept the Committee's view that manufacturers will continue to give such guarantees even though they will have to be accompanied by a further statement.
§ Another matter of concern arises in connection with the responsibilities of finance houses. The Finance Houses Association has represented that under the provisions of the order finance houses will have a responsibility for matters which 100 are quite outside their control, such as statements by retailers. These representations have been considered very carefully. Indeed your Lordships will recall that this debate was postponed from 2nd July to allow time for this problem to be thoroughly examined.
§ I certainly appreciate the objections of principle raised by the finance houses. Nevertheless, we must look at the facts of the situation. The proposed order will of course place finance houses in exactly the same position as they are under the Trade Descriptions Act 1968, where they may in law be the suppliers of goods to which a retailer over whom they have no control has applied a false trade description. So far as I am aware, there has not been a single case of a finance house being prosecuted in such a case under the 1968 Act. Enforcement officers undoubtedly use their good sense in pursuing the actual offender and, as they will aslo be responsible for enforcing the provision of the order, I foresee no danger of finance houses being placed at any greater risk.
§ I am strengthened in this view by the similar provisions in the Fair Trading Act and the Trade Descriptions Act whereby it is a defence for a person charged to prove that the offence was due to the act or default of another person, and that he had taken all reasonable precautions and exercised due diligence to ensure that neither he himself nor any person under his control committed such an offence. We do not believe, therefore, having considered the question very carefully, that the proposed order is likely to have any material practical effect on either the availability or the cost of hire purchase facilities.
§ My Lords, I will now turn to the second order. This arises from the second reference, which was made on 16th May, 1974, and which covered three practices concerned with prepayment in mail order transactions and in shops. The practices were, briefly these: first, seeking mail order customers without giving any undertaking to return money if the goods are not sent within a specified period; secondly, seeking mail order customers without identifying the seller or indicating his place of business; and, thirdly, taking payment for goods (other than through mail order transactions) without arranging for the money to be returnable if the 101 goods are not supplied by a specified date or within a specified period.
§ The Committee reported to the Secretary of State in November 1974, and agreed that the three practices adversely affected the economic interests of consumers. However it accepted only the Director General's proposals for dealing with mail order advertisements which failed to identify the seller or indicate his place of business.
§ This order therefore gives effect only to the proposals relating to one of the practices in the second reference. It provides that mail order advertisements, catalogues, etc., which invite prepayment for goods should state the name of the seller and the address where his business is managed. Although less ambitious than the original reference, the order, which will come into effect on 1st January 1977, will, in my judgment, be of some benefit to the consumer who wishes to get in touch with the advertiser after sending him money or receiving the goods. I hope that that is a sufficient explanation of the two orders, the first of which I now beg to move.
§ Moved, That the draft Consumer Transactions (Restrictions on Statements) Order 1976, laid before the House on 14th June, be approved.—(Lord Oram.)
§ 7.20 p.m.
§ Lord ELTON
My Lords, I thank the noble Lord for his lucid introduction of the two orders which he has brought to the attention of your Lordships, and I follow him in dealing with them together, but not in the order in which he has put them because the point with which he concluded is naturally freshest in my mind and the one on which I have not written a note. It is to the effect that the Committee to which the reference was made and which gave the advice on the second order—that is the Mail Order Transactions (Information) Order 1976—accepted only one of the recommendations. As I read paragraphs 88 and 89 of that report on pre-payment for goods—ordered by the House of Commons to be printed on 13th April 1976—I see on page 21 that they did in fact accept two of the suggestions, though one of them with modifications.
Therefore there remains at the back of my mind a nagging worry that since there is provision in the parent Act for the 102 Minister to accept the final recommendation, or to reject it, but not to accept it in part or to modify it, it may prove, if it ever went to the courts, that this order was ultra vires. I hope that the noble Lord will feel able to give a reassurance on this point. I would not wish to put it further than asking for his reassurance, but obviously if it is found to be ultra vires then it will have to be withdrawn and it is as well to be prepared for that eventuality.
My Lords, I now turn to the first of the orders to which the noble Lord referred the Consumer Transactions (Restrictions on Statements) Order 1976. As some of your Lordships will be aware, certainly none better than the noble Lord, Lord Oram, there has been a good deal of anxious exchange about this order, and at the outset of discussing it I should like to thank the noble Lord for having allowed the time for this discussion to take place, which he did by withdrawing the order at an earlier stage. That is an act which is never lightly undertaken by a Minister, and it is appreciated.
Among the reservations which have been voiced on this order by interested bodies has been prominent one to the effect that the order, as it appears to bear its interpretation, will require two separate statements to be made on every bar of chocolate as well as on every washing machine or other, more durable consumer goods. There is the statement which is the traditional one which we as schoolchildren perhaps relied on rather heavily. It is to the effect, "If these goods do not reach you in perfect condition please send them back to us for inspection and we will send you a new bar of chocolate together with the cost of sending the old bar of chocolate", of which, my Lords, I regret to say most of us had eaten two thirds before we sent it. That is a familiar announcement and the suggestion would appear to be implicit in the wording of the order, on page 3, Article 5, in the last paragraph:… unless there is in close proximity to any such statement another statement which is clear and conspicuous and to the effect that the first-mentioned statement does not or will not affect the statutory rights of a consumer.On first reading, this assumes that every bar of chocolate, box of chocolates, or pat of butter would have its old guarantee and next to it a new and rather intimidating statement that would give many people 103 the feeling that they ought not in fact take up the old guarantee any more than they ought to smoke cigarettes with a Government health warning on the packet. If a layman's interpretation of this is acceptable and can be endorsed to the effect that the two statements can appear in one concurrent paragraph—in other words, if the present guarantees can be re-worded to say all that they have said in the past and in concluding say that this does not in any way remove the duty of a retailer to return the money one paid for defective goods—then a great deal of this difficulty disappears.
I hope that in replying to what I hope are my brief remarks, the noble Lord, Lord Oram, will take the opportunity to reassure those who are concerned in this direction. This may be a little difficult for him in view of the transactions in another place recorded in Hansard of 30th July this year at column 1171 in which the remarks of the Minister of State replying appear to mean that the first of the two interpretations which I put before your Lordships—the requirement of two separate statements—was technically right but that it was so obviously commonsensical to apply the second of the two intrepretations (that is, the concurrence of two statements in one paragraph) that any court, even if a prosecution was ill-advisedly brought under the order, would none the less, while recognising the true state of the law, not enforce it by not giving a verdict to that effect.
That is something which one cannot accept as an assurance because it is asking a court blatantly to alter the law. But if in fact the law is as I have suggested it may be, and as we all hope it would be, then that is something on which we could rest rather more content with the order.
The noble Lord also referred to the difficulties of the finance houses and pointed out that this order leaves them in the same situation as the Trade Descriptions Act. I would not wish to advance any great pleasure on their part towards that Act, but I take note of what the noble Lord said and I suspect that the length of exchanges on the matter have probably removed the greatest difficulties.
In conclusion, I wish to refer to one other matter. There is anxiety, of which 104 I am sure the noble Lord is aware, about the effect of this on exclusion clauses in motor car sales guarantees when they are guarantees by the distributor and coincide with guarantees by the manufacturer, and there is a fear on behalf of the Society of Motor Car Manufacturers that the retailer's guarantee—as it were, the subsidiary guarantee, excluding the tyres and glass—may in fact be rendered ineffective. This is a fairly technical matter on which the noble Lord has had recent correspondence. I am sorry that my own correspondence on this matter came to hand so late that I was not able to tell him in advance that I was going to raise this matter, but I should be grateful if he could find an opportunity to work that into his reply. My concluding remarks, on which I inadvertently embarked too early a second or two ago, cover the whole of this, and that is that where regulations of this kind prove in the event to be unsatisfactory or unjust, or as many of us feared might be the case with the Restrictions on Statements Order, that they prove to work against the very people that they are meant to help, the consumer, and if the effect of the order is that two statements have to printed—then I think that it may result in a withdrawal of a number of guarantees, and that operates against the consumer, whom we are trying to help.
If any such eventuality or illegality arises, then it is very important that the Minister's Department and his advisers should become aware of it quickly and take rapid remedial steps. The construction of this Act is such that to amend an order is a very difficult, lengthy, and costly proces, and if it is to be used at all frequently I hope that it will be the Act and not the regulations that eventually get altered.
§ 7.29 p.m.
§ Lord AIREDALE
My Lords, this is an extension of the criminal law by delegated legislation and therefore it requires rather careful attention. I should like to refer to the first order in particular in its relation to the finance houses. The Minister referred to this aspect of the matter in some detail and I was very grateful for that. I do not think we can really feel very happy about this order in relation to the finance houses, because the Advisory Committee itself, in its report, expressed some misgivings. Paragraph 72 says: 105In relation to hire-purchase transactions mediated by dealers or agents it has been represented to us that it would be unfair to hold the supplier, for example, a financing company, criminally responsible for the wording in statements on goods, or on containers in which they are packed, because it is argued, the financing company has little if any control over the physical delivery of the goods by the dealer and no control at all over the container.Then I leave out one sentence, and the Committee concludes the paragraph by saying:… We would suggest that further consideration should be given to the matter before any order is made by the Secretary of State.So there is the Advisory Committee itself having qualms about it.
I believe this was the first report of the Advisory Committee, and I do not blame them at all, because they were feeling their way, but they clearly made a mistake in supposing that they did not have to come to a conclusion themselves but could ask the Minister to consider it further and then, presumably, introduce an order using his own prerogative, as it were, after further consideration. That, unfortunately, could not happen, because there is a rigidity of procedure built into the Fair Trading Act which was very well explained by the Minister in another place when this order was before them on 30th July. He said at column 1161 of the Official Report (Commons) of that date:I must make it clear that there are definite limitations on the action open to the Government in respect of any particular practice. An Order may implement the Director General's original proposal or such proposals as modified by the Consumer Protection Advisory Committee, but we have no power to introduce our own remedies.I think it was in supposing that the Minister had that power that the Advisory Committee, in their first report, made that mistake.
There is one other matter concerning this which I think requires attention. The Fair Trading Act under which this order is laid was passed in 1973. In the following year we had the Health and Safety at Work Act 1974, in which a new conception was introduced for the first time, so far as I am aware, in relation to the responsibilities of finance houses. Section 6(9) of the Health and Safety at Work Act 1974 imposes a liability, under criminal sanction, on suppliers of goods that, where goods are supplied on hire-purchase, the Act distinguishes between 106 the ostensible supplier, which is the finance house, and the effective supplier, which is the retailer, and it places liability on the effective supplier, the retailer, and not upon the ostensible supplier, the finance house. My Lords, that was not a piece of delegated legislation like this; that was an Act of Parliament, and Parliament itself enacted those words. I think the question must arise: Is it right that a subsequent piece of delegated legislation like this should fail to follow the example of distinguishing between the effective and ostensible suppliers laid down in an Act of Parliament?
I do not think we can expect this order not to be passed this evening—it has, after all, been passed in another place—but I think that something can be done about this. Both the Director General of Fair Trading and the Minister himself have power to refer matters to the Advisory Committee, and I would suggest that one or other of them refers this back to the Advisory Committee saying, in effect: "You must come to a decision upon this matter that you wanted the Minister to consider. It is for you to consider it, and, while you are considering it, have a look at that 1974 Act and see whether you do not recommend that this distinction between ostensible and effective suppliers should be preserved in subsequent legislation, particularly delegated legislation, in the field in which finance companies operate."
My Lords, my final word is to mention a point which was made by the Minister, who said that the finance houses have not got much to fear because there has not been any prosecution for an offence of this kind. You can use a two-sided argument here. If finance companies do not behave in this way and do not render themselves liable to prosecution, why continue to publish and pass orders making them criminally responsible for something which practice shows they do not in fact do?
§ 7.36 p.m.
§ Lord MOTTISTONE
My Lords, I must preface my remarks by declaring an interest as being a director of the Cake and Biscuit Alliance, and therefore I am more interested in the food side of these arguments than in any other. If it be permissible to your Lordships, I would 107 concentrate my remarks on the first of these two orders, which your Lordships will remember were withdrawn by the Government in July and then, rather unexpectedly, came to us through the Commons. We did our best during the holiday months to try to organise a meeting of the consumers, because the food processing industry genuinely believe that the outcome of this, although it may have all sorts of advantages to consumers in other respects, is positively harmful to them. The balance goes against the consumer.
One point was mentioned by the noble Lord, Lord Oram, and that is that there will be some firms who will withdraw the guarantee of satisfaction which most foods now have in some form or another. It is true that it is very useful to them in, if you like, assisting with their quality control, and therefore they will seek to try to retain them, although in the case of some foods there are some legal difficulties in complying with the order as it is at present phrased. I will not elaborate on that now as it varies from food to food; and, furthermore, I did not quite understand what the lawyers were talking about when I heard them discussing it. With the greatest respect to the noble and learned Lord on the Woolsack, lawyers are not always explicable to strangers.
The real point at issue, on which I think the meeting that we had with the consumers was making progress, is that in so far as the consumer is, if you like, part of the quality control chain, this is of immense value, not only to the manufacturer but also to the consumer. You can dismiss, just to dismiss it, the question of quality of food, because the Food and Drugs Act and that sort of control is sufficiently tight in this country to take care of that side of it. So it is a question of whether they are getting the quality of packaging; whether they are getting the sort of food they expect to have in the state in which they expect to have it; and it is terribly important in these days for the manufacturer to be able to have direct access to this information. In ancient times, when the Sale of Goods Act was written—what is it? Nearly 100 years ago—this was not a point, because the manufacturer dealt through 108 the retailer and it was perfectly reasonable that the consumer went to the retailer with a complaint, when it was up to the retailer to put it right.
In those days—and, indeed, until (shall we say?) about 1955—the retailers had a much greater control over the goods, particularly the food, going through their hands. But now, in the days of supermarkets, you will find that food goes through the supermarkets almost on a production line. The food manufacturing firms do not deliver all the goods by means of a personal salesman to the individual retailer, as they did, and still do, with the corner shops. They will probably deliver to some warehouse which eventually gets the goods to the supermarket, but they do not deliver most foods (except for those which are very perishable) and see how they are handled at the retailers. The retailer is operating, if a supermarket or something like it, at such a speed that if somebody complains it is simpler to say, "Have another packet", or tin, and to put the tin that has been complained about in a disposal bin than go to the trouble of sending it back to the manufacturer. This is one aspect of the problem.
The fact is that at present—and up to, perhaps, the implementation of this order in, I think, two year's time—the balance of responsibility between the retailer and the manufacturer so far as food to the consumer is concerned is very nicely balanced. It meets the needs of the manufacturer to give the best product he can (which is the way he sells) and the needs of the consumer in not specifically encouraging him or her to go to the retailer in the first instance.
The effect of this order, if it is read—and one has to assume it is read and followed through by the consumer organisations to educate people to use it—will be that in the first instance consumers will now tend more to go to the retailer than is perhaps good. They would then not go to the manufacturer and the manufacturer's assistance with his quality control will be diminished. This, in turn, means that the consumers will perhaps not get products quite as good as they were getting in the past and that the retailer will not, because of modern life, necessarily do more than just provide something in lieu for the customer. He 109 will not provide the missing link back into the quality control system of the manufacturer. The real worry is that as far as foods are concerned this order is not a particularly good one, and could perhaps have been phrased in a better way.
My Lords, I will not detain your Lordships much longer. The lesson that I personally have learned from this—and I hope that the Government might be able to learn from it too—is that it was possible, with a group of food manufacturers talking to the consumers directly, to get the beginnings of an understanding of each other's problems. What was remarkable was that it was the first time that a meeting like that had been held in relation to this order because I think there is only one manufacturer on the Consumers' Protection Advisory Committee because the Fair Trading Act merely talks about one or two people who supply, one of whom may be a manufacturer. I think there is only one. I do not know the gentleman. I discovered this only this morning and I have not had time to find out; but he does not himself provide a strong influence of, at any rate, the food manufacturing interests, to guide the CPAC on how it behaves.
What would have been helpful, would have been if the CPAC could have organised a meeting between the consumers and manufacturers—and possibly another between the consumers and the retailers who have a separate problem and the two must not be confused—and not, as has happened in this order, to rely on the Office of Fair Trading to send for the representatives of the food manufacturers trade associations, to tell them what the consumer was saying and then to relay their views back to the consumer by remote control through a Government or semi-Government office.
This process, which is perhaps a direct result of the Fair Trading Act, leads me to suggest that it is time we started to review the Fair Trading Act, which has been going for about three years, and that such procedures of consultation as are not properly dealt with (as clearly they were not in this case) could be tightened up within its rules or, if this is not possible—and the noble Lord mentioned the fact that the order itself is too tightly controlled—it may be that we shall have to have amending legislation. Let us get on with that, and not wait for more examples of 110 bad consultation resulting in a bad order which we then cannot reject.
§ 7.46 p.m.
§ Lord DRUMALBYN
My Lords, I suppose it is true to say that we are still in the experimental stage of the Fair Trading Act. It introduced an entirely new procedure with a good many safeguards. I am sure that the experience gained so far has been illuminating and that, after a certain time, one would wish to review that procedure and to make changes in it. But that is not what we are concerned with today because we either have to accept or reject these two orders. I welcome the one which the noble Lord dealt with second, and I hope that it is intra vires. As to the first, I think there are difficult considerations arising there. Everyone was agreed that guarantees—? certainly those given for durable goods; and we were thinking in terms of durable goods over this—ought not to appear to withdraw any of the rights of consumers and, indeed, should specifically draw attention to their rights.
What seems to have happened is that people have looked at the various forms of promises that are given and classed them all as guarantees. When I am thinking of a guarantee I am generally thinking of a document with an imitation seal at the top, very grand and in great detail, covering several square feet and covered in small print; whereas what my noble friend Lord Mottistone has been talking about, and what we are all concerned about, is a tiny slip of paper with perhaps one or two lines of writing on it.
My Lords, what is the effect of this bit of paper? Take the case of, say, the box of chocolates. You may get a tiny reference on the package itself or on the label. I think that the noble Lord, Lord Airedale—and I always listen with great attention to him—has drawn attention to the difficulties here, as has the noble Lord, Lord Mottistone. This is not regarded in any way as a guarantee. It is merely saying in effect: "If you, the consumer, find something wrong with these products of ours that you have bought from a retailer, send the box back to us and, if we think fit, we will either reimburse you or replace the product." I find that a very long way away from a guarantee in any sense whatsoever. Of course, the 111 actual order is careful not to use the word "guarantee".
My Lords, what exactly are we talking about here? We are talking about a very small section of cases that go wrong. A group of manufacturers had a survey carried out which was based on 3,000 interviews with housewives—generally considered a pretty wide survey, and about ten times wider than the previous survey carried out. It was there found that in the food field, where you have fairly low-priced goods, 77 per cent. of housewives who discovered that a particular product was below the standard in some aspect did nothing about it at all. Only 4 per cent. contacted the manufacturer and a further 18 per cent. contacted the store from which the goods were purchased. I should not have said that that indicated a very close balance between the people who, ignoring the piece of paper altogether, go back to the retailer and the people sending the goods to the manufacturer. Of course, it is very greatly to the advantage of the manufacturer, from the point of view of both market intelligence and product control, that the goods should be sent back to the manufacturer, but it does not follow that because it is an advantage to the manufacturer it is to the disadvantage of the consumer.
§ Lord DRUMALBYN
Quite the contrary. We ought to be encouraging more people to send the goods back to the manufacturer, because it improves the situation from the consumers' point of view.
The noble Lord said in introducing this order that if the proposals are necessary, practicable and fair, the order can be made. I think this short debate has shown that in this particular case it is very difficult to see that the proposals are necessary, and the difficulty, I am told, has been for the CPAC to find a way of differentiating between different types of goods, between durables and foodstuffs and other perishables. If this is so, we would rather like to hear from the Minister about it, because there ought to be some way, some prodecure, for getting round this difficulty.
Under the Trade Descriptions Act, the sections dealing with information 112 and so on, orders can be made relating to particular products and one need not try to cover the whole field. It might have been better to have proceeded in this particular case under the Trade Descriptions Act and not under the Fair Trading Act. I do not know. In any case, I agree with my noble friends that to this extent we have reached the wrong answer. It is going to be very expensive to make this change. It is suprisingly expensive to make changes of this kind, as I have found in my advertising Standards Authority role. Fortunately, we are not talking about advertising standards at all. This has not been under discussion, though it is once referred to in the orders.
My Lords, I really think that some means must be found of distinguishing in this way, and as we do not want to throw the order out, because it will do a great deal of good in other respects, we have to consider what should be done about it. I hope that a very broad interpretation will be given to what is required in the way of providing, another statement which is clear and conspicuous and to the effect that the first-mentioned statement does not and will not affect the statutory rights of the consumer". I wonder what notice the consumer will take and what good it will do? He might say, "What are my statutory rights?" He might go along and purchase a copy of the order and he will find this:statutory rights" means the rights arising by virtue of sections 13 to 15 of the Sale of Goods Act 1893 as amended by the Act of 1973, sections 9 to 11 of the Act of 1973, or section 4(1)(c) of the Trading Stamps Act 1964 or section 4(1)(c) of the Trading Stamps Act (Northern Ireland) 1965 both as amended by the Act of 1973.What information is the consumer going to derive from that? We really must be practicable with our legislation. I do not know what to say about this, but I hope the courts will take a sensible view of it, and where and as long as a very broad indication is given that the consumer has nothing to lose by complying with the advice—and it is only advice—that he is given to send the goods back to the manufacturer, that will be all right. The alternative is to regard these kinds of document as advice and not as in any way expressing a right of a consumer or an obligation of the manufacturer. There really is no obligation other than a moral obligation in this case, and the noble Lord will see that if he looks at the 113 various pieces of paper that are enclosed with goods.
So, while welcoming most of this order, I express considerable reservations about the other part. May I just say that one of the reasons for encouraging people to go to the manufacturer, or for that matter to the retailer, is that this particular survey I have referred to found that in 99 per cent. of the cases where the goods were returned to the manufacturer and in 96 of the cases where they were returned to the retailer, a satisfactory result was obtained.
§ 7.55 p.m.
§ Baroness ELLIOT of HARWOOD
My Lords, I shall not delay the House for more than a few minutes. I am nothing like as expert as the two last speakers, the noble Lords, Lord Mottistone and Lord Drumalbyn, but I had for five years the chairmanship of the Consumer Council and I did learn a lot on the consumer side as well as on the manufacturer side. I agree with all that Lord Drumalbyn has said. It seems to me that we have a highly satisfactory situation in our dealings with the manufacturers and the consumers and the guarantees that we see written on bars of chocolate and so on. All that, on the whole, works fairly well.
I do not know whether one could say that these additional protection notices in this Act are the best being the enemy of the good. It can happen very often that that is true. Certainly it adds tremendously to the cost to the manufacturer. In one paper that I have been sent there is a figure given for one company alone; that is, that if they have to add to the existing guarantees the words suggested in the order, it will cost them £20,000 and in another case £10,000. While that might be perfectly justifiable, it is certainly not very encouraging when everybody is trying to produce goods at the lowest price they can. I realise that this can be done. It is possible to alter guarantees. It is possible to put new stickers on foodstuffs, chocolate bars and so on, but it is tremendously complicated and frightfully expensive and one wonders whether the existing system is not sufficient protection for the consumer for the time being.
I agree with the noble Lord, Lord Drumalbyn, that the complicated machinery, or anyway the description of it in this order, is such that one does not 114 know how the ordinary consumer could possibly understand it. I hope very much that the noble Lord will consider what we have said, and that he will try to see whether it cannot be made a little simpler, a little less complicated and a little less expensive.
§ 7.59 p.m.
My Lords, first I should like to thank the four noble Lords and the noble Baroness for the tone of their contributions to the debate and the constructive approach that they have made to these two orders. I fear that I may not be able to answer or comment upon all the points that were made, but I will do my best.
I shall do as the noble Lord, Lord Elton did and take the first one, about which there is least disputation; namely, the mail order order. I think the only point raised in that connection was whether or not this order is ultra vires, because it was one of a group and only one is being legislated upon. I acknowledge that the noble Lord, Lord Elton, gave me notice that he was going to raise this point. This gave me an opportunity during the day to get advice, and I am glad to say that I am able to give him the assurance for which he asked. I am advised by the solicitors in the Department that any suggestions that the second order is ultra vires is incorrect. It is their opinion that where three practices and three sets of proposals were referred, as was the case here, it is possible for the Secretary of State to give effect to one set of proposals in their original form. Each set of proposals relating to one practice must be treated as a whole, but it is not ultra vires if it legislates on only one of the references and one of the proposals. I hope that that gives him the assurance that he was seeking.
The rest refers to the first of the orders, the consumer statements. The first point that the noble Lord, Lord Elton, raised concerned the drafting of the statements and the question of what is meant by "close proximity". He feared that if two statements were put in different parts of, for instance, a label, this might perhaps add to the cost and lead to difficulties. It is my understanding that it is essential that the two statements should be made and they would need to be two separate 115 sentences. To merge them into one sentence would possibly add to confusion. Provided that they are two statements, whether or not exactly in one paragraph as the noble Lord asked, or two consecutive paragraphs, would be a matter of drafting. But the fact that they can be in a consecutive form is probably the point that the noble Lord was asking about.
§ Lord ELTON
My Lords, I take it the noble Lord will, in using what machinery there is (with which I am not familiar), make this view known to those who are in contact with his Ministry and who might otherwise be the instigators of prosecutions. In other words, this will be a disseminated view not merely a view held at the centre.
My Lords, advice will be available, but I do not think it would be for me or possibly the Department actually to undertake the drafting, because the assessment of the drafting in the final case would be for the courts. Certainly there are facilities for advice and I take the noble Lord's point. Then he raised what he called—and I am glad he called it—a technical point in relation to the motor manufacturers and the fear that the order will prevent car manufacturers from giving warranties which exclude tyres. I can assure him that they need not fear that exclusion from their guarantees of warranties would be prohibited; but they would, however, have to include the statement required in Article 5. The point, as he acknowledged, is a difficult one. It may be helpful if I write further to him on this point. I shall gladly do that.
Then we had the contribution from the noble Lord, Lord Airedale, who first raised the problems which have been raised with a number of noble Lords by the Finance Houses Association. I covered the Government's case in respect of this in my opening remarks. He quoted from the advisory committee in this connection, indicating that they had qualms on this very point. There was a part of the paragraph that the noble Lord did not read out. It may be helpful if I read out that paragraph, because they went on to say:We think that there is substance in this representation though, on the basis of the evidence 116 before us, we do not consider that we would be justified in suggesting any modification of the proposals to meet the point".
My Lords, it continues:However we would suggest that further consideration should be given to the matter before any order is made by the Secretary of State".I can assure the noble Lord that consideration of all the details of these reports is given before legislation is drafted. That point has not been overlooked. The noble Lord, Lord Airedale, referred to something which I think is in the back of all our minds. He called it the rigidity of procedure under the Fair Trading Act. The noble Lord, Lord Drumalbyn, had this in mind in one or two of his remarks when he said that we are in an experimental period. Perhaps that is so. I notice that my honourable friend in another place likened the consultative committee to a jury and that apparently was the case for establishing this rather rigid procedure. It is clear that noble Lords are suggesting that second thoughts about that procedure are worth having. I personally tend to think that, although it is a little early to start amending legislation, particularly since—as has been acknowledged—this is the first step in implementing the legislation, we need to give a longer run before beginning to suggest amendments.
The noble Lord, Lord Airedale, made one further point. I remember having a private discussion with him in the corridor upstairs last July when we were looking at this matter. There was the interesting suggestion that we might have lifted out of the Health and Safety at Work Act the provision that distinguishes between the ostensible supplier and the effective supplier. Here again, interesting though that is, we are caught by the rigidity of procedure to which the noble Lord referred. The Committee did not take up this point. It did not suggest a modification of the Director-General's proposals along this line. Without such a modification or inclusion in the original recommendations, I am advised that it would not be possible to legislate in that way.
§ Lord AIREDALE
My Lords, that was why I was suggesting a reference back to the Committee so that the Committee could consider this matter. They probably have not considered it at all, so far.
Yes, my Lords, but I think it is rather asking much of me, having moved and urged noble Lords to accept this, at this point of time to say that I will withdraw it yet again.
I am glad that the noble Lord does not go to that extent. May I turn to one or two points which have been raised by the noble Lord, Lord Mottistone. He announced his interest. He need not apologise, because it helps to have an interest in these matters. It is a qualification that we welcome. He will recognise that I included in my opening remarks the main argument about the case put up by the Food Manufacturers' Association. The noble Lord said—and I accept this—that it is a matter of judgment as to how the balance of the effect of the order will fall in favour of the consumer or against the interests of the retailers and the manufacturers. We have to wait and see, but it is the view of the Government that this order will, on balance, help the consumer. That is what we are setting about doing.
§ Lord MOTTISTONE
I do not think the noble Lord has quite got the flavour of what I am trying to say, which is that at the moment, in relation to food—I am not talking about other goods—the balance is right without this order and the effect of this order will only be to make it worse. I am sorry the Government have been persuaded that this might not be so. I suggest to them that, because of the lack of consultation and the sort of things which I think the noble Lord agrees with us ought to have happened, they have not quite got the right story because the experts, the people who make the food and know the problems of doing that and how best to serve it and sell it to the consumer, have not been consulted in sufficient depth at the right time in the presence of the right people.
I can see that that is what the noble Lord had in mind as a spokesman for the food manufacturers, but equally I think I can say by way of rejoinder that the Consumers' Association, for example, representing the consumers, has reached the opposite conclusion in terms of the balance of advantage. Who will prove to be right, we must wait and see.
118 I was glad to hear the noble Lord say on behalf of those for whom he speaks that they will seek to retain the manufacturers' guarantees because, as I indicated, we are convinced that those guarantees are of value both to the consumer and to the manufacturer. Certainly we are hoping that they will retain them even though it costs something, and it will cost something. This was the point that the noble Baroness raised also. Certainly in these days of inflation I deplore as much as anyone the imposition of any unnecessary cost, but we should recognise that any legislation to give better protection to the consumer inevitably involves some cost. I believe that here again the outcome will be that it will not be a serious cost, and in any case will be outweighed by the benefit to the consumer.
I would point out in relation to the cost of printing the statement about the guarantee that there is a period of two years allowed in the order. That is a reasonable period, I think, for administrative arrangements to be made, and it should be possible to spread the cost over a reasonable period.
I doubt whether I have dealt with every point but I have tried to deal with the most important ones. With those words I should like again to move the first order standing in my name.
§ On Question, Motion agreed to.