Consumer Rights Bill

Public Bill Committee, 4 March 2014.

Clause 48 - Contracts covered by this Chapter

Stella Creasy (Labour, Walthamstow)

Good morning everyone, and what a wonderful, sunny morning it is. Let us hope that the warmth of the sun shines on our debate today—I really do mean that.

I know that people will be unable to contain their delight as we move into the chapter of the Bill dealing with services. Clause 48 concerns the service contracts that will be covered, about which I have a number of general questions for the Minister before we move on to the more substantive clauses dealing with which services the consumer might expect and how they might seek redress if those services are not quite as they would wish.

The issue is incredibly important, not least because two in five British consumers have made a complaint about a service in the last year alone. That is across a range of services, with 58% complaining about trade services and 56% complaining about airlines and holiday operators—as we look at the sunshine, we can tell that people will be thinking about their holiday and perhaps starting to worry about whether it will be a source of relaxation or resentment. Clearly, if we get this part of the Bill right, it will be the former, rather than the latter. The third category among the top concerns is cars and vehicle repairs, and, as we all remember, we expressed a number of concerns last week about how people might access redress in that regard.

Clause 48 is important because it covers which aspects of services consumers can complain about and in what context. Given that most complaints from the two in five people complaining about services are about circumstances they feel are outside their control, it is even more important that people have clear rights and a good sense of which services they can, and cannot, complain about.

I particularly want to ask the Minister how she sees the clause being enacted, because subsection (5) says that the Secretary of State may by order disapply the provisions in relation to a particular service. I want to set out the services that we need to clarify will be covered, because such a caveat in a clause could be quite significant. The consumer may think these are standard rights—we have all agreed we want the Bill to standardise rights so they are clear and people can remember them—but if they find out they do not apply to the service they might want to complain about, that would be a real concern. For example, Passenger Focus has raised with us the idea that the Secretary of State may or may not wish to make provision for transport users, because they have their own dedicated rights and redress system under the National Rail Conditions of Carriage, passenger charters and various EU passenger rights obligations. However, our concern is that those are not as strong or consistent as the service requirements in the Bill. Therefore, we might see a weakened level of coverage for passengers if the Secretary of State excluded passenger services from this legislation. I am pleased to report that I had no problems with my journey this morning, but I am afraid that is not always the case.

Stephen Doughty (Labour, Cardiff South and Penarth)

This is a particularly important point, given the disruption that many constituents will have experienced to train journeys in particular as a result of the recent adverse weather. I experienced disruption on a number of occasions, and had quite some trouble making compensation claims for some of the journeys that were cancelled.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right and I know hon. Members across—

Oliver Colvile (Plymouth, Sutton and Devonport) (Con) rose—

Stella Creasy (Labour, Walthamstow)

I will happily give way to the hon. Gentleman, whom I know is raring to go, in the light of the conversation we had earlier.

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

It is a delight to serve again under your chairmanship, Mrs Osborne. May I raise what is a very big issue in the south-west? A couple of weeks ago the line at Dawlish was totally washed away. As a result, West Devon and the whole of Cornwall are totally cut off from travel by rail. Nevertheless, we are most certainly open for business, and I hope the Secretary of State understands the importance of making sure that we are, especially given the upcoming tourist season. It is a fair point to ensure that compensation is given to passengers who need to get to London and back again, and who do not want to experience intercontinental flight times.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for his contribution. He is a dogged campaigner for ensuring that Plymouth is open for business in transport and holiday terms. He raises the point we are seeking to make this morning and seeking to clarify. The Bill will give consumers a series of rights regarding the kind of service they might expect from a holiday provider or travel agent, in order to see Plymouth’s wonderful holiday delights and destinations. I have yet to experience that pleasure, and I am sure that when this morning’s sitting is concluded, the hon. Gentleman will tell me what I will miss out on if I do not holiday in Plymouth.

Andy McDonald (Labour, Middlesbrough)

I am sure my hon. Friend will enjoy the delights of the south-west. It is absolutely vital that those rail services are restored urgently. On the quality of the services we provide and the rights of consumers and passengers, may I point out to her that £2,731 is spent per head of population in London, compared with £5 per head in the north-east of England? In the north-east, it can take 95 minutes to do a 40-mile journey on ancient rolling stock. The time has come to look at the quality of the services that our transport system provides.

Stella Creasy (Labour, Walthamstow)

The message is that other holiday destinations are available, including Middlesbrough, and I will add Middlesbrough and Plymouth to my list of places for relaxation. My hon. Friend is right to raise a concern about the quality of our transport infrastructure. All of us recognise there are areas in the country that need support so they can offer not just holidays, but business. My point is that although consumers have a series of rights to complain about the service when organising their holiday—and we are encouraging consumers to learn about those rights—we are concerned that those may not apply to transportation facilities. We are seeking comfort—comfort is the right word—from the Minister that passenger services will not be excluded from the Bill.

Let me set out our concerns. We know that most passengers are largely unaware of their rights. According to a study by the Office of Rail Regulation, 75% of those using Britain’s railways did not know enough about claiming their money back. It would help terribly frustrated passengers when they are on a journey that has not worked out if they knew they could get their money back. In addition, the regulator found that 74% of passengers felt that train operators did not do enough to inform people about how to claim compensation for problems with their journey. If passengers are not getting information from the train operators, is there an issue for us? We want to make sure that it is as simple as possible for consumers to know their rights. Surely, the rights that consumers have understood in other areas should read across to passenger services.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend is making a crucial point. I recently tried to claim back for a cancelled journey that was booked though a secondary ticketing site, trainline.com. I had great difficulty getting compensation for that journey, which the ticketing site had to check had been cancelled by the train operator. This is the type of bureaucracy and problems that passengers often experience when trying to claim compensation from secondary ticket operators, or indeed from the train operating companies themselves. That exemplifies why these rights need to be clear and as strong as possible.

Stella Creasy (Labour, Walthamstow)

My hon. Friend expresses his first-hand experience of the problems many people have with passenger services. That is why we think it important to be confident that these rights will apply to all services, or at least for the Minister to say on the record why particular services might be excluded.

Laura Sandys (South Thanet) (Con) rose—

Stella Creasy (Labour, Walthamstow)

I happily give way to my future wife.

Laura Sandys (Conservative, South Thanet)

It is a new week. When we look at how to implement this element of communicating rights, it is important that we consider not necessarily primary legislation but how different Departments manage different sectors, particularly regulated ones. I have just been looking at the National Rail app, and there is nothing there that tells customers anything about their rights. It would be interesting for the Minister to ask Ministers across all Departments where services need prominently to present their rights. Dealing with this issue through legislation will not necessarily offer the necessary flexibility. Such information needs to be in front of the consumer, rather than in regulations or in a back-office document.

Stella Creasy (Labour, Walthamstow)

I thank my hon. Friend for her intervention. I know she is still thinking about that 30-day right to return her offer of marriage, but I am holding on to the idea that I can persuade her not to. She is absolutely right, and I am sure that the now infamous implementation group will look at how people get information about their rights in relation to services. However, rather than looking at how information is provided, we are looking at a slightly different point, in that the clause includes a provision to exclude specific services from the Bill.

Let me give an example. If the Bill applied to passenger services, there would be a legal right to redress for a bus journey that was not of satisfactory quality. However, if passenger services are excluded by this provision, that right might not apply. We need to understand whether the provision allows the Secretary of State to exclude particular services. Passenger services in particular will be excluded because they already have a separate system of rights—rights that are not as strong as those provided by the Bill. That is not fair to consumers who, when they want to make a complaint, may think they have one set of rights only to find that they have another.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend is absolutely right. As I am sure she is aware, the EU regulation on bus and coach passenger rights only covers journeys over 250 km, so it does not apply to most domestic bus services. It is important to understand whether the Bill will strengthen bus and coach passengers’ rights if they are not satisfied with journeys under that particular distance.

Stella Creasy (Labour, Walthamstow)

My hon. Friend yet again hits the nail on the head. The point is that if people have one set of expectations, based on services in other areas of their lives, why would they not extend those to transport services? Their confusion is then added to by the point made by the hon. Member for South Thanet: that people’s rights are not always advertised on apps, or are completely different, so the read-across is not clear.

Fiona O'Donnell (Labour, East Lothian)

Does my hon. Friend agree that this issue could sit neatly alongside the previous Government’s Equality Act 2010? For people with disabilities, accessing bus and rail services often entails severe problems, restrictions and issues with the quality of service experienced.

Stella Creasy (Labour, Walthamstow)

It is a pleasure to serve on the Committee with Members who are so insightful about how the Bill might work in the real world and why we need clarity on this issue.

As I said, we are particularly concerned about passenger services, for which there is a series of requirements. It would be helpful if the Minister set out whether the Secretary of State intends to exclude any areas of service provision and, if so, why. In particular, will she explain why passengers would not be offered the same level of protection as people booking their holidays in, for example, Plymouth or indeed Middlesbrough? It is more complicated and confusing for consumers to have two different systems of redress and compensation for two services. As my hon. Friends the Members for East Lothian and for Cardiff South and Penarth pointed out, there are real examples where the rights in the Bill could apply to passenger services in a helpful way and challenge some of the problems that passengers have to put up with.

I look forward to the Minister confirming that our fears are mistaken and that the Bill will apply to passenger services. Will she say also whether there are any other services that the clause has been drafted to deal with? Perhaps she could set out why this particular element of the clause exists and why there is an exemption. If the Government were so minded to exclude a service from the Bill, how might that notion be put before Parliament so that we can test it and make sure it is appropriate?

We recognise that there might be stronger systems of redress, although I have not yet seen one in the Bill, which does offer some simple, clear rights. However, will the Minister set out why the clause is drafted in this way and what services the Government had in mind when the Secretary of State was given this power? That would be incredibly helpful. I look forward to hearing what the Minister has to say.

Fiona O'Donnell (Labour, East Lothian)

It is a pleasure to see you on this bright morning, Mrs Osborne, and I am grateful for the opportunity to make a contribution to the debate on clause 48. I am sure the Minister can understand that there are always at least questions to ask when a Secretary of State seeks to give away powers or to get new ones. There must be a reason for this provision, and it is right that Members on both sides should ask under what circumstances it might be used.

I want to reinforce what my hon. Friend the Member for Walthamstow said about the possible application of the Bill in the provision of bus and rail services. My constituency is served by the east coast main line, which has made great improvements in customer care under public ownership—long may that model continue. We also have ScotRail services, which First runs through the county into Edinburgh.

In the main, however, people in my constituency use bus services. I receive many complaints about those, which, under the terms of devolution, I have to pass to the MSP for East Lothian. However, responsibility for consumer rights sits with me. The Bill is an opportunity to give better rights to many people in rural areas. My constituency is mainly rural, and people rely on sometimes very limited bus services to travel into the main towns in the county and to access services there. Is the Minister averse to the clause applying to the provision of those services?

My hon. Friend the Member for Walthamstow kindly allowed me to intervene on the issue of people with disabilities. I am concerned that bus operators sometimes use it as an excuse. They say that if they give someone, perhaps with an electric wheelchair, time to manoeuvre into the space on the bus, that impacts on their ability to provide the service to the timetable. We need to strengthen consumer rights in that area so that we drive up standards.

Andy McDonald (Labour, Middlesbrough)

My hon. Friend is making an excellent point. Does she agree that the consumer rights framework provides us with an opportunity to make sure that those who are blind or partially sighted have access to good and full information through audio-visual systems on buses, so that they have the same rights and information as fully able passengers?

Fiona O'Donnell (Labour, East Lothian)

I thank my hon. Friend for his intervention, and I support what he says. That information is not just for people with visual impairments or hearing loss, but for tourists. When I come to my place of work here in Westminster, it is of great help when I get on a bus to have an audio indication of where I am—not that I am often lost in this city.

On rail services, there is also a complete lack of awareness among consumers, and I, too, am guilty of that in part. I have experienced significant delays when using the east coast main line to travel to and from work. I have not taken advantage of any compensation, and I certainly do not remember ever being informed about it by an announcement on the train, or being handed anything that told me I had a right to any kind of compensation.

Sheila Gilmore (Labour, Edinburgh East)

Will my hon. Friend give way?

Fiona O'Donnell (Labour, East Lothian)

I gladly give way to my hon. Friend, who has such an excellent record on defending the east coast main line.

Sheila Gilmore (Labour, Edinburgh East)

I have no personal interest in the east coast main line—I have no relatives working on it or anything else—but I have to say that my experience has been different. Announcements have been made, and forms have even been given out at the end of journeys. In fact, the offer East Coast makes is reasonably substantial: it refunds half the fare if the train is half an hour late and the full fare if it is more than an hour late. It does so promptly and without a great deal of argument. It is not quite so straightforward to claim a refund from other companies.

Fiona O'Donnell (Labour, East Lothian)

I am grateful for that intervention from my hon. Friend. I am pleased to hear that. I clearly just had a bad day, or maybe I tuned out of the rights that were being offered to me. However, that makes me wonder how much money would be due back to the Independent Parliamentary Standards Authority and the public purse if every Member in this place exercised their rights. That money would be welcome. As well as having rights, we have a duty to exercise them, especially when it involves the public purse.

I look forward to the Minister explaining why it is necessary for the Secretary of State to have this power, under what circumstances she sees it being used and how she sees it sitting alongside existing measures that apply to the provision of bus and rail services.

Mark Durkan (Social Democratic and Labour Party, Foyle)

It is a pleasure to be here under your chairmanship, Mrs Osborne. Like my hon. Friends the Members for Walthamstow and for East Lothian, I have particular concerns about the clause, which centre on subsections (5), (6) and (7). Subsection (5) allows the Secretary of State to

“provide that a provision of this Chapter does not apply in relation to a service of a description specified in the order.”

Such an order would therefore remove a particular service from a provision of the chapter. It is not clear whether that relates to particular circumstances, or whether it would be done on the basis of alternative and clear existing rights. It is not clear whether those alternative provisions would have to be equal, adequate and clear. If we are talking about transport services being excluded, for instance, the issue is whether that is because there are other provisions, such as European directives already in existence or to come. There is no requirement under the Bill for consumers to be assured that the alternative provisions they are told to rely on would be adequate or equal to the provisions in the Bill. That seems to me to be dubious. If the Minister knows exactly which services will not be included, surely that should be set out in the Bill for people to understand. We should not raise expectations that consumer rights will apply in respect of those services, if the first thing that is done is that they are effectively deleted from the provisions and effects of the Bill.

There is also the peculiar provision in subsection (6), which states:

“An order under subsection (5) may contain transitional or transitory provision or savings.”

What do the Government intend by that? If they are going to remove a service from the provisions, what transitional or transitory arrangements will there be? Will the Minister also explain the reference to savings? What will happen at the end of the transition period? Will passengers or consumers of other services be left in a worse position? The Government might say they are trying to leave people in a better position. The Minister might suggest that a new directive is coming along that will be effective, and we might have some parallel running until the new directive or rights under some other provision take effect. If that is the case, the reference to savings in subsection (6) is not clear.

If, as my hon. Friend the Member for Walthamstow asked, the power in subsection (5) is there to deal with particular circumstances that might arise, why is it purely a terminal power? It is a power to remove provisions and exclude them, and they will then be annulled. There is no power to revive them. In other provisions in other Bills, the Secretary of State has been given the power to rescind the effect or extent of a particular clause on a particular service. There is often the power to reinstate a provision, but there is no power whatever in subsection (5) to revive a provision.

Subsection (5) is clearly not a response to circumstances that might be affecting a particular service at a time perhaps of major infrastructural investment, with major service disruption, when the normal guarantees around times, standards and services may not apply. In such circumstances, people would accept exceptions to the standard rights that would otherwise be available to them. However, that is not provided for in the clause, and that raises serious questions about whether we will end up with a Bill that makes a lot of claims and raises a lot of expectations, but leaves a “Now you see it, now you don’t” consumer rights experience. “If you do have it here, you don’t have it there”, or. “Go find it somewhere else.”

People’s rights should be clear, as the hon. Member for South Thanet said. People should be able to know that they have rights, under what provisions they have them, and what clear recourse they have to exercise them.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I, too, welcome everybody, on such a beautifully sunny day, to what I am sure will be a gripping sitting of the Committee. As the hon. Member for Walthamstow said, the clause relates to services. The service sector accounts for two thirds of our economy, so it is really important that we get the rights correct in this part of the Bill. It has massive implications throughout the economy.

Current consumer protection when purchasing services does not reflect the value of the sector to the economy at the moment. The Supply of Goods and Services Act 1982 sets out rights for recipients of services provided under contract, which makes a solid foundation for this chapter of the Bill, but it is not in line with the extra protection that consumers get with respect to other products. For example, the Act applies only to England and Wales, and, unlike similar provisions for goods, it does not include remedies, so we are bringing consistency across the board, and we are extending rights and remedies, as they relate to services, to Scotland.

The aim behind chapter 4, which the clause introduces, is to update the law when a consumer contracts with a trader for the provision of services, so it will benefit both consumers and traders. That is the general framework of the chapter. As the hon. Lady highlighted, the clause includes a power, exercisable by a statutory instrument, to disapply the provisions to a particular service or services. There is a similar power in existing legislation, which has been used to disapply provisions to the services provided by an advocate in a court or tribunal, a company director, a director of a building society and the management of a provident society, and to services rendered by an arbitrator. It is likely that the power in the Bill will be used to exclude the same sorts of services.

Most Members have raised the issue of travel. Services such as passenger air travel and bus travel are normally provided under a contract, and therefore the “Services” chapter of the Bill would apply. My officials have been in close contact with the Department for Transport to ensure consumer protection for passengers using rail services, which was the issue that a lot of Members raised. The existing national rail conditions of carriage already provide a significant level of consumer protection for the provisions covered, and those conditions are also about to be refreshed to include stronger provision relating to compensation for consumers, in line with the requirements in the Bill. The hon. Member for Cardiff South and Penarth raised that issue.

We propose to exclude rail passenger services, which are covered by the national rail conditions of carriage. The national rail conditions are very similar and will be excluded only when they offer equivalent protection to that in the Bill. The concern that has been raised with us is that train operators will increase fares for passengers if they have to comply with two separate sets of regulations. By disapplying them when they offer the same protection, we are trying to ensure that passengers will have a level of protection equivalent to that offered in the Bill.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Should that condition not be stated in the Bill, then? That would create a lot of assurance.

Jennifer Willott (Liberal Democrat, Cardiff Central)

The point is that the provision in the Bill is very similar to the existing legislation. Also, as I said, various other groups will be disapplied that are already excluded under the current legislation—advocates in court and so on—and we are trying to ensure that the situation is clear.

Fiona O'Donnell (Labour, East Lothian)

The Minister is making it even less clear. She says that some of the rights in question are being refreshed, but if they do not meet the same standard as in the Bill, will she assure us that she will re-examine the matter? Or, to save any room for error, why not put the provision in the Bill, as my hon. Friend the Member for Foyle suggested?

Jennifer Willott (Liberal Democrat, Cardiff Central)

My understanding is that rail passenger services will be excluded only when the conditions of carriage offer equivalent protection. To put that in the Bill would make it more confusing.

Mark Durkan (Social Democratic and Labour Party, Foyle)

If there will be no difference to the consumer, and the situation will be as good as under the Bill, why do we need subsection (6), containing,

“transitional or transitory provision or savings”?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I shall come back to the hon. Gentleman on that point.

Hon. Members also raised the issue of bus services. Buses will be covered by the Bill because they are not covered by the conditions of carriage. There is no intention to exclude bus services. They will remain under the remit of the Bill and the rights under the “Services” chapter will apply.

On the issue of disabled access, I have to confess that since I have had small children and often travel with a pushchair, I have a much greater appreciation of the difficulties for people with mobility issues of using public transport. It suddenly opens one’s eyes. I have discovered all the streets near my house that have massive tree roots that someone cannot get past with a pushchair, and how many tube stations have no lifts and are impossible to get into and out of. I appreciate that that is not the only issue that people with disabilities face, but sometimes things happen in our lives that give us a better understanding of the issues that people with disabilities face.

I appreciate that using public transport can be very challenging for people with disabilities, depending on the operator, the services and so on. Under the Bill, if a consumer asks about services for disabled people and relies on the information they are given when deciding to go on that particular train, bus or whatever, clause 50 will apply. If they rely on that information, buy a ticket on a particular service and discover that it does not have audio announcements, or that someone was not there to help them get on and off the train carriage, or whatever it might be, having been told that that service would be provided, clause 50 would be breached, because they had relied on that information. So there are protections in the Bill. My understanding—I will check this—is that the Equality Act 2010 will apply, and that provides rights and remedies for people with disabilities to access services, including transport. The broader protection is probably under that Act, but parts of the Bill relate to the circumstances of those people too.

The hon. Member for Foyle asked about being able to revive provisions that have been disapplied under this part of the Bill. The power to revive does not have to be in the Bill; we would just need to revoke the statutory instrument. We can reapply the Bill to services under the same power; it is straightforward. The matter is not a one-way street.

Mark Durkan (Social Democratic and Labour Party, Foyle)

I am at a loss to understand why the power to reinstate is specifically included in some pieces of legislation and not others. The clause states:

“A statutory instrument containing an order…is subject to annulment in pursuance of a resolution of either House of Parliament.”

Once something is annulled, it is annulled. The Bill would benefit from having the power to revive stated clearly in it, as happens in other Bills.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I cannot comment on why some legislation has it and some does not. That is an issue for parliamentary counsel, and that is way above my pay grade. However, I reassure the hon. Gentleman that it is clear that it is not difficult to revive—we can just annul the SI, and it is perfectly straightforward. There is no intention for it to be a one-way street.

The hon. Gentleman raised a point about subsection (6). My understanding is that it is likely to be used extremely rarely. The provision is in the 1982 Act, which I have mentioned, and it has been used in few instances since then. However, we want to future-proof the Bill. We do not want to list where the provision would be used, but we want ensure that it is in the Bill, as it is in current legislation. The subsection means that the Secretary of State may make changes to ensure a smooth transition, which is normal for any statutory instrument. The provision is included even though we do not expect it to be used often.

Transitional arrangements are often included in Bills. There is a general clause to ensure that, because they are always needed. It makes it clear what it will happen between the two regimes. For example, if a contract is entered into before the Bill comes into force, we must keep some of the current provisions and not revoke them with immediate effect. That allows for transitional protection.

Mark Durkan (Social Democratic and Labour Party, Foyle)

I am still not quite clear. On the one hand, we are told that we have this provision in the Bill because it tends to be in other legislation, and on the other hand, we are told that some things tend not to be in other legislation.

I have another question. If an issue arose in relation to some of the devolved areas—I know that the Bill covers the UK, subject to legislative consent—would the disapplication of some of the provisions in respect of, say, Northern Ireland, be covered by the clause?

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am afraid that I do not know the answer to that. Northern Ireland is the only part of the UK that requires a legislative consent order for the Bill to come into force. Scotland and Wales are covered. I will write to the hon. Gentleman to clarify that point.

My hon. Friend the Member for South Thanet raised an interesting point about the access to information about how a person can complain and claim compensation. The hon. Member for Edinburgh East highlighted the example of when she was given complaints forms easily. I think the situation varies significantly from operator to operator. However, my hon. Friend raises a valid point about the importance of ensuring that passengers and consumers have access to the information that they need. I am happy to talk to some of my colleagues in other Departments to ensure that they are considering those issues.

As we have discussed many times in this Committee, ensuring that consumers have the information that they need to know what their rights are and how to exercise them is critical to making the system work. That applies in this area as much as in others.

Laura Sandys (Conservative, South Thanet)

The issue is particularly about regulated industries. We have Network Rail’s website, but the rights should be front-of-house and accessible. I thank the Minister for taking the issue forward.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I am happy to speak to colleagues in the Department for Transport about that matter. I hope I have answered the questions that hon. Members raised.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for setting out the issues. She said helpful things clarifying that bus customers will now have the protection of the Bill, which means that the issue should be about not the length of the journey taken but the provisions in the Bill. It is worth going through them, because if we are saying that rail passengers should not have equivalent rights, or if there are concerns that they might not be equivalent, there will be confusion.

The Bill requires the information the trader provides to be binding. For most people on buses and trains, that would include the timetable. Those are the times we can expect a service to be provided, and it provides information about where the service will go. We are concerned by what the Minister said—that the Secretary of State will use the provision to exclude passenger services, but the Minister hopes there will be equivalent services. What will that mean for binding information in a timetable, for example? If a service is advertised, is there a right to money back if that service is not provided? Will there be flexibility, as there is currently?

Fiona O'Donnell (Labour, East Lothian)

It is important that my hon. Friend raises the issue, especially considering the debate that is going on about the provision and funding of bus services. In rural areas, where perhaps a service is only once an hour or less, is it not even more important that people can rely on a timetable?

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. That is why it is important that bus passengers are aware that the Bill will give them rights to complain if the information is not binding. I am concerned by what the Minister said. We need more assurances that that same provision will be available for train passengers.

The Bill talks about services being

“performed with reasonable care and skill.”

Woe betide the bus driver who goes for the potholes, I hope. Again, there is a question about “care and skill” for train travel and the level of expectation. Anybody who has ever travelled on a train for which clearly more carriages should be provided or had a long-distance train journey standing the entire way, or sat next to the toilets, will have concerns about whether such circumstances are covered by “care and skill”.

Critically, the Bill talks about supply at a future time. We are concerned that consumers have a say in any equivalent provision for train transport. I am sure that the hon. Member for Plymouth, Sutton and Devonport would say that his constituents are concerned to know that the train service will be restored, so that they can travel to London if they want to without having to drive.

Oliver Colvile rose—

Stella Creasy (Labour, Walthamstow)

The hon. Gentleman doubtless wants to say that people in Plymouth want their train service back.

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

The hon. Lady is right to say that they want the train service back, but we also do not want our train line to be swept away again this time next year. That is why I welcome fully the Government’s commitment to producing a report by July on what alternative routes could be provided while also protecting the Dawlish and south Devon economy.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for that intervention, because he raises the concern the Opposition have. In the scenario he describes, would season ticket holders on the train journeys he talks about have a say in those alternative routes without the protection the Bill gives to passenger services? I am sure that he would be a diligent campaigner for his residents to have that say, but under the Bill, would a consumer have influence over service provision? We are concerned to ensure that the equivalent rights the Minister says will come from the refreshing of the carriage transport rules will be put in place.

On the question of services being provided in a “reasonable” time, anyone who has experienced a delay to a service will want such protection, but what does it mean? It is worth looking at the current carriage transport rules, because they are not as strong. Getting a refund in the form of vouchers is frustrating. If someone is not particularly confident in the service being provided, the last thing they want is to have to travel on it again. The legislation will allow consumers to seek a price reduction and their money back, rather than having to accept vouchers. It is fair to ask whether the Minister intends to ensure that, under the legislation, train companies cannot give someone vouchers rather than their money back.

Fiona O'Donnell (Labour, East Lothian)

Often, the people making such journeys are making a once-in-a-lifetime journey, as in the case of constituents of mine who travelled from Dunbar to London for a funeral. They are not planning to make that journey again, so they are unlikely to use such vouchers.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right, although, having visited the area around her constituency, I have to say I would make that journey many times. I would want to have confidence that I could complain if my journey was not satisfactory.

The Minister is absolutely right to say that there are instances where we might want to exclude certain things—advocates in court are a pertinent example. However, we want to hear from the Minister, preferably before the Bill is debated on Report, more about the concept of equivalent rights and where the refreshing to which I referred will come from. The service legislation will give consumers simpler and clearer protections in a number of areas. Not giving rail passengers those protections could be problematic in a number of ways.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Just to clarify, passengers will have the right to their money back for substandard rail travel. We have a written agreement with the Department for Transport that changes will be made before this power is used, to ensure that equivalent protection is given.

Stella Creasy (Labour, Walthamstow)

The Minister is talking about the power being exercised as opposed to the legislation coming into force. The ability to get refunds and the length of delay that a passenger has to experience are already covered under the current national conditions. It would be helpful to set out equivalence before the Bill comes into force, rather than before the power is enacted, which could be some considerable time in the future.

All our constituents who use rail transport will be concerned—rightly—to hear that the Government are seeking to exclude a particular service from the legislation. They will want to know that the assurances given by the DFT to the Minister will appear. Will she commit to clarifying what “equivalent” means before the Bill is enacted? That would be welcome, because it would give people confidence that the Bill will not be undermined in respect of rail passengers.

It would be very welcome if the Minister undertook to provide that information to the Committee, as we could then be confident that we will have certainty before the legislation is enacted, rather than when the power is used, which, as I said, could be months if not years in the future. We could then tell our constituents that, although they might not be covered by this Bill, “equivalent” means “same” rather than “similar”. That is where disparities can arise—for example, people receiving vouchers rather than a refund, and not having an accurate understanding of what constitutes a delay. [Interruption.] I hope that the note the Minister is being given is a positive one, saying that we will get that information ahead of the Bill coming into force.

Jennifer Willott (Liberal Democrat, Cardiff Central)

These are two separate issues. When the Bill is enacted is a separate issue from when the provision could be used to disapply the Bill from particular services. I am afraid I do not know what the time frame is. In theory, we could be talking about years away; I simply do not know when. However, the time when the statutory instrument is introduced is the time to debate whether the provisions are equivalent, what the information is, and what the SI will disapply. It would be more appropriate to have that debate when a decision is made on that. The whole point of debating statutory instruments is to raise those points.

Stella Creasy (Labour, Walthamstow)

I appreciate the Minister’s point but if, as she says, the power is not enacted for several years, we could be in a limbo position whereby consumers are not quite sure which legislation applies to their rights. If she does not use the power at the point at which the legislation is enacted, National Rail will be covered, by default, because it is not excluded from the Bill by these provisions. As she says, the Government’s intention is to disapply National Rail conditions, so consumers might be unsure. It would be helpful to clarify the situation, because that would give guidance to the train operators about what conditions they are expected to adhere to under the old or the new system. I appreciate she will not be able to do that today, but I urge her to think about it ahead of Report or ahead of the Bill becoming law.

We need the information and we need to have confidence, especially as the Minister said that the power could not be exercised for several years. [Interruption.] She says she does not know from a sedentary position. That makes the case all the more powerfully for setting out exactly what we expect the national conditions of carriage to contain. What is “equivalent”? What does that actually mean for passengers? Anybody thinking about taking a journey in the next couple of years would not know whether, if there was a problem with it, they would have to get a refund via vouchers, whether they could demand their money back, or what the concept of “reasonable care and skill” is. There is even the question about the timetable.

I am sure, having heard today’s debate, Passenger Focus will be full of ideas about what to do, and I am sure it will be writing to members of the Committee. Having heard the Minister’s words today, I am sure our inboxes are already filling up. I hope she will recognise there is genuine concern, and that she will think about how she can get us the information ahead of the Bill’s completing its legislative passage. We have put on the record our concerns and our request for more information. I hope that has been noted.

Clause 49 - Service to be performed with reasonable care and skill

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 38, in clause 49, page 30, line 8, at end insert—

‘(1A) In assessing whether the service has been performed with reasonable care and skill any claim made by the trader as to the outcome the service will achieve must be taken into consideration.’.

Clause 49 is about the first conditions that we would expect to apply to services. It contains the word that for all of us over the past three weeks has come to be loaded with meaning: “reasonable”. The clause is about services being provided with “reasonable care and skill”. The concept of reasonableness is something we have all become intimately acquainted with over the past couple of weeks, because it is so paramount in the legislation. The definition of “reasonable expectation” is loaded with meaning.

We have already debated in Committee the concept of reasonable quality of goods, and we have talked about reasonable quality for digital content. The clause now applies the same test of reasonableness to services, and it applies the concept of “skill” to the concept of reasonableness. Is it a good service and is it performed in a good way? That is how I would interpret it. There is no general definition of reasonable care and skill, so case law will set out what will be taken into consideration when judging whether a service has been performed in that manner, or, if it has not, when a consumer might be able to exercise their rights to a remedy, and whether they will have the service performed again or receive some money back.

Members will be familiar with the intent behind the amendment from our previously expressed concerns about the concept of reasonableness, and from the amendments we tabled on how we can help consumers understand what is a fair expectation. This is an incredibly important point when it comes to services—perhaps more so than with goods—because the concept of what is a reasonable service is very much in the eye of the beholder, so providing clarity about what people can and cannot expect to complain about is even more important. [Interruption.] The hon. Member for Braintree is looking vexed. I hope I can convince him with some examples. I see he is raring to go, so I will give way.

Brooks Newmark (Conservative, Braintree)

I feel as though I am sitting in a philosophy tutorial. I wait with bated breath to hear what the hon. Lady says about the definition of reasonableness and what one person’s reasonableness versus another’s is.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for his intervention. I am a little disappointed that he did not ascribe to himself the definition of reasonableness; that would be a truly philosophical endeavour. I did not study philosophy, so I cannot not prove why he is quite so reasonable, but I know that that was his intent in asking that question.

I will explain the amendment and why we have set a test. We recognise the Government’s case that, particularly when it comes to some services, what one person might consider reasonable would not be considered reasonable by other observers. Therefore, having a purely outcomes-based approach to what is reasonable, specifying that a particular effect has to be achieved by that service, is not practical in terms of the concept of reasonableness—it is, indeed, unreasonable. However, we do listen to the lessons from the Business, Innovation and Skills Committee and from consumer groups such as Which? and Citizens Advice, which have been concerned that, without some recognition of the role of outcomes in judging what is reasonable, consumers may experience very poor levels of service and have little redress because the trader would argue that they felt that the service was reasonable.

How, then, shall we strike a balance? Our amendment, as did our amendments to the goods and digital content elements of the Bill, tries to do so by looking at what information the consumer might draw on when commissioning a service, and what information it might be fair to take into account when judging whether a service has been performed with reasonable care and skill. The Government rejected the notion of an outcomes-based approach because of such examples as French lessons and hairdressing. I raise the issue of hairdressing with some caution, because some members of the Committee were concerned about whether our past conversations about hairdressing could apply to them. I can assure them that this is an issue we all recognise—a good level of service is always best.

The question of whether a haircut has been done with reasonable care and skill can often be in the eye of the beholder, so a trader may act with a reasonable intent and may give somebody a haircut that they decide they do not like. Is that not being done with reasonable care and skill? I think we all recognise that that could be disputed. However, what if a trader claims that a particular haircut will make someone look the spitting image of, shall we say, Jennifer Lawrence? She has beautiful hair—many of us would kill to look like Jennifer Lawrence—and if a trader were to say, “I can give you a haircut that will make you a doppelganger of Jennifer Lawrence”—[Interruption.] My hon. Friend the Member for Middlesbrough queries that. I can assure him that in my eyes, he looks like a film star all day.

Rehman Chishti (Conservative, Gillingham and Rainham)

The hon. Lady says that some hairdressers say they can make someone look a spitting image of another person. From her research, how many hairdressers in the country offer to make someone’s hair the spitting image of another person’s? I think that that is a wild assertion, like many others she has made today.

Stella Creasy (Labour, Walthamstow)

I presume that the hon. Member for Gillingham and Rainham is asking that because he would like the phone number of that hairdresser. Can I assure him that I personally think his hairdresser has given him a wonderful haircut with reasonable care and skill, and that he does not need to seek the Jennifer Lawrence haircut? Members may feel that haircuts are not such a good example: let me give them other examples of where outcomes-based claims are made about what a particular service will achieve.

Sheila Gilmore (Labour, Edinburgh East)

The example given might seem somewhat extreme—

Fiona O'Donnell (Labour, East Lothian)

No!

Sheila Gilmore (Labour, Edinburgh East)

Well, some of us are struggling with who that person is. Leaving that aside, if I were to ask for a particular style of haircut and come out with something completely different, however good it was, it would still not be what I intended. If I want it to be a particular length and it is cut very much shorter, surely that is not the outcome that I desired.

Stella Creasy (Labour, Walthamstow)

May I do my hon. Friend the Member for Edinburgh East a service and encourage her to watch “Silver Linings Playbook” and “American Hustle”? They are both fantastic films in which Jennifer Lawrence has beautiful hair. I can see that the hon. Member for Braintree wants to question whether “American Hustle” should have won a Oscar. I feel that that is not an appropriate debate for this room, but I agree with him. However, my hon. Friend the Member for Edinburgh East is absolutely right about the situation in which someone asks for a particular haircut and that haircut has been agreed with the hairdresser. If someone asks for a trim and gets a bob or a page boy cut—[ Interruption. ] I see the hon. Member for Braintree looking confused. They are very short haircuts that would be severely different from the trim that had been asked for. Would the customer have a right to say that the haircut had not been performed with reasonable care and skill because the outcome, although it might be a beautiful haircut, was not what had been sought? That is a fair question.

I will give some other examples of outcomes-based claims on which we think it would be fair for consumers to rely in seeking redress for services that are not performed with reasonable care and skill. There could be a weight-loss class that claims consumers will lose a specified amount of weight in a specified amount of time; a dry cleaner who promises to remove all stains from any garment—I have seen dry cleaners who make such claims; a personal trainer who promises to get the service user running a marathon within eight weeks; or a driving instructor who promises that someone will pass their test within a certain number of lessons. Those are the sorts of outcomes-based claims that some service providers will make.

There is a reasonable balance to be struck between giving consumers stronger protection from traders who simply say, “I’ve decided that this haircut will be better for you” or “You could not pass your driving test under any circumstance” and consumers who make an unreasonable demand on a trader’s care and skill. When deciding whether something is reasonable, there is a balance to be struck between traders who, in their advertising or communications with service users, make a specific claim for what a service will achieve and the outcome that the consumer has a right to expect.

Rehman Chishti (Conservative, Gillingham and Rainham)

The hon. Lady talks about offers that state that a personal trainer will have someone running a marathon or half-marathon in eight weeks. I run half-marathons, so how many such offers are out there? A lot depends on the physique and fitness of the individual, so the assertion that that individual will be fit in eight weeks is bizarre.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for his concern on both haircuts and fitness. I am relieved that he did not ask whether I could run a half-marathon, or indeed whether I could claim to be ready to run a half-marathon within eight weeks. He is missing the point, which is that there are circumstances in which service providers will make outcomes-based claims. All my examples are real-life examples, so the question is not whether the claims are appropriate, although I agree that anyone who suggests that they could get me running a half-marathon in eight weeks would clearly be as fanciful as the coalition agreement. [ Interruption. ] As my hon. Friend the Member for East Lothian says, eating half a Marathon would be more likely. I could certainly do that within eight minutes, let alone eight weeks.

My point is that people will make claims when providing services, and consumers should therefore be able to rely on those claims in the reasonableness test. I hope that Government Members can see the distinction. When traders make exaggerated claims and a consumer buys into a service on that basis, that should be taken into account when considering the reasonableness of that service. [Interruption.] The hon. Member for Braintree is ready and raring to go, so perhaps he will tell us whether he could run a marathon in eight weeks; I certainly could not.

Brooks Newmark (Conservative, Braintree)

I ran the Los Angeles marathon and ended up being very ill afterwards. I made a bet with someone, unfortunately. I agree with one part of the hon. Lady’s argument, which is the dry cleaning example. If someone says that they can remove a stain, they should remove the stain. There is only one party in that relationship that can deliver that claim—the dry cleaner. However, in the case of losing weight, for example, two parties are part and parcel of the contract. It is difficult for the provider to prove that the person on the other side of the contract, whether they are being trained to run a marathon or are trying to lose weight—I probably need to lose about a stone—has contracted to do that by doing exactly everything that the supplier of the service provides. I will buy one part of the argument, the dry cleaning part, but the other two examples are a little difficult to support.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for that intervention. I cannot see why he needs to lose a stone, especially since he can run marathons. [ Interruption. ] A Government Members says 3 stone; that is most unfair. I have heard some stories about Whips being tough, and clearly my understanding of what goes on in the Government Whips’ office is well founded.

The hon. Member for Braintree is absolutely correct: when traders make claims and consumers buy a service on that basis, but the claims do not bear merit, surely a consumer has a right to challenge the provision of a service. Simply to argue, “The trader made a claim that they could not possibly substantiate. That is your fault and you have lost your money, whatever the circumstances,” reinforces our argument. If the amendment were made, it would act as a disincentive to service providers to make such silly, unrealistic claims and would give the consumer protection from them.

I am sure we could find a personal trainer who would argue that, helped by their grit and determination, both myself and my hon. Friend the Member for East Lothian could run a marathon within eight weeks. That would not necessarily be beyond the realms of possibility. It is beyond the realms of what either of us would desire to do with our time, I suspect, but it is a claim that could be made. If the trainer were not able to deliver on such a claim, whatever we had done ourselves, they made that claim to secure our custom. That is the point.

Fiona O'Donnell (Labour, East Lothian)

In an age when there are so many pressures about body image—to which I am clearly immune—does my hon. Friend agree that the good providers of services will state that, in her example, the claim is conditional on a healthy diet or a regular exercise regime, making the consumer aware that they have a part to play in the contract? That is fine, and we can understand that. It is when the outcome is guaranteed and the provider of the service makes no indication that any commitment is needed from the consumer that the consumer should have rights.

Stella Creasy (Labour, Walthamstow)

I said that the Committee could become a little like therapy for people; I fear we are getting into therapy now. I assure all members of the Committee that as far as I am concerned, despite the unhealthy lifestyle we all lead with our long hours and stresses, they all look in fine form to me. That is not simply a way of trying to persuade them to support the amendment.

I will move on, but I want to put it on record that it is not simply the Opposition who are concerned that an outcomes-based standard needs at some point to be made part of the Bill.

Kwasi Kwarteng (Conservative, Spelthorne)

Will the hon. Lady give way?

Stella Creasy (Labour, Walthamstow)

If the hon. Gentleman wants to challenge the idea that members of the Committee look in fine form, woe betide him.

Kwasi Kwarteng (Conservative, Spelthorne)

No, I am not going to do that. This is the first time I have spoken in the Committee, but I have heard a lot of the arguments, and some of the Opposition’s arguments frankly seem absurd. Clearly there is a distinction between situations such as my hon. Friend the Member for Braintree mentioned, where the producer, shopkeeper or supplier of the service has all the obligation, and situations where, for example, a driving test instructor might say, “You will pass your test within 20 days,” or another trader might say, “If you follow this diet you will lose a stone.” In those situations there is clearly an obligation on the part of the consumer. To pretend that the two types of situation are the same does not make any sense whatever.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for his introductory contribution to our discussions. The Opposition would co-sign his request for a refund from charm school for his suggestion that our arguments are absurd. He is being a little disingenuous about the point that we are making.

Traders will make claims that are absurd. Therefore, when we are testing the concept of whether a service has been provided with reasonable care and skill, consumers should be able to say, “This is the promise I was made by this trader; however absurd, it has an outcomes-based focus and I therefore wish it to be taken into account in judging whether the service has been provided with reasonable care and skill.” The flip side of what the Bill will do, and the reason why groups such as Which?, Citizens Advice and the Business, Innovation and Skills Committee are concerned—[Interruption.] I do recognise the concerns of the hon. Member for Braintree. I know he feels that perhaps my argument is not strong enough, but let me tell him what the Committee said, because it might help. It stated:

“One of the risks of creating a statutory right that services must be provided with reasonable care and skill is that this is seen by traders and consumers as a standard to meet to ensure compliance, rather than as a statutory minimum...We recommend that the draft Bill should apply an additional outcomes-based liability standard to services that requires service provision to achieve the stated result, or one which could reasonably be expected, as well as to any product resulting from the service.”

So it recognises that where a stated result can be achieved by a particular service, it is surely right and proper for a consumer to be able to rely on that in the test of what is reasonable. It is not about an unreasonable expectation, such as whether we could run a marathon in eight weeks or whether a certain amount of weight loss could be achieved, but a stated result. That is the distinction we are trying to draw.

Fiona O'Donnell (Labour, East Lothian)

Will my hon. Friend probe Government Members to see whether they think that, when a product or a service makes a claim and the consumer fulfils all that they are required to do on their side, but they do not see the outcome promised, the consumer’s rights should be covered by this part of the Bill?

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. The presumption that Government Members are making is the argument that traders will make: “You obviously did something wrong, and that is why the service hasn’t met the stated result that we had said it would achieve for you.” The concept of reasonableness will therefore rely on the trader’s assumption, without some reference to the outcome that the trader had suggested. That is the loophole we are trying to close with the amendment.

Our question is, if someone does not lose weight, even though they have followed the diet to the letter and been out and exercised—they have not even sniffed a bar of chocolate—does the consumer have the right to say, “It was guaranteed. That is the reason I spent a lot of money on these weight-loss pills. I saw the advert’s claims, I did everything right, and yet still I haven’t secured that outcome”? I do not think it has met that reasonable care and skill test, because a claim has been made that cannot be substantiated. I therefore think that the test of reasonableness should be able to include stated results.

Kwasi Kwarteng (Conservative, Spelthorne)

Will the hon. Lady give way?

Stella Creasy (Labour, Walthamstow)

I will give way one more time, and then it would be helpful to hear from the Minister. She probably recognises that advertising claims and information that consumers might be given about what a service will do should be considered as part of the reasonableness test. The issue is whether a consumer will have that protection in the Bill.

Kwasi Kwarteng (Conservative, Spelthorne)

I am grateful to the hon. Lady for giving way. Clearly, this idea of consumer protection relies on finding out what the consumer has done. Many of us know of instances where people will say to us, “Oh, I followed the diet to the letter. I ate salad every day”, but they forget about all the other things they ate—the salad dressing, for instance. That is material in a diet. People get their little salad and forget about going to McDonald’s in between meal times. They will turn round and say, “I followed this diet to the letter. Give me my money back.” Surely that is not the situation the hon. Lady wants to defend.

Stella Creasy (Labour, Walthamstow)

I am delighted that the hon. Gentleman has decided to start contributing to the Committee. He has an eye-opening perspective. I would love to know at which point he forgot he went to McDonald’s. I will wager it was rather late at night.

If the example of the diet is causing confusion, let us return to the example of the dry cleaner who says that they will be able to remove any stain—[Interruption.] I see the hon. Member for Braintree agrees about the dry cleaner. If a dry cleaner says, “Tough. I think this is clean, so you will just have to deal with it”, does the hon. Gentleman think that that is reasonable care and skill, or does he think the consumer has the right to say, “Hang on a minute. I came to your dry cleaners rather than somebody else’s, because you made that claim. My family has held this beautiful divan for generations. There has always been a brown mark on it. I brought it in to you”? [Interruption.] Yes, or scatter cushions. We must return to the scatter cushions. Someone might say, “You have not removed the stain. I have paid for this service, and I would have paid for another service had you not made that claim.” The trader says, “Well, I have done a good job.” That is the loophole that we are trying to close. If Government Members can see that that can occur—[Interruption.] Goodness, I see the hon. Member for Braintree slamming the desk.

Brooks Newmark (Conservative, Braintree)

If the hon. Lady was just trying to deal with dry cleaners, I would agree with her, because there is only one part of that relationship that can deliver on that part of the bargain. What she is trying to do is conflate something where only one party can deliver that with something where two parties are part of the contract, such as going on a diet or running a marathon. That is what she is trying to do. I cannot agree with her on that, but if the amendment were just to do with dry cleaners, I would be tempted to support her.

Stella Creasy (Labour, Walthamstow)

The hon. Gentleman needs to look carefully at the amendment, because it is about not any specific service but the principle. Let me provide another example that might strike a chord with him. If he employed someone to paint or decorate his property, and they went over the edges of the bits at the top of his walls—I am such a bad decorator myself that I do not even know what they are called—that would not be reasonable care and skill. However, they had promised that they would make his house look beautiful and that it would be perfect. Should he be able to rely on their claim—if they had made such a specific claim—that their decoration would be perfection, in terms of what is reasonable care and skill?

If the hon. Gentleman accepts that, under the Bill, there are examples of where a trader could challenge his assertion that, “I don’t think that is reasonable care, because you have gone over the lines when you claimed specifically that you would be accurate with the painting”, does he accept that there will be instances where traders could use the Bill to avoid responsibility for not performing a service with reasonable care and skill? That is what the amendment is designed to take account of. It is not intended to create a series of unreasonable expectations from a consumer, but to ensure that, where a consumer has been given a pledge of assurance about a particular standard that a service will meet, they will be able to take that into account and challenge a trader who says, “It doesn’t matter if I said to you I would be perfect. What I meant by perfect isn’t what you meant by perfect. Therefore, them’s your apples. I am not going to give you your money back.”

We can all look at the weight loss and driving school arguments, but if the hon. Member for Braintree accepts that there is an issue with those types of services, surely he accepts that it is right to look at the issue, as the Select Committee on Business, Innovation and Skills, Which? and Citizens Advice did, and say that there needs to be some recognition that outcomes matter in judging the quality of a service. The Bill, as currently drafted, does not have that. The amendment is seeking to probe how a consumer can have that confidence.

At this point, it is probably a good idea to hear whether the Minister has any comments, and how we might resolve the hon. Gentleman’s concerns about dry cleaners and decorators, if not weight loss merchants and driving instructors.

Sheila Gilmore (Labour, Edinburgh East)

In some of the perhaps rather light-hearted exchanges this morning, we may be losing sight of the fact that this an important part of the whole issue of consumer protection and the need for such protection. For many years, this has been a problematic part of consumer law. Unlike the law that has developed regarding goods, there is a great deal of uncertainty over the concept of reasonable care and skill. There are still many complaints about services, and consumers are often left with the feeling that their complaints are not being fully resolved. Which? suggested that as many as two in five people who purchase services have complaints about the nature of that service. Clearly, there will be a wide range of complaints, but it is an important issue.

Somehow, over all these years, defining reasonable care and skill has proved to be difficult. The opportunity should be taken in the Bill to see whether we can arrive at a better conclusion. That was the thrust of the recommendations from the Business, Innovation and Skills Committee, for example.

The difficulty for the consumer here is that, unlike something that is more tangible, it can be harder to be clear about what “reasonable” means in this context. “Reasonable” has a long pedigree in legal disputes. Lawyers standing up in court undoubtedly have a clear grasp of what they consider to be reasonable, and they use the term constantly. The problem for the individual consumer is that they do not have that background in legal argument and precedent. They are asked by the trader to agree a definition of reasonable, in effect, which they may feel they really do not accept and they are made to feel that it may be them who is being unreasonable.

We have had a number of examples here, but quite often the response given by a trader is that, somehow, somebody else is at fault; either the purchaser of the service or some other party to the contract. Somebody did not bring the paint that gave the right shade, or they did not give them some part of the jigsaw of service that should have been given. However, the person who purports to provide a service is the one to bring all that together, not the consumer.

The example that came to my mind is floors sanded and sealed. This was very fashionable a good few years ago, at least in my part of the world, where a lot of people took on older properties and decided that they wanted to restore them to their late-Victorian or Edwardian origins. Indeed, I think that people still do, although my husband’s grandmother, who was in her 80s when we were doing this, told me, “I never liked those marble fireplaces and bare floorboards,” and could not fathom for one minute why we were stripping all this back to its origins. It just shows how things go in generations. It could well be that the nature of the floor is such that getting a good result is genuinely going to be quite difficult, but this should be made clear at the beginning.

So I go to a firm who will, no doubt, show me photographs of beautifully shiny, smooth floors that will enhance my home and make me live in an edition of Ideal Home magazine—at least until I start living in it, when it will turn into something quite different. However, my floor may well be so old and hard to restore to its former beauty that that is not going to happen. When I see the result I say, “I don’t like this. This isn’t what I expected to get. I expected to get something far better than this.” Yes, the floor has been cleaned up, but all the little grooves and so on have certainly not been removed.

Just the other day, I noticed that someone—I cannot imagine that it was me—must have been standing on one of my floors in stiletto heels, because there are lots of little indentations in it. I very rarely wear those heels, so it could not have been me. However, it is an old floor, so if it is not perfect, or as perfect as I had hoped it would be, has the trader not used reasonable care and skill? He may argue that he has used reasonable care and skill: he has done the best possible job that he could to my floors and has done the job that he thought he should do. It looks okay, but it is not perfect.

Perhaps the trader should have been clearer at the outset and told me, “This is what I can do for you. I cannot turn this into this picture because your basic floorboards are not going to come up to that standard ever again. They are too old; they have moved apart in various ways; and we are not going to cure that.” Providing that we have entered into a very clear contract as to what can be achieved, that is fine, but if we have not and if I have gone away with the notion that I am going to get a perfect floor that will look like the pictures in his showroom or in his brochure, the question of care and skill does come into play. From his perspective, he has used reasonable care and skill, as he has done the best that he possibly could in the circumstances, but I do not have the outcome that I thought I would get. Perhaps it could be argued that to imagine that such a transformation was going to take place was rather idealistic and I should have been more realistic, but people find themselves in that situation with various kinds of work on their homes.

Tiling is another example. Somebody may do their best to apply tiles to walls that for one reason or another in their history are imperfect in their shape. That is likely given all that can happen to a house. My house, for example, is getting on for 150 years old—not the oldest ever, but it has clearly been much lived in. A tiler might have used exceptional care and skill, but when the tiles start to fall off because they cannot adhere to the bumpy wall, is that his lack of reasonable care and skill, or has the home owner simply not had the outcome that they thought they would get?

Fiona O'Donnell (Labour, East Lothian)

Does my hon. Friend agree that a professional tradesperson should be aware of such factors and advise what a reasonable outcome will be as a result, to give the consumer the opportunity to change their mind?

Sheila Gilmore (Labour, Edinburgh East)

In many circumstances, we would hope that that conversation would take place, but clearly individual consumers do not always enter into such detailed conversations and nor, necessarily, do traders who are trying to sell a service.

Mary Glindon (Labour, North Tyneside)

All this talk of tiling and smoothing has made me think about what would happen if I went for a beauty treatment, having read that it would make me look younger—I would love that—but after the treatment, I did not feel that I looked younger. My skin might look refreshed for a couple of hours, but I would come away disappointed. It had not lived up to my expectation, but the treatment had been offered with the claim, “You will look younger after this.”

Sheila Gilmore (Labour, Edinburgh East)

I can assure my hon. Friend that the day of the cult of youth has gone. We are now, I hope, in an age when people recognise that maturity has many assets and the roles of people of a much wider range of ages are taken into account—not least, I hope, in the House.

Leaving that aside, the trader or the person providing the service, as a professional, will have a view of what is reasonable care and skill, which will understandably develop with their years in the job. Consumers buying services such as hairdressing—since, alas, hair has the distressing tendency to keep growing—have to go back repeatedly, but there are some jobs and services that we do not get experience in judging. We do not necessarily have, for example, major works done to our homes or book certain kinds of travel arrangements all that often. Our ability to judge as consumers is therefore rather more limited, but when we buy something, we expect a certain outcome.

Although the amendment does not cover all the points about outcomes and levels of care and skill, it highlights situations in which we have entered into a contract in good faith, thinking that a certain outcome will be achieved. If the amendment were to make those offering services more circumspect in describing what they offer us and make them take more care before getting a consumer to sign up and spend what are sometimes considerable sums, that would not be a bad thing.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Before I call Mr Newmark, may I point out that we are drifting into too many philosophical and personal examples, rather than studying the Bill? I would be grateful if Members were mindful of that.

Brooks Newmark (Conservative, Braintree)

I hear clearly what you say Mrs Osborne, but unfortunately the way the amendment is worded demands a somewhat philosophical approach because it is so broad. I was not going to speak at all, but I want to pose my questions to the Minister, having listened carefully to the hon. Member for Walthamstow. My concern covers two words: “reasonable” and “service”. I found her reasonable, but she may not find my arguments reasonable, even though I think that I am being reasonable in what I am saying. That goes for the provision of services, too. A lot of this is about perception.

The hon. Lady talked on two different points, and that is what I want to ask the Minister about. Is the amendment too wide-ranging for what the hon. Lady is trying to achieve? In two examples—hairdressing and dry cleaning—only one person is part of the bargain and can deliver it: the spot is removed, or the actress looks like Jennifer Lawrence, or not, but I could say that it does look like Jennifer Lawrence’s hair, while the hon. Lady could disagree. Who is the arbiter? Putting that aside, I am willing to buy into the argument that if only one party to a contract is responsible for delivering that service, they should abide by it. I have a problem, however, when there are two parties to the contract: the diet and marathon examples.

I shall give a classic example. I could follow the diet that the hon. Lady gives me to a T and lose a stone. My hon. Friend the Member for Spelthorne could follow an identical diet, so that we ate and drank exactly the same things. Unfortunately, he loses not a stone but three-quarters of a stone. As the contract provider, the hon. Lady could argue as a precedent, “The hon. Member for Braintree did exactly what I asked and he has lost a stone. Therefore, I was reasonable in providing that service. I have done everything that I said I would and here is an example: the hon. Member for Braintree has lost a stone. Unfortunately, for some reason that I do not understand, the hon. Member for Spelthorne has not.” I think that my hon. Friend would be unreasonable if he sued the hon. Lady for not providing the service that she said that she could provide.

Rehman Chishti (Conservative, Gillingham and Rainham)

On my hon. Friend’s point about where one has complied with everything in relation to what the provider had said about training and eating the right food, fair enough. But how is the provider or trainer to know whether the other individual has eaten that food? He does not know. If at the end of the period, the person has not achieved the level of fitness sought, there may be an issue whereby the provider cannot be satisfied that anything has been complied with at all.

Brooks Newmark (Conservative, Braintree)

I hear what my hon. Friend says. I am applying a form of reasonableness to both sides of the contract. Both people have abided by the contract and both parties have been reasonable. That is where my concern lies.

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

Does my hon. Friend think that this is a matter of genetics? After all, I have a brother who is, frankly, as skinny as a rake while I, as hon. Members may tell, am a little more well sorted, as they say. Therefore, it is not possible to legislate on the issue of genetics.

Brooks Newmark (Conservative, Braintree)

I am going to be reasonable with the hon. Member for Walthamstow. Yes, this has been a great therapy session, so I thank her for bringing this matter to the Committee’s attention, but I want to go back to the issue.

Stella Creasy (Labour, Walthamstow)

In having the debate that Government Members are having they are proving the point that this amendment makes, which is about the situation where a claim has been made. If I were to claim that I could make someone lose weight, that would be one thing; if I were to claim that I could make someone lose at least a stone, that would be another. That is why the amendment says that when we assess whether a request for a right to redress or for a repeat performance is reasonable, it is done on the basis of any claims that might have been made. The fact that this debate is taking place rather proves the point that where a claim is made, the question of what information it was based on should be part of the assessment process.

Brooks Newmark (Conservative, Braintree)

I am afraid that I have to disagree with the hon. Lady, because in that case, she is being unreasonable—in addition to which, having just seen a picture of Jennifer Lawrence’s hairdo, I do not think it is very good at all. On the question of perception—what one views as reasonable or attractive—all the Opposition members of the Committee are far more attractive with their hairdos than Jennifer Lawrence.

I shall finish by asking whether the Minister agrees that using the word “reasonable” is, unfortunately, too vague. The word itself is too vague and leads to difference in perception. Secondly, by conflating two forms of service—in the first, only one party can deliver the service, but in the example I gave of weight loss and marathon running, two parties form that contract—it is far too difficult to define whether that service has been provided or not. Therefore, my instinct is to oppose the amendment because it is far too vague and wide ranging.

Jennifer Willott (Liberal Democrat, Cardiff Central)

We have had a very interesting debate this morning. We have discussed how important the service sector is. The debate has shown how broad it is, what a huge range of different things fall under the umbrella of services and how difficult it is to define that and bring it all together. However, in showing how important it is, it is all the more important that we get the framework right. We must have a proper framework that gives consumers confidence to buy, and traders confidence to provide services. We agree that if a trader says it will achieve a certain outcome that it does not then achieve, that can be incredibly frustrating for the consumer. That is why the Bill introduces a new statutory right. Members need only to look to clause 50, which makes it clear that where a trader gives information about itself or the service it provides and the consumer takes that into account, the trader must comply with that information and if not, the consumer has statutory remedies available.

The hon. Member for Edinburgh East highlighted the example of not receiving the haircut that was asked for—a haircut that was too short or too long. We have heard similar examples from a number of Members concerning dry cleaners, weight-loss classes, personal trainers and so on. If those services were provided under a contract—if the hon. Lady asked for a particular haircut and was given a different one from the one she had requested—the hairdresser is likely to be in breach of the “reasonable care and skill” requirement and of the new right whereby, where the trader gives information and the consumer takes that into account when deciding to enter into the contract, they have the right to have it complied with. If the hon. Lady requested a particular haircut, made that agreement with the hairdresser—that is why she went to them—and did not get that haircut, the trader would be in breach of clause 50.

We debated at length this morning the ability of someone to learn to drive after a certain number of driving lessons, or to lose a certain amount of weight. Those are good illustrations of why the Government do not want to introduce a quality standard as such. Instead, clause 50 will be a much better way of addressing the concerns hon. Members have raised. If a trader wants to make a guarantee without an obligation from the consumer—except the obligation to pay, obviously—for example by saying, “It doesn’t matter what you do, you can eat as much chocolate as you want and do no training whatsoever, but I guarantee that, in eight weeks, you will be able to run a marathon”, it will be perfectly fair for the consumer, if the guarantee is why they went with that personal trainer, to be protected under clause 50 if the promise turns out not to be true, which I suspect it would.

Rehman Chishti (Conservative, Gillingham and Rainham)

The key point is to ensure that there are clear terms at the outset, known by both the consumer and the provider. Expectations will therefore be in line with those terms, which is what we must aspire to.

Jennifer Willott (Liberal Democrat, Cardiff Central)

My hon. Friend is absolutely right. If there is an agreement under which both parties have to do something—“I will get you running a marathon in eight weeks, as long as you train for an hour a day and you eat this particular diet”—and if both parties breach the contract, there will be different circumstances, and obviously they need to be taken into account.

The hon. Member for Edinburgh East gave the examples of sanding floors and tiling walls. The information that is shared pre-contract is critical, so that the expectations in the contract are well understood by both parties. That is one of the reasons why we are introducing more requirements regarding the need for information to be shared pre-contract. Traders cannot be held to unrealistic and uncommunicated consumer expectations. If the hon. Lady was having her floors sanded and she did not say to the trader that she wanted them to look exactly like those in a particular picture—if those expectations were not communicated—they cannot be taken into account. If they have been communicated, and the trader said, “Yes, absolutely no problem”, clause 50 would apply and remedies would kick in, including repeat performance, unless it would be impossible.

On the example given of the dry cleaner, if the trader says that they will get a particular stain out of the clothes that the consumer has taken into them, and the promise that they will deliver that service is why the consumer chose that dry cleaner, if the trader does not deliver, they will breach clause 50, as that was information given about the service and why the consumer went to that dry cleaner. Therefore, there are already provisions in the Bill that cover cases where information about the service is given by the trader before the consumer takes up the contract, on which the consumer bases their decision to go with that trader.

The Bill already covers this issue without needing to change the reasonable care and skill test, which is already in the Supply of Goods and Services Act 1982. It is well known and well understood, and, as the hon. Member for Walthamstow said, there is plenty of supporting case law. Changing it would reintroduce complexity into the Bill when we are trying instead to simplify the law in this area.

We consulted extensively on clause 50, which was included in the draft Bill that was published in June 2013. Since then, we have listened to stakeholders and made changes to it to clarify matters. It now better represents a balance, giving consumers the confidence that they can rely on important information that has been given and claims that have been made, while building in safeguards for traders.

I hope I have answered the concerns raised on both sides of the Committee and have explained how the Bill will apply to the different examples that have been given. With that, I hope the hon. Lady feels able to withdraw her amendment.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer. I am slightly concerned that the hon. Member for Braintree might be upset, given that he had said that the concept of reasonableness was not appropriate and was too broad.

I welcome the Minister’s saying that the provisions in the amendment are already included in clause 50. For the avoidance of doubt, given that Hansard can be used in court if people want to develop case law, will she confirm that her understanding of clause 50 is that in assessing whether a service has been performed with reasonable care and skill, any claim made by the trader as to the outcome that service would achieve must be taken into consideration? Will she say explicitly that the amendment is in the spirit of clause 50, so that a consumer could make use of that when making a claim in a court of law? If that is the Government’s intention and she said that, so that forms part of the legal framework, that would be helpful.

Jennifer Willott (Liberal Democrat, Cardiff Central)

Clause 50 states that if the trader gives information about himself or the services he is providing and that is the basis on which the consumer decides to enter into the contract, and the trader does not comply with the information he has given, that would be a breach of the clause.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that. The amendment is just about the outcome and we tabled it so that the trader’s claims about an outcome can be taken into consideration. We wanted that distinction between general information and claims of a specific outcome if a consumer bases their decision on that. If she would clarify that that outcome-based claim is included in clause 50, that would be incredibly helpful.

Jennifer Willott (Liberal Democrat, Cardiff Central)

It is slightly different from clause 50, but the amendment is within the spirit of that. “Reasonable care and skill” relates to how the service was performed rather than its outcome, but the clause does relate to the information that the trader gives about the service provided.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that assurance. On that basis that there is an outcomes-based test in the legislation, I beg to ask leave to withdraw the amendment.

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 46, in clause 49, page 30, line 8, at end insert—

‘(1A) For the purposes of this Act every contract to supply a service by those traders who are ring-fenced bodies providing financial services as defined under section 142A (Ring-fenced body) of the Financial Services and Markets Act 2000 shall—

(a) be subject to a fiduciary duty towards its consumers in the operation of core services to provide these with reasonable care and skill as well as in the management of any individual contract to provide services; and

(b) be subject to a duty of care towards consumers across the financial services sector.’.

We now move on to financial services, an area that many of us are concerned about because we have seen some poor levels of service. This is an example of where the concepts of reasonable care and skill and what is considered reasonable come to the fore. The amendment is based our concern that evidence shows that the behaviour of a service provider towards some of its customers may directly impact on other customers’ experience of a service. The question is, therefore, how to determine what is reasonable care and skill in that context.

The amendment follows attempts made by my colleagues in the shadow Treasury team to amend the Financial Services (Banking Reform) Act 2013. It would extend this Bill’s general duty of acting with reasonable care and skill to the financial services sector. The first part of the amendment would set out a fiduciary duty that would demand a higher standard of care for direct consumers. The second part would extend the general duty of care to all consumers across the sector. We recognise that banks play an integral role across the financial services sector and that their actions could impact on not just their own consumers, but everyone.

Whether or not people want to argue about the nature of the banking crisis, we all recognise that it has had implications for consumers. The amendment would test the concept of reasonable care and skill. That is needed because, while we all recognise that there was a huge outcry about the behaviour of banks and its impact on consumers five or six years ago, we are concerned that some of the lessons from that for everyday customers have not yet been learnt. Even though there has been a great deal of banking reform, it has mostly related to bank structures and has not necessarily dealt with the everyday interactions people have with their banks and the resulting implications.

In March 2013, a survey by Which? found that banks’ safeguarding of customer interests remains inadequate. For example, it found that banks are failing to give the right advice on transferring and managing cash ISAs—something many people are doubtless considering as we come to the end of the financial year. Some 180 calls were made to 15 leading banks and building societies to assess the quality of advice given to people who want to transfer their cash ISAs.

It said that HSBC, Yorkshire Bank, RBS, First Direct and Barclays all failed to give correct answers to three simple cash ISA questions in more than 50% of calls. Nearly two thirds of banking customers no longer trust their lenders to look after their money, according to a YouGov poll. Some 49% said that high-street banks were dishonest and a further 45% described them as incompetent. Just 1% of respondents believed that senior executives of the biggest banks had improved their behaviour since the financial crisis began. There is clearly a lack of confidence in our banking society among consumers, which directly impacts on their assessment of whether their banking services are being provided with reasonable care and skill.

This amendment tries to address that; it would enter into law a concept that would add greatly to consumers’ confidence in their banking services and to ensuring that their best interests were being served. It would also encourage those providing financial services to act in a prudent and ethical manner. In that sense, it would require a ring-fenced body not to act contrary to their customers’ interests while carrying out core activities. We recognise that, if this was applied more generally to banks, it could potentially create problems in areas where banks have their own competing interests or, indeed, where customers have competing interests but, by specifying that it would apply to core services, it is right that consumers would then be able to be confident that reasonable care and skill would be applied to their basic core services.

Andy McDonald (Labour, Middlesbrough)

I congratulate my hon. Friend on tabling this amendment. We hear many complaints by customers and sometimes it is difficult, when we see surveys, to know whether there is any basis to it or whether it is a perception, but the Which? survey bears that out: the perceptions are based in reality. It is incumbent upon us to ensure that that fiduciary duty between bankers and customers is absolutely at the heart of the relationship, as it should always have been.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is right and, in fact, some similar duties already exist in common law, but they have been developed piecemeal. We think that creating both a specific duty and a general duty—which the second part of what the amendment does—is absolutely right, as it gives clarity and can be applied within a legal framework. Such provisions are not just about current accounts and the stability of banks but about issues around mortgages, for example. Many hon. Members and media commentators have been concerned about mortgaging and remortgaging markets; we think stronger safeguards need to be pursued, especially in protecting customer interests and in providing a mortgaging service with reasonable care and skill. This is, after all, what this legislation will require banks to do. For example, mortgage customers on a standard variable rate might be persuaded that remortgaging is their only option and could end up accruing significant costs through surveying and legal fees. In many cases, because those costs are simply added to the mortgage, the customer does not necessarily feel that they are being made to pay for a remortgaging product, but they will pay the price at some point. I think that all of us, in that instance, would be right in querying whether that was providing a service of reasonable care and skill, especially when it comes to the consumer’s interests.

This amendment would tackle some of those issues and assure consumers that banks would always have to act in their interests because it would be how the test of reasonable care and skill was being applied. It would also follow some of the best examples of the use of fiduciary duties in other countries, such as when the US Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gives the Securities and Exchange Commission the authority to impose a fiduciary duty on brokers who give investment advice. When we are dealing with our finances, we all know the fear that we could make bad decisions that may haunt us, not just for a couple of months, like a haircut, but for several years and that may fundamentally and negatively affect our families financially for years to come. Giving these duties in respect of financial services would give consumers stronger protection and stronger forms of redress when it comes to whether financial services have been delivered with reasonable care and skill. We think that this would both enhance confidence in financial services generally and clarify consumers’ expectations of how a financial service is provided. It would require a broker to have a fiduciary duty towards consumers––not just towards an individual consumer but to a range of them. It is no good working with a broker who might offer one person a good deal but in their behaviour with others takes such risks that it would undermine the possibility of the deal being realised. That is what we are trying to get at with this amendment.

In this area of service provision, there are real concerns that previous incentives and behaviours, as the Which? survey shows, have yet to be fully addressed. We believe that they could be addressed those through having these additional protections in the legislation. I look forward to the Minister’s explanation of how she sees the legislation affecting the financial services sector, and whether she sees our case for a stronger duty of care, because of the interaction among financial services. How does she envisage that working?

Jennifer Willott (Liberal Democrat, Cardiff Central)

As the hon. Lady said, the amendment attempts to revisit a subject that I understand was extensively considered during the passage of the Government’s legislation on banking, in particular the Financial Services (Banking Reform) Act 2013, which introduced the concept of the ring-fenced bank, which was one of the recommendations of the Independent Commission on Banking chaired by Sir John Vickers.

No one would disagree with the proposition that customers need a better deal from their banks. As constituency Members, we have all had casework relating to concerns about banks from constituents, whether small businesses or consumers. The Government have been keen to see more competition between banks precisely for that reason. We also want better standards in the banking industry and a return to the days when the customer relationship mattered and the customer came first. I am sure all hon. Members agree with that.

Other measures in the 2013 Act implemented the recommendations of the Parliamentary Commission on Banking Standards about the conduct of individuals in banks and will be an important step forward in that respect. It is perhaps worth noting that the parliamentary commission did not, in its comprehensive report, recommend the introduction of either a fiduciary duty or a duty of care for banks. The Government continue to take the view that the introduction of either a fiduciary duty or a duty of care in legislation would not help to drive up standards within ring-fenced banks, or assist consumers.

Andy McDonald (Labour, Middlesbrough)

Does the Minister accept that a fair and accurate assessment of the mood of ordinary customers would be to expect that financial advisers from banks and life assurance companies behaved in a way that looked after people’s interests? That would be a simple statement of the obvious and the expectation of most people.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I agree with the hon. Gentleman that customers assume that they have the right to expect their best interests will be taken into account in a relationship with banks and so on. I will come to explain why that is not needed in the Bill.

The ring-fenced banks are already subject to duties to their customers under general law—they are a normal part of acting on behalf of a customer—as well as obligations in their contract with the customer. Where they hold funds or other property on behalf of the customer, they will be subject to fiduciary duties. There are also regulatory obligations imposed under the Financial Services and Markets Act 2000. There is, therefore, nothing to be gained by adding a fiduciary duty in statute here, especially when it cannot be as precise or readily enforceable as the specific obligations in the regulator’s rules or the terms of the contract.

The hon. Member for Walthamstow said that a fiduciary duty represents a higher standard of care. I do not believe that is the case. A fiduciary duty is a different kind of duty. It is appropriate when someone acts on behalf of another person, but it is not appropriate to a contractual relationship of the kind we are considering here. It would cut across the duties under financial services law. Banks are already subject to a wide range of legal duties, including obligations under Financial Services and Markets Act 2000 and the rules of the Prudential Regulatory Authority and Financial Conduct Authority.

As I said, banks also have contractual obligations to their customers. Any banking relationship or transaction is subject to a contract between the bank and the customer. I am sure that many Members are familiar with the FCA principle according to which the traders it regulates must treat customers fairly. Martin Lewis raised this matter when he gave evidence at the second sitting of the Committee, and said that the Financial Ombudsman Service has extensive powers of redress for consumers if that principle is not complied with.

Stephen Doughty (Labour, Cardiff South and Penarth)

On a wider point of principle, I believe that Consumer Focus found that the average loss a consumer incurs from a problem with a good or service is £196, but that that rises to £464 when the problem relates to professional services and financial services sectors. Does the Minister agree that with the greater level of damages comes greater responsibility? I have certainly seen that from my casework of problems that consumers have experienced with financial services and banks in particular.

Jennifer Willott (Liberal Democrat, Cardiff Central)

It is certainly clear that the loss incurred in terms of financial services can be significant. I am sure that we have all dealt with cases of mis-selling, hedging and so on, where the amounts involved have been massive. That is why we have lots of sector-specific regulation to make sure that such sectors are tightly regulated, and why we have the PRA, the FCA and the Financial Ombudsman Service. Martin Lewis said in his evidence that the Financial Ombudsman Service is an extremely good and effective organisation at obtaining redress for customers. We recognise that the potential loss is particularly great in terms of financial services and that the particular circumstances of that sector require specific legislation and regulation.

Given the wealth of sector-specific regulation, imposing the fiduciary duty as proposed in the amendment would not give the consumer any additional remedies. It is not clear what the wider duty of care proposed in paragraph (b) would add to the existing obligations or the regulatory requirements to which the ring-fenced body is subject. A ring-fenced bank is subject to duties to those who use its services under its contract with them. The Bill clarifies the existing rights under service contracts, so imposing a duty of care towards a bank’s customers adds nothing to those rights. The Government therefore firmly believe that it would be better for focused, specific requirements and standards of business to be imposed on banks and other regulated businesses by regulators. Rather than relying on high-level generic concepts such as a duty of care, banks can comply more easily with specific requirements and customers and regulators can hold them to account more effectively when the banks fail to comply with those requirements. In those circumstances, it is much easier for the banks to know what they have to do and for customers to know when they have not received a service to which they are entitled.

In the light of those comments, I hope that the hon. Member for Walthamstow will agree to withdraw the amendment.

Stella Creasy (Labour, Walthamstow)

It is welcome that the Government seem to accept the principle behind the amendment: we expect a particular level of care from our financial services because the potential consequences for consumers when services go wrong are so detrimental in terms of their long-term financial security.

The Minister argued that the amendment would not provide any additional protection. The legislation refers to the concept of reasonable care and skill, and we believe that there is an issue in terms of skill and the provision of financial services. We do not want to supersede or cut across other legislation, but we believe it is right to marry it up through this amendment.

In particular, we would like the Minister to comment on the concept of the skill of managing investments, because that it is what the amendment is driving at. We continue to see poor advice provided in our banking sector, which seems to us to be a good example of reasonable care not being taken. An example is people not being given the right information about their options regarding cash ISAs and so missing out financially. On the management of a financial service, how does she see the Bill, or indeed other legislation, offering consumers an opportunity to challenge a financial services provider who is not managing investments with reasonable care and skill, and what would the consequences be for them? That is distinct from whether a trader makes a cautionary claim about what can be achieved.

If a trader does not act in a reasonable manner towards the money that someone invests with them, does that person have a right of redress? The Minister says that it is better to have specific requirements, which gets us into the concerns that Committee members have expressed about bureaucracy. Surely when a person commits to a financial services contract with a service provider, they can expect them to act with a duty of care. The fiduciary duty is about setting out what that looks like; it is about reasonable care and skill being applied to how providers manage people’s money and investments.

The Minister says that the spirit of the amendment is already covered in legislation. It would be helpful if she set out where she sees the concept of skill being taken forward, because that is what we are looking for through the amendment. I appreciate that we have debated this in other parts of the House, during consideration of the Financial Services (Banking Reform) Act 2013, but it is important to get clarity on the concept of skill, which is what the Bill brings to those conversations. I am happy to give her time to get the answer from her officials, because this is an important point.

Stephen Doughty (Labour, Cardiff South and Penarth)

I want to reinforce what my hon. Friend says. I served on the Financial Services (Banking Reform) Bill Committee, as other members of this Committee did, and these issues were discussed then, but her point on clarifying the issue is absolutely right. The issue of skill is one that we ought to clear up, because many consumers, and many of our constituents, have experienced challenges around the financial products that we are talking about, and around banks and other financial services providers.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right, and when we discuss ombudsmen, I will give an example in which someone who received a financial service felt that the ombudsman was not able to apply a test of skill, so there was a gap. There are concerns for consumers trying to understand where skill comes into play, as opposed to outcomes; this is the reverse of the debate that we have just had about outcomes versus what is acceptable. I think that the Minister now has the answer in front of her, and it would be great to hear it.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I do indeed. Banks are subject to a duty to use reasonable scare and kill—that was a slightly worrying spoonerism for this time of the morning. They have a duty to use reasonable care and skill, as well as having duties under financial services legislation, so there is a requirement generally, and in financial services legislation, that covers the phrase that the hon. Lady highlighted.

Fiona O'Donnell (Labour, East Lothian)

On a point of order, Mrs Osborne. This does not relate to the spoonerism or anything else that has happened in our debate. The room is freezing. I should think that the Minister will come back this afternoon in tin foil. Is it possible for you to address that, so that we do not have to seek recourse from our trade unions?

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

Yes, I did notice that Members were availing themselves of extra clothing. I have asked for the heating to be turned up.

Stella Creasy (Labour, Walthamstow)

I thank my hon. Friend the Member for East Lothian for that point of order, as I did not bring as many items of clothing with me as this room merits.

Mr Newmark rose—

Stella Creasy (Labour, Walthamstow)

If the hon. Gentleman is about to offer me his jacket, that is incredibly gallant, but I suspect that he would then feel even colder.

What the Minister says about recognising the fear regarding how financial services providers will deal with questions of care and skill is very welcome. We tabled the amendment to probe the Government. I am happy to withdraw it on the basis of her assurances, but I think that we will return to this issue, not only in the Bill but in the House more generally, because evidence is strong that, daily, people still do not see the care and skill that they expect from financial services. It is right that we look at the consumer protection legislation, because it is the first port of call for most consumers when dealing with a service. It will be the first port of call showing whether the rights they have in other areas of their lives apply to how they manage their money. It is right therefore that we ask such questions about the Bill, but on the basis that the Minister says that the issues are covered by the legislation, I beg to ask leave to withdraw the amendment.

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 47, in clause 49, page 30, line 8, at end insert—

‘(1A) This requirement shall apply to all activities associated with providing a service including—

(a) the management of information held by the trader about the consumer gained in the course of this contract,

(b) the communication with the consumer regarding the contract including activities by the trader designed to induce the consumer to purchase further goods or services from the trader,

(c) for the purposes of this Act this shall be taken to include a requirement for traders to prove they have the direct consent of a consumer to share information on consumers gathered for the purposes of providing a service with any third party including, but not limited to, marketing and communication purposes, and

(d) the trader will be liable for compensation for any distress caused by such activity undertaken involving communications with the consumer via either themselves or a third party without this consent.’.

The amendment goes to an issue that many hon. Members have personal experience of, but enough about the phone calls or text messages we might get from our Whips. It is about nuisance calls and how we deal with the information that companies collect about us as part of providing a service to us. All of us know the frustration, irritation and, frankly, distress that unwanted phone messages and text messages cause not only us but our constituents. The amendment tries to address the problem.

Members on both sides of the House have campaigned on, and people feel strongly about, nuisance calls and unwanted messages. The amendment covers the things that a trader might do in the course of providing a service, but which are not directly related to carrying out that service. As we all know, when we contract to a service, a trader will collect a lot of information about us. They collect our personal details, bank information and other information. They will then use those details to market other services. The amendment looks at the things that might be called ancillary to a service and asks how a service provider will use reasonable care and skill in the management of the information.

I know that hon. Members will say that there are requirements under the Data Protection Act and privacy laws that cover how businesses handle and process sensitive data, but we argue that they are not clear. Nuisance calls are allowed to proliferate by how data might be used by service providers. The amendment seeks to bridge the gap and say that traders should adhere to the spirit of the Data Protection Act as well as hold data accurately. In particular, current legislation is not clear whether a company using personal details, such as phone numbers, to send messages—or sharing details with another company for the purpose of marketing further services—breaches consumer rights. Many of us will have seen people who get hundreds of messages from such companies. Would the Bill enable a consumer to seek redress through legislation? With the amendment, we are trying to make that explicit in the legislation.

We want to learn from the best evidence about what works in the market and what good traders are doing. I am sure that the hon. Member for Braintree is about to pop up and say, “This will be a terrible burden on business.” It should not be.

Mr Newmark rose—

Stella Creasy (Labour, Walthamstow)

I am sorry if I have mis-sold the hon. Gentleman. I am happy to take an intervention.

Brooks Newmark (Conservative, Braintree)

As always, I am listening attentively to the hon. Lady. I agree with her. I object to what she describes. We get nuisance calls, nuisance texts and nuisance e-mails. I do not think that anybody should provide information to a third party unless positive consent has been given by the consumer to the initial provider. I see on a lot of contracts, “Please tick this box to affirm that you wish to.”, not “that you don’t wish to.” It is an important nuance.

Stella Creasy (Labour, Walthamstow)

I thank the hon. Gentleman for his attention and for the point he makes. If I recall correctly, the Minister herself said how frustrated she was by some of those tick-boxes and the wording used, because it has to be read so carefully to see whether it means passing on information or not. I will come on to the point about passing on information and how the amendment will affect it.

Stephen Doughty (Labour, Cardiff South and Penarth)

I also recall that the Minister made that point. The particular point she made was that companies often mix the affirmative and negative boxes, attempting, essentially, to trick people. That clearly results in a lot of detriment for many of our constituents. I recall recent conversations at the Earlswood club in Rumney in my constituency. It was the topic of the night among the attendees while they were enjoying a drink. They were all receiving unwanted texts, e-mails and phone calls and it was a real cause of distress to them. Many of them were elderly pensioners and so on. It is a real problem and we need to find a solution.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. We have tabled this amendment because, given this information was provided in the course of providing a service, it is right to look at how that provision is affected and whether a trader is using reasonable care and skill in the way in which they manage data.

Brooks Newmark (Conservative, Braintree)

On that point—

Stella Creasy (Labour, Walthamstow)

I wonder if I could make a little progress, because I think that would help. I hope that this time round—I do not know which amendment, fifth time lucky—I can convince the hon. Member for Braintree of the merits of this case.

Some 75% of landlines in this country are registered with the Telephone Preference Service. The vast majority of us have said that we do not want these phone calls, we do not want this information, and we do not want to be marketed to. Something is clearly not working in the current system of regulating this problem. Even when people are ticking the boxes, there is not the appropriate management of the information that is gathered as a result.

In one six-month period in 2012, Ofcom found that 71% of landline customers said that they had received a live marketing call, and 63% had received a recorded marketing call—something most of us find even more frustrating because we cannot even register our dissent that the company has contacted us when we have said we do not want to be contacted. The Information Commissioner’s Office receives about 2,500 complaints a month from people sent unsolicited text messages, usually for a debt or a PPI mis-selling claim. These messages are a clearly unwanted nuisance, and I think we all know people in our communities who find them distressing.

Sheila Gilmore (Labour, Edinburgh East)

For many of us, they are annoying and people probably have different methods of coping with them. However, for some people, particularly older people, they are extremely distressing. My father is now in his 90s and his marbles are all there, but he almost stopped answering the phone because he got so many marketing calls. I sometimes tried to phone him at an unexpected time and he would not answer, at which point I panicked and thought that something was wrong. That was how distressed he felt by it and he is not someone who is particularly easily distressed.

Stella Creasy (Labour, Walthamstow)

My hon. Friend makes a powerful case that it is not just about the irritation: it is a serious problem for a number of people who feel their telephone—their communication services—are directly affected and their use of them is therefore restricted.

Mr Newmark rose—

Stella Creasy (Labour, Walthamstow)

I want to make a little progress, because I am conscious that many Members have very strong feelings about this debate. If we can make progress in resolving this issue through the Consumer Rights Bill, it would be right to do so. We know that since an online reporting tool was set up in March 2012, more than 240,000 complaints have been made to the Information Commissioner about unsolicited text messages and calls. Which? found that registering with the Telephone Preference Service might reduce the number of calls, but it does not stop them, because those people registered with the TPS still receive on average 10 unwanted marketing calls a month and six in 10 people registered with the TPS system are not satisfied.

There is a rather wonderful story about a gentleman from Leeds who was so fed up with receiving cold calls that he paid for his own premium rate line for contacts with banks and other service providers. In November 2011, this gentleman paid £10 plus VAT to set up his own personal 0871 number line, so now calls to him cost cold callers 10p a time, from which he receives 7p a time. So he makes companies pay for calling him.

Fiona O'Donnell (Labour, East Lothian)

Does my hon. Friend agree that this can also mean a real and significant cost to small businesses whose time and phone lines are tied up by having to respond to—or create the space for—cold callers?

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right, from both sides. The problem is not just the fact that small businesses are receiving these calls—although, as we know, the Bill does not at present cover small businesses—it is that appropriate marketing services are being diminished by people’s sense that all calls are not welcome. So where people are seeking to market and offer services in an appropriate way, they are being undermined by the sense that all calls are not welcome.

Brooks Newmark (Conservative, Braintree)

I am curious about whether the hon. Lady’s amendment takes in the fact that many political parties do the same thing. All parties make unsolicited phone calls and text messages to constituents at election time. Does her amendment include political parties as well?

Stella Creasy (Labour, Walthamstow)

I find it interesting that the hon. Gentleman suggests that political parties send unsolicited messages. When occasionally I receive calls from other political parties, I try to talk to them at length—partly because it stops them talking to anybody else. I have often had long and philosophical conversations, which I am sure the hon. Member for Braintree would enjoy as well.

Members will be familiar with attempts to deal with this problem. Ofcom can issue a fine of up to £2 million for persistent breaches on silent and abandoned calls, which are mainly caused by faulty automated marketing systems. For the last couple of years, the Information Commissioner also has had the power to issue fines of up to £500,000 on breaches of the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011. So far, £1 million in fines has been imposed, most recently—and satisfactorily for me—on a payday loans firm, which was fined £175,000 for bombarding people with spam texts that were supposedly from a friend offering them a loan.

The ICO's powers are set out under the Data Protection Act, but the challenge here is that it has had fines overturned on appeal, on the argument that not enough distress has been caused to consumers for the fine to be merited. We still see the volume of marketing and texts taking place because the onus is on consumers to prove that they did not want the messages. They might sign up for generic marketing, to hear from a financial services provider about other products, but not wish to get it over the telephone. That is why they have signed up for the Telephone Preference Service and stated clearly that they do not wish to receive calls, but would be happy to get, say, letters about services. However, to make a challenge consumers would have to prove they were then bombarded by their bank or a financial services provider on behalf of a bank, insurance company or whatever, as we have all experienced. Consumers would have to prove that they did not consent to those calls.

That is the challenge. It is not at the moment a consumer-friendly process and it is why the Information Commissioner’s Office would itself like to see a change in this way. There is an all-party group on nuisance calls which has been making recommendations about third party consent and lowering the threshold for the Information Commissioner’s Office to take enforcement action. Ofcom also supports the all-party group’s proposals. This amendment tries to learn from that.

Let me give the Committee an example of where the problem is, how enforcement currently works and why we think the amendment would make a difference. In a recent case, the ICO sought to take action against a firm which had issued hundreds of thousands of texts to mobile phones. They had made no effort to check whether the owners had given permission for anyone to make such contact. The decision to issue a £300,000 fine was overturned on appeal. The appeal tribunal fully accepted that the text messages were in breach of regulation 2(2) of the Privacy and Electronic Communications Regulations, because they were unsolicited and did not have any relevant consent. The firm was in breach of that regulation because it withheld its name and address. The actions were deliberate and designed for financial gain. It used unregistered SIM cards, which aided the concealment, and there was no effective method of screening a number to prevent a person receiving further texts.

However, the tribunal overturned the ICO's fine on the basis that it did not believe the messages constituted substantial loss or substantial distress, as required under the current legislation. This amendment would bring into scope that concept of reasonable care and skill when managing an individual’s data. It would require the trader to prove that he had the consumers’ direct consent to share their information. Members might be aware that people will sign up for information from a direct provider, but if that provider shares their information then, even with the greatest will in the world—and after people have read through those boxes and tried to decipher the confusing information—their information has been shared with a third party.

People might well have seen a programme on TV recently about a direct marketing company; in fact, when I was student I earned money through making calls for a direct marketing firm. We were always clear that we had to have the consumer’s consent to contact them. The system has now changed quite substantially regarding people being able to share data with third parties.

The amendment tries to address that issue and say that, if someone is going to sell on consumer data, which, after all, are an incredibly valuable commodity, the consumer’s direct consent should be sought. The amendment would place the onus of the management of data back on the company rather than on the consumer. That would give consumers a stronger protection. If a consumer gives information as a part of a service contract, they should be able to expect that information to be handled with reasonable care and skill.

Brooks Newmark (Conservative, Braintree)

I am sorry to press the hon. Lady. I am still interested to know whether an unintended consequence—or perhaps an intended consequence—of her amendment would be an impact on political parties, which engage in cold calling and texting constituents.

Stella Creasy (Labour, Walthamstow)

That would be very much about from where political parties, or indeed any trader, secured data to make those contacts. People are clearly passing on information. Under the current regulations, they may be challenged for doing so, but the way in which the current regulations are set up has not allowed the Information Commissioner to act as effectively as he wanted to.

Under the amendment, if the hon. Gentleman was to buy a list of phone numbers of people in Braintree but did not have the consent to contact them, he could be challenged by people saying, “I did not wish for you to contact me. You are breaching the law.” The focus of the amendment is on whether a person has the consent to make contact with someone else.

I would hate to see the hon. Gentleman oppose the amendment on the basis that it is about political campaigning. On the whole, because most political parties recognise that it is not a sympathetic thing to do, they do not spam-text people.

Brooks Newmark (Conservative, Braintree)

As with all legislation, the question is about the unintended consequences of whatever Act or amendment is being proposed. It is perfectly legitimate for me to ask whether the unintended consequence of the hon. Lady’s proposal is an impact on political campaigning, by all parties.

Stella Creasy (Labour, Walthamstow)

It is not an unintended consequence. I would hope that the hon. Gentleman, as an MP who probably signed up to the Data Protection Act, is managing his data appropriately and is seeking consent to share data and to contact people, because that is what the current law says he should be doing. The amendment is aimed at traders who are not behaving under the current law, and would put the onus on the trader to prove that they are acting within the law, rather than on the consumer to prove that traders are not acting within the law.

Rebecca Harris (Conservative, Castle Point)

Presumably, as political parties are not traders, but are offering people a conversation about their democratic rights, they would not be covered by the Bill.

Stella Creasy (Labour, Walthamstow)

That would depend on whether a contract was being offered. I agree with the hon. Lady that the Bill is designed for businesses and services. One could have a philosophical argument about whether political parties offer a service, but they would probably not come under the Bill. Political parties are already covered by the DPA. The issues about miscommunication that we are talking about now—spam text messages and cold calls—come from people abusing the DPA. What the Information Commissioner is struggling to do now is to take the consumer’s perspective into account when seeking prosecution, because of the way in which the tribunals and the case law are developing.

The amendment seeks to build on what came out of the all-party group discussions about the work that the ICO has done, saying that the onus should be on the trader to prove that they had the consent to contact the person, rather than on the consumer to prove that they did not. That has arisen because of the grey area between signing up for a general “I don’t want to receive calls” and signing up for someone else’s calls in a specific context. Which is the right one to do?

I think that there is general support and sympathy across the House about the need to tackle nuisance calls. We think that the issue is absolutely about consumer rights, as the information is given out in the course of securing a service contract. I hope that Government Members will be sympathetic to what we are trying to do here on data management, especially because it is rooted in cross-party work.

Rehman Chishti (Conservative, Gillingham and Rainham)

I agree that we must do everything we can to address the issue. Regarding what the hon. Lady said earlier about tribunals and the criteria applied to a decision, where it was said that no substantial distress was caused—

Stella Creasy (Labour, Walthamstow)

I welcome everyone back to a rather chilly Committee Room this afternoon. Given that we all now know our statutory rights quite well, I am sure that everyone is determined to complain, but we hope that it will not take 30 days to fix.

The hon. Member for Gillingham and Rainham was asking some questions about the tribunal decision, which I have with me should he wish to peruse it.

Rehman Chishti (Conservative, Gillingham and Rainham)

The point I was making earlier was this. The hon. Lady said earlier that the criterion applied by the tribunal to reverse a decision was that there was no substantial distress. That being the case, is she saying that the criterion should change from “substantial distress” to simply “distress”, so that there is greater fairness and clarity?

Stella Creasy (Labour, Walthamstow)

What we are trying to do with the amendment is slightly different. It is about where the detriment occurs and who can complain.

In tabling the amendment, we seek to understand whether we can establish responsibility on the person who has taken someone’s data for the purposes for which they are then used, and establish whether they have looked after those data with reasonable care and skill. Consequently, we would not get the kind of rulings that the Information Commissioner’s Office is having to deal with, where it needs to prove that there has been substantial distress even though it has evidence that someone is misusing information.

The focus would be put back on how the trader has used information, rather than the onus being on the consumer—or the body acting on behalf of consumers, such as the ICO—to prove that substantial distress has occurred, even if they have evidence that someone has broken the rules. The ruling that I mentioned shows clearly that the company had broken all the ICO's guidance and protections. However, because the tribunal said that there was no evidence of substantial damage or distress, it overturned the fine.

Through the amendment, we are trying to enforce the law; the law is not new. Companies should be acting in a certain way if they are abiding by the Data Protection Act. The fact that they are not doing so on such a widespread scale is why we think we should amend the Bill and approach the problem from a slightly different direction—the rights of the consumer on an individual basis. After all, it is all of us, as consumers, who are getting such messages.

Rehman Chishti (Conservative, Gillingham and Rainham)

I would like some clarification. Lowering the threshold from “substantial distress” to simply “distress” could avoid similar judgments in the future. I am trying to look at the basic principle; I know what the judgment is. What I am saying is that, if the use of “substantial distress” led to the reversal of a decision that should not have been reversed, why not simply change the criterion to simple distress, which would allow everyone to get redress at a lower threshold?

Stella Creasy (Labour, Walthamstow)

The hon. Gentleman’s point relates to for how the law on the ICO works. One problem is that it has to prove that even simple distress has occurred. There is an interesting question for us about whether the ICO is able to act on our collective behalf, which is what it was doing by bringing the complaint.

The chamber president said:

“In our judgment the effect of the contravention is likely to be widespread irritation but not widespread distress. Given the scale of the contravention, there is the possibility of some distress in very unusual circumstances but we cannot construct a logical likelihood of substantial distress as a result of the contravention.”

That kind of confusion—dancing on a pin head, essentially—about what the company did, which clearly contravened data protection laws, is where the detriment occurs. It might mean that the ICO has to find every single customer who has received one of those text messages to prove that widespread distress has been caused by receiving them.

The judgment also mentions “irritation”. “Irritation” is a bit like “reasonable”, is it not? Whether someone is distressed by their irritation, or just frustrated by it—

Kwasi Kwarteng (Conservative, Spelthorne)

Vexed.

Stella Creasy (Labour, Walthamstow)

Indeed. The hon. Gentleman is taken with the word. We are going to have a semantic afternoon, which I very much welcome.

All these problems would cause most of our constituents vexation, irritation and indeed distress. What they really want is to see an end to nuisance text messages and calls. Everybody in this House agrees that we should try to deal with them. The question is, is there a better way to help with enforcement of the law? The way in which data are collected through a service—which, after all, is where such data originate—is a good place to deal with this issue. We are asking a good question about the reasonable care and skill that any trader should demonstrate when they take someone’s data and do something with them. If we establish a test of reasonable care and skill in the management of data, it becomes the responsibility of the trader, not the consumer, to prove that it has not been transgressed. That is what we are trying to do, and it would give the Information Commissioner stronger powers and give clearer direction to such tribunals when people do complain. After all, there were complainants who brought the original case about such text messages. The amendment would provide stronger powers to say that this issue needs to be dealt with, and it would send a much clearer message to companies that they should comply with data protection law, which is all we are asking them to do.

I stress: this is not about a new right, power or form of law. The current data protection laws are being wilfully ignored by some companies, and such text messages are resulting in a huge amount of consumer detriment.

Rebecca Harris (Conservative, Castle Point)

Would the hon. Lady’s proposal affect the text message I received this lunchtime? It said:

“Records indicate you were involved in a non fault car accident in the last 2.5 years. As such you are entitled to compensation.”

That is inaccurate data: it was not a non-fault accident; I was personally to blame. So this text message is not helpful to me, but it would be much more helpful to the person whose car I hit. How would the hon. Lady’s proposed change affect such a situation?

Stella Creasy (Labour, Walthamstow)

Let me start by recognising the hon. Lady’s honesty about the accident she had, which is important. I do not know whether some of these companies are listening to our debates and showing how little concern they have for data protection. The question she should be asking is, how did they get her number in the first place? After all, I am sure her number is not in the public domain. She perhaps gave it to her insurance company in the course of dealing with her accident. The question then arises of how it used the data she gave them, and how that information ended up with a third-party organisation that is telling her— erroneously, as she points out—that she is entitled to compensation.

There are very real questions that all of us, as consumers, would have in such situations. For example, if we gave our car keys to somebody else to look after, and found that a third party had them, we would want to hold the person we gave them to accountable for passing them on, whether we had given them permission or not, because the question arises: what will happen to our car as a result? We should see data as a resource, in the same way. The amendment would hold culpable the person who handed over someone’s data without their permission, resulting in their receiving all those messages.

I hope that the entirety of the message received today by the hon. Member for Castle Point is on the record. Many of our constituents receive such messages. They are told that they are entitled to payment protection insurance payments, or to compensation. Usually, the number given in such messages is on a premium rate line—an issue we will discuss later in the Bill. This is really about gaining money from the consumer.

We all recognise that such practices are not acceptable. The question is whether we can do something about them. The first point is whether we see this as a consumer rights issue. The Opposition do, because people have a right to expect their data to be used with reasonable care and skill. The second point is whether this is the right way to deal with the issue. We are happy to listen to the Government’s arguments, but we do think that the Bill should be a vehicle to enable progress to be made on tackling nuisance calls and text messages. That the hon. Member for Castle Point has received one today shows that this problem affects anybody and everybody in the UK. The message we are sending today—not through a text message or, we hope, unsolicited—is that there are ways to amend the Bill to deal with the problem. We can certainly tell Government Members where we obtained their data to enable us to communicate with them, because we ourselves, as MPs, would be held accountable under the Data Protection Act.

If most companies can abide by the law and not pass on information, or are willing to seek the consent of consumers via an active process of consent before they do so, they should also be able to prove that they have done that. That is what the amendment would require, instead of a consumer having to go to the ICO to say, “I’m getting all these messages and it’s causing me huge distress as I can’t stop them. Can you help me?”

We are talking about situations in which people have to change their phone number or not pick up their phone—that is what the father of my hon. Friend the Member for Edinburgh East is having to do—so surely it cannot be beyond the wit of the House to change such companies’ behaviours and introduce proposals about how data is managed that put the consumer and their needs and rights at the heart of the process. That is what the amendment is intended to do.

I am looking forward to hearing what the Government have to say, because I think there is a general consensus that the situation needs to change. I hope that they will recognise the spirit and intention behind the amendment. We will happily work with them to get this right, but what we will not do is let the matter rest. All of us who look at our clogged-up inboxes, listen to the phone ring or hear that irritating beep as an automated message comes in, know that something has to change. I hope to hear from the Minister shortly a proper response on these points.

Jennifer Willott (Liberal Democrat, Cardiff Central)

I shall deal first with the amendment, and then move on to the broader issue of nuisance calls.

The Bill is intended to achieve the right balance to ensure that consumers can have confidence in the services that they contract for in respect of the sharing of data. The Bill provides that balance through the “reasonable care and skill” test, which comes from the Supply of Goods and Services Act 1982. As I said during the debate on a previous amendment, the test is well known and understood by consumers and businesses. The amendment would add to that test, but we know from stakeholders that changing the test would add complexity rather than simplify the law in this area.

Both businesses and consumer groups have told us that they do not want to add complexity by changing the test. For example, the Finance and Leasing Association told us that the text as drafted

“provides consumers with adequate protection and businesses with a clear marker of the level of service they are required to deliver to meet their legal requirements”.

Of course, everyone agrees that consumers’ personal data should be protected—that is a given—but consumers’ rights about the collection, processing and disclosure of personal data are covered by the Data Protection Act 1998, to which the hon. Member for Walthamstow said that I would refer, and enforced by the Information Commissioner. The DPA regulates the disclosure of personal data as well as the storing of it, to ensure that an appropriate degree of protection is given to individuals’ information.

The hon. Member for Walthamstow also mentioned the principles that the Data Protection Act applies to organisations that are processing personal data. Those principles are designed to ensure that personal data are, among other things, processed fairly, lawfully and securely. For that to happen, there are various conditions with which a business needs to comply, one of which is that the person in question has given their consent to the processing. There are also criteria about whether the processing is necessary for the performance of the contract, and they state that it is necessary to comply with legal obligations and so on.

The Data Protection Act already lays down clear rules, but we all recognise that the broader issue of nuisance calls is a serious and growing problem. Tackling nuisance calls is a priority for the Government. We all have constituents who are affected; in fact, probably all of us are affected. My hon. Friend the Member for Castle Point just gave us an example, and I am registered with the Telephone Preference Service, but every weekend when I am back at home I get international calls, even though I do not have that many friends who live abroad. Clearly we are all victims of such problems.

The problem is that there is no simple quick fix. Many things have been tried over the years, so we are pursuing a range of options for reform that are both legislative and non-legislative, in an attempt to have an impact on the volume of nuisance calls. Significant work has been done over the past year or so, and it is starting to generate results. For example, there is much better signposting, with clearer advice for consumers about what to do with nuisance calls. There is a much simpler complaints process, which I have used. The ICO system is simple and easy to use to complain. Trying to encourage constituents to report people who make nuisance calls is helpful. A lot of work is being done to improve call tracing.

We are looking at greater use by the regulators of their powers to issue substantial monetary penalties to companies that break the law. If we want to stop companies making such calls, hitting them in the pocket is one of the most effective ways to get them to change their behaviour. The hon. Member for Walthamstow mentioned that the penalty that Ofcom could impose was increased from £50,000 to £2 million. That is an enormous increase. Ofcom can now fine companies serious amounts of money. The ICO can now impose a penalty of up to £500,000 for the first time.

Andy McDonald (Labour, Middlesbrough)

I am listening attentively to what the Minister says about the range of available solutions. We have heard about unsolicited text messages that relate to road traffic accidents. Perhaps those texts could be reduced by asking the Association of British Insurers to encourage its members to stop the practice of third-party capture, because they are generating those unwanted and unsolicited texts, while the ABI is complaining about the alleged compensation culture that it is helping to generate.

Jennifer Willott (Liberal Democrat, Cardiff Central)

A lot of work has been done on PPI-related texts. The claims management regulation unit, which sits in the Ministry of Justice, looks at the claims management companies—the primary issue that the hon. Gentleman raises—and it works closely with the ICO, Ofcom and other relevant bodies to detect and punish those who are involved in this unacceptable process.

From June last year, the unit started to publish the names of companies that were under investigation and those that were subject to recent enforcement action, to try to name and shame them and encourage a change of behaviour. That is part of the ongoing work to try to improve industry standards. The hon. Gentleman has a point: there are some reputable companies, but an awful lot behave illegally.

More work is being done on the better sharing of information between the regulators. Another issue that is being looked at is what scope there is to lower the legal threshold for enforcement action, which could well make a difference. In relation to the issue that the hon. Gentleman has raised, we are looking at the accreditation of the companies that make calls to see whether we can tackle the issue from both ends: accrediting those who make such calls and naming and shaming those who behave inappropriately. We are also considering consumer consent to clarify that issue.

Ofcom is looking at how effectively the TPS is protecting consumers. Its research is due to be completed by this spring. The Government will review the findings and consider what action needs to be taken to try to tighten up that system. As I said, my experience of being registered on the TPS is that an awful lot of calls are made from international numbers. As people who are registered with TPS know, international calls slip through the net.

Sheila Gilmore (Labour, Edinburgh East)

Do not other calls that do not necessarily come from abroad slip through the net—for example, when a survey is being conducted and the caller says, “I just want you to answer a few questions.”?

Jennifer Willott (Liberal Democrat, Cardiff Central)

That is true. I do not suggest that this is the only problem, but a particular issue with the TPS is that a lot of calls from this country are screened out but international calls are not. From the autumn, BT will be able to display international numbers, rather than simply the word “international” being shown on caller display. That will make it easier for people to report companies that are in breach of the TPS rules and for action to be taken, which is difficult at the moment.

There are significant technological challenges. For example, technology that allows numbers to be spoofed for legitimate purposes can be misused for nuisance call purposes. We are working with regulators in the industry to see how that issue can be addressed. There are no easy answers on this issue; it is very complex to sort out. DCMS is looking at potential solutions, both legislative and non-legislative, as I have said, and further details will be provided. An action plan with more details is due to be published very soon.

A number of people have raised the issue of distress. That is one of the issues that DCMS has been considering as part of its examination of how to address the issue of nuisance calls. The Government are working with MPs in the all-party group, as the hon. Member for Walthamstow mentioned, and with consumer groups, the industry and the regulators to try to identify the most effective solutions and the way to tackle this issue. So a lot of work is going on looking at the different ways we can approach this problem to reduce the number of calls. I appreciate that it is an issue that bugs pretty much everybody. As constituency MPs, we see that it is an issue that comes into our postbag a lot. The Government are taking a lot of different actions in different areas. I hope that that reassures hon. Members that we are taking the issue seriously and think it needs to be tackled. I hope the hon. Lady will withdraw her amendment.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her response, because it is good to see that there is agreement that we need to tackle this issue. The challenge for all of us is that, given that there is general agreement that this is causing consumers detriment, why would we not try to do something about it in a Bill about consumer rights? Why would we not make sure that people have a right to have their data managed properly? To quote the Finance and Leasing Association—a trade body that represents a large number of payday lenders, who are particularly proliferate in this kind of behaviour—as an example of an organisation speaking sense about how we manage data is not necessarily the best example. However, I am interested in the Minister’s brief mention of the fact that the Government are looking at the question of consumer assent.

The amendment looks at the question of consent from a consumer perspective. I would be interested to hear more from the Minister about what issues around consent the Government are looking at, because, after all, this amendment is precisely about that issue. If the Minister could assure us that the questions that are put in this amendment, particularly about the way in which information is managed from the consumer and the requirement to seek consumer consent to pass on information, that would be very welcome. If the Minister says that the TPS is not working for her—we have all confidently told people to register their numbers so that they can have that protection—we are now openly admitting that companies are flouting it.

One of the important matters for me is the ruling from the ICO. Naming and shaming does not seem to be working, partly because there is so much money to be made. Enough people are responding to these text messages and calling the numbers at premium rates that companies are making the money needed to cover any possible fine. Fines are then being overturned on the basis that there is no real distress, because people are putting up with these problems, rather than society getting to grips with the fact that companies are essentially breaking the data protection rules. Are we missing an opportunity to give consumers the protection that consent provisions could offer?

I am very happy to look again at how we might do that, but we want some assurances and some more detail from the Minister about the issues of consent that she is looking at and where that might fit into a consumer rights ethos. After all, this is about people’s right to have their data used in an appropriate fashion. It would be helpful to the Opposition if the Minister could set out more about the issues of consent that the Government are looking at.

Jennifer Willott (Liberal Democrat, Cardiff Central)

That is one of the issues that are being examined in the action plan, which, as I have said, will be coming out shortly. The action plan may come out in time for us to revisit the matter on Report. By that point, or certainly by the time the Bill has come back from the Lords, we will have a clearer picture. Once the action plan has come out and hon. Members have had a chance to look at it, some of the issues the hon. Lady is concerned about may be addressed, so it would be more appropriate to take up anything outstanding at a later stage.

Stella Creasy (Labour, Walthamstow)

Sure. That is helpful. The Opposition would be happy to withdraw our amendment for the moment on the basis of a general agreement that companies should be responsible for doing data management with reasonable care and skill; that consumers should therefore be able to raise concerns under consumer protection law if they feel that a company is not behaving in that way; and that we will get more information about what that might mean for consumer consent from the report that the Minister is talking about, with a view to possibly returning to the issue.

We would certainly be keen to see the issue come back to the House. If the Government have good ideas, as I said, I pledge that the Opposition would be happy to support them on that, but the idea that consumers need to be asked about how their data are being used is an important principle and an important right. We tabled the amendment on that basis. I am happy to withdraw it based on the Government’s assurances that they are looking at those issues and that they agree with us that this part of consumer legislation needs to be dealt with. I am sorry that the matter was not covered in the Bill originally, which would have given us more time to look at how such a proposal would fit in with other rights such as how a consumer might say, “What is the test for a reasonable use of data and care and skill?”

However, getting some progress on the issue at all in the Bill would be welcome to us. If that is what the Minister is offering us, we will be happy to hear more about it later on in the Bill’s progress. I beg to ask leave to withdraw the amendment.

Clause 50 - Information about the trader or service to be binding

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 40, in clause 50, page 30, line 18, at end insert—

‘(1B) Prior to the provision of the service or agreeing the contract, whichever happens first, the trader will explicitly provide the consumer with relevant details of their statutory rights under sections 51, 52, 55 and 56 of this Act.’.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

With this it will be convenient to discuss the following:

Amendment 41, in clause 50, page 30, line 18, at end insert—

‘(1C) The trader is required to provide full details of the total cost of the service prior to sale including any additional service fees or charges that could be incurred by the buyer in purchasing the service.

(1D) The information set out in subsection (1C) should be portrayed prior to sale and the explicit consent to purchase the service at this price sought prior to sale.’.

Amendment 42, in clause 50, page 30, line 22, after ‘trader’, insert ‘with equal prominence and’.

Amendment 49, in clause 50, page 30, line 31, at end insert—

‘(4A) Where the trader seeks to change any of the information set out in subsection (3) after a contract has been entered into by a consumer, the trader must—

(a) ensure that if the consumer does not wish to agree to the changes sought, the consumer is able to terminate the contract without incurring financial detriment; or

(b) offer the consumer an alternative contract with a comparable financial outcome for the consumer of the existing contract.’.

Stella Creasy (Labour, Walthamstow)

I do not particularly want to spend a great deal of time on the amendments, simply because we have debated in a number of different ways the kind of information that people should be provided with at a point when they are seeking to commission a service. The question of point-of-sale information has vexed a number of members of the Committee over the course of our sittings.

Amendment 40 is about the point-of-sale information that someone should receive should they commission a service. The Opposition are interested in—in fact, we await with baited breath—what the implementation group will come up with on these questions, but we wanted to provide an opportunity to ensure that the requirement is statutory, so that all service providers would have to give the point-of-sale information that we all think is important. People are told that they have statutory rights, but the perpetual question is what their statutory rights actually are.

The amendment is an attempt to introduce the provision that people should have information about what their rights are when it comes to services. Given that people’s rights will be different from those for goods, we think it is right to have different information for service contracts, particularly on the right to repeat performance and the right to a price reduction. It is about that sort of information, to reassure the hon. Member for Wycombe, who I know is desperately concerned about extending contracts to hundreds of pages. We do not think that that would be particularly onerous information to provide. We think it would be helpful to provide that information, especially given the different remedies that the Bill sets out, which is why we have tabled that amendment at this point.

Amendment 41 is another example of an issue that we have had similar debates about. The concept of the information someone would get on total pricing is perhaps even more pertinent when it comes to services than goods, simply because people are more likely to enter into a concurrent agreement in a service contract than they are in a one-off goods purchase.

The amendment is about total cost information and the total cost of a service. Given that the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which the Minister talks so clearly about and is so determined will make such a difference, state that

“the total price of the goods or services inclusive of taxes, or where the nature of the goods or services is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated”

should be displayed to consumers, we think that it is right to say that consumers should have the total cost of a service contract to be able to assess whether they are paying a fair price. After all, the Bill discusses people being able to have a fair price; how do they know they are paying a fair price if they do not have the information about what the total cost of a contract will be?

As somebody who has been campaigning on the total cost for payday lending, I would have loved to see people having an honest assessment of how much a payday loan would cost them at the point at which they might commit to one. I think the figure would have been different from what they had been told in the shops. When I went into some of the shops to do mystery shopping, I was told a number of different costs for that service. The Minister may say that that is an argument for the FCA, but the point that people may commission a service and find all sorts of extra charges and variations being added in, which may substantially affect the cost, is pertinent.

I will give some examples that are not related to the payday lending industry. Someone takes their car to be serviced, and the garage charges them extra to return the car afterwards or to clean it, even when the consumer has not contracted with them to do so. The trader may try to argue that it is all part of the service, although it is an additional service, and try to charge them for it.

Consumers may end up paying hidden charges on services such as insurance, energy or premiums on their credit card. Anyone who has switched to a paid-for bank account may find themselves incurring all sorts of additional charges on their bank account. It is not necessarily a bad thing that people are being charged for certain services—it is for the consumer to decide whether they want to pay the charge for each individual service—but the consumer should have the information to enable them to decide whether a charge is fair.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend makes an interesting point. I was contacted a couple of days ago by a constituent who was concerned about the increasing use of continuous payment authorities. She had purchased services from a company in minute amounts, but for which a continuous payment authority had been issued. She believed that money for things for which she had not consented to pay had been taken from her account. That seems to be an increasing problem in such situations.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. His constituent’s case may relate to amendment 42, which is about small print. It deals with charges that people may incur but which traders may not specify prominently as being part of the cost. We had a debate in an earlier sitting about tickets, booking fees and additional fees that were sometimes imposed for using a debit or credit card. People do not expect to pay those additional fees, but because they are two thirds of the way through the transaction, they end up paying them through gritted teeth. We think that the total cost should be displayed prior to the purchase, so that people know exactly what they are paying for and they do not have any nasty surprises. Amendment 42 states that such charges should be given equal prominence. People have the right to know that they may incur such charges, so that they understand exactly what they are getting into.

Stephen Doughty (Labour, Cardiff South and Penarth)

My hon. Friend gets absolutely to the point. We have talked about Ryanair and the infamous charges for things such as insurance that are buried as deeply as possible in its website. Increasingly, companies seem almost wilfully to try to mislead consumers with such charges, either by hiding them or by doing clever things such as including tick boxes that mean yes or no, to try to trick people into paying for additional things that they did not know they were paying for.

Stella Creasy (Labour, Walthamstow)

Indeed. Good companies do not want to trick their customers, because if people are tricked, they are less likely to come back. It is bad practice, and why would anyone want to deal with someone who does not honour a contract by providing a quality service that represents value for money? The amendments are about getting to the heart of some of the practices of which consumers become unwitting victims.

We are not talking only about charges, although charges are the most obvious way in which people may feel that they have been misled by not being given clear information. Another example might be information about the qualifications of the provider of a service. I do not think that anybody who consulted Dr Gillian McKeith about nutrition would have thought to question whether she had appropriate qualifications until Ben Goldacre uncovered the fact that she had bought her PhD online. She was eventually sanctioned by the Advertising Standards Authority for calling herself a doctor, on the grounds that to do so was misleading.

Which of us would have gone through a contract with a fine-toothed comb—indeed, some contracts are implied—and studied all the information on which we based our purchasing decision? Information that is pertinent to why a consumer might commission a service should be displayed as prominently as all the other information, to ensure that they have the full facts. Gillian McKeith might have known all sorts of interesting things about nutrition, but it was not right to base her advice on the shorthand of being a doctor. I am technically a doctor, but if anyone were to have a heart attack in front of me right now, I could not help them because that was not the subject of my doctorate. People often ask me whether I have medical experience. I would never put in small print that I do, but such issues have occurred with some traders.

That covers amendments 40, 41 and 42. Those three amendments will be eerily familiar to members of the Committee, because they reflect the concerns we raised earlier about the information people have at the point of sale to ensure that they are not sold one thing only to discover that, in the small print, something else is part of the deal. Amendment 49, which is grouped with those amendments, is about a slightly different but linked issue: the information that consumers rely on when purchasing services. It is intended in particular to protect consumers from changes that service providers might want to make to a contract mid-term.

We have all seen that happen. I would be surprised if all Members who have a credit card have not had a letter from their provider recently changing the interest rates. Indeed, many have sought to exploit people’s current financial vulnerabilities by increasing their interest rates. As a result of that, interest rates on credit cards are higher than in many years, and essentially, by changing the interest rate, they have changed their contracts with their consumers.

We all understand that the cost of providing a service can change, whether through external conditions such as inflation, fuel price rises and tax rises or supply issues. The issue is whether consumers are then locked into a service and cannot use information to exercise their ability to determine whether a change in price for a service is fair.

Members will probably be familiar with the Bank of Ireland example from March last year. It invoked a small part in its contract, citing exceptional circumstances, to put up interest rates for more than 13,000 mortgage customers. It put up rates on its tracker mortgages, which are linked to the Bank of England base rate, from about 1.39% to 2.9% in May. The rate leapt again to 4.49% by October. Anyone thinking about what such an increase would mean to their mortgage will realise how financially substantial that change was.

The challenge for the Bank of Ireland’s consumers was that a tracker mortgage had been sold to them on the basis that it would track the Bank of England’s base rate, which is still 0.5%, plus a margin. The substantial changes in the rates faced by those consumers meant that many had little option but to pay, because getting out of a mortgage and finding an alternative is incredibly difficult, especially when the bank claimed that the change was owing to exceptional circumstances. They were, therefore, essentially locked into those payments. The bank reversed its decision with regard to 1,200 of those 13,000 people, but that still left 12,000 people paying a massively increased rate for their mortgage and dealing with a contract variation mid-term that they had little alternative but to accommodate.

That has caused a lot of concern in the mortgage industry, and we have tabled other amendments to test how other financial services issues that the Minister said would be covered by the legislation might be affected, such as when companies might try to change terms midway into a contract. Other people may have seen such mid-contract changes to service with mobile phone contracts. The presumption is that consumers will simply put up with that change without being given an opportunity to leave. If the contract is to be varied from the terms initially agreed to, the amendment would give consumers the opportunity either to leave the contract or to seek a comparable financial deal so as not to be particularly out of pocket.

The Financial Conduct Authority has written to banks about what happened with the Bank of Ireland and said that it is concerned that such terms may be unfair under consumer protection law. However, it is not clear how. As this is a consumer protection Bill, it is right to look at how people in such situations might be affected.

Andy McDonald (Labour, Middlesbrough)

Does my hon. Friend agree that it is reprehensible that many companies write to people mid-contract to announce changes to the terms and conditions when they really mean that they are increasing the money to be paid or the interest rate applied? That practice really ought to be avoided.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is right. We can draw a distinction here. The Bank of Ireland used the concept of exceptional circumstances. It is ambiguous at best where an exceptional circumstance can be determined, but it decided that there were exceptional circumstances in relation to its tracker mortgages fixed to Bank of England rates. Against that is an understandable change in, for example, supply, which changes a trader’s ability to continue providing the service to which a consumer was contracted, and might mean that they seek to renegotiate terms. Furthermore, when a consumer is essentially locked into something, for example if they are asked to exit their own home in order to avoid charges, that is simply not reasonable—that word again—but it is a fair reflection of the challenge that was faced.

What can we do to make sure that the consumer protection law on things such as exceptional circumstances, is clear-cut enough that consumers have rights too? In situations like the Bank of Ireland mortgage rates rise, people should not be left, as 13,000 people are, paying four times as much in interest on their mortgage at a time when I am sure many people can ill afford it.

This group of amendments is about getting to the heart of how we help consumers to make the right decisions and ensure that they have the right kind of information at the point when they buy something. They should what they can expect; what the pricing will be; what the conditions of sale are, including all the terms of contract, not just what is in the small print but everything they might possibly be told about; and what they can expect and do should the service provider seek to change the terms and conditions of the sale at a later date.

I hope the Government will receive the amendments relatively well, because we all know people who have been in the positions that I have described and would therefore be concerned to ensure that the Bill can cover them. I know that the Minister will again tell us all about the implementation group when it comes to some of the issues around point of sale and costing, and I am also sure that she will tell us about the consumer regulations. It will be interesting to see how she feels they would be affected by such matters as total cost charging, and how that would be displayed. Service contracts may be changed midway through, which is not necessarily something that would happen with a goods contract, so it would be interesting if the Minister gave us her thoughts on how she sees the lessons from the Bank of Ireland mortgage issue and what she thinks it means for consumer protection.

As much as I am sure the Minister will say that this is about financial services, as a general principle it seems to us right to ask whether the law gives consumers clarity about what they should expect if there are mid-contract changes. That is what amendment 49 is about. I look forward to what the Minister has to say about these four amendments.

Jennifer Willott (Liberal Democrat, Cardiff Central)

As the hon. Lady said, amendment 40 is the same as amendments 6 and 31, which we discussed in the case of goods before the break and last week. We have also discussed the issue as it relates to digital content. As I said at those times, we can all agree that it is important that consumers receive the right information at the right time. I therefore reiterate that the Government are committed to ensuring that consumers and traders are better informed about their rights and obligations. Part of that is the simplification in the Bill, which is one of its main purposes. Providing excellent consumer information is a central part of the reform programme. As the hon. Lady predicted, that is why we have the implementation group looking at the matter. It is considering where in the process would be the most effective point to inform consumers of their different rights.

I will not go into that in detail, but in the case of services, which may be provided over quite a period of time, it is even more important to be careful about when the information is given. For example, information given by a builder arriving to start a job might be less useful than information that is given a couple of months later when he hands the work over to the customer. The time frame is quite important when looking at how to do this. Also, in the case of services, there is a significant amount of sector-specific legislation that sits alongside, or sometimes takes precedence over, the provisions in the Bill.

Therefore, providing information only about the rights in this Bill could actually be misleading to consumers. All these issues are being considered by the implementation group and undoubtedly we will hear more about that in the future. It would not be helpful to introduce into the Bill a requirement to provide information at the point of sale without a consensus that that is the best way forward. I therefore cannot support the amendment.

Amendment 41 relates to the communication of costs that a consumer will face. The Government are committed to making sure that consumers have clarity and transparency on costs, as they are one of the most fundamental factors in a decision to employ a trader or to take up a particular service. As the hon. Lady ably predicted, the consumer contract regulations are important here. For services within their scope, they will make sure that the trader provides information to the consumer about the total price including taxes before the contract is made. As I have said before, those regulations will come into force in June and will operate alongside the Bill.

As the hon. Lady said, it is especially important for consumers to know what they are paying for services. Some services can be some of the most expensive things we will ever pay for: a big extension or some other large piece of building work will cost significant sums of money. There can also be a considerable disconnect between the actual price and the amount the consumer expected to pay. For example, my parents-in-law recently had an extension built. Once the builders dug down, they discovered that there were no foundations at the back of the house, something they clearly had not expected when they started the job. That made the job significantly longer, and more difficult and expensive. There is no way that could have been predicted, and in such cases the expected and actual cost can vary significantly.

Under the regulations the price will have to be clear and comprehensible to the consumer before they buy. The Bill makes it clear that that information becomes part of the contract and cannot be changed without the consumer’s express consent. I will come back to how the price is calculated in a moment, but on the point made by the hon. Member for Cardiff South and Penarth, the regulations make it clear that the consumer’s express consent must be given before any payments are made in addition to those required by the main obligation. It will not be enough to have a pre-ticked box, as the hon. Gentleman highlighted: that does not signify express consent for additional payments and so will not be permitted. Those measures should go a long way to making sure that consumers know exactly what they are buying before they commit.

Importantly, when traders do not know the price, the regulations give them the flexibility to set out how the price will be calculated. With a builder, flexibility will probably be built in because they will not know what is going to happen. Flexibility is particularly important for services. For example, a painter or decorator might not know how many hours it will take to do a particular job but will know how much he charges per hour, and can therefore provide details of how the price will be calculated even if he cannot commit to a final price because of various circumstances. I agree with amendment 41 in principle, which is why the consumer contract regulations cover all those issues.

Amendment 42 concerns the new statutory right in clause 50 that information provided about the service or trader be binding, an issue I raised in response to a previous amendment. That right has been introduced to help consumers know what they are buying and to help them get what they pay for—we could refer back to the debate about people’s choice of haircuts and so on—and I am sure we all agree that that is a worthwhile intention.

A consumer could be given a lot of information about a service and a trader at the same time—that is normal when someone contracts for a service. We want the trader to comply with information that the consumer took account of when agreeing the contract. However, to be fair to the trader the consumer must take all information into account, including any qualifications that the trader might give—they cannot pick and choose from the information given. For example, a trader could say, “I will landscape your garden before the end of the month unless the weather is bad.” If it then absolutely buckets down for the rest of the month, the consumer cannot say, “Well, you said you’d do it by the end of the month,” and ignore the second part of what the trader said. The consumer has the right to regard the information as binding, but must treat any qualification to that as binding as well.

We have also listened to stakeholders and have made it clear that in order to qualify the information, the qualification by the trader must be given at the same time as the original information. They cannot go back on it later. We have made that change since publication of the draft Bill, when it went to pre-legislative scrutiny. I am sure everyone will agree that it is important to clarify that the qualification has to be provided at the same time as the original information.

Amendment 42 would add a requirement that such information be given with equal prominence, otherwise the consumer would be able to choose which information to take account of. As I have explained with regard to amendment 41, there is already a requirement in the consumer contracts regulations that information be given in a clear and comprehensible manner. That would cover information on the main characteristics and the price of the service, among other things. Any changes to that information must be expressly agreed by the consumer and the trader. So an additional requirement for prominence would not add anything for consumers, but it could place an additional burden on traders. We already have a requirement in the Bill that terms about the main subject matter or price must be prominent, to avoid being challenged in court for fairness. We will come to that part of the Bill, and I am sure we will debate the issue in more detail.

We also heard evidence from industry—it is in some of the written evidence the Committee has received, which I am sure we have all read in detail—that conversations with consumers would become more scripted and “stunted” in response to changes to the provisions on prominence. We want traders and consumers to be able to discuss the service being provided and to engage properly with each other. The evidence we have been given states that the more rules are placed on those communications, the less useful they become, and the more it becomes a tick-box exercise to make sure that someone has read everything on the script in front of them.

Amendment 49 also refers to clause 50. We all agree that it is disappointing when we are promised something that is then not delivered. That is why we are proposing the new right laid out in clause 50, so people get what they pay for. The right as drafted is a proportionate response to this concern. Consumers need to have confidence that they are getting what they think they are paying for. However, the very nature of the services sector means that traders need flexibility to respond to changes and challenges as they deliver a service.

For instance—I gave the example of my parents-in law’s house—a builder might not know the extent of the work that is required until they start doing the job, and it would be reasonable to have flexibility built into the contract to ensure that they can take into account the circumstances that arise as the job progresses. So, we are proposing a balanced solution in the Bill. The consumer has the right to expect that information given to them by the trader be correct, but the remedies we suggest are more flexible and proportionate.

Amendment 49 refers specifically to traders being able to change information that is given pursuant to the consumer contracts regulations, without repercussions. We agree that the trader should not be able to do that; there should be implications. That is specifically set out in subsection (4), which makes it clear that a trader cannot change information without the express agreement of the consumer.

On the remedies, we make it clear that a trader must comply with the information that has been given about the performance of the service. If not, the consumer is entitled to request that the service be re-performed until it does comply. This gets us to the same place as the second option given to the trader in the amendment: that the trader must offer the service contracted for.

The statutory remedies also recognise that, in some cases, re-performance in accordance with the contract might be impossible, in which case the consumer will be entitled to some money back. That sets quite a high standard. A consumer will also be entitled to some money back where performance in accordance with the contract is possible but cannot be done within a reasonable time or without significant inconvenience, an issue we discussed in a previous sitting.

We also agreed that in some cases, which we hope will be the minority, termination of the contract will unfortunately be the most appropriate remedy, so we make it clear in the Bill that it is still open to the consumer to terminate the contract, which they have a right to do under common law. Under common law this right is reserved for serious breaches, or for breaches of the most important terms. It is right that termination of a contract should be reserved for the most serious cases, rather than being an easy fall-back. For example, consider a small trader who agrees to paint a whole house, with one wall in cobalt blue. I have no idea why someone would want that, but one never knows. He does not realise that the paint is out of stock and he cannot paint the wall that particular colour. He has painted the rest of the house and that is fine. Is it right that the consumer should be able to terminate the contract for that minor point, when the rest of the house has been painted?

Under the Bill, the consumer can first request that the trader repaint that wall in the right colour, and only if that is truly impossible can the trader refuse. If he cannot get the paint he will be able to refuse, in which case the consumer will be entitled to an appropriate price reduction. The difference is that under the Bill the trader still gets the job. In the best-case scenario the consumer gets the whole job done. In the worst-case scenario the consumer gets the majority of the work done and some money back. That is a more proportionate and flexible way to handle the situation.

We consulted extensively on the new proposals and we received broad support for them. As I mentioned, there are also specific provisions on unfair terms. If the parties agree that one of them can change the terms in the future, they should be free to agree those new terms. However, to avoid challenge in court on the grounds that they are unfair, the terms must at least be prominent. In some cases, they will be open to challenge even if they are prominent. That is a significant increase in consumer protection.

The hon. Member for Walthamstow mentioned the case of the Bank of Ireland. That would be covered by the grey list—the unfair contract terms—which we will debate in more detail. The grey list is an essential part of the unfair terms legal framework. The Government propose to maintain the grey list in law, but make it clear for the first time that such terms are assessable for fairness. It already covers terms that allow the trader unilaterally to alter the characteristics of goods, services or digital content without a valid reason. Because that is already covered, we do not think it necessary to make this change.

I hope that answers the hon. Lady’s questions and that she will be happy to withdraw the amendment.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for her answer. If I understand her correctly, amendment 40 and the question of how people might get information about their statutory rights at the point of sale of a service is a matter for the implementation group. We await the group with bated breath, given how important it has become. I draw the Committee’s attention to new clause 6, which asks for details on when the work of the implementation group will take place.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Is my hon. Friend starting to think that, if the Minister announces any more work for the implementation group, BIS will call it a growth sector?

Stella Creasy (Labour, Walthamstow)

The implementation group may have much in common with a pregnant panda—we all wonder when it is due to give birth. We understand from the assurances the Minister has given today that it will deal with exactly the issues that amendment 40 seeks to address.

The Minister says that the consumer regulations will come in, so we will get answers to the issue that amendment 41 seeks to address. On amendment 42 and the question of prominence, the Minister said, as I understand it, that consumers will have a right of redress under other parts of the Bill, because it could be argued that such information should have been given at the point of sale. That would be an additional request for information—not just about the charges but the nature of the service and the person providing it—that should be provided with equal prominence. That should be binding, in case a consumer did not see something in the small print. We have some concerns about that, but I imagine the Minister will ask the implementation group what information consumers can reasonably expect to be told about at the point of sale.

I take the Minister’s point about scripted conversations, but one of the reasons why financial services have scripted conversations is that there has been confusion in the past about what services will and will not cover. The script provides protection in that it prevents both the trader and the consumer from making assumptions that are not borne out.

We are a little concerned about amendment 49. I take the Minister’s point that varying contracts mid-deal is covered by the unfair contract terms. However, it would be helpful if she could point to the part of schedule 2 that she thinks covers the issues to do with exit. We agree that changing the terms mid-contract to the financial detriment of the consumer. The question is how that can be assessed, given that the unfair contract terms do not say that. Our amendments were tabled on that basis. If any reasonable person can recognise that someone cannot leave a contract because, for example, they would have to sell their house to get out of the mortgage obligations, are the unfair contract terms really enough of a protection? If the Minister accepts that that can happen, would it not be better to have a general principle to say that varying contracts mid-service is reasonable in some circumstances, but it should not be done at the expense of the consumer? The consumer should have the right to exit the contract, which is what the amendment would provide for.

It is not clear how the mechanism that the Minister set out fits together. For example, if a person is able to challenge the Bank of Ireland about their mortgage—although the 12,000 people were not able to do that—will they have a right to leave the mortgage and seek another mortgage on their property without penalty and without being financially penalised by any mortgage deal offered by a subsequent provider? If not, that person is essentially locked into a term that has been declared an unfair contract term, just because the Bank of Ireland decided not to offer a mortgage at any other rate.

If those provisions will be covered by the unfair contract terms, it would be helpful if the Minister could clarify where it says that the consumer will get redress and will not be penalised for not being able to leave the contract that has been declared unfair because of the nature of the good or services that it was against—for example, long-term borrowing for a house or a car. I want to tease that out so we can be confident that consumers cannot be locked into a contract that is escalating in price without redress that does not result in the loss of the service or the good in question. The Bank of Ireland relied on that format. It would be helpful if the Minister could clarify that.

Jennifer Willott (Liberal Democrat, Cardiff Central)

My understanding is that paragraphs 12 to 15 of schedule 2 relate to that issue, but ultimately it is up to the courts to decide whether the terms are unfair. Those paragraphs relate to the hon. Lady’s examples.

Stella Creasy (Labour, Walthamstow)

Given that the schedule of terms does not expand on the number of unfair contract terms that are part of case law, and that the Bank of Ireland customers have not been able to secure redress, can the Minister do a little more to guarantee that consumers have protection should their contracts be found to be unfair? I am concerned, because the existing legislation has not helped the Bank of Ireland customers. We have seen that happen.

Jennifer Willott (Liberal Democrat, Cardiff Central)

It is important to highlight that the Bank of Ireland case was not a court case. It went to the Financial Conduct Authority, which decided that there was no case to answer and wrote to the Treasury Committee to say so. I understand that that was because the Bank of Ireland put in place a range of alternatives. However, the unfair terms part of the case was not tested because it did not go to court.

Stella Creasy (Labour, Walthamstow)

I thank the Minister; that is helpful. However, it proves the general principle that if a contract is varied mid-term in a way that the consumer could not reasonably have expected and they are not able to exit it, they could experience detriment. We are seeking clarification about what rights consumers have not to be financially penalised or have a service that they rely on removed because they cannot afford the service or adapt to the way in which it is provided, but are locked into the contract. In the Bank of Ireland case, those 12,000 people were locked into a particular deal.

Jennifer Willott (Liberal Democrat, Cardiff Central)

What I can say is that new terms are being included in the list—lines 12 and 14 are new terms—but we will come to that in more detail when we discuss it. I am sure that the hon. Lady will want to go into it in more detail then.

Stella Creasy (Labour, Walthamstow)

I thank the Minister for that answer. With that in mind, I am happy to withdraw the amendment on the basis that we will come to the issue of what the implementation group, that pregnant panda, will deliver for us. When we come to debate schedule 2, clause 63 and the unfair contractor, we will get clarity on how to ensure that consumers who face contracts changes halfway through the term are not financially penalised. We have tabled an amendment to make explicit the financial detriment question. I would hope, from what she is saying—she sounds sympathetic to the plight in which those people found themselves—that there will be support for that amendment. Given her assurances, I beg to ask leave to withdraw the amendment.

Clause 51 - Reasonable price to be paid for a service

Stella Creasy (Labour, Walthamstow)

I beg to move amendment 50, in clause 51, page 30, line 37, leave out from ‘price’ to end of line 38 and insert

‘for all elements of the service supplied and the consumer faces ongoing costs or charges for an element of the service.’.

Sandra Osborne (Labour, Ayr, Carrick and Cumnock)

With this it will be convenient to discuss the following: amendment 51, in clause 51, page 31, line 3, at end add—

‘(4) To enable consumers to assess whether the price they are paying for a service is reasonable, and no more, and with regard to the provisions of section 50(1), the Secretary of State will—

(a) under the power set out in section 89 (Supply of customer data) of the Enterprise and Regulatory Reform Act 2013 enact regulations to require all regulated persons to provide customers with data regarding their personal use of a service,

(b) specify in a report presented to Parliament within three months of Royal Assent of this Act which traders operating as a business as defined by section 2 shall be considered regulated persons including any government, or local or public authority and therefore identify a relevant regulatory body to undertake the duties set out in paragraph (c),

(c) having regard to the powers set out in section 89(8) of the Enterprise and Regulatory Reform Act, require regulators of services provided by regulated persons to submit a report within three months of Royal Assent of this Act on guidance to include—

(i) the provision of such data in a format which enables the consumer to assess whether the price they are paying for a service is reasonable including but not limited to the description set out in section 89(7) of the Enterprise and Regulatory Reform Act 2013,

(ii) the provision of guidance that can enable third parties to make a request for this information with the consent of the consumer including measures to limit the total charge that can be applied for any such single request for data on behalf of multiple consumers,

(iii) requirements for those who hold data on consumers on behalf of any government, local or public authority to seek to use this information to secure social and consumer benefits for its application as directed by the Information Commissioner,

(iv) requirements for all regulated persons to recognise that primacy of ownership of any data generated directly in the course of a contract with a consumer at any point in its execution lies with the consumer and as such any decision requiring the transmission of this data in a format where the consumer can be identified to a third party by the trader must secure the direct consent of the consumer,

(v) requirements for all regulated persons to make available upon request to a regulatory body information pertaining to their management of non personal data collected in the course of interactions with consumers by traders for the purposes of enabling regulatory bodies to assess whether the rights of consumers to a reasonable price for a service have been infringed,

(vi) guidance for the trader to clarify their ongoing responsibility for the security and accuracy of data held on consumers whether the consumer continues to maintain a contract with the trader or not, and

(vii) guidance for all regulated persons on ways to make publicly available information about how consumers may exercise their right to access data for the purposes of being able to make decisions on contracts for services.’.

Amendment 52, in clause 51, page 31, line 3, at end add—

‘(4) Where the consumer is required to pay for a service via a third party as part of another contract, for the purposes of assessing whether the charges they are required to pay are reasonable they will have a right to the full details of any contract including all charges and costs to which they are contributing.

Amendment 53, in clause 51, page 31, line 3, at end add—

‘(4) Where the consumer is being supplied a financial service, the consumer shall be provided with such information as shall enable them to know the risks that were taken into account in calculating the applicable premium and the profit that either—

(a) the financial services company, or

(b) financial broker anticipates to make on that premium if there is no claim on the policy.’.

Amendment 54, in clause 51, page 31, line 3, at end add—

‘(4) Where the service provided is for an additional assistance service, a reasonable price will be one which is judged by reference to the guidance set out by the original provider of the service who has approved the provision of such an additional service including specifying a range of costs for its provision which can be considered reasonable.

(5) An “additional assistance” service for the purposes of this Act is to be considered any service assisting a consumer to use the original service that does not alter the original service provider’s intent in operating this service.’.

Clause stand part.

Stella Creasy (Labour, Walthamstow)

This is what might be termed a behemoth of amendments, but they go to the heart of how we in the Opposition see consumer rights. I want to put it on record that amendment 51 in particular speaks to what I would argue is a different approach to consumer rights, the one that we in the Opposition would wish to take. When the Government introduce their policy proposals on consumer rights and legislation, we feel it right not simply to seek to amend them, but to introduce our own ideas and encourage the Government to see the progressive merits of what we propose.

With that in mind, given that amendment 51 is quite substantial, I will talk first about amendments 50 and 53, and then come to amendments 52 and 54. I hope that Government Members are settled in and ready for a rather long, but I think interesting, debate about the question of information. All the amendments go to the heart of what the clause seeks to do and whether it is possible. Clause 51 is about the right of a consumer to pay a reasonable price for a service. That leaves a simple question: how do they know that they are paying a reasonable price for a service? How do they access the information necessary to make good choices as a consumer? We know that markets are broken without good information, because information asymmetries allow people to be exploited and allow prices not necessarily to reflect a fair cost.

Fiona O'Donnell (Labour, East Lothian)

Does my hon. Friend agree that that is particularly the case when someone has a service contract with a trader that does not cover all work? They are then tied in because they have already invested the money, but they find that the additional charges are completely out of kilter.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. They also do not know what they are paying for; they do not know what service they are actually contracting.

To start gently, amendment 50 talks about how we might consider what information people need to be able to assess the fair price for a particular service given the questions about ongoing fees. A good example is pensions. We all know that there is a debate, particularly on the Pensions Bill, about disclosing charges. People should know what they are paying for, especially for a service that is due to serve them a substantial amount of time in the future.

We know that there are concerns, especially within the pensions industry, about whether people have information, especially from fund managers, about the costs and charges that they face. We know that people on annuities in particular are paying out a large proportion in fees, so the money is not actually going into their pension pot. They think that they are building up a substantial pot, but they discover on retirement that the reverse is true. Did they know that their costs were being affected in such a way? It is right to ask how to ensure that, as the amendment says,

“all elements of the service supplied and the…ongoing costs or charges for an element of the service”

are disclosed so that the consumer can tell whether their expectations for something such as a pension can be made good on, which would allow the consumer to make relevant provision. Although we appreciate that the Pensions Bill is being considered by Parliament, there is a consumer protection issue. There is cross-party agreement that fees and charges should be disclosed so that people know the cost of their pension and pension management.

Stephen Doughty (Labour, Cardiff South and Penarth)

Will my hon. Friend join me in commending the work of our hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who has been doing excellent work in highlighting such charges? I have personally experienced a complete lack of clarity on these charges, which affected my ability to decide whether I was getting a good pension or whether I was being ripped off by unfair charges.

Stella Creasy (Labour, Walthamstow)

My hon. Friend is absolutely right. I, too, pay testament to our mutual friend, whose constituency I will not attempt to pronounce because I have never been able to get it right. He has been doing tremendous work in forensically detailing the way in which unfair and non-transparent fees and charges are to the detriment of consumers. Indeed, my hon. Friend the Member for Cardiff South and Penarth will see the hand of our mutual friend in this amendment.

Pensions are a good example of where clarity on pricing would allow consumers greater confidence in the choices they make. That relates not only to pensions but to ongoing service contracts that are perhaps more mundane. Anyone who, like me, has had the misfortune to try to use the wi-fi on, say, a Virgin train and found that it does not work and has then used their phone as a personal hotspot will be all too aware of the additional data charges that one might incur—they are always a nasty surprise. Again, those fees are part of the price because a phone is advertised as having the service and people therefore think that it would be a reasonable price within the contract. I can tell Members that, if they go over their limit, the price can be very expensive.

Those are all examples of where someone contracts a particular service and thinks they are paying a particular fee only to find a nasty surprise at the end of the contract term, or indeed as part of the contract term. Amendment 50 therefore simply gives people access to information on ongoing costs or charges so that they can be conscious as and when they make a choice. In the pensions market, for example, people would be able to know the financial implications of moving between different pension pots or moving jobs.

Amendment 53 is slightly broader and focuses on people’s understanding of risk when they use financial services. I know the Minister will point to the psychological research she has on overloading people with information, but I have great belief in the public’s ability to understand financial management and financial risk, and the research bears that out. Information can be provided in such a way that it enables the public to assess risk, but people cannot assess risk if they are not told about it. People cannot know what their pension pot might accumulate to if their pension provider is not giving them details on their annuity or any charges that might be incurred. That is not just an issue when investing in pension funds; it is also an issue when investing in ISAs, for example. I am sure many Members have had an ISA over a large number of years and realised that it has not made much money, but how they might have understood that risk, and understood where else they could have put their money, is not clear for many consumers. Amendment 53 simply does what all good financial services providers would do, which is to help people understand risk so that they can make an informed choice.

Amendments 50 and 53 are about the simplicity of information that consumers are provided with that would enable them to make good choices. They are therefore harbingers for amendment 51, which goes to the heart of a progressive approach to information and the role of information in markets and in empowering consumers.

Fiona O'Donnell (Labour, East Lothian)

Does my hon. Friend agree that the fact that people were not properly advised of the risk of endowment mortgages damaged the industry’s reputation and cost it a lot of money in the long run? Does she agree that it is in the sector’s interests to give good advice about risk?

Stella Creasy (Labour, Walthamstow)

I agree. A number of residents in Walthamstow are now due to retire. In fact, one of them should have retired a good 10 years ago. He continues to work because he has an endowment mortgage, which is due to be realised in two or three years, if I remember rightly. The value of the property, being in a London borough, has increased substantially and the sheer cost of paying out his endowment mortgage will bankrupt him, so he is working and working, even though he is too frail to continue to work, to try to keep going to be able to pay that. Indeed, he has taken out a number of other loans to cover some of those costs. He is in a parlous situation. Nobody looking at that situation would ever have sold him the sort of mortgage product that he has. He did not know or understand the risks that he was getting into, for him or his family. He is a proud man and he is a broken man as a result of these changes.

We all recognise that financial products out there are good or bad for people. Surely, helping people to understand the risks and therefore to prepare for them is what a good society does. The last thing that any of us wants to do is to become the dead hand of the state picking up the problems and trying to deal with them. That man is very much on my mind when people talk about endowment mortgages, because I can see the problem that he has.

Indeed, thousands of people have interest-only mortgages that are also due to come to fruition and were taken out when it was regarded as the right way to manage getting on to the housing ladder, without an adequate risk-assessment process or consumers being given the information to make an appropriate risk assessment.

Looking at the housing market in the UK, particularly in London, I fear that people are again being given mortgages and poor financial advice about whether they can really afford them and the risks that they will face. Such amendments are not about saying that they cannot make choices for themselves; they are about saying that financial service providers in a good society act to ensure that people have a better understanding of risk and the ongoing costs and charges that they face.

Andy McDonald (Labour, Middlesbrough)

My hon. Friend has highlighted the scourge of endowment mortgages. I am Spartacus; I was one of those many thousands of people who took up those terrible policies. Any measures that can be introduced to give people greater information are good. In the 1980s, we were all provided with ridiculous projections about what such policies would produce that were never sustainable. I have one that will come to fruition in June. It promised to produce about £25,000, but I will be lucky to get £4,500 out of it. It would have been better if I had put the money under the bed.

Stella Creasy (Labour, Walthamstow)

I can only sympathise with my colleague. This problem reflects the poor information provided to consumers, although it should be provided to enable them to adequately assess risk.

Amendment 53 simply says that assessing risk is something that we want consumers to be able to do. We should ensure that they have that information.

Amendment 51 reflects the approach that we want to take to empowering consumers. Any consumer rights Bill should have at its heart not, as this Government’s Bill does, a principle about what people can do when things go wrong, but a proactive capacity for consumers to be able to avoid problems in the first place. Consumers therefore need to be empowered, because that offers them the opportunity to avoid those problems.

The three principles of empowerment are information, advocacy, which we will come to in clause 79, and redress. I want to talk about information and how we ensure that people have the information they need to deal with the choices they want to make, to tackle the information asymmetries that lead to inequality and poor prices, which reflect that inequality. One of those inequalities comes from the lack of information about what other choices people might have, or what service they are paying for.

The inequality manifests itself in the fact that many people in this country on higher incomes have their goods and services subsidised by those on lower incomes in part because of the information restrictions that they face. Healthy, fair and competitive markets have effective methods for information sharing, because they are vital to make an economy work for both consumers and businesses. The Government’s failure to ensure that people can access the data that they need to compare goods and services means that our economy is not functioning as well as it could do. We believe that passionately.

The Government’s own research, “Better Choices: Better Deals” argues that even were consumers only to use what are called first-generation intermediaries—namely, price comparison websites—they could in effect gain between £150 million and £240 million a year. It is interesting to note, however, that only 13% of users of such sites get the lowest-priced deal. The Government admit that one of the reasons is that those users do not necessarily have the right information. It is no good for the Prime Minister to get up and say about Government services that information is the best disinfectant, only for them not to provide the relevant information in a format that people can use. People who have tried to request from a service provider their own usage data, to which they are entitled under data protection laws and the subject access request legislation, will find that they are provided the data in all manner of formats. Whether that format is one that a consumer may actually use is the critical issue.

A recent EU survey found that UK consumers have some of the lowest levels of switching, in terms of comparing prices, reading terms and conditions and showing an interest in consumer information. At the heart of changing that situation and of empowering consumers is ensuring that we can unleash the capacity of data to help consumers make the right choice. A functioning and healthy market is one in which there is an information flow that allows every consumer to do that, so that every consumer is able to negotiate and navigate the best deal.

On Second Reading, we therefore talked about the midata project, which was also discussed in the evidence session. It is a voluntary programme of 26 organisations among energy, mobile telephone and financial service providers to get consumers to increase access to their personal data. That approach is entirely voluntary, although we recognise that the Government consulted in November 2012 on giving themselves an order-making power under what was to become the Enterprise and Regulatory Reform Act 2013 to enable them to compel businesses to release

“consumers’ consumption and transaction data in a portable, machine readable format upon request.”

Put simply, people should be able to request their own usage data in a format that they can use, so that they can make comparisons with other types of usage.

What does that mean? Back to therapy: I tried to switch my own energy account and I gave up after 20 minutes, because I could not understand the questions that I was being asked or even the information on my bill. I do not think that I am alone in that experience. Talking about the Bill with a number of colleagues, the question whether they have switched has come up time and again. I can tell the Committee that only a minority of other Members have said that they have managed the process. People often say that politicians are not representative of the wider public, but on that issue we are very representative.

Furthermore, fundamental questions need to be asked. If we accept the principle that what consumers need to be empowered is information, they might want to access information not simply about one or two areas of their lives, so that they can negotiate and understand whether they are paying a fair price, but across a whole range of services that they are paying for. We have therefore tabled an amendment that seeks to learn the lessons of the midata project and to understand how we can unlock the capacity of that data and not only apply it in the four sectors identified by the Government, but ask whether it has lessons across all areas in the public and private sectors, both of which the Bill covers, where we pay for services. Government Members, who are the first to argue that we should all be concerned with public value for money, would I am sure also recognise that consumers of public services are also entitled to be able to assess whether they are paying a fair price for goods or services.

The amendment therefore does a number of things. It is probably helpful for me to talk through its various provisions. First and foremost, it would require the Government to use the powers to do with the midata project that they have not yet enacted to overcome the unsurprising reluctance of companies to release data. It does not take a rocket scientist to work out that if one of the ways that a company can retain customers is through information asymmetries—making it difficult for customers to cross-compare goods and services—why would companies co-operate and release data in a meaningful format? It is one thing to go on to a price comparison website and look at various costs and charges; it is another actually to be able to compare like with like.

The amendment would use the power that exists in the Enterprise and Regulatory Reform Act 2013. We have recognised a good thing to do under that Act, so let us get on and unleash the data, so that consumers can use them. The amendment also asks a question: if we accept the principle of unleashing data and can access the relevant information, in what areas of our lives do we need to be able to assess whether we are paying a fair price for a service? The amendment would require the Government to look across a range of sectors covered by the Bill, including national Government and local and public services. Are there lessons to learn about how we release data in a portable and user-friendly format—after all, that is at the heart of the midata project—that could empower consumers in other parts of their lives?

Having set the test to discover whether there are broader lessons for the public and private sectors, the amendment lays out some of the framework for managing the data. We all recognise that it is important that we manage data appropriately, and the Opposition want to see data managed in a progressive way. The amendment would require a report into whether data should be provided in a format that people can access in a portable way and how that might be determined. It sets out that that would be the role of the regulator. It is not a burden for business; we think regulators should be doing it. After all, the regulator is supposed to speak on behalf of the public in interactions with service providers. It is therefore right that the regulator is asked to look at how data can be provided.

Sub-paragraph (ii) of amendment 51 would require the regulator to report on the provision of guidance that can enable third parties to make a request for information, which raises the concept of next-generation intermediaries. We have talked briefly about first-generation intermediaries—namely, price comparison websites—and have already discussed whether people are able to use them to their full benefit; we know that many are not. The Opposition are interested in the growth of next-generation intermediaries in other countries and whether we can do more to encourage them to develop in this country. Next-generation intermediaries take the principles behind price comparison websites and expand on them. Whereas a price comparison website might try to bring together basic information about different services but have difficulty in comparing like with like, next-generation projects bring together consumers to negotiate or collectively bargain.

In Australia, consumers have been banding together in their thousands—indeed, one in 14 Australian citizens is a member of such a vehicle and has been able to negotiate substantial decreases in energy costs, health insurance and more general insurance products. There has been a huge revolution for consumers, led by consumers. Next-generation vehicles can go to a service provider and say, “There are 10,000 to 15,000 consumers signed up. Tell me what price we can pay collectively.”

The amendment is about enabling that process to take place—enabling consumers in Britain to not just get hold of information individually, but club together to negotiate the deal that they want. We do not want service providers to try to evade such actions by putting large charges on to the cost of providing data, so the amendment would require the regulator to set out how to ensure that, where consumers want to work together and have given their consent to a next-generation intermediary company, they can request the information en masse, without contradicting the group’s ability to act on behalf of consumers.

Basically, service providers must not make the cost of providing data so exorbitant that it would prevent switching happening, or restrict consumers’ capacity to shop around as a collective block. I think that we would all recognise that it is one thing to go to an energy company with a like-for-like comparison and say, “I want the same tariff;” it is another if 10,000 people do. I encourage Members who have not yet looked at what is going on in Australia to investigate it, because that seems to be exactly the sort of consumer behaviour that we want to unlock in the UK, to help consumers to stop the high costs of energy and insurance in the first place by allowing them to negotiate together themselves.

Fiona O'Donnell (Labour, East Lothian)

I wonder whether my hon. Friend—I am sure many hon. Members have—has heard from their constituents who they feel that they have been ripped off by factoring services. Does she see any opportunity here for consumers to act together to renegotiate or change the terms of factoring agreements?

Stella Creasy (Labour, Walthamstow)

We recognise that we are at an early stage in the UK. Those are exactly the sorts of issue that we could look at. How can we help consumers to come together and have real muscle to negotiate collectively, without the state having to do it, and look for the deals and vehicles that they want to work through?

Hon. Members might have seen things such as “The Big Switch”. They are about how we get the information that makes those processes happen. The instance that my hon. Friend described is exactly on the same point. One of the things that stops collective bargaining is not having collective information. If we can unlock the information, consumers can choose whether they want to participate in the next stage. However, if we do not provide the framework that allows the information to be unlocked, we will never get further along the process.

I want to turn to sub-paragraph (iii) of amendment 51. Having unlocked that information, as data are such a resource in our society, we should be asking how we can use the information to secure social and consumer benefits. I am sure that many hon. Members will have been lobbied by their constituents regarding the care.data project and the concerns about unlocking data in the public sector. We recognise that there are benefits to be gained from using the data collected in the public sector, but we think that those benefits should accrue to the public first and foremost.

We think that there are some general principles. Sub-paragraph (iv) of amendment 51 includes suggestions about ensuring the primacy of ownership of data by the public. If someone has created the data, they should be their data. We should be wary of eroding that right, in the same way that we should be wary if we were eroding someone’s democratic rights—their data, their ownership.

We want to ensure, however, that we can use the data, as the resource they could be, to tackle some of our health care problems, to understand trends and to use what people call big data for social benefit. The amendment would set out principles that people who own the data sets should adhere to: they should not hold back on data, but they should seek to secure public benefit from them. It is not enough to own that data set—people should do something with it—but what they do with it should be for consumers’ benefit and the public interest.

Oliver Colvile (Conservative, Plymouth, Sutton and Devonport)

Is the hon. Lady aware that pharmacies are campaigning firmly to have data from general practitioners shared with them? She is right to say that the data have to be in the ownership of the patients—they own the data in the first place—but it is important that we give health professionals as much opportunity as possible to look at some of the those data, subject to patients requiring that. The pharmacy industry’s campaign is very big.

Stella Creasy (Labour, Walthamstow)

The hon. Gentleman has hit the nail on the head. He is right that there is an opportunity. However, the question for all of us, and the concern that has rightly been raised, is in whose interest those datasets are acting.

The amendment would recognise a public value-for-money test. How would a consumer of public services know that they were getting value for money, which is, after all, a fair and reasonable price to pay for a service? They would know from getting the social benefits of the data that they have contributed to. We therefore think that it is absolutely right to look at whether the model set out in midata and the data management model that that project sets out can be applied to the public and can answer some of the questions the hon. Gentleman asked.

How data are shared and manipulated to find the trends that we are looking at should surely be a matter for the interests of the patient. There are concerns about identifying patients, how the information might be used and how someone might be able to drill down into it. Privacy is a key concern for patients.

We ask therefore ask that data be managed in the social and public interest and that we have a broader conception to which we can hold organisations as a result. After all, a number of datasets held not just in the public sector but across society could have social benefits. It is absolutely right to ask that, if we have contributed to them, it is in our consumer interest to unlock that social benefit.

We have proposed within the NHS constitution enshrining people’s right to own data that they have created. That should be a general consumer right—we are all consumers of public services—so the Bill seems an appropriate point to ask how such a right will be affected by these proposals. People would therefore have the right to understand whether they are paying a fair price for their public services, in the same way as people would have a right to understand whether they are paying a fair price for any service that they might commission in their private life.

Given that the Bill explicitly covers services and trades offered by local and national Government, as well as other public services, we think that it is entirely in scope to look at these issues. Indeed, my colleague from Norfolk, Mr Foreman, has offered a series of proposals in respect of patient records. Other datasets might have a similar format. For example, there will be a dataset in education. Surely, it is right that, as consumers of education services, our constituents can understand how that dataset is used and benefit from it. We seek to have the general principle that those who create the data should benefit from them.

Sub-paragraph (v) of amendment 51 is about the collection of data. I draw a distinction between someone’s direct personal data that a company might hold—for example, on usage—and the collective, non-personal dataset to which they have contributed by using that service. Consumers should be able to assess whether they have paid a fair price for a service that relates to those non-personal data.

In theory, all those non-personal data are already in the public domain. Let us take, for example, supermarket pricing. If someone has contributed to how a company prices a pint of milk, they could go from store to store to identify the difference in price, and they could pool that information. In reality, few of us have the capacity to do that. Again, that leads to companies being able to exploit an information asymmetry, whereby people simply cannot test whether some of the deals on offer are good because they cannot go from store to store themselves.

We recognise that there is a test for business about the sharing of data directly with consumers and that there would be a number of complicated data protection questions; they would arise, for example, if people could access their own clubcard accounts, as well as the dataset that their clubcard accounts are part of, to identify the demand for goods, the price paid for them and all the choices that are part of the price that they pay. That is why it is right to have a halfway house and to argue that a regulator could consider whether the prices that people pay are fair. As a society, we would then have a mechanism to explore those datasets when we have concerns about the prices that people are offered, without compromising people’s data security and management.

Let me give the Committee some examples of non-personal data. We have all seen coverage in the papers of special deals that look good but turn out not to be. A regulator should be able to look at such pricing information and mis-information and understand whether consumers are paying a fair price. One of my bugbears as a London MP is that the cost of goods in my local express store owned by the same supermarket is higher than if people could go up the road to the main store.

People might be cross-subsidising, through a lack of information about prices, express stores over the main superstores. My constituents, who increasingly do not have access to main superstores but are given local stores, might be subsidising residents in more affluent parts of London who have access to the major stores. I would expect a regulator to answer questions about whether the prices that my constituents pay are fair and about the subsidy that they pay to have an express store on their doorstep, as opposed to being able to go to a major store.

It is right therefore that we have a format and a way to access the collective dataset, as opposed to just a format to access the individual dataset, because both are important in tackling the information asymmetries that allow consumers not to pay a fair price.

The final part of our mega-amendment 51 that reflects Labour’s increasing approach to empowering consumers is about how we protect that data. We have already had a debate about protecting consumers from nuisance calls. The amendment is about data protection. If we recognise data as an important resource for empowering people, we must also recognise the need to protect the data source. Whether in the public or the private sector, making the service provider responsible for the security and accuracy of data seems important.

Brooks Newmark (Conservative, Braintree)

This is really a point of clarification. The hon. Lady caught my attention when she talked about cross-subsidisation, which particularly applies to petrol stations. In densely populated urban areas, the price of petrol is often lower than in rural areas. Many of my constituents are paying much higher prices than those who are being subsidised. I am trying to understand what she is suggesting in terms of price transparency, because price transparency already exists. Is she calling for more transparency about subsidising prices? What point is she trying to make with the amendment?

Stella Creasy (Labour, Walthamstow)

The point of the amendment is that people need to understand prices in order to know whether they are paying a fair price. The clause is, after all, about a fair price. How do we unlock the power of information to give consumers a better deal? How can consumers better understand whether the price at the pump in Braintree, as opposed to that in Colchester—having lived there, I am not sure that I would describe it as a gritty urban town, but I recognise the difference that the hon. Gentleman is talking about—is fair?

Given that prices should reflect consumer demand and supply in a functioning economy, we believe that there is a role for a regulator to analyse the datasets that companies generate to assess their pricing. A consumer may have a loyalty card with a petrol station, through which the company builds a dataset about them. The consumer has a right to those data, but the company has complete discretion about how they provide them. That means that a company might fulfil its obligations to respond to a subject access request, but the data might not be meaningful. Given the benefits to the consumer of understanding whether they are paying a fair price, we believe that there should be a way of unlocking those data as an individual and as part of a dataset. All the users of a petrol station in Braintree contribute to its profitability, as do the calculations made about the use of other petrol stations in the area. All those conversations are taking place within the service provider, which looks at its profit margins and works out where it can charge certain prices.

Consumers contribute to the company’s database, so we believe that if concerns exist about unfair prices, an independent agency should be able to analyse the data and ensure that, say, a consumer and their neighbour are both paying a fair price. That is the difference between personal and non-personal data. In both cases, if we can unlock the power of information, consumers will get a better deal without the need for state intervention.

Brooks Newmark (Conservative, Braintree)

I am trying actively to listen, and I think I know exactly what the hon. Lady is getting at. Being equitable, transparent and fair are all important, but the flip side is the cost of gathering that information and putting it together. It sounds to me as though that is a costly exercise, and the cost may unfortunately be passed on to the consumer. The unintended consequence of her attempt to achieve lower prices and greater transparency may be to cost the consumer more. If I have misunderstood, please tell me.

Stella Creasy (Labour, Walthamstow)

I think the hon. Gentleman has misunderstood, because the data already exist. The company owns the dataset to which the consumer has contributed, and it uses it to set prices. However, there is no scrutiny or supervision of those data in the consumer’s interest. That is what we are trying to unlock. [ Interruption. ] Well, I do not think it would cost more, because the dataset already exists.

I know people who go around their local area and check prices between and within companies to assess whether they are paying a fair price. We simply seek, through a regulator, to unlock for public benefit the power of the existing data that are held for commercial interest. That would save individuals from having to do all that work themselves to ensure that they are not being ripped off. An example could be when a supermarket says it is offering a special deal that is not in fact special. We have seen examples: “Panorama” did a study that found that in Asda a 1 kg “Better pack, better value” tub of Clover spread cost more than two 500 gram tubs. All that information already exists; we simply do not have access to it.

Brooks Newmark (Conservative, Braintree)

But there are websites—MoneySuperMarket.com and others—on which one can do price comparisons. It may be that since social media such as Twitter are still relatively new technology, the market has not got to the level of efficiency the hon. Lady would like, but I do not understand why we need Government involvement and Government regulation to achieve that. Surely, when it is in the consumer’s interests some bright spark—a student at some university—will come up with a mechanism to bring that transparency about.

Stella Creasy (Labour, Walthamstow)

Forgive me, but I think the hon. Gentleman was absent from the room when I started on the long journey of trying to explain the problem with the clause. That information does not exist, and one of the challenges—[ Interruption. ] The hon. Gentleman says the market will do it, but that is precisely the problem. This is an issue of how we make the market work better. In whose interests is it to release those data, when having them enables a company to capture customers who do not know in full detail whether they are paying a fair price?

Mr Newmark rose—

Stella Creasy (Labour, Walthamstow)

Forgive me, but I really want to make this point. The hon. Gentleman raised the issue of price comparison sites. I do not know whether he was here when I was talking about first generation intermediaries, which are price comparison sites, as opposed to next generation intermediaries, which are what the Opposition want to unlock. First generation sites rely on particular information but do not get all of it, and so consumers cannot compare like for like. We want to unlock the capacity for making a true comparison, removing the information asymmetries that exist within the market.

The hon. Gentleman is suggesting that the market will somehow mysteriously provide all that information, but companies are not clear about their pricing, and they can get away with telling consumers that they are paying a cheaper price or that the “buy one, get one free” deal is a good deal because there is not that transparency right now. [Interruption.] The hon. Gentleman is shaking his head, but there have been quite a lot of studies on this matter. That is why the Office of Fair Trading issued new guidance to supermarkets—unfortunately, it is voluntary—about how they market such deals.

We are making precisely the point that the hon. Gentleman is making: rather than the Government getting involved, there is a benefit to making our markets more open and free by using that information. We want to find a way to make that information accessible for analysis by an independent third party. If someone could get hold of every loyalty card dataset, they could unlock a tremendous amount of information on spending patterns and prices, which would enable us to have a better understanding of whether a fair price was being offered.

In itself that would unleash the kind of competition that I think the hon. Gentleman is talking about. He is expecting the market to do it but the fact that it has not already happened tells us that companies are holding on to those datasets, which must already exist, because it is in their commercial interests to do so. I encourage him to look at the midata project and reflect on why we have such poor switching rates in the UK, why consumers are not able to enter into new arrangements and new deals, and whether it is the lack of information that is stopping them. It cannot be from a lack of interest, as we can see from the banking sector, in which some rules on switching have been changed to unleash that capacity where there is read-across for data.

We do not want to have to deal with prices for the public. We want there to be a power to enable the public to get information and to know whether they are paying a fair price, which in and of itself would encourage businesses to offer a fair price. That is what amendment 51 would do. Underpinning the Opposition’s proposals is the preventive approach to consumer detriment that we want to take.

I am acutely conscious of time, and I want to move on to amendments 52 and 54. However, I know that some Government Members are interested in the power of big data to unlock markets. I hope they will find amendment 51 interesting, as it simply points out that we need to find ways of doing in the UK something that has been done in other countries for public and consumer benefit. It would enable that work to be done.

Amendment 52 deals with another situation in which people might not be able to access information to secure a fair price. I want to put on the record a personal case from my constituency that well illustrates the problem. I have 4,500 residents in Walthamstow who are leaseholders, and as part of their lease they are required to pay for buildings insurance. As part of that buildings insurance, they are also required to pay a terrorism surcharge. The freehold managers who oversee the leases have determined that Walthamstow is a terrorist target. I know that because I have written to them about it, and they sent me back press coverage of the fact that one of the plane bombers lived in Walthamstow.

That means that 4,500 of my constituents are paying an extra £80 on top of their buildings insurance, which is already an expensive premium, as part of their lease. They have gone to a leasehold valuation tribunal to try to resolve that, because it is a substantial sum to be paying when we cannot say why Walthamstow would be a particular terrorist target compared with anywhere else. We know that other leaseholders are not paying such premiums. The contract for the insurance they are paying for directly is held by the freehold managers. The insurance company, Oval, has steadfastly refused to give my constituents, despite many interventions, the details of the policy they are paying for.

My constituents simply cannot assess whether they are paying a fair and reasonable price, even if one were to agree that Walthamstow was somehow a terrorist target. I have yet to see evidence to prove that, but if people should be insured for it, they should have a right to the information on the contract they are paying for to assess whether the charge is fair and reasonable.

Amendment 52 would ensure that people could access that information. Those 4,500 constituents of mine are stuck, unable to exercise their rights to challenge that contract because they cannot prove one way or another whether it is a fair price. They are not alone in dealing with those issues; I know that a number of leaseholders have dealt with them in the past. It is an entirely fair principle that, if someone is paying for a good—even if on behalf of a third party—they be able to access the relevant information to ensure that they are not paying over the odds.

Amendment 54, the final one in the group, is an interesting amendment, not least because we welcome the fact that the Government appear to have moved their position since Second Reading, when they said that the Bill could not deal with copycat websites. They have now stated that it absolutely does deal with copycat websites, so we welcome their announcement today of a crackdown on copycat websites.

I am sure that all members of the Committee are familiar with copycat websites. Let me bring some constituency experience to the issue. A constituent of mine paid £500 to the Tax Return Gateway for what she thought was her tax return, only to discover that the fee it charged was for processing her tax return, not calculating it. Transport for London tells us that 1,000 people a day are paying for their congestion charge through a copycat website, which adds an extra £4 to the cost. We know that increasing numbers of people have complained to the Government about paying copycat websites an additional premium for services that should be free or have a relatively reasonable charge. The European health insurance card should be free, but some sites are charging £24 to process the application.

Some sites offer added services, and our amendment is crafted to recognise that there are some additional services that people might want. I went to the post office to get my passport application checked, for example, and people might welcome having an application checked so that they know it is right the first time. I did not, however, pay £72.50 to have it processed, which is what some people are paying through uk-passport.net. Anybody who has looked at such sites will know that they use colours, formats, texts and fonts that are very similar to the official sites. They buy up the Google AdWords so that their website appears at the top of the listings. The Government’s announcement today that they have done some work with Google to crack down on how such websites are advertised is welcome. That is despite the Government having told us that they did not feel that the Bill was about that issue.

Our concern is that such sites are a bit like Japanese knotweed. We might be able to shut them down quickly, arguing that they are not offering an additional service and are therefore misleading consumers, and that it is an unfair contract term—with my constituent who paid £500, we managed to get the money back through her bank, but not through the company itself, which still disputes it and claims that she owes the money—but unless we do something fundamentally to change the way the market for additional services operates, they will continue. They will simply set up new usernames and accounts and continue charging people.

It was therefore with great interest that I read the Government’s press release, which claimed that the Consumer Rights Bill was absolutely designed to tackle copycat websites and lists it as an example of the legislation they are bringing in to crack down on such sites. While working with Google to de-list such sites so that they cannot be found when people google terms such as “passport application”, which is how people find them, we need to challenge the idea that we can pick off individual sites and find a way to recognise that people are exploiting such searches. We all want people to be able to access services online, so we do not want to stop people accessing such services or providing appropriate additional services. We need to find the right balance.

Fiona O'Donnell (Labour, East Lothian)

I am so pleased that my hon. Friend is highlighting many of these cases. Does she agree that the Government also need to talk to the FCA and the banks about when the consumer suddenly realises that they have been conned and wants to stop such transactions? One of my constituents tried to stop a £400 charge from Tax Return Gateway being taken from their account, but for some reason their bank would not co-operate.

Stella Creasy (Labour, Walthamstow)

That is the difficulty. I know that Tax Return Gateway, having contacted it about a case in my constituency, argues that it provides a legitimate service and one would not want to ban additional services. I have used an additional service that helped with my passport application and found that useful, and I am sure other people have used such services. The question is, what is a fair price to pay for an additional service? If someone was paying more than that, a bank ought to be able to intervene, say that that was an unfair service charge and that, therefore, the contract was not valid and they could get their money back. That is what we had to do for my constituent. It is because the situation is so unclear that we need a framework for preventing the problem in the first place.

Mary Glindon (Labour, North Tyneside)

Is that not all the more important for some of the services on the list kindly provided by my hon. Friend’s office? The European health insurance card service—I know all about, that as I was involved when it was set up—is completely free, so we cannot even talk about what would be a reasonable price to pay for access to such Government services. Moreover, if people are happy to charge unreasonable amounts for some of the other services and copycat sites, how can we be sure that the data they collect, such as national insurance numbers, will be held securely?

Stella Creasy (Labour, Walthamstow)

My hon. Friend raises an issue that relates to the reason why we tabled amendment 51: ensuring data privacy, whichever service people contract to. That is why the Government should look at these issues.

Our amendment simply says that judging whether a price is reasonable—as the clause sets out to do—should be done by reference to the original service provider. Frankly, the passport service should be able to offer guidance on what it considers to be a fair price for having a passport application reviewed. By way of contrast, TfL may well say that there is no fair price to pay for completing a congestion charge application because its website makes it so easy to do so. Therefore, anybody charging an extra £4 a day for the congestion charge—that is 40% on top of the cost of the £10 congestion charge—would be acting in an unfair manner. Therefore, they would not be charging a fair price and the person paying the charge could get their money back.

The amendment is a way to ask the original service provider to help deal with the problems at source. That would give the departments particularly targeted by these firms the ability to fight back. They could say to Tax Return Gateway that £500 is not a fair price to pay for filling in a tax return: there might be a price that one might want to pay for online accountancy services, but that is not it. Guidance could be set out and anybody being charged more than that would have recourse to go to the bank and say they have been misled, that it was not a fair price and it breached their consumer rights. They could ask for help to get their money back, and would be able to do what my constituent was able to do through her bank but the constituent of my hon. Friend the Member for North Tyneside was not, because there is ambiguity about whether such behaviour is illegal. It is not illegal at the moment because there is a facility for additional services. We are saying that the original service provider should set out guidance on what is a fair price to pay—[Interruption.] The hon. Member for Braintree is shaking his head again. I look forward to his intervention if he wants to explain why he is frustrated by that proposal.

Brooks Newmark (Conservative, Braintree)

It may be a result of our respective philosophical perspectives, but hon. Lady is trying to say that there is one arbiter out there who can judge what pricing is. If she was arguing that we should deal with hidden pricing and hidden costs, I would completely agree with her. If she was arguing that we should deal with circumstances where the service provided was completely wrong, I would agree with her. However, she is simply arguing against market forces. If someone is willing to charge an extra amount of money for a particular service, such as filling out a passport, and I know that that may cost me an extra £40 or whatever the amount, I do not see why the Passport Office should act as judge and jury in deciding what someone else can charge for whatever extra service has been provided. I just do not understand what the hon. Lady is driving at.

Stella Creasy (Labour, Walthamstow)

That is quite interesting, because I suspect that the hon. Member for Braintree will be deeply unhappy with some of the work that the Government are doing on this, because we have all recognised that there is a problem with the copycat websites. I encourage the hon. Gentleman to google passport application to see some of the sites for himself and how easy it is for people to think that they are on the official site and to be misled by that. The pricing structure is not clear. I recognise that the Minister is trying to crack down on that and attempting to ensure that where sites are unclear, that means that they should get delisted. The fundamental problem remains that the industry continues, it is ripping people off and more and more people are being caught by it. That industry can continue to operate because it is exploiting confusion about the price of a passport application, or the price of the congestion charge. It is not fair to ask organisations to pay to compete on Google AdWords, which is the only other way that we could try to deal with the problem, but it is fair to use the provisions in the legislation on unfair contract terms, which are designed to ensure that consumers pay a reasonable price, to set out the reasonable price set by the original service provider. Surely, the Passport Office must have some understanding—

Mr Newmark rose—

Andy McDonald rose—

The rest of the debate is in Hansard.