Digital Markets, Competition and Consumers Bill

Public Bill Committee, 4 July 2023.

Steve McCabe (Labour, Birmingham, Selly Oak)

I have the usual preliminaries before we begin. Remember to switch your electronic devices to silent. The Speaker does not permit food or drinks, other than the water provided, to be consumed during the sitting. If Members could email their speaking notes to hansardnotes@parliament.uk or pass them on when they have finished speaking, that would be extremely helpful.

You may have spotted at the top of today’s amendment paper that there is a supplementary programme motion in the name of Mr Wood, the Government Whip. I understand that he does not intend to move it at this point in the proceedings, but that he may move it at the end of the sitting. Is that correct?

Mike Wood (Conservative, Dudley South)

Yes, Chair, either this morning or at the start of the afternoon—whichever is appropriate.

Steve McCabe (Labour, Birmingham, Selly Oak)

Okay, we will take it later. That is fine.

Clause 217 - Prohibition of unfair commercial practices

Kevin Hollinrake (Conservative, Thirsk and Malton)

I beg to move amendment 71, in clause 217, page 146, line 5, leave out second “trader” and insert “person”.

This amendment ensures that the definition of “commercial practice” for the purposes of Chapter 1 of Part 4 of the Bill includes an act or omission by a trader relating to the promotion or supply of a consumer’s product to another consumer.

Steve McCabe (Labour, Birmingham, Selly Oak)

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 218 to 222 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

It is a pleasure to serve with you in the Chair, Mr McCabe.

Clause 217 sets out the unfair commercial practices that are prohibited. Those include misleading actions, misleading omissions, aggressive practices, contravention of the requirements of professional diligence, the omission of material information from an invitation to purchase, and the practices listed in schedule 18.

The clause also defines important terms for the purpose of this chapter, including “commercial practice”, “consumer” and “trader”. Commercial practice is defined as any act or omission by a trader relating to the promotion or supply of any trader’s product to a consumer or of a consumer’s product to another person. As such, a business providing a platform on which products are promoted or supplied may fall within the scope of this chapter.

Government amendment 71 is a technical amendment to clause 217. It ensures that the Bill reflects acts or omissions by traders that are currently covered by the Consumer Protection from Unfair Trading Regulations 2008, or the CPRs for short. It ensures that traders that enable private individuals to sell products to each other are within the scope of this chapter, reflecting the scope of current law.

Clause 218 defines and prohibits commercial practices that are misleading actions and restates the equivalent provisions from the CPRs. It protects consumers from traders who deceive through the provision of false and misleading information.

Clause 219 defines and prohibits commercial practices that are misleading omissions. It requires traders to provide consumers with the information they need in an up front, clear and timely manner to make an informed transactional decision.

Clause 220 defines and prohibits commercial practices that are aggressive and restates the equivalent provisions from the CPRs.

Clause 221 defines and prohibits commercial practices that contravene the requirements of professional diligence and restates the equivalent provisions from the CPRs. It requires that traders do not engage in practices that fall below the standard of skill and care they may be reasonably expected to have provided.

Clause 222 lists what information must be provided to consumers when a commercial practice is an invitation to purchase. The information is deemed material.

I hope hon. Members will support Government amendment 71, and I propose that clauses 217 to 222 stand part of the Bill.

Steve McCabe (Labour, Birmingham, Selly Oak)

I call Neil Coyle.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Is it not the shadow Minister first?

Steve McCabe (Labour, Birmingham, Selly Oak)

I thought you were indicating. This is what happens when you are drafted in at the last moment, isn’t it? I will eventually wake up; do not worry.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Thank you, Mr McCabe. It is a pleasure to serve with you in the Chair.

In speaking to the amendments, may I thank the organisations that have contributed? There is a whole range of them, but I would particularly like to thank the British Toy and Hobby Association and Electrical Safety First, not least because they are based in the best constituency in the country: Bermondsey and Old Southwark. The other organisations include Which? and trading standards bodies. There is a range of amendments in my name covering a range of issues. They have at their core the need to protect British consumers, British businesses and British standards. I want to air a lot of issues. I hope I will not need to force votes and I am keen to hear what the Minister has to say in response.

Amendment 118 would make a person marketing goods online a trader for the purposes of the Act. Amendment 119 would make it an unfair commercial practice to sell goods online unless the specified safety requirements have been complied with. Amendment 123 should be self—

Steve McCabe (Labour, Birmingham, Selly Oak)

Order. Mr Coyle, we seem to have got out of sync. You are currently speaking to your amendments, but we have not quite got to them,

Neil Coyle (Labour, Bermondsey and Old Southwark)

Are we not there yet, Mr McCabe? It looks like it is me who needs to wake up.

Steve McCabe (Labour, Birmingham, Selly Oak)

It has been an early start for all of us. Why not just pause there and we can return to you later?

Neil Coyle (Labour, Bermondsey and Old Southwark)

I am a bit rusty.

Steve McCabe (Labour, Birmingham, Selly Oak)

Regard it as a dress rehearsal. I call Seema Malhotra.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

It is a pleasure to serve under your chairship, Mr McCabe.

Before we turn to the group led by amendment 118, I will make some brief remarks on clause 217 stand part and speak to Government amendment 71. Clause 217 sets out a general prohibition on unfair commercial practices. As the Minister has outlined, it defines commercial practice as

“any act or omission by a trader relating to the promotion or supply of—

the trader’s product to a consumer

another trader’s product to a consumer, or,

a consumer’s product to the trader or another trader”.

Subsection (4) introduces provisions outlining what constitutes an unfair commercial practice, which may include a misleading action, a misleading omission or an aggressive practice, and those are dealt with in the following clauses. In addition, the subsection states that a commercial practice is unfair if it is listed in schedule 18, which we will debate in detail shortly.

We welcome the clause as a necessary provision in prohibiting unfair commercial practice, and I reiterate that we look forward to working with the Minister, including in today’s debate. If there are ways in which we can improve the Bill, we are very happy to work collaboratively so that it is as robust as possible. The amendments tabled by my hon. Friend the Member for Bermondsey and Old Southwark in the light of our discussions with stakeholders will play an important part in those deliberations.

Amendment 71 ensures that the definition of commercial practice for the purposes of chapter 1 of part 4 of the Bill includes an act or omission by a trader relating to the promotion or supply of a consumer’s product to another consumer. We welcome this amendment, which importantly ensures that the actions of rogue traders still fall under the definition of commercial practice and supports the integrity of the regime.

Clause 218 introduces provisions defining commercial practices that are misleading actions. We welcome the clause, which provides a necessary definition of a misleading action, and support its inclusion in the Bill.

Clause 219 introduces a definition of commercial practices that count as misleading omissions. Under the clause, a misleading omission would constitute the omission of material information and information that the trader is required by another enactment to provide. As with clause 218, it is a common-sense, straightforward clause and we support it.

Clause 220 sets out how an aggressive practice could constitute harassment, coercion or undue influence. That can involve behaviour before a contract or purchase is made, but it can also occur after a transaction has taken place. We support the definition’s inclusion in the Bill, but I ask for clarification. I draw the Minister’s attention to subsection (3)(a), where the Bill states that

“‘coercion’ includes the use or threat of physical force”.

Does the Minister intend that coercion includes many other threats, be they financial or personal blackmail, to suggest just a couple? Is there a wider definition or guidance on interpretation that would be helpful in providing clarification for the consumer as well as for those making a decision under the clause? I would welcome clarity from the Minister on that.

Clause 221 defines commercial practices that contravene the requirements of professional diligence. That includes practices that fall short of the standard of skill and care that a trader may reasonably be expected to exercise towards consumers and that is commensurate in the trader’s field with honest market practice or the general principle of good faith. That is important for rooting out rogue traders who may not be qualified for their profession, whether they are builders, electricians or other experts. We welcome the definition.

Clause 222 sets out where a commercial practice would be considered to have omitted material information. Subsection (2) lists what would constitute an omission, including the main characteristics of a product, the business address and the delivery price, among other things. Although we support the list of omissions and welcome its inclusion in the Bill, elements of the clause could go further to provide more protection to consumers, as reflected in amendment 127, tabled by Opposition Front Benchers, and amendment 126, tabled by my hon. Friend the Member for Bermondsey and Old Southwark, which we will come to.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I think there is just one key point that the hon. Lady asked me to address, which is about other types of coercion. Looking at the definition with regard to practices, clause 220 talks about “coercion or undue influence”. Under subsection (3),

“‘undue influence’ means exploiting a position of power in relation to consumers so as to apply pressure in any way”.

I think that covers the definition, as she requested.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I beg to move amendment 118, in clause 217, page 146, line 11, at end insert—

“(c) a person marketing P’s goods for sale online.”

This amendment makes a person marketing goods online a trader, for the purposes of this Act.

Steve McCabe (Labour, Birmingham, Selly Oak)

With this it will be convenient to discuss the following:

Amendment 119, in clause 217, page 146, line 22, after “222),” insert—

“(ba) a product is sold online, and the operator of the online marketplace has not taken reasonable steps, as defined by regulations made under section 234 of this Act, to ensure that the goods offered for sale in the online marketplace comply with—

(i) the General Product Safety Regulations 2005 (SI 2005 No 1803) (‘the 2005 Regulations’), and

(ii) such other safety requirements as the Secretary of State may specify.”

This amendment makes it an unfair commercial practice to sell goods online unless the specified safety requirements have been complied with.

Amendment 123, in schedule 18, page 343, line 2, at end insert—

“32 Marketing online products that are either—

(a) counterfeit; or

(b) dangerous.”

Amendment 120, in clause 218, page 147, line 9, at end insert—

“(e) an operator of an online marketplace failing to take reasonable steps, as defined by regulations made under section 234 of this Act, to ensure that no goods offered for sale in the marketplace have been the subject of a notification to an enforcement authority under regulation 9 of the 2005 Regulations.”

This amendment makes it a misleading action to sell goods online without taking reasonable steps to ensure that those goods have not been subject to a recall.

Amendment 124, in clause 223, page 150, line 27, at end insert—

“(4A) Where a commercial practice has been found to be unfair under paragraph 32 of Schedule 18 of this Act, the authorities under this section have the power to require the removal of the relevant online marketing from the internet.”

Amendment 121, in clause 234, page 158, line 4, at end insert—

“(4A) The Secretary of State must by regulations define ‘reasonable steps’ for the purposes of sections 217 and 218 of this Act.”

This amendment requires the Secretary of State to make regulations to define “reasonable steps” for the purposes of clauses 217 and 218 of this Act.

Amendment 122, in clause 241, page 160, line 14, at end insert—

“‘online marketplace’ means a service using software, including a website, part of a website or an application, operated by or on behalf of a trader, which allows consumers to conclude distance contracts with other traders or consumers;

‘safety requirement’ includes—

(a) any relevant enactment governing the safety of products or of a specific type of products,

(b) any voluntary national standard of the United Kingdom, and

(c) any standard adopted by an international standardising body.”

This amendment defines the terms “Online Marketplace”, and “Safety Requirements”.

Neil Coyle (Labour, Bermondsey and Old Southwark)

It will surprise no one that I wish to speak to these amendments; I am sorry for being rusty. Having been on Bill Committees previously and managed to get amendments through, or at least poached by the Government, I feel embarrassed to have slipped up on this one.

I went through the amendments previously, so I hope Members can copy and paste from previous debates. Amendment 123 is self-explanatory. Amendment 120 would make it a misleading action to sell goods online without taking reasonable steps to ensure that the goods have not been subject to a recall. Amendment 124 would create the takedown power—the power to remove dangerous or counterfeit goods from online sales. Amendment 121 defines reasonable steps. Amendment 122 defines an online marketplace and safety requirements, in line with the bodies who have contributed who are still concerned about where things are at in the Bill.

I think the Government’s original aim was to publish a draft Bill; this Bill took some organisations by surprise, and I think a lot are playing catch-up, hoping that issues will be aired here and that Ministers will be meeting with them soon, ahead of the Lords stages. They hope to see a bit more progress on some measures in the Bill. Most accept the need for this legislation, but very few seem convinced that the Bill does the complete job.

Mr McCabe, you were not in the Chair for our evidence sessions, where we had all the “wild west” references. The Minister suggested a Clint Eastwood in “The Good, the Bad and the Ugly” character to help take action. For those not familiar with the genre, that is the third film of Sergio Leone’s trilogy, and Clint played an antihero. He takes Tuco in to claim the reward, and then shoots him down from the noose, in order to claim further, higher rewards down the line—so that is an intriguing analogy from the Minister.

The first film in the trilogy was “A Fistful of Dollars”. I am here with “For a Few Dollars More”—the second in the trilogy—to offer a better system, with some improvements to what the Government have put forward, to try to do a better job. For those who are familiar with “The Good, the Bad and the Ugly”, there are only two kinds of people in this world—those who have seen the film, and those who have not.

The main amendment that I wish to speak to is amendment 124, and the takedown power to require the removal from online trade of counterfeit or dangerous products. This would deliver, in part, what the Minister, the hon. Member for Thirsk and Malton, said on Second Reading of the Online Sale of Goods (Safety) Bill, in response to my hon. Friend the Member for Gateshead (Ian Mearns), when pressed about taking items offline. He said that,

“we should go further than that and require marketplaces to ensure that such products are not on their sites at all, ever, and that they check to ensure that they do not appear and, indeed, remove retailers who have transgressed.”—[Official Report, 20 January 2023; Vol. 726, c. 715.]

This group of amendments, and particularly amendment 124, help deliver what the Minister said he would like to achieve, and what I hope the Bill will achieve by the point it completes its progress through both Houses.

Fundamentally, it comes back to what customers believe. My constituents, and customers, believe whether they are shopping at Argos on the Old Kent Road or on Amazon online that the goods they are buying will meet the required UK standards. That is simply not what is happening.

Some 90% of toy sales online are through Amazon, eBay and AliExpress. I have referred to Amazon previously, and I do not want to pick on Amazon, but it is one of the big three. It has done some work to try to address the concerns of organisations and trade bodies, but it is simply not enough. In its US annual report a couple of years ago, Amazon acknowledged that it was, in its own words,

“unable to prevent sellers in our stores or through other stores from selling unlawful, counterfeit, pirated or stolen goods”.

I use Amazon to represent online marketplaces more generally, because of the familiarity of customers. They believe it is a reputable organisation and trust that it meets standards, but that is not the case.

Of course, Amazon also has an ongoing battle with the GMB on recognition, which it should have resolved some time ago. Ministers should have been supportive on that issue: they say they want a high-skills, high-wage economy, and that is what trade unions set about to deliver, and that is certainly what the GMB is seeking, in partnership with the Amazon workforce.

Frankly, it is a bit shocking that some of these amendments are necessary, but they are. The British Toy and Hobby Association survey “Don’t Toy with Children’s Safety” highlights some significant concerns. The toy industry is worth £3.2 billion to the UK economy—it is a massive sector. The survey showed that, in 2021, 60% of the toys tested were unsafe for a child to play with, and 86% of the toys freely available online were illegal to sell in the UK. That is appalling for lots of reasons, including because some of it is counterfeit.

We touched on this point in previous debates. British companies trade legitimately in goods that they are licensed to provide and make. They hold a trademark. It is insulting for them to have others trading on profitable sites such as Amazon and others with contempt for UK law, in a way that would be tackled if it was happening in a physical shop or even down a market. The truth is that Del Boy’s products would meet higher standards than some of those sold online. Platforms have been accommodating counterfeit, hooky, shoddy and dangerous goods for far too long.

The comparison with shops is important because the Government have said time and again that they want to protect the high street. Here is one means of doing so in a way that is faster and stronger than the current proposals would deliver. Physical shops pay their staff and meet standards, but are undermined in this wild west.

The British Toy & Hobby Association and Make UK tell us their version of events—they invest millions in research and development in this country to improve toys and goods and developing technology, and then they get ripped off by hooky goods that are flogged online. That undermines all their good work.

BTHA said that some of these goods are illegal because they are counterfeit, some because they do not meet labelling standards, some because they have not been tested for fire safety and even the most basic security issues and some because they do not meet other standards and are unsafe for sale in the UK. Again, it would not be possible to sell them in a shop, but they are sold freely online. At the extreme end, some of the items were identified as being illegal because they have what are termed “chemical restriction failures”, which I hope is reasonably clear. Some are illegal because of their packaging, because they contain small parts that could cause choking or because they come with a high risk of suffocation. I hope hon. Members get the point.

As the report states, marketplaces have been told about these products, but they have not tackled them sufficiently. Organisations such as BTHA are concerned that the Bill does not go far enough to tackle some of these issues, and does not tackle them quickly enough.

In the report’s appendix, there is a story about a crocodile toy—I’ll make it snappy. In July 2018, a sample of this crocodile toy was purchased and assessed by BTHA. The product included a zip opening, which gave access to stuffing that failed toy safety standard EN71-1. There was no labelling with CE marks or address details, which is problematic. At the end of the test, BTHA reported the product to Amazon in September 2018. It took two months for Amazon even to bother replying. It confirmed that the product’s Amazon standard identification number, or ASIN, had been taken down and that it would not be sold. However, in November 2018, Amazon was still advertising the product.

In December, the crocodile toy was sent for full independent testing, but was still being sold freely online. In January 2019, the BTHA bought more of these products. They were exactly the same and were simply on sale with different ASINs and from different sellers. They failed all further tests. That was reported to Amazon, which took no further action. In fact, the crocodile took a prime place by becoming the platform’s “choice” of purchase, and was marketed as different kinds of toys, including a pillow for children, which had the same problems and was illegal, despite the attempt of National Trading Standards to intervene to take it down.

The next steps saw a new label appear that read:

“Not suitable for children under 36 months”,

which is illegal in itself. It also had incorrect marking and a care label that said:

“Not suitable for children under 6 years old it contains widgets. So please keep your children not putting it in the mouth”.

That was the limit of the safety precautions taken at Amazon’s request by the supplier. In November 2019, there was still concern about this product, which is just one example of many. It was revealed that 277 pages of identical products were on sale across the site, representing about 1,600 products that were likely to be illegal and unsafe. All were reported to the platform, but no action was taken. Even at this point, the fire and furnishings testing was done and the Office for Product Safety and Standards tried to have the product recalled, but it was still on sale. By this point, it was back on sale from the original vendor, which Amazon said had been removed from the site. This simply should not happen. It is unsafe and dangerous for children.. There were multiple opportunities for the platform to remove the seller and products. There were multiple agencies involved to try to get it taken down, including fire safety agencies and Trading Standards, but the platform refused to act and became part of the problem. The fear is that platforms will play cat and mouse with the current proposal unless there is a clearer power to have dangerous or counterfeit goods removed. The rapid removal power in amendment 124 provides the means to do that.

Another example is from a Which? report in 2022, which was the outcome of an Electrical Safety First investigation. The cost of living crisis and rising energy costs meant that many people were looking at how to save money on energy bills, and energy saving devices were being plugged online. The devices plug into the mains and claim to work by “smoothing” household voltages, which then “optimises” the performance of appliances such as fridges, saving on energy costs.

Sadly, research from the Which? specialist lab found no evidence that any of the products work. There was no evidence that they were saving energy or that there was any benefit to the customer, which was the primary purpose they were sold for. On top of that failure, Which? found that the boxes were dangerous, as they did not comply with electrical safety standards. Some also had faulty components; one had clay inside the plug.

The OPSS issued four separate recall notices, including one to eBay, due to a

“serious risk of fire and electric shock”.

Despite the involvement of the OPSS, 90 products are still for sale on Amazon and 20 on eBay. Which? believes that

“the measures marketplaces have in place to control the sale of unsafe products are clearly insufficient, and that far more needs to be done to prevent ineffective and potentially dangerous products from being listed.”

Both Amazon and eBay say that they have removed energy-saving boxes from their sites, but near-identical or identical products are reappearing online shortly afterwards.

It should not take Which? reports and further studies to get to these amendments. Lives are at stake if this is done wrong. ESF has reported fires in Darlington and east London caused by faulty battery packs bought on online marketplaces. It has also investigated e-bikes, for which there is huge demand to cut transport costs and save energy. There was a fire in Shepherd’s Bush in June 2022 caused by charging an e-bike. Amendment 124 is a direct means of delivering for customers by getting such products taken offline.

Paul Scully (Conservative, Sutton and Cheam)

I can confirm that the letter went out yesterday morning.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Maybe it is still in the internal post. I thank the Minister for the letter; it would be nice to know what it says. The point is that the Bill does not make clear how customers will secure redress. It presents a convoluted route of multiple agencies and potential court action that people simply will not want to take.

My amendment does not go as far as some have suggested. It is a moderate suggestion. There have been suggestions that there is full and shared liability for platforms for any product sold and that some of the measures should be retrospectively implemented so that there should be penalties on those who have sold goods that they know to be counterfeit or dangerous going back for years. I hope that amendment 121 in particular, but also other amendments in this group, are useful to the Government in delivering their aims and defending customers and businesses.

The wording of amendment 124 is crucial; I hope that the Minister will come back to this when he responds to the debate. It would “require the removal”. It is not a request to remove a product; it is a requirement to remove a product. It could be put in the hands of all the bodies in clause 143, with penalties and timely action to prevent a fatality if this is not done quickly enough. The use of the word “require” is deliberate, because the power to request is in other legislation. For example, the police can request the removal of video footage from YouTube that is incitement to violence or hatred, is homophobic or is incitement to violence between gangs. One meeting I had with the Met revealed that more than 300 requests to take down videos had been ignored by YouTube. They included calling for revenge and the murder of specific individuals in revenge attacks between gangs in London. The police should have a stronger power than that, but as with this legislation, the power to request that something is removed is insufficient; it must be the power to compel the removal, similar to—for those familiar with local authority powers—a cease and desist order by a planning body. That would be a comparable power if the Government are keen to have something stronger than that offered in the current legislation.

I hope that amendment 124 helps British businesses, jobs, standards and customers and helps the Government —that is why I am here today. Ministers claim that they want to make the UK the “safest” place in the world to be online, and here are the means to deliver that laudable aim.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I congratulate my hon. Friend on his tour de force in going through his amendments and the reasons for tabling them. We can all agree that as a package, the amendments move us further forward in ensuring that there is adequate regulation of products sold in online marketplaces. My hon. Friend also made reference to the work of Electrical Safety First and its research. Having met the organisation, spoken at its event in Parliament and seen the important work it does through the all-party parliamentary group on online and home electrical safety, I think I can say that we all recognise that we must ensure the steps taken in the Bill will be adequate to deal with the challenges we know consumers face and which can put families, lives and businesses at risk.

My hon. Friend spoke to his amendments. Amendment 118 makes someone marketing goods online a trader. Amendment 119 makes it an unfair commercial practice to sell goods online unless the specified safety requirements have been complied with. Amendment 124 provides for a takedown power, about which the Minister has made some positive comments. We believe very strongly that that is needed, and I hope that he will give a commitment today about how we can take it forward, and whether the Government will accept the amendments tabled by my hon. Friend the Member for Bermondsey and Old Southwark, which we support, or introduce their own during the course of the Bill.

We welcome the amendments and the clarity that they call for. I will not speak too much, but I will make one comment to illustrate the point that my hon. Friend made. In a series of investigations, Electrical Safety First found 60 unsafe e-bike and e-scooter chargers for sale across four online marketplaces, including eBay, Amazon, AliExpress and Wish.com. That is particularly concerning, given the increase in fires caused by unsafe e-bike and e-scooter batteries and chargers. Younger people might have access to some of those newer products, and they may not be so aware of what warning signs to look for. That is a risk of danger that we cannot take lightly.

Now is probably a good time to raise the Government’s long-promised, shortly-to-come product safety review, which was first promised for publication over a year ago, in spring 2022, by Baroness Bloomfield of Hinton Waldrist during the Report stage of the Building Safety Bill in the other place. It is interesting that both she and the Minister have been in position over that time, as have others. The promise has outlived a number of Ministers. In all seriousness, if we understood what “shortly” meant, that would be very helpful for the Committee. Perhaps there is an issue in the Department that the Minister wants to share; we would certainly do all that we could to help. A year has passed and the product safety review has still not been published. He will know as well as I do that it is one of the things that groups such as Electrical Safety First have called for repeatedly. How can they do their work as effectively as we need them to if the Government are not doing the work that we need them to do?

I hope that we will hear something more concrete about when the product safety review will be published. The Minister will know that, as long as Ministers delay action on product safety in online marketplaces, and delay assistance to all stakeholders involved in keeping our consumers safe, their work is made harder. They need the strategy, and the direction that it will bring. The amendments, while not expediting the necessary Government action, would nevertheless provide extra safeguards in the meantime against unsafe products being sold on online marketplaces. It is important that the Government respond to the amendments, either today or during the course of the Bill, and particularly to the takedown power, which is very much needed.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I appreciate the continued spaghetti western analogies. In my case, “Pale Rider” might be a more apt example, as obviously my demographics mean that I am pale, stale and male, but we are keen to ensure that we have a proper shoot-out with the people the hon. Member for Bermondsey and Old Southwark describes. I am totally onside with the vast majority of what he says. He knows we need to make sure we take the right kind of action in this area, and his amendments would add provisions related to product safety to regulate the sale of dangerous and counterfeit goods in online marketplaces. Existing UK product law is clear: all products must be safe, including those sold online. However, we recognise the challenge the growth of online marketplaces has created for how we deliver product safety in a global economy. I gently say to the hon. Gentleman: these are not just UK-based problems: this is a global problem. As he knows, marketplaces operate around the globe and other jurisdictions are also seeking to tackle the issue.

I hosted a roundtable with major online marketplaces in April and was clear that, in addition to their current duties, they must do much more to keep unsafe products off their sites, including removing third-party sellers who supply unsafe goods. That point was mentioned on Second Reading of the Online Sale of Goods (Safety) Bill, as the hon. Gentleman referenced just now. The Office for Product Safety and Standards, which I visited in Teddington, is following up with a programme of test purchases. There I saw at first hand some of the potential products sold online, such as toy magnets that do not comply with UK product standards. My hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) has done fantastic campaigning in that area on button batteries. There is much we need to do. This is not just a consumer safety problem: it is about creating a fair and level playing field for UK retailers. The hon. Gentleman mentioned Argos and Amazon, but I would add our local high-street electrical stores, which have also been disadvantaged by online marketplaces being able to operate in the way they do.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I do not remember any western in which a sheriff held a roundtable. In terms of the outcome, what is the pace at which counterfeit or dangerous goods will be removed? That is the concern for consumers. Even if I buy something, discover that it is shoddy and report it through the process in the Bill, there is still a significant gap in time before something is taken off. The takedown power is crucial to prevent further hundreds, thousands or millions of that product being sold or marketed to people when it is known to be dangerous or faulty and could put lives at risk.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I entirely agree. We do not think the marketplaces are going far enough. It is a key phrase that the likes of Amazon, Wish and so on just see themselves as marketplaces rather than distributors. Our point is that they are distributors. The key thing is making sure that is properly defined in law. The hon. Gentleman is right to point out some of the percentages. That is the work done by the OPSS, defining that between 60% and 80% of the products it sampled were unsafe. That is clearly and completely wrong.

Neil Coyle (Labour, Bermondsey and Old Southwark)

There is no answer in that as to the timespan.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I am coming to that.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Minister is coming to it, but the takedown power is the crucial bit to do that and it is what the OPSS, which he refers to, says it wants.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Perhaps if the hon. Gentleman allows me to go through my speech, I might be able to give some answers to his points. We are on exactly the same page on this and we have to get this right. He talks about getting the analysis right and raised a different analogy of where he considers we may have got that wrong in the past. It is important we get this right. From our perspective, the product safety route is the right way to do this. The whole product safety framework will be reformed, including online sales, and that holistic review of product safety, taking existing obligations into account—we believe there are distributor obligations—is the most appropriate vehicle for meeting concerns about unsafe goods sold online.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The shadow Minister also asked when the product safety review will take place.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Very shortly. I just answered the shadow Minister; there is no prolonging this issue from my perspective. We are keen to get on with this but want to make sure the review is in the right place and the right shape when it happens. We want it to happen very soon.

The forthcoming consultation will include proposals to ensure that shopping online is as safe as on the high street and that there is a fairer playing field for law-abiding businesses. We anticipate publishing these proposals soon and look forward to continuing engagement with our stakeholders to inform and shape our proposals.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I am grateful to the Minister for giving way and for his reassurance that this will be looked at over the summer. As things stand, the Government are saying—the Minister has just said—that a product could cause a fire and potentially a fatality, but still the process would be to report it through a particular agency and possibly take court action, rather than what the regulators want to do and customers want to see, which is the take-down of the item to prevent any further dangerous incident or potential fatalities. I hope that the Minister gets to a point where that immediate power will be available.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I totally understand the hon. Gentleman’s point, which is why I will look at it over the summer. It is not provided for in the Bill, but he makes a good point and I am keen to explore the options. We will come back to the House at some point to report what we will do in this space. I therefore very much hope that he will withdraw his amendments.

Neil Coyle (Labour, Bermondsey and Old Southwark)

With that reassurance of looking at this further over the summer and to improve on where things stand, I will take the Minister at his word. The idea that we can support everything in a product safety review that will start we know not when feels a bit like missing the bus—or missing the stagecoach, to stick with the analogy. The powers need to be in the Bill to ensure that when the product safety review is done, the vehicle is already available to enable dangerous or counterfeit goods to be removed, but given his reassurance, I beg to ask to leave to withdraw the amendment.

Schedule 18 - Commercial practices which are in all circumstances considered unfair

Richard Thomson (Scottish National Party, Gordon)

I beg to move amendment 68, in schedule 18, page 343, line 2, at end insert—

“32 Making claims about—

(a) the environmental benefits, or

(b) the sustainability (as defined by section 234(1C)) of a product or service which are not based on evidence which can be verified by a court.”

This amendment seeks to ban the practice of “greenwashing”. It would include the making of unsubstantiated claims about the sustainability of products and services an unfair commercial practice.

Steve McCabe (Labour, Birmingham, Selly Oak)

With this it will be convenient to discuss amendment 69, in clause 234, page 157, line 29, at end insert—

“(1A) The Secretary of State must consult on a definition of sustainability for the purposes of paragraph 32 of Schedule 18.

(1B) A consultation under subsection (1A) must—

(a) set out which products and services can be labelled sustainable; and

(b) require the definition to comply with international standards.

(1C) Following a consultation under subsection (1A) the Secretary of State must by regulations amend this Chapter to add a definition of sustainable.”

This amendment seeks to ban the practice of “greenwashing”. It requires the Government to define which products and services can be labelled “sustainable” and requires that this definition complies with international standards.

Richard Thomson (Scottish National Party, Gordon)

It is a pleasure to serve under your chairmanship, Mr McCabe. With your indulgence, if it is appropriate, I will also speak to amendment 69 and am happy to speak to amendments 115 and 116.

Steve McCabe (Labour, Birmingham, Selly Oak)

We will stick to amendments 68 and 69.

Richard Thomson (Scottish National Party, Gordon)

Thank you for your guidance, Mr McCabe.

I have not yet spoken in Committee, and the reason for that is simple. As I said on Second Reading, from a Scottish National party perspective, we think that the Bill is generally speaking a good Bill. Our concern is primarily with the bits that we feel are missing, so the amendments that I will speak to this morning and afternoon are with a view to fill in some of the potholes that we see in the road for the Bill.

Amendments 68 and 69 would tackle the phenomenon of greenwashing. By that, I mean the practice by which companies use advertising and/or public messaging to appear more eco-friendly, whether in the generality or with regard to specific products, than is actually the case. The amendments would compel the Secretary of State to consult on a definition of sustainability for these purposes that is in line with international standards and then to amend the relevant chapter to add that definition to the Bill, and to add greenwashing to the schedule 18 list of practices which are in all circumstances considered unfair.

Extravagant claims about the environmental credentials of companies and products, in a bid to make them seem more eco-friendly than is the case, are certainly nothing new, but there is growing concern among consumers about the environmental impact of their economic and lifestyle choices. In a survey for the ClientEarth organisation—it dates from only a few years ago; I think the figures are still relevant—66% of consumers have indicated that they are happy to pay more for products that they consider to be environmentally friendly, and that rises to 72% for consumers under the age of 20, so there is not only a massive concern but, potentially, a massive spend on the part of people who wish to buy products that are in line with their ethical objectives when it comes to consumption. But that means that there is also a massive spend that is potentially being misdirected and which is, in effect, penalising companies that are more genuine and honest in their claims than some other companies.

An absence of rules or a slackness in the rules on what is permitted allows all kinds of exaggerated and potentially misleading claims to fill that space. A European Commission study from 2020 highlighted the fact that more than 50% of examined environmental claims were found to be vague, misleading or unfounded. The way we get around that is, as the Commission proposes, to come up with some reliable, comparable and verifiable information that will allow consumers to make informed choices. The European Union proposals to target the problem have in their sights explicit claims that are made in the promotion of products. Claims will need to be independently verified on environmental grounds, to be proven with scientific evidence, to cover environmental impacts that are actually relevant to the product, and to identify any possible trade-offs in its manufacture, production or use, to give a full and accurate picture that will allow consumers to make an informed choice. The EU will target the 230 or more “environmental labels” in existence in the marketplace at present.

I will give an example, and it is one of the more egregious ones; I certainly was not aware of this until recently. A symbol found on some products looks a bit like the yin and yang symbol, with arrows pointing into each other. At first glance by the unwary—I include myself in that—it looks like it means that the product is recyclable. I found it on the side of a bottle of gin. It looked like it was a kind of earthenware thing. The world can stand only so many table lamps made out of such things, so I was thinking, “I want to dispose of this product responsibly. What can I do with it?” I had a look at it and I thought, “Well, that’s a recycling symbol. Into the recycling it goes.” But I went and had a look afterwards and it turns out that the symbol is no such thing: it makes no claim about whether the product is recyclable; it simply means that the company is contributing to the costs of a Europe-wide recycling scheme and not that the product itself is recyclable.

That product—I am sure I am not the only person who has done that—has ended up in a recycling stream, potentially fouling that section of the recycling stream and all the other recyclates there. It is exactly that sort of thing that we are talking about. I should say that the bottle of gin was not purchased for me; I do not particularly care for the stuff. Nevertheless, it is those sorts of claims that influence consumer purchases and influence what materials go into manufacturing. Those economic signals go throughout the market, and there is a misalignment with the expectations that people have when it comes to disposing of the product. It has influenced the choice, led to adverse outcomes and, potentially, penalised those companies that deal in a more honest fashion with how their products are disposed of at the end of their life.

The point has been well made about the importance of making sure that environmental claims are verifiable so that consumers can make informed choices. The way to do that is, as with other unfair practices, to include it as the 32nd example of unfair practices that are considered unfair in all circumstances. It would also allow Ministers to go away and consult on a definition of what is sustainable and then come back and add that to the Bill in a way that would allow us to at least emulate if not exceed the best practice emerging elsewhere.

The amendments are important. I look forward to the Minister’s comments. If the Government are not minded to accept the amendments, I look forward to hearing how they intend to tackle unfair practice.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I will speak just briefly to schedule 18 and then to amendments 68 and 69. I thank the hon. Member for Gordon for his amendments and his explanation of them.

Schedule 18 introduces—

Steve McCabe (Labour, Birmingham, Selly Oak)

Order. The general debate comes at the end. We need to stick with the amendment.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

That is fine. I have one line, but it can come later.

Amendment 68 would ban the practice of greenwashing. Making unsubstantiated claims about the sustainability of products and services would be an unfair commercial practice. Amendment 69 is consequential on amendment 68 and would require the Government to define which products and services can be labelled “sustainable”, and requires that the definition complies with international standards.

I support the principle of the amendments tabled and the arguments made. They are along the lines of the discussion that we had in Committee last week when I spoke to the issues around greenwashing, our standards and support for evidence. I asked the Minister what overall strategy he has to ensure that green claims are accurate and evidenced, and I asked that we have a strategy for the prevention of false claims as well as a mechanism for enforcement against them. As has been argued, that issue is on the increase, particularly for younger people.

Research has shown that those under 35 across the world make decisions about products, services and even their employment on how much they trust the information that they see in relation to sustainability and climate responsibility. If we do not tackle that issue, we will see a further increase in people misleadingly marketing products because they know that those issues drive consumer purchases. They have great influence on consumer purchases and decisions.

The Minister might refer to the green claims code introduced by the CMA. Important work has been done, but in the absence of any real leadership or strategy from the Government I want to ask the Minister whether they intend to put the green claims code, or its successor, on a statutory footing. Making sure that we have a robust legislative underpinning and strategy for such issues is increasingly important, because many stakeholders see a gap.

Greenwashing was also mentioned by consumer groups in the Committee’s evidence sessions. I would press the Minister on whether the Government have plans to introduce amendments on the issue, and to strengthen voluntary or other codes relating to green claims and expectations. In an increasingly green economy, consumers are at risk of falling victim to misleading green advertising, and legislation needs to catch up.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Amendments 68 and 69 would add the practice of greenwashing to the list of banned practices in schedule 18, and would introduce a requirement for the Government to consult on the matter. I thank the hon. Member for Gordon for his amendments, and I absolutely agree that consumers should not be misled. I admire his commitment to recycling, which is admirable. I wondered whether I should touch on that, given the difficulties that the SNP has got into with its deposit return scheme, but—

Richard Thomson (Scottish National Party, Gordon)

I thank the Minister for that sideswipe, but it would be a great deal easier for the Scottish Government to comply with an English-designed scheme if that scheme was actually in existence for us to emulate. Absent our deposit return scheme, we are stuck with the recycling schemes that we have, and I wonder whether the Minister will get to the point.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I was just referring to the hon. Gentleman’s point. I will briefly say that our perspective is that a nationwide scheme would be best for business.

Misleading consumers about the environmental qualities or impact of goods and services in a way that causes, or would likely cause, consumers to take a different decision is already against the law. Furthermore, under clause 187, when the CMA gives a provisional notice to a person in respect of an infringement of the unfair trading provisions, the CMA can require the respondent to provide evidence to substantiate the claims that they make to consumers. That meets the shadow Minister’s requirement. It is against the law to mislead, and as she says, the CMA’s draft guidance on sustainability agreements between businesses, which aim to ensure that environmental goals are achieved, will give greater clarity on these issues. Those interventions are already significant. The Government’s priority is to ensure that interventions support our environmental goals; we would then observe their impact before taking further steps. I hope the hon. Member will withdraw amendment 68 on that basis.

Richard Thomson (Scottish National Party, Gordon)

I am sorry to disappoint the Minister, but this is an issue of fundamental importance, and if I withdrew the amendment, it would be an opportunity missed. Of course, we could go through any number of proposed amendments to the Bill and say that there is already legislation in place that in some way tackles that issue. Of course it is true that there are measures on this issue, but there is still a proliferation of claims out there that have not been tackled by existing legislation. I know the Minister is a keen advocate for ensuring that markets work as effectively as they can, and for allowing markets to reach conclusions. The amendment is simply a tool that would allow Ministers to act in the interests of consumers. It would be a missed opportunity not to push it to a vote, and not to include it in the Bill.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I beg to move amendment 115, in schedule 18, page 343, line 2, at end insert—

“32 At any stage of a purchase process, presenting a price for a product which omits obligatory charges or fees (or an estimate thereof) which are payable by the majority of consumers, which are not revealed to the consumer until later in the purchase process.”

This amendment adds the practice of “drip-pricing”, a pricing technique in which traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process, to the list of unfair commercial practices.

Amendment 115 would add the practice of drip pricing to the list of unfair commercial practices. Drip pricing is a pricing technique whereby traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process. For example, an airline may advertise a flight abroad at a certain cost that does not include an obligatory seat charge. That is added only later in the purchasing process, by which point the consumer has already prepared to purchase the product and is less likely to stop the purchase. The argument that this practice should be included in the Bill was well documented during the Committee’s evidence sessions. The consumer group Which? stated:

“We think that drip pricing is another practice that is very harmful. There is a lot of evidence that that is the case, and it should be included on the face of the Bill.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 13, Q16.]

That sentiment was reflected in Committee by Citizens Advice, the National Consumers Federation and Consumer Scotland, all of which argued that schedule 18 could be improved by adding the practice of drip pricing. Which? provided evidence of consumer detriment in its written submission, which states:

“We know that in many online markets people overpay for products and services because only part of an item’s price is initially shown and the total amount to be paid is revealed only at the end of the buying process. For example, multiple hotel booking firms were shown to have failed to have displayed compulsory charges such as taxes, booking or resort fees in the headline price. However, while the use of these practices is common, the CMA has found its enforcement against drip pricing has been inhibited by the absence of an explicit ban.”

In its 2021 paper, “Reforming Competition and Consumer Policy”, the CMA notes:

“Drip pricing causes real detriment to consumers...Advertising of Prices market study concluded that of a series of different price framing practices, drip pricing was clearly the most harmful frame for consumers in terms of purchasing and search errors, and that raised levels of consumer learning did not fully mitigate issues with the practice. Lengthy transaction processes associated with drip pricing can ensure consumers gain a greater sense of ownership of a product and are less likely consider other offers once additional costs are revealed.”

It is clear that the introduction of drip pricing to the list of unfair commercial practices would be supported by consumer groups and the CMA, so I urge the Minister to consider supporting the amendment. I look forward to his response.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I share the hon. Member’s concerns. That is why we commissioned research earlier this year, which we will publish shortly. It will detail how widespread and harmful the practice is. The Prime Minister has already said that we will gather evidence on what steps the Government should take to tackle drip pricing, so I think we are aligned in our commitment to tackling the issue.

One of the key challenges, which I do not think the hon. Lady addressed, is distinguishing drip pricing that is harmful or anti-competitive from practices that may offer greater value to the consumer—for example, a company offering optional extras such as faster postage or insurance. We will consult during the passage of the Bill on which elements of drip pricing might need tackling, and on whether further action is required. We believe it is important to conduct that exercise first, so that we have a proper, evidence-driven policy. I hope the hon. Member will withdraw the amendment.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I thank the Minister for his comments. There are issues to consider in relation to the amendment, but I think the broad thrust of the argument for taking action is clear. The Minister says that the findings of the research will be published shortly; I am assuming that “shortly” is not in more than a year’s time. We need to clarify that with the Government. If shortly means shortly, however, then I would be grateful for confirmation that, on the basis of the research, the Minister intends to address drip pricing; that may determine the wording in the Bill. Can the Minister confirm that there is an intention to address the issue during the passage of the Bill, perhaps through a Government amendment? The Opposition are very willing to work with the Government on that.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I am keen to make a commitment to work with the hon. Member on the issue, and to ensure that a measure is brought forward as quickly as possible. I cannot give a precise date, but it will be very shortly.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

On the basis that shortly means shortly, I am willing to withdraw the amendment. Will the Minister clarify that he expects the research to come forward before Report, so that we have time to look at it? That would be a good point at which to bring forward an amendment on the issue.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I cannot say when Report will be, and I do not have the timetable for that, or for the consultation on the work that we may need to do on the issue. I cannot make that precise commitment, but we are very committed to delivering on drip pricing. As the hon. Member knows, the Prime Minister spoke on it, so I cannot imagine that there will be any undue delay.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

On that basis, I beg to ask leave to withdraw the amendment.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I beg to move amendment 116, in schedule 18, page 343, line 2, at end insert—

“32 Commissioning, incentivising or authorising the writing or submission of false consumer reviews or endorsements, in order to promote products.

33 Offering or advertising to submit, commission or facilitate false consumer reviews or endorsements.

34 Displaying consumer reviews of products on an online interface—

(a) without taking reasonable and proportionate steps to ensure that such reviews are submitted by consumers who have used or purchased the products in question;

(b) where any consumers who provided reviews were incentivised to describe certain products in a particular way, without taking reasonable and proportionate steps to ensure this is not the case; or

(c) in a way that deceives or manipulates consumers, or where a practice has been undertaken in relation to reviews that otherwise materially distorts or impairs the ability of consumers to make free and informed decisions, without taking reasonable and proportionate steps to ensure this is not the case.”

This amendment adds the practice of commissioning fake reviews, offering services to write fake reviews, and displaying consumer reviews without taking reasonable steps to verify their accuracy, to the list of unfair commercial practices.

Steve McCabe (Labour, Birmingham, Selly Oak)

With this it will be convenient to discuss amendment 125, in schedule 18, page 343, line 2, at end insert—

“32 Stating or otherwise creating the impression that reviews of a product are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check that they originate from such consumers.

33 Submitting or commissioning another legal or natural person to submit false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote products.”

This amendment would add fake reviews to the list of banned practices.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I am pleased to speak to amendment 116, tabled by my hon. Friend the Member for Pontypridd and me. I will also touch on amendment 125, tabled by my hon. Friend the Member for Bermondsey and Old Southwark. They are similar provisions, and he will want to make his own arguments for amendment 125.

Amendment 116 adds the practice of commissioning fake reviews, offering to provide the service of writing fake reviews, and displaying consumer reviews without taking reasonable steps to verify their accuracy to the list of unfair commercial practices. Amendment 125 would similarly add fake reviews to the list of banned practices. We support both the amendments, but I will speak to amendment 116 in more detail, as it provides a more comprehensive legislative basis for banning fake reviews, and was recommended by the consumer group Which?.

When the Bill was published, the Government announced with much fanfare that they would introduce provisions banning the unfair commercial practice of fake reviews. However, nowhere in the Bill is there any measure that bans fake reviews. The supposed banning of fake reviews can be found in clause 234, which gives the Secretary of State the power to add to the list of banned practices. Unless the Minister corrects me, all we have is a promise from the Government that at some point in the future—beyond 2025—fake reviews might be banned. As Which? said during the Committee’s evidence sessions,

“We do not think that we should wait. Clearly, fake reviews are harmful, so the buying, selling and hosting of fake reviews should be included in schedule 18.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 13, Q16.]

It was not just consumer groups that expressed that sentiment; the British Retail Consortium also stated:

“We are concerned about fake reviews. We support the banning of them. We wish that what the Government propose for them was on the face of the Bill.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 49, Q78.]

I would be grateful for the Minister’s explanation of why the Government have left a ban out of primary legislation. One view is that the Government intended to include a ban, but ran out of time. Well, we have time to catch up during the passage of the Bill. Retail and consumer groups consider this measure very much noticeable by its absence, and it is important and significant that we address it during the passage of the Bill.

I have no doubt that the Minister will stress the need for further work and consultation on the issue. If so, perhaps he could also reflect on the considerable evidence of consumer detriment caused by fake reviews. Which? research from 2020 found that consumers are far more than twice as likely to buy poor-quality products that have been boosted by fake reviews. That affects the Minister’s constituents, mine, and those of every Member of this Committee.

As the CMA has noted, the average UK household spends £900 a year as a result of being influenced by online reviews. That demonstrates how significant the financial damage of fake reviews can be. In the Department for Business and Trade’s research from April this year, 11% to 15% of reviews in the category that it assessed were fake. That is the Government’s own research. The evidence is clear: action on fake reviews is needed now to protect consumers from their negative consequences. I would go so far as to say that the Opposition are doing the Government a favour by introducing these amendments. We have done the Government’s work for them.

I urge the Minister to support the amendments. Perhaps he will want to bring forward his own, as the Government are known to take good ideas when they see them, many of which they take from the Opposition. We understand that there has been significant dysfunction in Government, which may have got in the way of their doing the work that the country needs them to do. I therefore urge the Minister to support the amendments. He may also want to bring forward his own amendments at a future stage of the Bill or in the other place. I jest, with good reason, but we are not precious; we just want the right thing to be done. I hope that in his response, the Minister will confirm what action the Government will take during the passage of the Bill.

Richard Thomson (Scottish National Party, Gordon)

I very much support amendment 116, to the extent that I withdrew my attempt at an amendment that would have countered fake reviews. It is clear that fake reviews are a matter of real concern, not just for reputable companies, but for consumers, who like to rely on customer feedback before making some of their most important financial choices. Schedule 18 defines and sets out unfair practices, and it is only right that fake reviews be added to them. We again come back to the fundamental principle that if a market is to work effectively and efficiently, people need access to timely and accurate information. That goal of having accurate information in the marketplace is subverted considerably when fake information and misinformation are allowed to abound.

As the hon. Member for Feltham and Heston has said, the amendment comes from the consumer group Which?, which might be thought to know something about standing up for the best interests of consumers in the marketplace. It would outlaw certain practices to do with commissioning, incentivising or authorising the writing or submission of fake reviews, and all the criteria in the amendment clearly relate to unfair commercial practices. If we are in the business of defining unfair practices, those seem to me to be pretty reasonable definitions to add to the schedule.

Let me return to our debate on Second Reading, when we had possibly the most unencouraging engagement across the Floor of the House when I was challenged by the right hon. Member for Wokingham (John Redwood) about how we might go about defining fake reviews. However, there seemed to be an outbreak of consensus, at least at that stage, on co-operation between the Government and the Opposition parties over what that might look like, although I have not seen any proposals coming forward from the Government.

The issue has managed to unite Labour and the SNP with the consumers’ organisation. The question I would pose to the Minister, which I would like him to address this time, is, if not this, what? We all seem to agree that fake reviews are a problem. If we are not going to deal with the matter in this way with this definition, how are we going to deal with it so the marketplace can work with effective information and so the views of consumers can play their full part in helping people to make informed choices, which are so important in ensuring the marketplace can work effectively?

Neil Coyle (Labour, Bermondsey and Old Southwark)

My hon. Friend the Member for Feltham and Heston and the hon. Member for Gordon have already made some excellent points, so I will be brief.

Amendment 125 would add fake reviews to the list of banned practices. No customer should be hoodwinked by the deceitful practice of submitting a fake review. Fundamentally, many customers see fake reviews as fraud, which is the fastest-growing crime. Our police services are overstretched and sadly, under this Government, they do not have the resources to tackle fraud. The amendment examines alternative routes to securing action to tackle a problem that is leading to dangerous circumstances, as has been outlined.

Amendment 125 would provide a stronger power than the one proposed, and it has been called for by organisations representing British customers and responsible British businesses. It would be better for good business, better for customers and better for ensuring that standards were upheld. The charity Electrical Safety First, which is based in Bermondsey and Old Southwark, has said that in one of its investigations 93% of products bought from online marketplaces were unsafe—93%! In some significant part, that is down to fake reviews imposing a false legitimacy on goods. People buy because they believe other people have bought and have had an enjoyable experience or got the product they sought.

My hon. Friend the Member for Feltham and Heston has already provided examples of the need to protect consumers, and I draw the attention of the Committee these live examples, which are happening right now. “A portable heater” was on eBay and people were saying it was fine, but it had

“easy access to live parts with 240 volts running through the heating element, posing”

what ESF called

“an imminent risk to life.”

Another example is a

“‘water-proof’ extension lead… on Amazon.”

Guess what? There are

“no water-proof capabilities”

and this

“presents a significant risk of electric shock. This item has already been recalled as unsafe by the Office for Product Safety and Standards”.

A combination of the takedown power and the removal of fake reviews that claimed that these products were okay and good to use would be a significant step forward—one that, sadly, is not in the Bill.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I am not sure that I can take that analogy any further. I think we are all in agreement. They say that the art of originality is to remember what you have heard but forget where you heard it. The Opposition say that we are stealing their good ideas, but obviously we committed some time ago to taking action in this area. I am not averse to taking some of the good ideas that we hear from the Opposition from time to time, but we also have to ensure that we reject the many bad ideas we hear from them in debates.

The Government agree that legislation to tackle fake reviews should be strengthened. We anticipate doing so by adding to the list of banned practices. However, it is important to get the details of those proposals right. That includes defining what we mean by fake reviews and how “reasonable and proportionate” steps will be understood. Similarly, we want those rules to encompass the manipulation of reviews that may harm consumers, which also needs detailed work with stakeholders to define. For example, the issue is not just about people trying to boost reviews, as the hon. Member for Feltham and Heston stated; it is also to do with people removing negative reviews inappropriately, which might affect ratings on review sites. The Government will therefore be consulting on fake reviews during the passage of the Bill to ensure that these rules work as intended and are clear for businesses. We will be doing that shortly, in the autumn.

The hon. Member for Bermondsey and Old Southwark talked about ESF and Which?. I have spoken to both organisations and met them regularly. In fact, one of my first jobs in my ministerial role was to speak at an Electrical Safety First conference. On that note, I hope that hon. Members will withdraw their amendments.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I am slightly disappointed by the Minister’s response; it does not sound as if there is anything other than long grass here. Significant groundwork has been done, both within Government and with stakeholders. Having another consultation in the autumn is like long grass: it is designed to spin things out until we reach 2025 and then there is something to add to the schedule. Unless the Minister wants to tell me that there is an intention to do more during the course of the Bill, we will be pushing this to a vote.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Schedule 18 introduces a list of commercial practices that will automatically be considered unfair in all circumstances and will be prohibited. The list is long and comprehensive, and the Opposition welcome every practice listed, including a seller’s claiming to be a signatory to a code of conduct when they are not, falsely claiming that a product is able to prevent disease, providing inaccurate information about the availability of a product, and threatening a consumer if they do not buy a product.

However, we are concerned that there are significant omissions, which we addressed during our debates on the amendments. We will be happy to consider alternative wording, but we will continue to pursue additions that we believe would strengthen the Bill and its implementation. Nevertheless, we support the inclusion of this important schedule in the Bill.

Kevin Hollinrake (Conservative, Thirsk and Malton)

As has been said, the schedule protects consumers from the most prevalent and harmful commercial practices engaged in by deceitful traders. It largely replicates schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008 and provides a list of 31 commercial practices that are banned in all circumstances due to their inherently unfair nature. Among those practices are operating pyramid promotional schemes, displaying trust marks without obtaining the necessary authorisation, and stating that a product can be legally sold when it cannot.

Clause 222 - Omission of material information from invitation to purchase

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I beg to move amendment 127, in clause 222, page 149, line 21, at end insert—

“(j) for goods and services offered on online marketplaces, whether the third party offering the products is a trader or not, on the basis of the declaration of that third party to the provider of the online marketplace.”

This amendment would add whether or not a third party seller on an online marketplace is a trader or a consumer to the list of omissions of material information in an invitation to purchase.

Steve McCabe (Labour, Birmingham, Selly Oak)

With this it will be convenient to discuss amendment 126, in clause 222, page 150, line 11, leave out “and its price”.

This amendment expands the definition of an invitation to purchase to cases where the information provided to the consumer covers the characteristics of the product but not its price.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

It is a pleasure to speak to amendment 127, tabled by my hon. Friend the Member for Pontypridd, and to make some remarks about amendment 126, tabled by my hon. Friend the Member for Bermondsey and Old Southwark.

Amendment 127 would add whether a third-party seller on an online marketplace is a trader or a consumer to the list of omissions of material information in an invitation to purchase. We have already raised concerns about the safety of products sold in online marketplaces, specifically through third-party sellers, and these concerns are accentuated by the inexplicable delay—it has been over a year since its publication was first promised, as we have discussed—of the product safety review into precisely this issue. In the meantime, the amendment would provide an extra safeguard for the consumer by making it mandatory for them to be informed about the status of a seller when they purchase a product online. That is particularly important in an increasingly digital economy, in which almost every individual or business can sell but consumers are unaware that they have different rights and forms of redress, depending on the status of the seller.

Consumer rights groups regularly conduct studies of products sold by third-party sellers on online marketplaces to test whether they comply with UK safety requirements. For example, in February this year, Which? sent 10 plug-in mini-heaters bought from online marketplaces such as Amazon and eBay to be tested at its product safety lab. All of them failed and were illegal to sell in the UK. That is especially dangerous for consumers in the light of the Conservatives’ cost of living crisis, which is resulting in people being pushed to buy cheaper, less reliable products.

Although only comprehensive Government action on this front will lead to the issue being properly tackled, the amendment would go part of the way towards providing the consumer with more power in online marketplaces, by informing them of the status of a seller and that their rights of redress when purchasing some products will vary from the rights they have when buying from the high street. It is a common-sense amendment that will help inform consumers in our digital economy and subsequently reduce the risks they face when buying from online marketplaces, and I look forward to the Minister’s response.

Amendment 126 would expand the definition of an “invitation to purchase” to cases where the information provided to the consumer covers the characteristics of a product but not its price. My hon. Friend the Member for Bermondsey and Old Southwark will speak to the amendment, which raises important questions for the Government. Removing the price from the definition of an “invitation to purchase” would ensure that many rogue traders, and the services they offer, were in scope of the definition.

As the Chartered Trading Standards Institute has pointed out, many rogue traders who target vulnerable consumers do not give a price when offering to do work. This means that it would automatically not be considered an “invitation to purchase”, and the regulations in clause 222 would not apply. By removing the reference to “price” in the definition of an “invitation to purchase”, the amendment would ensure that more rogue traders fall under the definition and can be caught by the legislation. The Minister may have his own views on the amendment. This is a really important issue, so I would welcome his response on the effectiveness of the amendment in addressing the issue and on the impact it could have.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I have a few brief supplementary comments, further to the excellent speech of my hon. Friend the Member for Feltham and Heston. I just want to point out an anomaly and the problematic nature of the wording of the Bill, which I hope the Government will re-examine before they go further.

Amendment 126 would expand the definition of “invitation to purchase” to cases in which the information provided to a consumer covers the characteristics of a product, but not its price. That might sound counterintuitive, as it did to me when I first went through this with organisations, but it would expand the goods and services covered by the legislation. That is important, because the use of “price” in the wording of the Bill could prohibit action against a rogue trader. The existing wording might stop the Government meeting the aims that they are setting out to achieve.

The suggestion is that the specific requirement that the price be covered, if that is not the price paid, will potentially prevent action from being taken against a trader who deliberately advertises a price, but then changes it. An example might be where someone arranges for a person to come and fix a car part, a boiler or a pipe leak, and that person then arrives and says, “The product you’ve looked at online is not compatible with your boiler,”—or their fittings, their car or whatever it might be—“but guess what: I’ve got a different one in the van that’s a bit cheaper,” or a bit more expensive, “but will do the job better for you.”

By making a slight change to the wording of the Bill to remove the words “and its price” on page 150, amendment 126 would deal with that kind of rogue practice, which is out there and which has been raised by trading standards. The fear among the bodies that are trying to secure greater action against rogue traders is that the existing wording of the Bill allows wiggle room and will let the dodgy practices continue. I hope that airing that specific, possibly niche concern today will give us greater time to capture it and ensure that the Bill does not preclude action against rogue traders where specific prices are agreed up front but that is not the deal that takes place, because someone pays for a cheaper or even a more expensive alternative that does the same job.

Having flagged that concern, I hope that the Government will look again at the wording and at how they will meet their overall aim, which I support.

Kevin Hollinrake (Conservative, Thirsk and Malton)

It is an interesting point. We took the decision to strengthen the existing provisions in the Consumer Protection from Unfair Trading Regulations 2008 in relation to invitations to purchase by removing the need for enforcers to prove that the transactional decision test has been met. This significantly increases the criminal liability of unscrupulous traders.

Amendment 126 would expand the definition of an invitation to purchase still further to cases in which information about products is presented to consumers without a price shown. We are concerned that that would expand the definition too far. Moreover, other provisions in chapter 1 of the Bill will achieve a similar aim: they will prohibit traders from making misleading statements or omissions in respect of all commercial practices. We feel that that covers this issue. However, I am happy to have further conversations with the hon. Member for Bermondsey and Old Southwark, certainly based on the evidence he has received, which I am happy to look at.

Amendment 127 would require that information as to whether a third-party seller or online marketplace is a trader or a consumer be added to the list of material information in an invitation to purchase. We have the same aim. Clause 222(2)(c) will require

“the identity of the trader and the identity of any other person on whose behalf the trader is acting”

to be disclosed. Moreover, subsections (2)(d) and (e) will require a range of contact details to be provided to consumers about who they may be buying from.

Accordingly, I hope that hon. Members will not press their amendments.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I thank the Minister for his comments. We still take the view that this needs to be tighter. In the light of his intentions, which we understand, we will take it away and look at it again. I do not want to lose our amendment, but we will not press it to a vote today. Perhaps we can come back to it at a future stage of the Bill.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I am grateful to the Minister for saying that he will look at the evidence. I am happy not to press amendment 126.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I beg to ask leave to withdraw amendment 127.

Clause 223 - Public enforcement

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 223 sets out who is responsible for enforcing the prohibition on unfair commercial practices. Trading standards have a duty to enforce the prohibitions in their areas across Great Britain. The Department for the Economy in Northern Ireland has a duty to enforce the prohibitions in Northern Ireland. The CMA has the power to enforce the prohibitions on a civil and criminal basis in the UK.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

We welcome clause 223. As the Minister states, it introduces provisions relating to the enforcement of the prohibition of unfair commercial practices, setting out how local weights and measures authorities—trading standards—will have a duty to enforce the prohibitions. The CMA will also have enforcement powers. We have talked several times in this Committee about the importance of trading standards in enforcing the regime. How involved have the CMA and trading standards been in the discussion around the powers in the Bill?

Is the Minister confident that local trading standards officers have the resources to enforce the regulations, especially after 13 years of what can only be described as a managed decline of local trading standards authorities, with local services facing a 52% reduction in service capacity under the Government’s watch since 2010? It is important to know that, because where increased expectations are coming through in legislation the question is whether there will be capacity to deliver on the new demands. I would be grateful for his response.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I have meetings with the national teams of trading standards, and indeed the CMA, on a regular basis. We have had numerous discussions about the legislation, if the hon. Lady means her question broadly. Indeed, she was able to question some of those witnesses in the recent evidence sessions. Clearly, resources for trading standards are a matter for local authorities, not central Government. It is for local authorities to determine where those resources are committed.

Clause 224 - Rights of redress

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 224 sets out the conditions under which consumers may exercise redress rights. The main condition is that misleading actions or aggressive practices must play a significant factor in the consumer’s decision to make payment for the supply of a good or enter a contract. Without the clause, victims of rogue traders who engage in lies and aggressive selling practices would be left with no private right of redress.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Under clause 224, as the Minister says, the consumer will be able to enforce their right to redress relating to unfair commercial practices, subject to conditions, including that they have entered into a relevant contract, that the trader has engaged in a prohibited practice, that the prohibited practice was a significant factor in the consumer’s decision to make payment, and that the product concerned is not of an excluded type. Those are important provisions, including in the context of our debate about greenwashing. That is why it is important that we take forward the issues we have debated. None the less, we welcome the clause and these important provisions.

Clause 225 - Rights of redress: further provision

Richard Thomson (Scottish National Party, Gordon)

I beg to move amendment 67, in clause 225, page 152, line 30, at end insert—

“(4A) The Secretary of State must by regulations make any further provision necessary to ensure that the rights of redress available under this Chapter are equivalent to, and not lesser than, those available under the Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277).”

This amendment seeks to ensure that the “Consumer Rights to Redress” that will be set out through secondary legislation cannot offer a reduced level of the protection than the Consumer Protection from Unfair Trading Regulations 2008.

Steve McCabe (Labour, Birmingham, Selly Oak)

With this it will be convenient to discuss amendment 114, in clause 225, page 152, line 33, at end insert—

“(7) The Secretary of State must—

(a) prepare a report on the merits of introducing a consumer right to individual and collective redress by regulations set out in 225(1), and

(b) lay a copy of this report before Parliament.

(8) The report must be laid within the period of 12 months beginning with the day on which this Act is passed.”

This amendment would require the Secretary of State to prepare and lay before Parliament a report on the merits of introducing a consumer right to individual and collective redress through secondary legislation, as is the case in EU member states.

Richard Thomson (Scottish National Party, Gordon)

As the explanatory statement sets out, amendment 67 seeks to ensure that the consumer rights to redress introduced through secondary legislation by Ministers cannot offer less protection than the Consumer Protection from Unfair Trading Regulations 2008. That statutory instrument was effectively the successor to the Trade Descriptions Act 1968 and was designed to implement the unfair commercial practices directive as part of a common set of European minimum standards for consumer protection. Consumers, not just in Europe but throughout the UK, have benefited immensely from those protections. It is important as a point of principle that as legislation is repealed or evolves, there should be no inadvertent reduction in baseline consumer protections. There should be a reduction in consumer protections only where the Government deliberately choose to do so and we have an open debate.

The amendment is very much about ensuring that nothing slips down the drain inadvertently in terms of consumer protection. If the Government are not minded to accept it, what existing protections will they unwittingly let fall by the wayside? The amendment would capture the baseline level of protection through future secondary legislation. I look forward to the Minister’s remarks.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I am pleased to speak to amendment 114, which stands in my name and that of my hon. Friend the Member for Pontypridd. I will also make reference to amendment 67, tabled by the hon. Member for Gordon.

Amendment 114 would require that the Secretary of State prepare and lay before Parliament a report on the merits of introducing a consumer right to individual and collective redress through secondary legislation, as is the case in EU member states. Amendment 67 would ensure that the consumer rights to redress set out in secondary legislation cannot offer less protection than the Consumer Protection from Unfair Trading Regulations 2008. We support the principle of amendment 67, which would have a similar effect to amendment 114 by ensuring a more robust consumer right to redress.

More specifically on amendment 114, I refer the Minister to the written evidence of Which?, which notes that

“the Bill states that ‘Consumer Rights to Redress’ may be provided for in future secondary legislation, so it will give the Secretary of State powers to amend these rights. These rights are fundamentally important, as they include payment of damages when a trader misleads a consumer. We want assurances that they will not be downgraded as a result of this process, and a commitment from the Government to strengthen redress procedures when these new regulations are drafted.”

Amendment 114 would require a commitment from the Government to report on doing that, aiding the process of strengthening redress procedures when new regulations are drafted. I urge the Government to support amendments 114 and 67, and to ensure that consumer rights to redress are as strong as they can be, particularly in an increasingly digital economy.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Amendments 67 and 114 deal with consumers’ private rights to redress. I agree with the hon. Members for Feltham and Heston and for Gordon that it is vital that consumers have robust private rights of redress.

Amendment 67 would limit changes by regulation to the consumer rights of redress to those that are equivalent to the remedies in the CPRs—the Consumer Protection from Unfair Trading Regulations 2008. The Bill includes powers to amend rights of redress. That could include how such rights are exercised; the powers could also be used to make those rights clearer and simpler. Those would be positive changes for consumers that might not meet the test of equivalence to the current regulations that the amendment would impose. We would like to retain the ability to exceed the existing private redress provisions, if appropriate, which may encourage more consumers to make use of these rights. The first regulations made using the power will be to create the new regime to replace the current private redress provisions in the CPRs. Accordingly, those regulations will be subject to parliamentary approval via the affirmative procedure, thereby providing for appropriate parliamentary oversight of use of the power.

I turn to amendment 114. The courts already have the power to make an enforcement order against an infringer, or to accept undertakings from them to provide redress to affected consumers, through the measures in part 3. Enforcers can also accept undertakings from infringers to provide redress to affected consumers. For example, in 2021 the CMA secured an undertaking from Teletext Holidays to pay over £7 million in outstanding refunds from package travel trips cancelled due to covid-19.

The Bill will make the power to require enhanced consumer measures directly available to the CMA. Consumers also already have individual private rights of redress. In the “Reforming competition and consumer policy” consultation, we consulted on whether to introduce a right for consumers to bring collective redress. Responses were mixed, with concerns raised about unintended consequences such as the creation of a claims culture and inadvertently disincentivising the bringing of proceedings by consumer groups.

The hon. Member for Feltham and Heston referred to the EU situation. The outcome, however, is similar to the desired situation under the EU’s directive on collective redress, which requires member states to designate entities, such as consumer organisations, that can bring actions for collective redress on consumers’ behalf. The EU does not mandate that member states introduce direct rights for individual consumers to bring an action for collective redress.

We will keep the evidence under review, but our priority is to embed the CMA direct enforcement regime and understand the impact that it makes. On that basis, I hope that hon. Members will not press their amendments.

Richard Thomson (Scottish National Party, Gordon)

With regret, I am not minded to withdraw amendment 67. I hear what the Minister says about how the Government may wish to go beyond existing levels of consumer protection. That is welcome where appropriate, but I do not see anything in the amendment that would prevent Ministers from doing that. The key element in the amendment is to capture a baseline level of protection, equivalent to what was in the 2008 regulations, to ensure that there is nothing that dips below that without a conscious decision to do so having been taken and debated. On the basis that there is nothing that would prevent the Government from enhancing the levels of protection at any time, I am keen to divide the Committee.

(Afternoon)

Maria Miller (Conservative, Basingstoke)

That is a good way to start our session.

Clause 225 - Rights of redress: further provision

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss that clause 226 and 227 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

It is a pleasure to serve with you in the Chair, Dame Maria. Clause 225 enables the Secretary of State to make new regulations for consumers to have a right to unwind, a right to discount and a right to damages. The regulations may cover, among other things, how such rights are to be exercised and when damages are to be payable. Before these regulations are made, the existing private redress provisions set out in the Consumer Protection from Unfair Trading Regulations 2008 will continue to apply. The first use of the power will be subject to the affirmative procedure, ensuring appropriate parliamentary scrutiny.

Clause 226 sets out how consumers can exercise their right to redress and allows consumers to undertake civil court action. Any legal claim must be brought within the time limit for simple contracts that applies under the Limitation Act 1980. If successful, a consumer will then have the right to unwind, the right to a discount, or the right to damages.

Clause 227 outlines the relationship between consumers’ private redress rights and other claims that are related to the prohibited practices of misleading actions and aggressive practices. It states that a consumer is not prevented from pursuing a claim under a rule of law, equity, or other legislation, but they cannot recover compensation twice for the same conduct.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

It is a pleasure to serve under your chairship today, Dame Maria. I thank the Minister for his opening remarks. He covered how clause 225 confers a power on the Secretary of State to make regulations providing rights of redress to consumers, including the right to unwind relevant contracts, receive a discount, receive damages and so on.

The Opposition support the clause and recognise the need for further provisions for rights of redress, but why is that being left to secondary legislation? Does the Minister know when the Secretary of State may exercise this power? There is a danger of further delay. Why is this a power, rather than a duty? Perhaps the Minister can come back on why it was decided that the legislation be set out in this way. I can understand that there may be some reason to allow for further provision, but one would have thought that some measures would be brought in earlier.

Clause 226 sets out how a consumer can enforce their rights to redress, and I thank the Minister for his comments on it. Specifically, it sets out how a consumer with the right to redress by virtue of the regulations would be able to enforce their rights through making a claim in the civil courts. In Scotland, proceedings could be brought before the sheriff or the Court of Session. We welcome this clause in ensuring consumers have swift access to means of redress.

We also support clause 227, which would have the effect of avoiding double compensation, which is a common-sense and welcome provision.

Maria Miller (Conservative, Basingstoke)

For the avoidance of doubt, if anybody wants to remove their jacket, please feel free to do so. It is a little muggy in here.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I am very grateful. I have just a couple of points. Obviously, no gap will occur because of this, because the existing provisions are still effective until the provisions are replaced by any provisions made by the regulations. The reason for doing it like that is to create more flexibility around different measures that might need to be introduced. The world of consumers, consumer behaviour and activity providing services for consumers and goods is changing rapidly, so it makes sense to take a more flexible approach.

Clause 228 - Inertia selling

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 228 protects consumers against inertia selling, which occurs when traders send unsolicited products to consumers and then demand payment for the products or that the products be returned or safely stored. The clause provides clarity for consumers and traders, leaving no room for doubt. Consumers are exempt from any obligation to pay for the unrequested products, return them or store them safely. The lack of a response by a consumer to a trader does not mean that the consumer has agreed to pay for, return or store the product.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

The Minister has laid out the reasons for this clause, which we very much support. It is important to support consumers against inertia selling, and it is a real worry when we hear of cases where traders demand an immediate or deferred payment for the return or even the safekeeping of products that have been supplied but not solicited by the consumer. It is important that we clarify that consumers are not required to pay for products supplied unsolicited by the trader, so we support the clause.

Clause 229 - Offences

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss the following:

Government amendments 72 and 73.

Clause 230 stand part.

Government amendments 74 to 77.

Clauses 231 to 233 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 229 sets out that it is a criminal offence for a trader to engage in a commercial practice that involves any of the following: misleading actions, misleading omissions, aggressive practices, any of the practices in the list of banned practices in schedule 18, save for those expressly excepted, and/or knowingly or recklessly engaging in a commercial practice that contravenes the requirements of professional diligence.

Clause 230 describes the defences that may be available to defendants charged with offences under clause 229. These are a defence of due diligence and an innocent publication defence. To avail of the due diligence defence, a defendant must prove that the offence was due to the act or omission of a third party or information provided by a third party. The innocent publication defence is available, in certain circumstances, to a defendant charged with a relevant offence that is alleged to have been committed by the publication of an advertisement.

Government amendments 72 and 73 preserve the current effect of existing consumer law by excluding contraventions of the requirements of professional diligence from the offences to which these defences apply.

Clause 231 sets out the rules on liability when a trader commits an offence as a result of an act or omission by another person, and when a body corporate commits an offence. It is a restatement of the same provision in the Consumer Protection from Unfair Trading Regulations 2008, or CPRs.

Government amendments 74 to 77 preserve the current effect of the CPRs. This means that contraventions of professional diligence are excluded from the offences to which the criminal liability of others applies.

Clause 232 sets out the penalty for offences. It is a restatement of the same provision from the CPRs.

Clause 233 sets out the time limit for prosecution. This is within three years of the offence taking place, or within one year of the discovery of the offence by the prosecutor, whichever is earlier. The time limit is the same as set out in the CPRs and enforcers will be familiar with their application.

I hope that the Committee will support Government amendments 72 to 77 and clauses 229 to 233.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 229 introduces provisions setting out the conditions under which it would be a criminal offence for a trader to engage in an unfair commercial practice of a kind prohibited by clause 217. The Minister outlined what those practices would be: a misleading action, a misleading omission, omission of material information from an invitation to purchase, and so on. The clause also makes every practice listed in schedule 18 a criminal offence, apart from using editorial content in the media to promote a product where it is not made clear that it is a paid-for promotion, or including in an advert a direct appeal to children to buy advertised products.

The Opposition recognise the importance of making unfair practices criminal offences and support this clause. However, why does the legislation specifically make two practices in schedule 18 not subject to a criminal offence?

Clause 230 provides a range of potential defences for an offence charged under clause 229. We recognise the need for a defence of due diligence and therefore support this clause. However, we would welcome further explanation from the Minister regarding subsection (1), which specifically outlines that it is a defence for the trader if the offence was “a mistake or accident”. I just wonder whether there is any more guidance regarding what the bar or threshold is here, and about how individuals and businesses will be required to prove that an offence occurred as a result of a mistake or accident.

Amendment 72 ensures that the defence provided for under clause 230(1), the defence of due diligence, does not apply in relation to an offence under clause 229(4). This replicates the current position under the Consumer Protection from Unfair Trading Regulations 2008. We welcome this common-sense amendment, and we similarly welcome amendment 73.

Clause 231 sets out that where a body corporate commits an offence with the consent of an officer of that body, both the officer and the body corporate can be prosecuted and punished. This also applies if the offence is attributable to neglect on the part of the officer. We welcome this clause because it ensures that all those responsible for an offence that has a detrimental impact on consumers are subject to being held accountable and to action as a result of that offence.

Amendments 74 to 77 ensure that the imposition of liability on another person does not apply to an offence under clause 229(4). This replicates the current position under the Consumer Protection from Unfair Trading Regulations 2008. Assuming that this is consistent with the current legislation, the Opposition of course support this amendment.

Clause 232 sets out the penalty for offences under this chapter, and how a person guilty of an offence is liable to a fine or imprisonment for a term not exceeding two years. We support this clause.

Finally, clause 233 outlines the time limits for prosecution under clause 229, with a prosecution needing to begin within three years of an offence, or within one year of the offence being discovered by the prosecutor. We support this clause, although is the Minister confident that within a year of discovery will be long enough, particularly considering the current resourcing pressures on our prosecution and justice systems? He may have confidence, and of course we do not want to lengthen the timescales, but how will he know how many prosecutions are missed due to running out of time?

Kevin Hollinrake (Conservative, Thirsk and Malton)

The banned practices to which the shadow Minister and I have referred are not currently subject to criminal liability, and we did not consider it appropriate to introduce new criminal offences.

On the “mistake or accident” defence, the defendant has an obligation to prove it was a mistake or an accident, which I think is a reasonable provision.

The timescales are replicated from the current timescales in the 2008 regulations, so there is nothing new here. We are pretty confident the timescales will be appropriate but, of course, we will continue to engage with the relevant enforcement bodies to make sure they are appropriate.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

How will the Minister know how many prosecutions are missed due to running out of time?

Kevin Hollinrake (Conservative, Thirsk and Malton)

We have continuing engagement with the various enforcement bodies, such as trading standards and the Competition and Markets Authority, through either officials or Ministers. If there were a problem, we are confident we would receive that feedback and be able to make a decision on how to act accordingly.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

rose—

Maria Miller (Conservative, Basingstoke)

Is this an intervention or a further speech?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

It was meant to be an intervention, but the Minister sat down.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I have concluded my remarks.

Clause 230 - Defence of due diligence and innocent publication

Clause 231 - Offences: criminal liability of others

Clause 234 - Powers to amend this Chapter

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I beg to move amendment 129, in clause 234, page 157, line 30, leave out subsection (2).

This amendment would ensure that future “banned practices” are both criminal and civil breaches, reflecting their potential seriousness and putting them in line with all but two of the current banned practices.

This amendment would ensure that future banned practices are both criminal and civil breaches, reflecting their potential seriousness and putting them in line with almost all other current banned practices. As we understand it, under the legislation as drafted, any practice added later by the Secretary of State will not be subject to criminal enforcement. Perhaps the Minister can clarify that, because it is slightly unclear. Given that clause 234 is the means by which the Government are planning to take action on fake reviews, will the Minister confirm his intentions on penalties for breaches?

This is a straightforward amendment that seeks to ensure that future action against fake reviews, or any other unfair commercial practice, is just as robust as the action taken on the face of the Bill. I do not intend to press the amendment to a vote, but I would be grateful for a clarification from the Minister because, during the course of the Bill, we will want to understand the penalties and be clear about those for different practices.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I thank the hon. Lady for her amendment and her remarks. She will be aware that, ordinarily, when criminal offences are created, it is important and beneficial for Parliament to have ample opportunity to scrutinise them. That is usually via primary legislation, rather than powers given to Government. There is, of course, nothing to prevent Members of Parliament from introducing primary legislation to criminalise specific practices in future, should the House consider it desirable to do so. In the meantime, any new practices added to schedule 18 will continue to benefit from the relevant civil penalties, as well as the greater deterrent effect that we expect from the considerable reforms that we are introducing.

On the penalties themselves, we will go much further than any UK Government have ever done before; we are empowering the courts and the CMA to impose fines of up to the higher of £300,000 or 10% of worldwide turnover for infringements of consumer-protection law.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I thank the Minister for his comments. I beg to ask leave to withdraw the amendment.

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss the following:

Clauses 235 to 242 stand part.

Government amendment 78.

Clauses 243 and 244 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 234 gives powers to the Secretary of State to amend this chapter. New regulations using the powers may not be made before consultation and will be subject to the affirmative procedure. For example, the power to amend the list of banned commercial practices in schedule 18 will allow the Government to respond more quickly to emerging consumer harms and ensure that appropriate levels of consumer protection are maintained.

The power to amend the list of information deemed to be material in an invitation to purchase means that we can ensure that consumers get the information that they need when they prepare to make a purchase. The power to amend the list of prohibited practices in clause 224(7) will enable the Government to extend private rights of redress to further commercial practices, such as misleading omissions. I hope that hon. Members will agree that it is critical to future-proof the Bill through these provisions, given the constantly evolving environment in which traders operate.

Clause 235 establishes that the Crown is not criminally liable for any infringement of the regulations. This does not affect the application of the regulations in relation to a person in public service of the Crown.

Clause 236 states that a contract or agreement is not void purely because of a breach of this chapter, except for cases where voiding of the contract arises as a result of a consumer exercising their right to redress.

Clause 237 defines “transactional decision”. This is an important and broad definition, which includes decisions before any purchase has taken place as well as decisions after a purchase has taken place.

Clause 238 defines an “average consumer”. It largely restates the equivalent provision from the Consumer Protection from Unfair Trading Regulations 2008.

Clause 239 defines “average consumer” in situations where a group of consumers are particularly vulnerable to a commercial practice. It recognises and makes explicit that consumers may be vulnerable for a range of reasons, including their age, health, credulity and circumstances.

Clause 240 defines “product” for the purposes of this chapter. A product can mean goods, services and digital content. That is important as it means consumers are protected from unfair trading practices when purchasing digital content from businesses online.

Clause 241 defines a range of other terms used in part 4, chapter 1 of the Bill. Clause 242 provides an index of defined terms in this chapter.

Clause 243 revokes the 2008 regulations and re-enacts their substance in part 4, chapter 1 of the Bill. It also makes a small number of consequential amendments to other UK legislation.

Government amendment 78 makes a minor consequential amendment to section 393 of the Communications Act 2003 to include part 4 of this Bill. That will enable Ofcom and the CMA to collaborate in relation to matters covered by part 4 in the same manner that they do for the consumer protection regulations.

Clause 244 sets out that the 2008 regulations will continue to apply to any unfair acts or omissions occurring before this Bill is enacted. The clause also provides that part 4A of the consumer protection regulations, which deals with private right of redress, will continue to apply until new regulations are made under this chapter. I hope hon. Members will accept amendment 78, and I commend the clauses to the Committee.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 234 introduces a provision allowing for the Secretary of State to amend the list of banned practices in schedule 18. The clause will be the route through which we may see later action on fake reviews. The Opposition welcome the flexibility this gives the regime and supports the clause, but I want to ask the Minister one question on changes that can be made.

We have talked about additions, but there is also the power to remove a practice from the schedule. We understand the principle and the importance of the flexibility to add practices, particularly considering the ever-increasing ways that rogue traders can mislead consumers in not only the digital economy, but in the real world. However, I would welcome clarity on the circumstances in which the Government would want to remove a practice from the list and, more importantly, the process it then uses to do so. Will it be subject to similar procedures? It would be helpful to understand that for the record.

Clause 235 exempts the Crown from criminal liability as a result of the provisions in this chapter but does not affect their application to persons in service of the Crown. Will the Minister clarity that Crown exemption?

Clause 236 provides that a contract or any other agreement would not be void or unenforceable due to a breach of the prohibition of unfair commercial practices or the promotion of unfair commercial practices. We recognise that the clause is necessary to ensure that contracts or subscriptions can continue at the wish of the consumer in spite of breaches under this chapter, and we therefore support it.

Clause 237 defines “transactional decision” for the purposes of this chapter. We welcome the clause and the broad definition it introduces. The explanatory notes state that a transactional decision could include, for example, a decision to travel to a shop as a result of a commercial offer, a decision to agree to a sales presentation by a trader, or a decision to click through to a website as a result of information relating to the product. A whole range of purchasing decisions along the consumer journey will fall under this broad and effective definition, allowing for more consumer protection.

Clause 238 defines the meaning of “average consumer” for the purposes of this chapter. As the Minister outlined, the average consumer is defined as reasonably well-informed, observant and circumspect. We particularly welcome subsection (3), which sets out that the average consumer cannot be expected to know when a trader is hiding something from them. That is important, because anyone can be duped by someone hiding information from them. We support the clause.

Clause 239 describes consumers who may be defined as vulnerable persons for the purposes of this chapter. This is really important. Subsection (4) sets out that consumers may be considered vulnerable due to

“their age…their physical or mental health”

or

“the circumstances they are in.”

The Minister outlined some of the context, including that elderly consumers may be more vulnerable to certain practices, such as pressure selling, because of their age. We could even find that younger people are more vulnerable to unfair practices because they do not have the experience to judge products. The clause also covers consumers affected by a serious illness and so on. The explanatory notes expand on the phrase

“the circumstances they are in,”

stating that it includes things such as being in mourning, going through a divorce or losing a job.

We welcome the clause. It is important that we have some considered protection from unfair practices for those who are likely to be more vulnerable. However, that should not lead to unnecessary delay in decisions being made. I came across someone recently who had sadly lost her husband. She wanted to make some transactional changes and was considering selling the family home and moving somewhere more appropriate for her. She had just a little bit of a struggle and was told that she was considered vulnerable, but at the time she really did know what she needed and wanted. We should consider how the clause may be interpreted and implemented so that it does not lead to an unintended outcome that could cause further distress.

Clause 240 defines “product”, for the purposes of this chapter, as goods, a service or digital content. We welcome the clause.

Clause 241 describes how terms are to be read for the purposes of the chapter, including “business”, “code of conduct”, “goods” and “supply”. Having those definitions is extremely helpful not just for traders, but for the consumers for whom this legislation is really intended. Clause 242 provides an index of defined terms for the purposes of the chapter.

Finally, we welcome clause 243 and we support amendment 78. Clause 244, which we also support, sets out how the chapter applies to an act or omission that occurs on or after the commencement date of the chapter.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I think the hon. Lady asked two questions, and I missed the second one. While she is thinking about what the second question was, I will address the first one, which was about why we are establishing the power to delete practices from the banned list. That is because some practices may become redundant or have needless duplication that we need to avoid. For example, Parliament may choose to provide for regulation elsewhere to better address a particular service so that we do not get duplication. The power will require parliamentary approval through the affirmative procedure. As a consequence, there will be a requirement for us to consult on any such changes.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I think the Minister was referring to my second question on the meaning of average consumers and vulnerable persons. Rather than wanting any changes, I wanted him to recognise that someone’s circumstances can lead to an over-assumption of their vulnerability, and an interpretation of that vulnerability can make it more difficult for those who really do know what they want, even though they are in those circumstances.

Kevin Hollinrake (Conservative, Thirsk and Malton)

The hon. Lady makes a very good point. Regulators play a part in this as well by ensuring that the average consumer is assessed correctly and that there is relevant assessment of any characteristics. Businesses can be challenged on the back of that to ensure that they do not exploit consumers, especially those who are vulnerable to a particular commercial practice.

Clause 243 - Consequential amendments etc relating to this Chapter

Clause 245 - Overview

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss the following:

Clauses 246 and 247 stand part.

That schedule 19 be the Nineteenth schedule to the Bill.

Kevin Hollinrake (Conservative, Thirsk and Malton)

In chapter 2 of part 4 of the Bill, we are introducing measures to give consumers new rights over their subscription contracts, while ensuring that businesses are not overburdened by regulations. The measures are an important part of the Government’s commitment to help consumers have more control over their spending. Together, they will deliver £400 million in consumer benefits per year.

Clause 245 assists readers to navigate the chapter. Clause 246 provides a legal definition of a subscription contract.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Can the Minister clarify from when the Government expect these specific clauses to be implemented?

Kevin Hollinrake (Conservative, Thirsk and Malton)

From the—first we have to get Royal Assent, of course—

Neil Coyle (Labour, Bermondsey and Old Southwark)

With immediate effect?

Kevin Hollinrake (Conservative, Thirsk and Malton)

There may be some regulations to deploy after that. I can find out for definite if the hon. Gentleman gives me a few minutes. It is in the Bill, of course, so it should be pretty quick.

Clause 246 provides a legal definition of a subscription contract, which is principally one that automatically renews or continues so that a consumer continues to be liable for payments unless they end the contract. That includes contracts that are of fixed duration but can be ended earlier by the consumer. Contracts that offer a free or reduced-cost trial for a defined period and then revert to a higher cost are also in the scope of the chapter. It is critical that such contracts are included as calculations show that each year, around a quarter of consumers get rolled over accidentally from free or reduced-price trials.

Clause 247 provides for specific sectors and subscription contract types to be excluded from the chapter and those sectors are detailed in schedule 19. The sectors have been excluded because they are already subject to regulation and may be supervised by a specialist regulator. To apply the chapter to them would overburden them with regulation and trespass on the remit of a specialist regulator. It could also potentially create conflict between the regulation and legislation, particularly if the sectors already provide consumers with similar protections.

Sectors may also have been excluded on public policy grounds, such as the exclusion for childcare. The childcare sector, like many of the other excluded sectors, provides an essential service and these are not the type of contracts that we consider raise the risks commonly associated with a subscription trap. The exclusions in schedule 19 may need to change over time as the regulatory and legislative regimes for the excluded sectors change. That is why clause 247 ensures that the Secretary of State has the power to adapt the provisions through secondary legislation.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 245 provides an overview of this chapter, which centres around duties on traders in relation to subscription contracts and the rights of consumers if those duties are breached. The chapter also introduces further rights and protections for consumers in relation to subscription traps, specifically regarding the right to cancel contracts during cooling-off periods, and the information that must be made available to consumers.

We welcome the principles of the chapter and I note that before the Bill was bought before the House, the Labour party had already announced that we would legislate in government to tackle subscription traps and protect consumers, particularly in the light of the Conservative cost of living crisis, because we know that things have become worse for consumers. Any time the Government want to adopt a Labour proposal, we will welcome it. We have tabled some new clauses in this area, which I will come to later.

Let me start by welcoming the action on subscription traps taken by the Government so far in the Bill. As I said before, Citizens Advice estimates that £306 million a year is spent on unwanted subscriptions in the UK, so we need to act and, in that spirit, to work constructively with Ministers to ensure that the measures are as robust as possible.

Clause 246 defines the scope of subscription traps, which are defined as a business-to-consumer contract for the supply of goods, services and digital content that either auto-renews for an indefinite or fixed period or contains a free trial or specified reduced price for a specified period in the contract, after which time the contract renews and the consumer becomes automatically liable for payments. We welcome the definition and the important inclusion of subscriptions that start with a free trial, a technique that is commonly used. However, I want to press the Minister on subsection (1), which sets out that

“a subscription contract is a contract between a trader and a consumer”.

The Minister will probably have a straightforward answer on how business-to-business subscriptions are covered. There are plenty of instances where a business may pay for a subscription, so I would welcome assurances about how businesses are covered, particularly smaller businesses and those run by the self-employed.

Clause 247 sets out that certain types of contracts are “excluded contracts”, meaning that they are not subject to the regulations in this chapter. We see the clause as necessary to ensure that certain types of subscription are not affected by the Bill, specifically subscription contracts for which it would be impractical for the regulations to apply. We welcome the power in the clause and recognise the need for the Secretary of State to have the flexibility to add other types of contracts to the list of excluded contracts, which is subject to the affirmative procedure. The clause sets out that if a contract is listed in schedule 19, it falls under the definition of an excluded contract.

Included in schedule 19 as excluded contracts are utility bills such as those for electricity, gas and heating, as well as medical prescriptions, insurance, rent payments and childcare, among others. We understand some of the reasons for those common-sense exclusions, but can the Minister tell us whether the Government have consulted relevant stakeholders on the exclusions? Were there any suggestions to include in the schedule contracts that have not made it into the Bill?

Kevin Hollinrake (Conservative, Thirsk and Malton)

I think the hon. Lady raised two points. The provisions apply specifically to traders to consumers, not traders to businesses. On how we determine the exemptions, such as for magazines, delivery services, gyms, software and so on, a range of stakeholders, including regulators, businesses and consumer groups, developed the list and the scope of sectors that are exempt from the subscription measures.[Official Report, 20 July 2023, Vol. 736, c. 13MC.]

Schedule 19 - Excluded contracts

Richard Thomson (Scottish National Party, Gordon)

I beg to move amendment 117, in schedule 19, page 349, line 39, at end insert—

“Non-commercial society lotteries

13 (1) A contract under which a lottery ticket or tickets are purchased for one or more non-commercial society lotteries.

(2) In sub-paragraph (1), “non-commercial society” has the meaning given by section 19 of the Gambling Act 2005, and “lottery ticket” has the meaning given by section 253 of that Act.”

This amendment seeks to exclude lottery tickets purchased for non-commercial society lotteries from the scope of the provisions on subscription contracts.

It is a pleasure to serve under your chairmanship, Dame Maria.

A few moments ago, I was encouraged to hear the Minister express a desire not to trespass on any of the specialist regulators, and I am delighted to say that that is exactly what the amendment is intended to achieve. I hope we can all agree that charity lotteries do an awful lot of good. They raise an awful lot of money, and they are fun. They are also already heavily regulated by the Gambling Commission. If the Gambling Commission does not fall under the category of specialist regulator, I am not entirely sure what does.

I raised this issue on Second Reading, but I was beaten to the punch by the right hon. Member for Calder Valley (Craig Whittaker), who said that subscription-based charity lotteries

“are already heavily regulated by the Gambling Commission”.—[Official Report, 17 May 2023; Vol. 732, c. 882.]

He wanted to see whether such lotteries could be removed from schedule 19, and the Minister committed to looking at the matter in detail. I do not know what the result of the Minister’s deliberations has been. I know that by the time the Under-Secretary of State for Science, Innovation and Technology was on his feet to sum up he was certain that it would fall outside the scope of the Bill. Despite his best efforts on that occasion, I have to say that some of the representatives of the charity lottery sector I have spoken to are not reassured.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I do not propose to say much on the amendment. The hon. Member has laid out his arguments, and it would be helpful to hear some clarity from the Minister on his position.

Kevin Hollinrake (Conservative, Thirsk and Malton)

The hon. Member for Gordon makes an excellent point. As he said, the point was raised on Second Reading. We appreciate the work that society lotteries do in terms of fundraising—that £400 million a year is vital for many good causes. It is certainly not our intention to capture society lotteries, including the national lottery, in this chapter of the legislation on subscription contracts. We are working with the society lottery sector to understand whether we need to further clarify the legislation to reflect that. I am sure that we will discuss the issue again during later stages of the Bill.

Richard Thomson (Scottish National Party, Gordon)

If the Minister can assure me that we will have that open dialogue, and that the Government will share the outcomes of their deliberations, at this stage I am content to withdraw the amendment, but I will return to it on Report, contingent on what he is able to say at that point. I beg to ask leave to withdraw the amendment.

Clause 248 - Pre-contract information

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss:

That schedule 20 be the Twentieth schedule to the Bill.

Clauses 249 to 253 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 248 places duties on the trader to provide the consumer with pre-contract information set out in schedule 20 before they enter a contract. All key pre-contract information must be given together to the consumer and separately from any other information. That is to ensure that it is not obscured by technical detail or marketing material and the consumer’s attention is focused on the information that they need to make an informed decision.

Clause 249 sets out obligations on the trader in concluding a contract, such as ensuring that the consumer expressly acknowledges their payment obligation if the contract is made online. That will ensure that consumers are fully aware of the contract they are entering.

Giles Watling (Conservative, Clacton)

As the hon. Member for Gordon said, the national lottery has an amazing track record—£47 billion has been given to good causes over many years—and we do not want this great institution, of which we should all be proud, to be hamstrung by endless requirements such as reminder notices. Will the Minister table amendments to the Bill on reminder notices ahead of Report that would ensure that the national lottery is exempt, as intended?

Kevin Hollinrake (Conservative, Thirsk and Malton)

My hon. Friend is absolutely right that we do not intend to include national lotteries or society lotteries in this legislation. We are talking to those bodies to ensure that they are confident that that is the case. If we need to amend the Bill to do that, we will, but those conversations will continue. I am grateful to my hon. Friend for making that point.

Clause 250 requires traders to send reminder notices in certain instances. A reminder must be sent on the first occasion that a subscription renews, including when a free or low-cost trial is coming to an end. That will ensure that consumers know they will soon become liable for payments, or higher payments, and can decide whether they want to continue the contract.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Minister says that clause 250 is relevant only in certain circumstances. Can he be clear that the Government’s intention is not for the provision to cover someone who has perhaps been a decades-long subscriber to, for example, Sky? I hate to pick a particular company, but it is for the purposes of the conversation—I am not a Sky subscriber. Is the Minister saying that, if a person had had a contract for a decade and was a regular viewer of sports channels, or whatever it might be, they would not be caught by the clause? The “certain circumstances” do not seem to be well understood by some businesses outside this building.

Kevin Hollinrake (Conservative, Thirsk and Malton)

We have had dialogue with Sky, and many other organisations have contacted us to clarify some points. A subscription contract with Sky would fall under the provisions. Sky may be concerned about certain things, in terms of cooling-off periods, but I have not had any feedback from Sky or others that they have concerns about these particular provisions, unless the hon. Gentleman wants to mention something specifically.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I think that Sky briefed quite widely—it briefed members of the Committee and beyond—that it thinks that it is caught by the provision and that it covers all contracts. I can understand that a person would be caught by the new provisions if they had a new contract where there was a discount, as my hon. Friend the Member for Feltham and Heston already pointed out, but to impose the condition retrospectively on business contracts that someone could have had for decades seems to place a new onus on existing business arrangements. The Government have avoided doing that in other legislation, and I wonder about the rationale. I picked Sky off the top of my head, but it is an organisation that is concerned.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I did not quite understand the hon. Gentleman’s point when he first made it. I think he is saying that it covers existing contracts as well as new contracts. Is that his point, and can I come back to him on it?

Neil Coyle (Labour, Bermondsey and Old Southwark)

Sure.

Kevin Hollinrake (Conservative, Thirsk and Malton)

After the first renewal reminder, consumers with a monthly renewing contract will be sent a reminder around the six-month mark. For contracts that renew less frequently than every six months, such as annual subscriptions, a reminder will generally be sent whenever the contract renews.

Clause 251 sets out the required timescales for serving reminder notices. Parts 1 and 2 of schedule 20 set out what pre-contract information traders must give to the consumer before they enter a contract. Part 3 of schedule 20 sets out the information that traders must include in a reminder notice.

I can address the point made by the hon. Member for Bermondsey and Old Southwark right now, if he would like: the subscription contract clauses will apply only to new contracts taken after chapter 2 comes into force. Reminder notices must include information on the forthcoming payment, including any increase since the last renewal. They must also include an indication of how long the consumer will be committed following renewal, and how to end the contract should the consumer wish to.

Clause 252 requires traders to provide a clear and straightforward cancellation route for consumers to exit a contract. Through the clause, consumers will be able to exit their contract in a single communication and without having to take any steps that are not reasonably necessary for ending their contract. That will put an end to poor practices that force consumers to spend a disproportionate amount of time and energy trying to exit their contract.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I thank the Minister for giving way; he has been very generous. To be clear, is it the Government’s expectation that a subscription could be cancelled through a single communication from any device or social media platform? Over recent days, significant figures have tried to close bank accounts and other things by tweeting. Is it the Government’s expectation that this communication would come from a verified point of contact, such as an email address or phone number that the company holds? Otherwise, I could set up a Twitter account—or a Threads account, as we have seen this week—in the Minister’s name and then cancel his TV, or other, subscriptions.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I may have misunderstood his point, but I think the example he gave was of a bank closing an account from Twitter. That is the other way around—that is the bank closing the account rather than the customer.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I was thinking of Laurence Fox.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Okay, but I think clause 252 is clear that there must be a straightforward cancellation route for consumers to exit a contract. He appears to describe a convoluted route, but I did not quite understand it. Would he like to expand on his point?

Neil Coyle (Labour, Bermondsey and Old Southwark)

Sorry if I was not clear. I thank the Minister for checking. Will it have to be from a single point of contact, such as a verified address, to protect the customer as well as the business? If I wanted to cancel a contract, would I have to use the email address or phone number that the company holds for me and not, as the Bill currently reads, a Facebook post or something that the business may not be able to confirm is mine? Does that help?

Kevin Hollinrake (Conservative, Thirsk and Malton)

I am not sure whether it does or not. I refer the hon. Gentleman to one of my earlier points: it is a straightforward cancellation route. What he describes to me is not a straightforward cancellation route. That is the key definition. We can have a discussion after this sitting.

Clause 253 requires a trader to send a notice confirming when the contract was, or will be, ended once they have been notified of cancellation by the consumer. This also applies where a consumer exercises a cancellation right under this chapter. The trader must provide this notice promptly, and on a durable medium, and refund consumers any overpayment for which they are no longer liable.

I now turn to new clauses 5 and 6, which I will address together. They propose that traders must obtain a consumer’s express agreement to an auto-renewing contract by the consumer’s active opt-in. Through new clause 5, when consumers sign up to a subscription contract, they would have to be given the option to choose whether their subscription auto-renews after six months. If they do not choose this auto-renewal option, the contract would end after six months unless the consumer expressly asks for it to continue.

New clause 6 would apply equivalent requirements to contracts that auto-renew after a free or low-cost trial and may also auto-renew again subsequently. The Government share the view that consumers must be able to avoid being trapped in unwanted subscriptions and ensure their hard-earned cash is spent only on subscriptions they actually want. However, we know that the majority of consumers enjoy the auto-renewing features of their subscription contracts and the convenience they provide.

Through these new clauses, if a consumer had not opted-in to an auto-renewing contract, but they decide they want to keep their subscription, they would have to repeatedly respond to emails or similar to continue their subscription, or risk it unintentionally lapsing. That risk could be multiplied across each subscription they hold. For that reason, the Government decided not to pursue that approach, which was supported by our public consultation.

It is also important to consider the burdens the changes could place on businesses. The measures would add significant regulatory costs to businesses as they adapt their business models to meet the proposals. We are confident that the approach we have taken strikes the right balance of ensuring consumers are able to exit their contracts at various points during their contract, as well as maintaining consumer convenience.

Furthermore, the existing clauses in this chapter already achieve much of the ambition of the amendments. As I set out earlier, clause 250 will ensure consumers are sent regular reminders about their subscription, including towards the end of a free or low-cost trial. These reminders will ensure that consumers have the right information at the right time to decide if they want to continue their contract, or cancel it.

In addition, through clause 252 we will ensure easy cancellation routes so that subscriptions are as easy to leave as they are to enter. Finally, the Bill enhances consumers’ existing cooling-off rights. Clause 256, which we will discuss shortly, introduces an extra 14-day cooling-off period after a free or low-cost trial, and at the 12-month mark when a longer-term contract auto-renews. That means that, if for any reason a consumer has not been able to take action to cancel before renewal, they have an extra chance to do so.

Together, those measures will ensure that consumers can make informed decisions about their subscription contract. They also make it easy to leave while avoiding creating additional steps for those who want to continue. I hope that reassures hon. Members that the Bill will enable consumers to manage their contracts effectively, and that they feel able to withdraw the amendments.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 248 introduces provisions requiring traders providing a subscription contract to give consumer information as set out in schedule 20, which I will say a few words on shortly.

We very much welcome this clause as necessary in ensuring consumers are as informed as they possibly can be before entering into a subscription contract. I just ask the Minister to expand on subsection (2) It sets out that the information must be provided

“as close in time to entering into the contract as is practicable”.

I would welcome clarification on that requirement. Under that provision, exactly when would the Minister expect a time as close to entering into the contract to be practicable?

Schedule 20 on pre-contract information and reminder notices sets out information that is required for traders to give to consumers before entering into a subscription contract. Among other things, it would require traders to provide information on how often payments will be taken, to provide consumers with a pro-rata cost per month, to state the minimum total amount for which a consumer would be liable under the contract, to outline how the consumer could exit the contract, and to provide a summary of the consumer’s right to cancel the contract and of the right to cancel the contract within a renewal cooling-off period. The schedule is necessary for giving consumers the chance to have that information before entering into a subscription contract. We welcome its inclusion in the Bill.

Clause 249 introduces provisions requiring traders to ensure that the final step consumers take when entering into an online contract involves the consumer expressly acknowledging that the contract imposes an obligation on them to make payments to the trader. This clause and clause 248 are vital in ensuring consumers are informed before choosing to enter into a subscription—a minimum requirement for ensuring effective consumer protection in this area.

The Opposition welcomes how, if the trader does not comply with that requirement, the consumer would not bound by the subscription contract. In addition, traders would be required to give consumers additional information on whether there are any restrictions on the delivery of the product to be supplied under the contract, and which means of payment would be accepted for the contract.

Clause 250 covers reminder notices. Alongside clause 251, it has the effect of requiring traders to issue written reminder notices to consumers explaining that a subscription contract is going to continue, and a renewal payment will fall due unless the consumer takes steps to end it. Those reminder notices would not need to be issued more frequently than once every six months, which we welcome as a timeframe allowing for informed consumers without causing undue annoyance. The first reminder notice must include the first renewal payment, for which the consumer will become liable under the contract, and each subsequent renewal payment. We welcome the clause, and I will further discuss ensuring that consumers are not locked into subscriptions in the provisions to come.

Clause 251 sets out the timing and content of the reminder notices. Under the clause, the reminder notice must be given to the consumer between three and five working days before the last cancellation date, meaning the last day on which the consumer can end the contract and avoid becoming liable for the next renewal payment. The Opposition welcome the timeframes, including that for a 12-month subscription contract, as giving the consumer sufficient time to decide whether they still want their subscription contract to continue and, if necessary, to cancel the contract before a renewal payment is due.

Clause 252 introduces provisions imposing on traders an obligation to put in place arrangements to enable consumers to end a subscription contract in a single communication and without having to take any unreasonable steps. The purpose of the clause is to prevent traders adopting practices that would deliberately hinder a consumer exercising their rights to exit a subscription contract. It is a welcome clause, which should tackle the practice of, as the explanatory notes set out, requiring consumers to phone a call centre, complete a long form, or complete a survey of their reasons for exiting—all those things are barriers to the consumer making the decision to exit the contract. Those are unnecessarily onerous cancelling terms, and could lead to consumers not cancelling a subscription when they need to. Sometimes that could also be because people are short of time or they may not be able to do everything in one moment.

It should be as easy to exit the contract as it is to enter it. Will the Minister expand on whether he is confident the provision will have the desired effect of stopping traders making it harder to leave a contract than to enter it? Does he think the provision goes far enough in ensuring there are not those undue hurdles?

Clause 253 relates to where the consumer has exercised a right to cancel and sets out a requirement on the trader. The trader is to give the consumer an end-of-contract notice acknowledging the request to cancel, which must be in writing and there must be a clear date when it is going to take place. The end of contract notice must be given within three working days after the day on which the consumer has given notice of cancellation, or, when the consumer notifies cancellation online, the trader must give the end of contract notice within 24 hours of cancellation. In addition, any overpayment received by the trader must be refunded to the consumer. We welcome the clause as providing greater transparency for the consumer throughout the cancellation process.

I move to speak to new clause 5 and 6, tabled by myself and my hon. Friend the Member for Pontypridd. As has already been expressed, while the measures in the Bill certainly improve current legislation and ensure that consumers are more informed of their rights and circumstances in subscription contracts, they fall short of the action we need. As Citizens Advice told us during the Committee’s evidence sessions:

“we think that the intent is right, but this is potentially a huge missed opportunity for action on subscription traps.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 14, Q17.]

That sentiment is echoed in the written submission of Which? to the Committee, which states that

“the Government could have gone further within this Bill”

in tackling subscription traps. The Minister will be happy to hear that that does not need to mean going back to the drawing board. As I mentioned, we announced in April this year that we want to take action on subscription traps. As Citizens Advice again said in its evidence to the Committee:

“The specific change that would make a huge difference and is legislatively straightforward is to provide that, at the end of an annual trial subscription, the default is that the consumer opts out. That is not about things like car insurance, where there is a detriment to people opting out, but for basic subscriptions, opt-out should be the default.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 14, Q17.]

That is our policy, and it is precisely what new clauses 5 and 6 would do.

New clause 5 would allow the consumer to opt in to their subscription auto-renewing every six months or, if the period between payments is longer than six months, before every payment. If the consumer does not opt in for auto-renewal, they would be required to notify the trader manually if they wanted to renew. New clause 6 would similarly introduce an option for the consumer to opt into their subscription auto-renewing after their free or discounted trial; otherwise, they would have to notify the trader manually if they wanted to continue the subscription. These are two straightforward new clauses that would result in consumers being considerably more empowered at the start of, end of and throughout their subscription contract, allowing them to opt into auto-renewal.

Action in this area could not be more necessary. We have talked about the people spend per year on unwanted subscriptions; indeed, the Government’s own analysis estimates that UK consumers spend £1.6 billion a year on subscriptions. In the midst of a cost of living crisis, this could well be an important support for family and individual income. As the Consumer Council stated in its evidence to the Committee:

“In the online detriment research that we carried out, one consumer told us that they signed up for a 30-day trial but it took them six months to get the subscription cancelled.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 35, Q47.]

In circumstances such as that, the simple process of opting in or out of auto-renewing at the start of the contract would have enabled the consumer to easily opt out and, in doing so, saved them valuable funds. We want to get this issue sorted. I welcome the Minister’s response and again make the offer to work with us on this as we move forwards through the passage of the Bill.

Kevin Hollinrake (Conservative, Thirsk and Malton)

There are a few points to pick up on there. The shadow Minister wanted clarification on what “as soon as practicable” means. We expect traders to provide consumers with the relevant pre-contract information immediately before concluding the contract. If the contract is concluded online, that information should be provided during the online order process. If face to face, the trader should give that information before a contract is agreed.

The hon. Member for Bermondsey and Old Southwark raised a point about when the provisions will commence. We do not clearly have a set commencement date at this point in time, but we are keen to get these measures in place to protect consumers. We also recognise that there must be sufficient time for businesses to adapt, and we will engage with stakeholders, including the ones referred to by the hon. Gentleman, to ensure that an appropriate transition takes place. When cancelling or ending a contract, is a single tweet enough? I think that was the hon. Gentleman’s point. The ability of the consumer to end their contract by notifying the trader by any means is a safety net whereby consumers can always use the fall-back option of a simple notification if it is preferable or easier for them, particularly if the trader has failed to provide a clear route for consumers to end their contract.

Where necessary, the Government will provide further clarification in business guidance, which will obviously include discussions with stakeholders. However, as the provisions state, it is important that consumers notify a trader in a way that clearly communicates their intention to end the contract, which can be actioned by the trader. Hence this notification must be given in a sufficiently clear manner. I think it is fair to say that a sole tweet probably would not be sufficiently clear.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I think that last comment about a tweet not being sufficient would be welcomed by responsible businesses that just want to use the verified contact details.

The other point is perhaps a bit more worrying, Chair. We are quite well into this Bill Committee. There is an economic impact assessment. The Minister has said today that the measures would be implemented immediately, but has just corrected that in his final comment. The assessment set out here does not now include the cost to business of implementing these measures, because we do not have a start date. How can businesses plan to implement measures when they do not know their start date, and they do not know because the Minister is still clarifying what would be considered sufficient contact from a customer to close an account?

Do the Government intend to provide new impact assessments to reflect what the Minister has just said—?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Is this a speech or an intervention?

Maria Miller (Conservative, Basingstoke)

I think that I say that. [Laughter.]

Neil Coyle (Labour, Bermondsey and Old Southwark)

When will the Government provide the right figures for what this will cost businesses in Britain?

Kevin Hollinrake (Conservative, Thirsk and Malton)

The assessment is set out. The impact assessment for businesses states a figure of £179 million, I think.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Will the Minister give way?

Kevin Hollinrake (Conservative, Thirsk and Malton)

No, I am not giving way, thank you very much, because I want to address the hon. Gentleman’s points.

Regarding when these provisions will commence, of course we do not know how quickly this legislation will pass through both Houses of Parliament. It will be subject to much debate, including by people such as the hon. Gentleman. However, I have said clearly that the Government will give guidance and work with stakeholders to make sure that they fully understand the provisions in this legislation and have time to prepare for them. That is what I said in my earlier remarks, so I think the hon. Gentleman is being a bit churlish in terms of that perspective, perhaps for political purposes. However, all the way through this legislation, we have been keen to strike a balance between what is right for consumers and right for businesses. That is a balance we intend to strike, because we fully recognise the needs of business as well as the needs of consumers.

Clause 254 - Terms implied into contracts

Maria Miller (Conservative, Basingstoke)

With this, it will be convenient to discuss clause 255 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clause 254 sets out that a trader’s compliance with their main duties under this chapter is an implied term in every subscription contract. The clause is necessary as it gives the consumer access to legal remedies or defences to a claim by the trader where the trader has failed to comply with duties set out in this chapter.

Clause 255 gives consumers a right to cancel their contract if a trader fails to give the required key pre-contract information or reminder notices, or if their failure to provide an easy way of ending the contract means that a consumer remains trapped in their contract. Consumers who cancel their contract as a result of such breaches will be able to do so without penalty, and in prescribed circumstances may be entitled to a refund.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 254 sets out that the trader must comply with certain terms in every subscription contract they enter into, and various information is given about what is expected. We welcome the inclusion of clauses 254 and 255 in the Bill.

Clause 256 - Right to cancel during cooling-off periods

Giles Watling (Conservative, Clacton)

I beg to move amendment 113, in clause 256, page 170, line 22, leave out “any circumstances” and insert

“circumstances where the consumer has not yet made use of the goods or service provided under the contract”.

I had intended to withdraw this amendment, because I received assurances from the Minister that the Government will take this issue seriously. I tabled it because of concerns about the length of cooling-off periods. People can join a service, binge watch an entire series, resign, and then go back again and again. The Minister assured me about that, but I look forward to hearing his comments.

Kevin Hollinrake (Conservative, Thirsk and Malton)

I thank my hon. Friend for his amendment. He is absolutely right to draw attention to this issue.

The initial cooling-off period ensures that a consumer has 14 days to cancel after signing up if they change their mind or do not like the product. The renewal cooling-off period further strengthens consumers’ cancellation rights by giving them an additional 14-day window to cancel their contract later on in some circumstances.

My hon. Friend makes important points. Cancellation rights should be fair to businesses, of course. The aim of the measures in the Bill is to give consumers a window in which they can change their mind before taking on, or renewing, a contract for what can be a significant ongoing liability. We heard several examples of consumers who missed the end of their free trial by a short period, and were then committed to an expensive contract because they had not cancelled in time. However, my hon. Friend makes a good point because there are particular circumstances around the supply of digital streaming services that have to be taken into account to ensure the Bill is fair to businesses. We will engage with businesses, regulators and consumers to ensure that refund and return sales are fair and practical, and work across all sectors, including digital streaming. We intend to return to this issue in secondary legislation to ensure the provisions are fair to providers and the services they provide. I very much hope my hon. Friend feels able to withdraw his amendment. We will engage in further discussions in due course.

Giles Watling (Conservative, Clacton)

I thank my hon. Friend for his reassuring comments. He says we will deal with this issue later when we come to secondary legislation, so I will not press the amendment. I beg to ask leave to withdraw the amendment.

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to consider clauses 257 to 259 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clauses 256 and 257 set out an initial cooling-off period, and, in some circumstances, a new renewal cooling-off period. They provide that the consumer can cancel any time after signing up until 14 days after receiving goods, or 14 days after the date of the contract for anything else, such as services or digital content. The renewal cooling off period will apply when a free or low-cost trial ends and the consumer becomes liable for payments or higher payments. It will also apply when a contract auto-renews to a new term of 12 months or longer.

Clause 258 requires traders to give consumers a cooling-off notice whenever a renewal cooling-off period applies. This information confirms that the contract has renewed and informs consumers of their right to cancel.

As I mentioned in relation to amendment 113, clause 259 creates a regulation-making power. The regulations may provide for conditions or restrictions on the exercise of a cancellation right. They will set out detailed rules on the consequences of cancellation for the consumer’s refund rights and any arrangements for goods to be returned to the trader.

Clause 259 also gives power for a cooling-off period to be extended in specified cases. The regulations will set clear expectations on traders and consumers, so that they know their respective rights and responsibilities when a consumer cancels their subscription contract. Government will work with a range of stakeholders in developing the regulations. Where we intend to make regulations containing rules extending a cooling-off period, we have committed in clause 259(5) to consult.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

The clause gives the consumer the right to cancel a subscription contract without penalty during the initial cooling-off period and any renewal cooling-off period. That right, exercisable in any circumstances, cannot be subject to any restrictions or conditions imposed by the trader. The definition and timescales of cooling-off periods are defined in later clauses.

The clause is important to give consistency to the consumer about what rights they should expect in both initial and renewal cooling-off periods. We welcome the clause enabling the consumer to stop the renewal of a contract that may have renewed without them realising. I am also grateful to the Minister, for his response to amendment 113 and the questions posed by the hon. Member for Clacton.

Clause 257 sets out the meaning of initial and renewal cooling-off periods, as well as the timescales for such periods. We welcome the clause and the clear definitions. Under clause 258, the trader would be required to give a consumer notice of each renewal cooling-off period. Again, we welcome that, the clarification of consumer rights in those periods and the provision of transparency to consumers.

Clause 259 provides a delegated power for the Secretary of State to make further provision, by regulations, on the exercise of a consumer’s rights to cancel a subscription contract. It specifically empowers the Secretary of State to make provision on the exercise of the rights of a consumer to cancel a subscription contract, the consequences that follow a consumer exercising such rights, and extending a cooling-off cancellation period in such cases and to such an extent as the regulations may specify. We recognise the need for flexibility in this new subscription contract regulatory regime, and thus the flexibility to future-proof the regime, dealing with circumstances as they arise. We support this clause as well.

Clause 260 - Offence of failing to provide pre-contract information about initial cooling-off rights

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss the following:

Clauses 261 and 262 stand part.

Amendment 128, in clause 263, page 175, line 40, leave out

“level 5 on the standard scale”

and insert—

“the statutory maximum;

(c) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine (or both).”

This amendment would make subscription traps offences “triable either way”, therefore bringing it in line with other similar offences in the Bill, for example for misleading actions.

Clause 263 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

The clause sets out that the trader commits an offence if they enter into an off-premises subscription contract and do not provide information about a consumer’s initial cooling-off cancellation right. Off-premises contracts mainly consist of contracts that are not concluded on the trader’s business premises and include situations such as doorstep selling.

In off-premises sales, the consumer is typically more vulnerable to poor trading practices. It is therefore necessary to make breach of this requirement an offence to act as an extra deterrent to rogue traders. That approach maintains consistency with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, which stipulate that failure to provide required pre-contract information about cooling-off cancellation rights in the case of off-premises contracts is an offence.

Clause 261 provides a defence for a person charged with the offence set out in clause 260. That is to ensure that if an offence was committed due to the act or omission of a third party and without fault on the part of the person charged, they are not held criminally liable. The trader must prove that they exercised due diligence to avoid the offence being committed by themselves or another person under their control. Clause 262 sets out that an officer can be held criminally liable if an offence was committed by a company or other corporate body with the consent or connivance of that officer or due to their neglect. That is necessary to strengthen the deterrent effect of the offence and hold other responsible people accountable. Clause 263 sets out that traders who commit an offence contrary to clause 260(1) are liable to a fine.

Amendment 128 would allow traders to be prosecuted in both magistrates court and Crown court and increase potential penalties, including imprisonment, where traders do not inform consumers about their cancellation rights before entering off-premises subscription contracts. I appreciate that hon. Members wish to ensure that penalties are consistent with those elsewhere in the Bill. However, the penalties are designed to be consistent with those for failure to provide information about cancellation rights for off-premises contracts in the 2013 regulations, which currently govern all consumer contracts and will continue to govern other off-premises contracts. Consistency is important to ensure that breaches of equivalent rules are treated fairly and consistently, regardless of the type of contract. I therefore urge that the amendment be withdrawn.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 260 creates an offence where a trader fails to provide the relevant information on a consumer’s initial cooling-off cancellation rights before entering into an off-premises subscription contract. That contract is defined in subsection (5) and could include contracts concluded by door-to-door sellers or traders using temporary high street stands. It is a welcome clause and an important way of increasing consumer protection, ensuring that all kinds of subscription contracts and not just those entered into online are regulated under the chapter.

Clause 261 introduces a provision providing traders with a defence of due diligence to the offence laid out in clause 260. That defence enables the trader to prove that another person was responsible for the offence and that the trader took all steps to avoid committing the offence. While we recognise that it is important that traders have a right to a defence, I welcome the Minister’s assurances that this has been worked through and there is confidence that rogue traders will not be able to abuse that defence and argue their way out of criminal enforcement by claiming due diligence.

Clause 262 would establish direct liability for company officers for offences committed by the body corporate in circumstances where it is proven to have been committed with the consent or connivance of a company officer or neglect on their part. We welcome the clause.

Finally, clause 263 sets out how a person who commits an offence under clause 260 is liable on summary conviction to a fine. The Minister has outlined his response to that and it is helpful for me to briefly speak to amendment 128, tabled by myself and my hon. Friend the Member for Pontypridd. As is clear in the explanatory note, the amendment

“would make subscription traps offences ‘triable either way’, therefore bringing it in line with other similar offences in the Bill, for example for misleading actions.”

The Minister has outlined another way in which he sees that as being consistent with how penalties are applied.

We will not push the amendment to a vote. The most important thing is that there is consistency, and we will look again at what the Minister has said today.

Kevin Hollinrake (Conservative, Thirsk and Malton)

The hon. Lady asks me to address her point about the defence of due diligence. The defences listed in the clause are consistent with defences in other areas of the law, so we are comfortable that they strike the right balance.

Clause 264 - Information and notices: timing and burden of proof

Kevin Hollinrake (Conservative, Thirsk and Malton)

I beg to move amendment 79, in clause 264, page 176, line 31, after “period” insert “or date”.

This amendment corrects a drafting error.

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 265 to 271 stand part.

Government amendments 80 to 82.

Clauses 272 and 273 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Clauses 264 to 273 set out how to determine when information or notices are deemed to have been given and where the burden of proof lies in any dispute. Clause 264 sets out how to determine whether a trader or consumer has taken action as required by this chapter, and who is responsible for proving that.

Government amendment 79 is a drafting amendment to ensure consistency across the affected subsection as to when a consumer is treated as having given notice of their desire to end or cancel their subscription contract. The amendment is important to ensure that the clause works as intended, and I hope Members agree that it necessary.

Clause 265 will ensure that any term in a subscription contract that conflicts with this chapter will have no legal effect. That includes any term that seeks to exclude or restrict a trader’s liability arising from the implied terms of this chapter. In cases specified in regulations under clause 269(1)(e), the clause will also prevent traders’ contract terms from allowing them to take a renewal payment before the day on which a subscription contract renews.

Clause 266 sets out that a consumer can seek legal remedies, other than those set out in the chapter, if a trader breaches a term of a subscription contract. They can claim those remedies, in addition to ones under this chapter, as long as they do not recover twice for the same loss.

Clause 267 ensures that the measures in the chapter will apply where a UK consumer and an overseas trader agree a contract governed by a foreign law if the contract has a close connection with the UK. Whether that is the case will depend on the circumstances, including whether the overseas-based trader targeted the consumer in the UK. That will ensure that traders cannot avoid providing UK consumers with the protections of this chapter simply by operating or structuring their operations overseas. The clause also makes it clear that the chapter applies only to new contracts and not to existing ones, reflecting the usual principle that new regulatory requirements should not operate retrospectively. Clause 268 sets out that this chapter applies to the Crown.

Clause 269 sets out the powers for the Secretary of State to make regulations in relation to a number of matters covered by this chapter, including regulations related to information and notices that traders must provide to consumers, arrangements traders must make to enable consumers to exit their contracts, and details regarding overpayments and refunds. Regulations may also restrict what notice period traders can require from consumers to end their contract. Most of the areas covered by this power involve matters of detail on which the Government will likely want to make different provision for different kinds of cases and contract models.

Clause 270 amends the Consumer Rights Act 2015. This ensures that pre-contract information given by a trader is treated as a binding term of the subscription contract that cannot be changed without the consumer’s express agreement. Clause 271 sets out consequential amendments to existing legislation—in particular, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Clause 272 sets out how important terms and phrases in this chapter are to be interpreted, for clarity. Government amendments 80, 81 and 82 to the clause remove the words “pre-contract information” from the definition of “durable medium” to ensure that its definition is compatible with its use throughout the chapter. These amendments are important for accuracy of the Bill, and I therefore encourage Members to support their inclusion.

Finally, clause 273 provides an index of expressions used throughout this chapter, to make the chapter easier to navigate. I therefore invite Members to support Government amendments 79 to 82 and clauses 264 to 272.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I welcome the speed with which we are moving through these clauses. Clause 264 specifies the timing and burden of proof for information and notices that are given under this chapter. For the electronic communication of notices or information, the clause makes it clear that delivery would be deemed instantaneous, even if the consumer does not receive the notice due to a reason beyond the trader’s control.

Subsection (6) specifies that in a dispute as to whether any information or notice has been given to the consumer, the burden of proof would be on the trader. We welcome that provision. However, under subsection (7), the burden of proof would be on the consumer in any dispute regarding whether a notice to end a contract or cancel it was sent to the trader, or with regard to the timing of that notice.

While the Opposition recognise the need for a balanced burden of proof, I draw the Minister’s attention to the written evidence submitted by consumer group Which?, which states in relation to subsection (7):

“We think this is unfair as it would create a disproportionate burden on consumers in situations where consumers cancel via means under the control of the trader. An example of this would be completing an online form, from the traders website, where no explicit confirmation has been given that the subscription has been cancelled.”

Can the Minister outline, for the benefit of the Committee, what will happen in such cases, where the consumer must cancel through a means that cannot be easily used or saved as evidence of cancellation? Does he not accept that in such circumstances, placing the burden of proof on the consumer is impractical, so there may need to be additional protections?

Amendment 79 corrects a drafting error, so we support it. Clause 265 introduces provisions such that any term in a contract contravening the regulations in this chapter has no legal effect. We welcome the clause ensuring that traders are unable to work their way around these regulations and therefore support its inclusion in the Bill.

Clause 266 clarifies that any rights the consumer may have under common law for breach of any term of a subscription contract are not limited by rights specified in this chapter. We welcome the clause ensuring that consumers are able to exercise both kinds of right in combination, providing ease for consumers.

Clause 267 introduces provisions regarding the application of this chapter. It sets out that if a trader were to choose the law of another country to govern a subscription contract but the contract has a close connection to the UK, chapter 2 would still apply. We welcome this common-sense clause, which enables the regime to be effectively enforced.

Under clause 268, the Crown would be bound by the provisions in chapter 2 but would not be criminally liable as a result. It would be helpful for the Minister to clarify what those circumstances might be, so that we can understand the provision more clearly.

Clause 269 grants the Secretary of State a delegated power to make regulations in relation to how and when information or a notice required to be given by traders to consumers under chapter 2 may or must be given, what information notices given under chapter 2 must contain, what arrangements a trader must make under clause 252 to enable consumers to end contracts, and when a consumer may exercise such a right, specifying the period in which a trader must refund an overpayment. While the Opposition recognise the need for this delegated power, it is not clear to us why these regulations are being left to secondary legislation and are not on the face of the Bill. I would be grateful if the Minister could clarify that and the reason for the regulations being subject to the negative procedure.

Clause 270 makes consequential amendments to the specified sections of the Consumer Rights Act 2015 and will ensure that information given to consumers as part of the pre-contract information required under chapter 2 is treated as a term of the contract. In effect, traders would not be able to make changes to the matters covered by this pre-contract information without the agreement of the consumer. We welcome that provision.

Clause 271 makes further consequential amendments to other legislation, and we support it. Clause 272 sets out general interpretations for this chapter, including definitions of “business”, “consumer”, “goods”, “trader” and “working day”. We support the clause and welcome its inclusion. Amendments 80 to 82 have the effect of expanding the definition of “durable medium” for the purposes of this chapter. We support these amendments. Clause 273 provides an index of defined expressions in the clause. It is self-explanatory, and we support it.

Kevin Hollinrake (Conservative, Thirsk and Malton)

The shadow Minister makes some fair points. In terms of the requirement for the consumer to prove cancellation, as she no doubt recognises, clause 6 contains obligations on the trader as well, to ensure that there is a burden of proof on them as to whether the information notice had been given by the trader to the consumer.

Clause 253 requires the trader to send an acknowledgment to the consumer that they received the notice to end the contract. We also address this in business and consumer guidance. This approach to burden of proof and the trader’s duty to confirm receipt of cancellation via their website is in line with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Businesses and consumer advice bodies are familiar with those regulations, and traders should be used to complying with them.

There is no policy justification for emanations and servants of the Crown not to be bound by this chapter if they are entering a contract with consumers of the kind regulated by this chapter.

We will certainly work with businesses, regulators and consumer groups in developing the regulations under these chapters to ensure they are fair and proportionate, and to make sure that the arrangements for things like how traders issue reminder notices work for both parties.

Clause 272 - Interpretation

Clause 274 - Meaning of “consumer savings scheme contract”

Maria Miller (Conservative, Basingstoke)

With this it will be convenient to discuss the following:

Clauses 275 and 276 stand part.

That schedule 21 be the Twenty-first schedule to the Bill.

Clauses 277 to 282 stand part.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Part 4, chapter 3 of the Bill introduces requirements that businesses operating consumer savings schemes such as Christmas savings clubs adequately protect consumers. Clause 274 defines consumer savings scheme contracts for the purposes of the Bill as including contracts that seek to incentivise members not to withdraw their money until a certain time.

Clause 275 sets out definitions. Clause 276 gives the Secretary of State the power to amend schedule 21 to exclude contracts or arrangements in specific sectors. That will ensure businesses are not subject to dual regulation and safeguards them from overburdensome or potentially contradictory regulations.

Schedule 21 provides a specific set of exclusions from the regulations for certain arrangements, including for small businesses with low-value schemes.

Clause 277 sets out that consumer savings schemes must be underpinned by arrangements covering the cost of refunding consumer payments in the event of the trader’s insolvency. It allows traders to choose trust arrangements or insurance. This is the heart of the regulations. Users of consumer savings schemes make payments in good faith expecting to be able to redeem their money at the end of the savings period, and these provisions will protect consumer payments and maintain confidence in the sector.

Clause 278 specifies the baseline requirements for traders choosing the insurance option. They include a requirement that it must be sufficient to return all moneys saved by scheme users not redeemed at the time of insolvency.

Clause 279 specifies minimum requirements for traders protecting payments via trust arrangements. Those requirements cover the protection of consumer moneys and also permitted uses of funds, ensuring they can only be used to supply the goods and services consumers signed up for.

Clause 280 places traders under a legal duty to convey certain information to a consumer about the protection mechanism used. That is necessary to ensure consumers can check their money is protected as required and know what to do if they need to reclaim it.

Clause 281 adds this part of the Bill to the Regulatory Enforcement and Sanctions Act 2008, which means that businesses with primary authority partnerships will be able to receive tailored advice, helping reduce the costs of compliance without reducing regulatory protections. Clause 282 defines certain terms in this part of the Bill.

New clause 7 seeks to create an enforcement role for the Financial Conduct Authority within six months of Royal Assent. When designing the provision, we considered who should undertake the enforcement role and concluded it was not appropriate for the FCA. Its primary role is to license and oversee banking and financial services before market entry. Consumer savings schemes are nearly all offered by retailers and groups that service the retail industry. The FCA has no existing relationship with many of these service providers. The Law Commission also considered whether savings schemes should be regulated as financial products by the FCA. It concluded that the additional burdens placed on the FCA in terms of resources would be disproportionate. In contrast, we believe that trading standards will be able to use their existing relations with business to oversee these rules. To that end, we have agreed to work with the Primary Authority Supermarkets Group to develop guidance for enforcers and traders. I hope the hon. Member for Bermondsey and Old Southwark will not press his new clause.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I have a couple of points; I will try to keep them brief. The clause fundamentally rejects where the Government suggest the responsibility for oversight of a savings scheme should sit. I was just listening to the Minister, and it is probably worth flagging up the message from the Chartered Trading Standards Institute on this. The Government say that they have assessed where this should sit; they say that they have worked with partners and consulted, but that does not seem to be the feeling of the chartered institute covering the sector, whose language is interesting:

“These brand new provisions have been inappropriately dumped on local authority trading standards to deal with, but it would be much better placed to give the Financial Conduct Authority the responsibility to regulate new provisions on savings schemes which are similar in nature to banking and other financial matters already regulated by the FCA. Saving schemes are often national schemes”—

such as Farepak, which Members will be familiar with. No individual local authority could have prevented what happened with Farepak; I think that is the point it is making. I will come back to its direct comments—

“and therefore should be in the remit of a national regulator with the experience and resources to deal with financial matters. CTSI would like to see all references to local authorities removed in these provisions and to pass on responsibility.”

The Minister says that the FCA is not the right vehicle or body. Perhaps there is space and time to examine what that body should be. The point made by trading standards is that they do not have the skillset to oversee financial services in the way that the Government are demanding. They do not have the resources—that is the point made in our evidence sessions. This follows 13 years of cuts to weights and measures—to trading standards—which we have seen across the country; there has been a 50% cut in their capacity to do the job. Again, this is the Government trying to insist that local government take on greater responsibility after cuts to their own resources.

Southwark is a case in point. We have seen similar cuts to trading standards, but also to the overall council’s budget. The Government reduce the responsibilities of central Government Departments, such as the Home Office, and pass on additional costs running into the millions for things such as emergency children’s services with no recourse to public funds, without giving additional resources to councils to do so. This is another case in point where the Government are trying to push a new power and demand on to an already overstretched and under-resourced arena.

New clause 7 would have made the FCA the relevant body, rather than local authorities, but the point of the new clause is that trading standards should not be made responsible for something when they do not have the expertise or resource to be effective. If the Government do not think it should be the FCA, it is up to the Government to come back and find the right body. It is the Government’s legislation; they want it to be effective, and for these saving schemes to not collapse and leave people without, so it is incumbent on the Government to come up with either the resources and skills—training, whatever it might take—for trading standards to do this, or an alternative body to oversee these specific saving schemes. It is important at this stage to flag that concern, because there is a deep resentment, almost, from the sector over the Government’s suggestion that trading standards take this on, yet the Government still insist that it is the appropriate vehicle.

I hope there is still time to review which alternative body might be able to take on this task. This feels like something that a national body should deal with, and it should not sit with local authorities as operators and rogue traders may cover whole regions of the country, not one single local authority. I did listen to the Minister, and take onboard his suggestion that the FCA is not necessarily the right vehicle, therefore I am prepared to withdraw this amendment, as drafted, but I would like to see a commitment to reconsider where this responsibility sits.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Clause 274 introduces the definition of a “consumer savings scheme contact” for the purposes of this chapter. Specifically, the clause defines it as a contract under which the consumer makes payments to a trader,

“the trader credits those payments to an account that is held by the trader for the consumer…and the payments credited to the consumer’s account provide a fund for the consumer to redeem as goods, services or digital content”.

The definition forms part of new provisions introduced by this chapter which are important for protecting consumers who use consumer savings schemes, and we welcome this. Clause 275 defines other terms used in this chapter—and in clause 274—and we welcome the further clarity this brings.

Clause 276 introduces schedule 21, which sets out arrangements that are excluded from the scope of a consumer savings scheme contract. It includes regulated financial services activities, arrangements for the supply of utilities, a contract between a consumer and a trader where the trader’s turnover is less than £1 million per year, childcare voucher schemes, and package holidays .

We welcome that exclusions might be necessary in cases where it is impractical for these regulations to apply. However, I would welcome some further clarification on paragraph 3 of the schedule to set out how contracts offered by small businesses are exempt. Is that in relation to wanting to have the right balance between smaller businesses and consumers? We obviously want to ensure that the consumer is as protected as possible in these contracts, so I would be grateful for a response from the Minister on that.

Clause 277—“insolvency protection requirement”—introduces provisions regarding the event of a trader’s insolvency and covering the costs of returning to the consumer any protected payments at the time of the insolvency. We do welcome that, and it is important in the context of record levels of insolvencies. It is a particularly unstable period, and it is important for consumers to have protections.

Clause 278 sets out what is understood to be an “appropriate policy” in the instance of a trader complying with the provisions in clause 277 by taking out an insurance policy. Under the Bill, an appropriate policy is one in which consumers are insured with cover for the refunding of prepayments held in the consumer’s account that have not been redeemed at the time of insolvency. The insurer must also be authorised by UK authorities. We welcome this clause, though I ask the Minister to expand on subsection (3), which requires the trader to

“meet the costs of arranging and maintaining an appropriate policy”

and explicitly inhibits traders passing that cost on to consumers.

I would be grateful for two things. First, will the Minister explain how we can be confident that the trader will not find a way to pass on this additional cost to the consumer? Secondly, will the Minister confirm how quickly, in the event of insolvency, consumers can expect to have their prepayment refunded? It would be helpful if he could clarify that. Does he feel that provision is tight enough in the Bill?

Clause 279 applies in circumstances where a trader complies with the insolvency protection requirements in clause 277 by using a trust arrangement. It sets out how it must ensure consumer prepayments are held in a trust located in the UK. The consumer’s prepayments must also be held in a trust until either the funds have been redeemed or the payments have been returned to the consumer. Similarly to clause 278, the Opposition welcome this clause as providing greater protections under consumer savings schemes in circumstances where the trader becomes insolvent.

I refer the Minister to subsection (7), which requires the cost of administering the trust to be paid for by the trader. Again, how will the Minister be able to safeguard against the trader passing this additional cost on to the consumer?

Clause 280 sets out the information requirements attached to this chapter. Specifically, it sets out that, within 30 working days of the consumer’s first payment into the savings scheme, the trader must provide:

“the name, address, telephone number and email address of the insurer or trustees responsible for protecting the consumer’s payments;

where insurance arrangements are in place, the policy number for the policy under which the consumer’s payments are protected;

where trust arrangements are in place, a copy of the trust deed under which the consumer’s payments are held.”

It is a welcome provision, but will the Minister expand on the 30-day time period? On what basis does the Minister believe that the trader would need 30 days to put these arrangements in place? Would these arrangements not happen automatically as soon as the consumer enters the scheme? That is an important question for ensuring that the consumer is informed of their protections.

Clause 281 would add chapter 3 of part 4 of the Bill to the list of enactments in schedule 3 of the Regulatory Enforcement and Sanctions Act 2008. We welcome the clause.

Clause 282 introduces definitions for the purposes of this chapter. Similarly, we welcome the clause in providing the transparency, consistency and clarity needed.

Kevin Hollinrake (Conservative, Thirsk and Malton)

The hon. Member for Bermondsey and Old Southwark thinks that trading standards is not the right body; the Government think that it is, and that position—of it not being the Financial Conduct Authority—is supported by the Law Commission. These are clearly not financial products. They are not defined as such in the relevant legislation.

Trading standards already has a business relationship with supermarkets. There is already a Primary Authority Supermarkets Group in the trading standards network; it therefore seems logical, given that supermarkets will probably be offering these kinds of services, that this should be handled by trading standards.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Why does the Minister think that the Chartered Trading Standards Institute does not want this responsibility?

Kevin Hollinrake (Conservative, Thirsk and Malton)

That is not the feedback that I have heard. I am very happy to see the information that the hon. Member has in front of him and to try to meet those concerns of the trading standards body. Trading standards is the most relevant body in our view; the hon. Gentleman may take a different view, and he is entitled to do so.

The shadow Minister mentioned small businesses. The small businesses that are excluded are those with an annual turnover of less than £1 million and collect less than an average of £10 a month from customers, so we do not see those as having the same potential detriment as with other, larger organisations.

As for traders passing on the costs of the insurance or the trust, they are clearly prohibited from doing so in this legislation. There is a requirement, as the hon. Lady will have seen, for the accounts of a relevant trader to be audited every three years; we would expect those checks to take place at that point to ensure that it was being done appropriately.

On payments being made, clearly that will be a case for either the insolvency practitioner or the insurance company, but we would expect that fees held in trust would be rapidly returned to people who were due to have their money returned. On the shadow Minister’s point about 30 days, well, it is

“before the end of 30…days”,

so the information may well be provided, as she would desire, much more quickly than that.

Written evidence reported to the House