Consumers, Estate Agents and Redress Bill [HL]

My Lords, Clause 46 allows the Secretary of State to make orders requiring regulated service providers to belong to a redress scheme. It specifies that such a scheme must be approved by the relevant regulator or be administered by the Secretary of State or a person appointed for this purpose, and designated as an appropriate redress scheme. Before an order can be made under the clause, the Secretary of State must consult the relevant regulator and others with an interest in the matter. A redress scheme is defined as a scheme under which consumers’ complaints may be made to, and investigated and determined by, an independent person. The independent person must be independent of the service provider against whom the complaint is made and the relevant regulator in relation to that service provider. The Secretary of State must be satisfied that there is at least one redress scheme in existence that service providers who are required by any order to belong to a redress scheme are able to join before making such an order. In the event that there is no scheme established by industry, this clause makes provision for the Secretary of State to establish one. Subsection (5) requires that the Secretary of State seeks the consent of Welsh Ministers before making an order that relates to a water undertaker or sewerage undertaker for an area that is wholly or fully in Wales. I recognise the concerns that have been expressed on this point and in Committee, especially by the noble Lord, Lord Newton. I understand that some noble Lords would prefer that the Bill provided for only one redress scheme to be established in each sector. As drafted, the Bill leaves open the possibility of a sectoral regulator approving just one scheme for its sector. That is indeed our policy preference; I make that clear to noble Lords. However, we do not feel that it is appropriate to prescribe that as a requirement on the face of the Bill, as it may not be appropriate in all sectors or in all circumstances. We believe that the sectoral regulators are best placed to decide the appropriate number of schemes to be approved within each sector. In approving a redress scheme, the provisions in the Bill place a requirement on a regulator to have regard to the total number of qualifying redress schemes available to the relevant service providers. That is intended to avoid any undue proliferation of schemes in a sector. A regulator could indeed decide that the interests of consumers would not be served by multiple schemes, and so might only approve one scheme. I consider that that would provide the greatest degree of clarity and efficiency for consumers and service providers alike. I am happy to reassure your Lordships’ House that the Bill does not require there to be more than one scheme in each sector. We should recognise that the market sectors as they are today will inevitably change over time. What is appropriate today may well be unduly prescriptive and damaging in the future. A redress scheme set up by the current market incumbents may prove to be entirely unsuitable for new entrants in the years ahead, and could well represent a barrier to entry into developing markets—a barrier that is avoidable today. This clause introduces a statutory requirement for service providers in the energy and postal sectors to belong to a redress scheme, and will give consumers in those sectors greater assurance of achieving certainty of resolution of complaints.