Consumers, Estate Agents and Redress Bill [HL]

moved Amendment No. 74: 74: Clause 48 , page 28, line 5, at end insert ““; and ( ) membership of such a scheme requires a supplier to have in place and operate appropriate and effective internal complaint handling procedures”” The noble Baroness said: My Lords, the amendment goes to the heart of what this Bill seeks to achieve: a new culture where responsible business practice empowers the consumer and where services are delivered and maintained cost-effectively and efficiently. The amendment would limit what could be a great deal of damage caused by an oversight inthe Bill. I thank the Minister for bringing forward government Amendment No. 69, which now includes the phrase ““best practice””, to a limited capacity, within the requirements for a redress scheme. This is a step inthe right direction, and I was pleased to see that the Minister had taken on board my amendment from Committee. His amendment takes the redress scheme in the right direction, but I am concerned that the wording could be circumnavigated by some redress scheme proposers to allow them to avoid making complaints-handling procedures a compulsory component of any scheme, thus creating inconsistency across the industry. Amendment No. 74 would ensure that no redress scheme would be approved unless it required all members to have in place and operate effective internal complaint- handling procedures. The initial function of the amendment is clear. Under Clause 46, the Secretary of State has the power to order all regulated suppliers to be members of a redress scheme; therefore, the inclusion of AmendmentNo. 74 would compel regulated suppliers to put effective complaints handling in place. It seems strange that the requirements for complaints handling are so flimsy in a Bill which postures to be the key to streamlining business and consumer relations. It is all very well offering redress to customers, but it is vital to remember that the redress scheme is the last stop in what we could describe as a journey of complaints made by the consumer. It is the last resort. If one is drawing up a Bill that is intended to align the provision of services with consumer satisfaction, a redress scheme that is designed to catch the worst failures in dealing with complaints should of necessity be designed proactively to prevent that failure in the first place. In 2007-08, Energywatch will receive, it tells us, 600,000 contacts from customers. Approximately 200,000 will require active intervention with the company. New arrangements will mean that, in that same year, the full burden of complaint resolution falls on those companies. This will require a major systems and process overhaul within each supplier if these complaints are to be dealt with effectively and constructively. Energy companies in particular do not have a good record of dealing with complaints, which are by definition technically challenging and complex. I am extremely anxious that, while the merger of Energywatch and Postwatch into the National Consumer Council could provide the perfect opportunity to relate one consumer matter with another, not only the most valuable evidence of complaints but also the effective delivery of service to the consumer, will be compromised. If complaintsare not easily accessible to Consumer Voice, which will be, after all, a sign-posting organisation, the operations of trading standards bodies, the citizens’ advice bureaux and regulators could be compromised by a lack of necessary information. The amendment does not re-invent the wheel. Indeed, a model of the system that it proposes is already successfully working in the financial services market. The Financial Services Authority already requires that membership of the Financial Ombudsman Service is dependent on an organisation having an appropriate and effective internal complaint-handling function. The Financial Services Authority goes one step further by prescribing the procedures that an organisation must follow when handling complaints, from ensuring that the complaint handler has sufficient authority to settle the complaint to offering redress. The energy industry is run on an entirely permissive model. Perhaps I may list some characteristic traits of our energy industry's attitude towards consumers. Not one supplier currently records all direct complaints in a manner which would meet criteria set out by the International Organization for Standardization. Not one supplier records a consumer's complaint if it has been resolved at the first attempt. Most suppliers are unable to conduct root-cause analysis of consumer complaints, so the same mistakes keep happening. No suppliers publish data on the quality of their complaints-handling services. I listened with great interest to the noble Lord, Lord O'Neill of Clackmannan, in Committee, where he suggested that the Bill should take heed of the financial services industry in streamlining complaints through one ombudsman. I hope that he will support the amendment—if he is in the House—which would ensure that, while there may not be one redress scheme, there would be a guaranteed strong standard of complaints handling and, most importantly, consistency across the industry. I hope especially that the noble Lord, Lord Whitty, whose eloquent contribution in Committee I read again with great interest, will be able to support the amendment. I remember particularly his saying: "““It is … important, that regulators do not have an option to specify higher standards of customer service, which they will regulate and for which there will be sanctions for failure, but have an obligation to do so””.—[Official Report, 9/1/07; col. GC76.]" I was pleased to see that he recognised the difficulties that the National Consumer Council faces. The simple truth is that complaints are set to increase as the population of this country increases and as more people use services. The new NCC, in its capacity as complaints handler, and the companies themselves are not, and will not be, equipped to process them. Her Majesty's Government have claimed that this Bill signals the improvement of consumer services and a future of streamlined research and response to the consumer from industry, yet the merging of bodies such as Energywatch and Postwatch, without ensuring that companies will now take on the burden of complaints, will amount to little more than wallpapering over the cracks. I know that the establishment of effective complaints-handling procedures will have a hugely positive impact on the combined forces of the new National Consumer Council, Consumer Voice and Consumer Direct. If consumers can expect to have problems handled efficiently and solved within a reasonable time frame, set out in advance by the company, that will reduce the impact on Consumer Direct of handling thousands of additional complaints and enquiries. Energywatch has emphasised that making complaints-handling procedures compulsory is the only way to achieve the dual objective of improving complaints handling and saving resources. It will allow the NCC to focus on delivering excellent research and policy work, and most importantly it will ensure that vulnerable consumers, especially those in need of additional advocacy and support, are not left behind by a so-called streamlining operation that does no more than provide a signpost that points away from the real problems that people face. This amendment is vital to the success of Consumer Voice as a champion for consumers. The Minister's response at Committee was somewhat limited by the large group of amendments and was therefore somewhat disappointing. I hope that he will be able to accept this amendment or, at the very least, agree to look at it and for us to come back to it at Third Reading. I beg to move.