Consumer Protection from Unfair Trading Regulations 2008

My Lords, I thank noble Lords and the noble Baronesses for their kind words of welcome. I feel it is something of a snare because from now on it is going to go downhill. Let me start with the points raised by the noble Baroness, Lady Wilcox, particularly on the issue of international uniformity. This is a problem which we face in many areas but this minimum or maximum directive has to be written across international legislation—it cannot be embellished—and this gives it a better chance of a uniform introduction across the Community. The European Court of Justice will have a responsibility for ensuring a consistent approach and the Commission is chairing a series of working groups on transposition and consistent enforcement which, it is to be hoped, will ensure the kind of uniformity the noble Baroness seeks. Certainly the Government have the same aspiration. On small and medium enterprises, we agree they are important and share the concern that the publicity and guidance should be on a particularly grand scale in order to reach such enterprises, as the noble Lord, Lord Whitty said. However, the regulations are intrinsically simpler than all the laws they replace, which is very important. It was a mighty task to incorporate in these regulations a comprehensive knowledge of the predecessor laws and we commend the people who did it. Now we have a single concept of fairness and specific examples of regulations which can be seen on one or two pages. I hope that business will find these regulations easier to understand and easier to comply with. The noble Baroness asked whether the regulator, the OFT, and the local regulators, trading standards, will have sufficient resource. In both cases we believe that their current resource will be sufficient because of the change from many laws to a simple law. The Government are not convinced that the implementation of the Unfair Commercial Practices Directive will create new burdens on either the OFT or local authorities. It will replace many existing legislative provisions which trading standards authorities had the duty to enforce. We accept that the regulations also contain new protections which will need to be enforced but, beyond the need for training on these new rules, which the Government are funding, we do not believe they should inevitably lead to additional enforcement costs. Rather they will provide local authorities with a greater flexibility to prioritise their enforcement work and to tackle areas causing maximum consumer detriment and will provide more effective and flexible sets of enforcement options. However, the Government are investing £7.5 million over the next three years in specialist trading standards scam-buster teams. These regional teams will work across Great Britain, focusing on the worst rogue trading practices. There will also be teams at the forefront of using these new regulations. The noble Lord, Lord Razzall, asked that this be handled by primary legislation. But, of course, this is a European directive and we have a consistent way of implementing European directives. Yes, it is indeed through secondary limitation, with all its limitations, but there is a burden on us in these circumstances to have extremely comprehensive consultation leading up to the publication of regulations. We believe that that has happened in this case. Noble Lords referred to some of those consultations and how the regulations have been improved as a result of it. This has led to a recognition that enforcement must be proportional. While it is quite true that these regulations make the criminal law more capable of being involved in their enforcement, the Government’s whole theme is a proportional approach. On the issue of individual rights of redress, consumers already have extensive private law rights in contract and in tort. Nevertheless, the Government accept that providing a private right of redress in relation to the regulations could clarify existing consumer rights. It would enhance consumer rights in areas where the regulations provide new or improved protection—for instance, in relation to aggressive commercial practices—and should stimulate traders to greater compliance with the law. However, we are concerned that adopting a private right of action for the regulations might have unintended and adverse consequences by potentially providing consumers with an undesirable attitude to sue traders and by impacting on the law of misrepresentation. The Government have therefore asked the Law Commission to undertake a project to consider how far a private right of redress for unfair commercial practices would simplify and extend consumer law. On the point raised by the noble Lord, Lord Smith, on the Advertising Standards Authority, I can confirm that the Government would expect enforcers to secure compliance with the regulations in accordance with Hampton principles of targeted and proportionate enforcement in line with the regulator’s compliance code. The investigative powers in the regulations do not distinguish between criminal and civil outcomes so as to not predetermine how the breach will be tackled. This will enable enforcers to choose the remedies appropriate to the particular case. There will be clearly a case for criminal prosecutions in the most serious breaches, but the Government would encourage enforcers to use the full range of remedies, including advice and information, established means such as the Advertising Standards Authority and civil remedies. We strongly believe that where good practice has been established, particularly by the Advertising Standards Authority, these regulations should use and build on that good practice. It is absolutely the point that the regulations in general are all-embracing—and I thank my noble friend Lord Borrie for bringing it out. They start from a general concept and then move to specifics for certainty in clear cases. That is their strength. These are great regulations. In some ways, I could not have had better regulations to start on, because they are so centrally valuable, representing the most important change in nearly 40 years in this area. But this is not a statement that former bodies have failed; they have done great service over many years. It is saying that basically, because of the European regulations, we have had to look at our own scope. So we can take the best practice, put it in these regulations, build on it and get a unified approach. We thank the former bodies for their contributions so far; as we have said, some of them will be used in the proportionate approach. I touched on the point about ensuring resources. I agree with the noble Baroness, Lady Buscombe, that it will be important for businesses both large and small to continue to familiarise themselves with the implications of the new regulations. To assist this process of familiarisation, the Department for Business, Enterprise and Regulatory Reform is working with the Office of Fair Trading to educate businesses, consumers and enforcers in the run-up to, and in the months following, the coming into force of the two sets of regulations being debated this evening. This will include the distribution of pamphlets to more than 700,000 businesses, making them aware of their responsibilities under the new regulations. In addition, the department has produced a communications toolkit for all business stakeholders, alerting them to the introduction of the new regulations and explaining how to publicise them to their members. A major public relations campaign designed to raise long-term awareness in consumers will be aimed at national and regional press and broadcasters as well as the many consumer titles in the marketplace. I am sure that that will bring out the differences. The predecessor legislation was aimed at the world being fair and the regulations are aimed at the world being fair. I hope that businesses will see this as an evolving thing rather than just asking them to scrap their mindset and start again. It is so tempting to use the acronym. On the matter of ““buy one get one free”” offers and free gifts with purchases, I agree these are well established marketing practices in the UK and not in themselves misleading. We do not believe that the specific prohibited practice relating to the use of the description ““free”” will prevent the use of the word ““free”” in these cases. This is because the unavoidable cost of responding to the commercial practice is the cost of buying the product—the one item in the case of ““buy one get one free”” or, say, the magazine with which the free gift comes. The area in which there may be some intrusion is with bundling situations, when part of the bundle is described as free when in practice there is an expense in acquiring the larger bundle. I thank noble Lords for being so kind in letting me present these regulations. The consumer protection regulations make an excellent new law that will protect millions of people in outlawing a host of misleading and intimidating sales practices that are all too often used to back consumers into a corner. The new protections will make life a lot tougher for rogues and make it easier for legitimate businesses to operate. Simplifying the consumer framework will make it easier for businesses, enforcers and consumers to understand. The business protection regulations will ensure that this does not lead to any reduction in business protection. I commend the regulations to the House. On Question, Motion agreed to.