I rise to move Amendment 14, standing in the names of my noble friends Lord Mendelsohn and Lord Stevenson, and speak to the others in this group.
When we debated the issue of micro-businesses as consumers within the then Consumer Rights Bill, we argued—and I think the Minister sort of agreed in principle—that micro-businesses should be treated as consumers where they are purchasing goods or services which are not their core business. I think the example we cited was that we would expect a hairdresser to be knowledgeable enough in their purchase of shampoo, hairdryers and scissors, and so not to expect the same level of protection as when we as individuals buy a hairdryer from Boots. However, when a hairdresser bought some coffee for the staff, or a kettle to make it, their right to return that kettle, should it be faulty, should be the same as for any of the rest of us. So, essentially, business-to-business purchases which a small trader would have with its main suppliers should not attract the same consumer protection, but its one-off, non-essential purchases, should be covered.
I believe that the Minister’s main argument at that point against our amendment was that the Consumer Rights Bill was not the right place for it—but a Bill encompassing a Small Business Commissioner surely is. We have a number of asks for these amendments, each of which seek to put a small or micro-business in a similar position to an ordinary consumer when purchasing goods or services not core to the business.
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Perhaps I can best illustrate this by starting with Amendment 40, on the handling of complaints and access to redress. On complaints about unsatisfactory service or the quality of goods, our view is that the protections in the Consumer Rights Act about returns, refunds, repairs and unfair terms should be available to micro-businesses—which we define as having fewer than 10 employees, though of course we would be happy to discuss the exact definition if this principle were agreed. My guess is that the Minister would share our view that retailers or service providers would not have any problem with this. Indeed, in practice they probably treat a small commercial customer as if they were an individual. It seems nonsense that if someone running a small consultancy or barber shop runs out to buy a heater for the office and pays with a corporate cheque they have none of the normal consumer rights they would get had they paid cash or with a personal cheque or credit card.
On having complaints heard by an independent body, there is a similar issue with the EU directive on alternate dispute resolution, introduced on 16 March via the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015. These regulations require every service provider and retailer to be able to signal to complainants an appropriate ADR provider for that particular sector. Very sadly—this is a problem of Europe rather than us—the company does not have to agree that the complaint can be handled by that ADR provider, which is somewhat confusing for the customer but not in front of us today. Unfortunately, although the obligations from the directive as set out in the SI should have been in force on 9 July, they were postponed by the Government until this month. They are now the law. Before I go on to subsection (2) of Amendment 40, could the Minister update the Committee on the number of recognised ADR providers and what proportion of the total market she estimates is now covered in the manner required by the directive?
Amendment 40 would ensure that, as with any other customer or client, a micro-business should similarly be told of the appropriate ADR provider and, where a company uses that alternative dispute resolution provider, complaints from a micro-business would also be heard as with any other customer or client. Again, many existing ombudsmen schemes already allow small businesses, small charities and organisations like that to access their service. We are not talking about B2B complaints, where supplier contracts give rise to complaints. Where a micro-business buys something outwith its own specialist knowledge and core business—an umbrella for visitors or the services of a window cleaner—its ability to have a complaint dealt with quickly, cheaply and independently should be the same as for any other consumer.
The lead amendment, Amendment 14, is on the issue of unfair contracts, about which I currently know rather a lot, being in the middle of a house-move. The example I will give is my own but had much broader salience, unfortunately. Pickfords will do the removal and storage. I am sure it is a good firm, especially as I am moving to the headquarters of the
original Pickfords. However, it insists that we buy its full insurance despite much of it already being covered by our own house insurance. More than this, because I am a sort of sad anorak, I of course read all the small print—pages of it. I discovered that if something was broken I could make a claim only if I did so within seven days of delivery to my new house. Many noble Lords may be unpacked and sorted seven days after they have moved to a new house, but I have the feeling that I will not be. I doubt we will have finished or even started unpacking the books by then. However, there it is in very small print: only a claim made within seven days of the delivery to our house would be met. No doubt they would seek to enforce that if, a fortnight later, some very damp books were discovered. As a private consumer I could challenge the fairness of that term, given that it clearly was not brought to our attention. However, could a small business moving a couple of filing cabinets across town also claim that part of the contract as an unfair clause?
For these reasons Amendment 14 would enable small businesses to take allegations of unfair treatment or unfair contracts to the Small Business Commissioner’s complaints scheme. In similar mode, Amendment 24 would enable the commissioner to advise a court that a particular contract term is unfair and that the court may then declare that contract void. This is particularly important in the case of payment terms, where many a company is now requiring small firms—and, I gather, even very large ones such as WPP—to accept very long periods for payment of their invoices. Small firms are in a very weak position to negotiate against these. They will often be in competition with bigger firms, which can take the risk of long payments. They may not be members of a trade body which can advise or represent them. They need the work yet are in a totally unbalanced relationship as regards bargaining power with the much larger company, so they are not able to query these very long payment times. That just about sums up an unfair contract.
Finally, I turn to Amendment 48, which will again be familiar to the Minister as we sought to protect rent to buy consumers during the passage of the Consumer Rights Act. This amendment would require traders who offer hire-purchase agreements to provide proper information and explanations before a contract is made, allowing the business to compare the total sum due under the contract to a representative retail price for the goods. Importantly, it would end the practice of requiring the customer to purchase an insurance policy which is sold or brokered by the trader as a condition of entering into the contract.
Much of the Bill recognises the importance of promoting enterprise and helping small businesses get a fair deal. What it also needs to recognise is that—almost by their nature—small firms do not have in-house lawyers, contract checkers or savvy negotiators. They are often just individuals, with a talent for computers, dressmaking, importing, building or picture-framing. When they buy—not their essential tools or hardware, but their casual purchase or advice—they are not really in a B2B relationship. They are often as informed and savvy—or perhaps I should say as uninformed and unsavvy—as the rest of us. The way we can really
help them is to extend normal consumer and redress protections on such goods and services to them. I beg to move.