Enterprise Bill

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Mr. Purchase: That is not enough.

Mr. Waterson: That may be right.

In case hon. Members are worrying, I should say that my lady wife and I did not join a holiday club in the Canary Islands. We noticed, however, that the organisation involved was substantial and that it was run entirely by English people. That part of the world has a long tradition of such things, which first

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appeared under the timeshare brand name and then under that of holiday clubs.

Proposed subsection (10) identifies a range of issues that are of interest not only to consumer organisations and trading standards departments, but to Members of Parliament, and I am sure that those present have come across at least a sprinkling of references to them in their mailbags and surgeries. One such issue is the refusal

''to leave a consumer's home until a contract has been signed''.

I mentioned the elderly lady who had people in her home for five hours. The amendment also refers to

''putting pressure on a consumer to sign a contract by stating that the same goods . . . will not be available later when this is not the case . . . exaggerating the dangers to which a consumer may be subject to persuade him to buy an insurance policy . . . pressuring a consumer to sign a contract without a reasonable opportunity to study the contents''.

It goes on to mention

''accompanying a consumer from his home to obtain money for a purchase'',

which presumably means frog-marching the hapless consumer to a cash machine to draw out money to pay for an item.

The amendment then refers to

''selling goods or services which are clearly unsuitable''.

I shall not to go into it in great detail, but Age Concern has sent all members of the Committee a very good report. I looked at the draft some weeks ago, partly because I am co-Chairman of the all-party group on ageing and older people. The report provides worrying evidence of the methods used to sell products such as special chairs and beds to elderly or disabled people, yet much of the high-pressure salesmanship involved avoids existing regulations. People who thought that they were replying to an advert for embrocation for their backs have ended up buying a massive and very expensive armchair. Some have been asked to pay enormous sums and to put down large deposits. Others have been blackmailed into buying a stair-lift by being given a worrying picture of what life would be like if they could not get up the stairs. Some of the items involved are incredibly expensive, such as a rise and recliner chair that cost £4,350. So the report goes on; I commend it to the Under-Secretary and to members of the Committee.

Another scam involves

''awarding a prize which promises a free offer or reduction in price for goods or services''.

Interestingly, we were told on the street in the Canary Islands that we had won a prize. It never materialised, but it was supposed to be enough to get us into the premises just around the corner. The amendment refers to a whole series of other scams, including—last, but not least:

''obstructing a consumer who attempts to terminate a contract.''

Back in 1973, when part III of the Fair Trading Bill was debated in Parliament, Sir Geoffrey Howe, as he is now, said that its purpose was to create a climate in which the overwhelming majority of traders who dealt fairly with the public could continue to flourish without interference, and in which the minority who

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maintained an unhelpful attitude to justified complaints by consumers would see sense and, in the end, the necessity of mending their ways and improving their standards. I think that it would be fair to say that all members of the Committee believe that part III of the 1973 Act has simply not lived up to the ambitions that people had for it. The provision was supposed to have been targeted at traders who followed a consistent course of conduct that was unfair and detrimental to consumers. None of us regrets the passing of part III. We merely want it to be replaced with something more effective and immediate.

I am pleased to say that a variety of other bodies supports the amendments. I have a letter from the Institute of Plumbing, in which it expressed support for the NCC's proposals. It states:

''The addition of a 'general duty not to trade unfairly' will help protect the public from unscrupulous and sometimes dangerous traders in our industry and elsewhere.''

The Law Society—curiously so; I would have expected it to have reservations, but the opposite is the case—has a particular reason for supporting the amendments. It states that

''legal services are usually a 'once off' ''—

let us hope that remains the case—

''and—frequently—a 'distress' purchase and so most consumers do not have a ready framework against which they can judge and compare price and service.''

The Law Society then speaks about the so-called ''claims farmers'' or self-styled tribunal advisers who resort to pressurised selling techniques that involve repeated cold-calling by telephone and repeated unsolicited visits to consumers' homes. It states:

''Part of the selling process can involve pressurising the consumer to overstate their claim with the consumer being given an unrealistic picture of the compensation that might be available. The consumer is persuaded to enter a complex agreement''—

one that he simply does not understand—

''concerning the purchase of insurance and/or the fees and expenses that will have to be paid''.

The Law Society is therefore firmly supportive of those two amendments.

It is fair to say also that there are some less enthusiastic voices. The CBI is concerned about the extension of stop now orders. It says

''They have been used extensively by the OFT since their introduction in June 2001 but they have operated with a total lack of clarity and certainty of process.''

It went on to discuss the delay in producing guidance, but we were fortunate to received guidance on stop now orders on the day of Second Reading. It then said that it would be ''looking for necessary safeguards''.

The joint briefing from the Local Government Association and the Local Authorities Co-ordinating Body on Regulation Standards is generally supportive, but it echoes a point that we made on Second Reading and have made more than once in Committee. It states:

''these proposals will inevitably increase authorities' workloads. After consulting our member authorities, we believe that additional

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resources will be required for trading standards departments in the region of £10–£15 million.''

I want to press the Under-Secretary on some of the scams and abuses that the consumer organisations say will not be affected by this part of the Bill, not even as amended by the Government's amendments, which we shall discuss in more detail in another debate. It seems fairly clear, to use the words of NACAB, that

''the scope for action will comprise existing legislation''.

In other words—I shall not be churlish about it—powers are quite laudably being extended to a range of activities that are the subject of existing legislation, whether primary or secondary. That will make a difference to many consumers, but NACAB goes on to say:

''For the CAB Service the acid test of whether the Enterprise Bill will bring improvements for consumers is whether it will mean an end to practices like the following'',

and it lists a number of activities of rogues and tricksters which they believe will not be affected by this part of the Bill. Again, I expect the Under-Secretary to deal with those issues.

NACAB further illustrates the point with the story of some CAB clients in the London area who were pressured into buying a holiday scheme:

''They attended a presentation, having been told they had won a holiday, at which they were sold Canal-Time on a houseboat. When they tried to withdraw, they were told that they must pay £595 in administration costs or the company would sue for the full cost of the deal—£9,445. They did not get cancellation rights under timeshare legislation because boats are not included under current timeshare legislation.''

Pyramid money-gifting schemes are also mentioned; some hon. Members will have come across those. The example given is of a retired man from the north-east. He

''invested his savings on the promise that the returns were guaranteed. He lost everything and is now receiving money advice from the CAB for non-priority debts of over £333,000.''

Mr. Harry Barnes (North-East Derbyshire): I am grateful to the hon. Gentleman for having tabled the amendments. Now that we have moved on from the CBI-influenced amendments that we considered earlier, we can be sure that we shall deal with a lot of interesting information from the National Consumer Council and the citizens advice bureaux—there are some seven examples in the NACAB briefing. Another area is junk mail—an incredible rip-off practised on the poor and vulnerable—which ties in with many of the other methods that have been described.

Mr. Waterson: I am grateful to the hon. Gentleman—he makes a telling point—if a trifle worried whether some of my amendments will pass muster as far as he is concerned. I have lurched to the left in no uncertain fashion.

Credit repair scams, which we shall probably discuss when considering the part of the Bill dealing with insolvency, are also referred to by NACAB. It reports:

''Clients of a CAB in South London contacted a local credit repair company who promised to repair their credit rating in two weeks for a fee of £400. The clients received no help at all from the

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company. When eventually the clients visited the offices of the company, they found that the company was no longer in existence.''

I have already touched on the really big problem, that of timeshares and holiday clubs. Of principal concern are sales of timeshares that do not involve a specified building, and those involving periods of less than three years, thereby removing themselves from the scope of current legislation. As I understand it, and as NACAB and others read the legislation, the Bill will not deal with that. NACAB goes on to say:

''Many companies try to avoid the legislation and evade the cooling off period by designing a product so it is not a time-share in the legal sense.''

NACAB's briefing gives several examples of clients being taken for a ride by timeshares that call themselves holiday clubs.

Doorstep and distance-selling is a problem not just for the average consumer but, as I have tried to describe by reference to the Age Concern report, for the elderly and housebound.

 

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Prepared 23 April 2002