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Lord Razzall: I support the remarks of the noble Lord, Lord De Mauley. My concern is very straightforward. This is clearly a highly desirable clause giving powers to provide intermediate action. My concern is that it will be a lawyers' paradise. The Human Rights Committee is indicating it believes that there is a serious human rights concern here, but Ministers in another place are saying that they do not believe that is so. The way in which such disputes are usually recognised and regulated is through the courts. I should think it would be to the Government's benefit to bring forward a clause that we all support by accepting this amendment or introducing their own to make it clear beyond peradventure that there is no human rights risk.
Lord Sainsbury of Turville: Clause 38 enables the OFT to impose intermediate sanctions on licensees, and these sanctions are called requirements. Requirements are an important new tool for the OFT to ensure an effective and targeted licensing regime. Currently, the OFT's powers are limited to refusal of an application, or granting a licence on different terms. They can also vary, revoke or suspend an existing licence. The effects of these sanctions can be severe as they can prevent people from trading. The OFT adheres to the Cabinet Office enforcement concordat, which means that the regulatory action it takes must minimise the costs of compliance to business by ensuring that any action be proportionate to the detriment caused. That, in turn means that the OFT is able to act only in the most serious cases, where a person is simply not fit to hold a licence.
In many cases, the OFT is powerless to address consumer detriment because withdrawing a licence would be disproportionate. For example, if there were
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a problem with the sale of credit in one branch of a national company, it would not be justifiable to revoke the whole company's licence. A similar situation occurs where one employee is intimidating customers when collecting debts. Those cases may not be serious enough to call into question the fitness of a person to hold a licence, but the OFT should be able to act to protect consumers. That is why we have proposed this power to impose requirements on licensees. The OFT has produced a note on requirements, which is in the House Library and gives more information on how the OFT intends to use this power. It states that dissatisfaction is dependent on the OFT having evidence that the conduct causes or could cause consumer detriment; and that it is directly linked to the activities covered by the licence or licence applied for. The note also gives examples of cases where requirements may be considered.
Perhaps I may give some practical examples. The OFT could use this power to address a wide range of problems. For instance, if there were problems with certain employees explaining credit agreements to customers, a requirement for training employees could be imposed. It might provide that sales representatives in a named branch are trained to inform consumers how they can cancel their agreements. Or if a debt collector's employees were unfairly pressurising customers by calling very late at night, a requirement could stipulate that they should call only between 8 am and 8 pm. A requirement may also refer to a person other than the licensee. However, it would be addressed to and binding on the licensee. And it can require that a particular person does not undertake a specific activity such as collecting debts in person.
The amendment before us would severely limit the effectiveness and flexibility of the OFT's powers to impose requirements on licensees by limiting the circumstances under which it could impose requirements. I have explained that we are not talking about fitness to hold a licence or breaching specific provisions in the Act, but about general conduct of a licensee that could cause consumer detriment. Neither of the examples that I have just given breach any specific provision in the Act, but I am sure that Members of the Committee will agree that they are likely to cause considerable consumer detriment, and that something should be done to deal with that. That is what requirements are intended for. The amendment would prevent those cases being dealt with because of the way in which it limits the circumstances in which requirements could be imposed. That would reduce consumer protection as the OFT's ability to improve the conduct of licensed business would be curtailed.
However, there are already sufficient safeguards built into the Bill to prevent the OFT abusing the powers in Clause 38. The OFT will publish guidance on how it will use those powers. An OFT note on requirements has already been lodged in the House Library. The OFT will have to let licensees know that it is minded to impose requirements, explain why and
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give them an opportunity to make representations on the proposal. Moreover, requirements can be appealed to the new appeals tribunal, which provides a safeguard against OFT exercising any powers unreasonably.
That power does not enable the OFT to tackle the fitness of a licensee and is not therefore about depriving him of a possessionthe licencebut about ensuring the proper use of the rights that he enjoys under the licence. There is, therefore, a very good argument that those powers fall within the exception to Article 1 Protocol 1 of the convention; that is, they are not about taking away assets from people, but about controlling the use of those possessions, which is why it is compatible with human rights legislation.
We believe that the OFT's powers contain sufficient procedural safeguards, which I have set out, and give due protection. So I urge the noble Lord not to weaken the extra consumer protection that the Bill brings, and hope that he will agree to withdraw his amendment.
Baroness Oppenheim-Barnes: Will the noble Lord expand on one point? He spoke very reasonably about a case in which one person in a large company has done something that is contrary to the regulations, or is contrary to the OFT's view. Is there any figure in the noble Lord's mindor anywherewhich would allow a certain number of those contraventions to take place in a company before action would be taken? If they were all individually done, there could be as many as 12 or 13 such contraventions which would not be caught. Does the noble Lord have in mind a number that would exempt a company?
Lord Sainsbury of Turville: The issue is about proportionate action. If there are examples of that taking placeeven in a huge companyin a particular branch or place, it would be proportionate for the OFT to take action on that and to lay down a requirement, so that it can be reasonably content that it will not happen again.
Lord De Mauley: I hope I gave the impression that we recognise the advantages of the intermediate sanctions, which are, of course, an improvement over a single sanction of removal of a licence. I also hope that I have explained our concerns about the use of the
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word dissatisfied, in particular. While we are happy to withdraw the amendment in Grand Committee, we reserve our right to come back at Report.
After section 183 of the 1974 Act insert
"183A OFT GUIDANCE
(1) No guidance is to be published under the 1974 Act without the approval of the Secretary of State.
(2) In preparing or revising guidance under that Act the OFT shall consult such persons as it thinks fit.""
The noble Lord said: The amendment would require the OFT to produce guidance before the provisions on unfair relationships came into force, and is therefore concerned with ensuring greater certainty about what is meant by "unfair relationships". As we have already discussed, there is a lack of detail in the Bill; far too many of the significant policy areas have been left to secondary legislation and guidance from the OFT, none of which has been clarified by disclosures to date. That is unsatisfactory and will create uncertainty not only for business, but for consumers. In addition, Parliament will be denied an opportunity to consider vital detail.
As the Bill is drafted, the detail of key features is left to be developed by the OFT, an agency over which the Government have limited ministerial control, and in an area where it is also the regulator. As a result there is a danger that the OFT may become both judge and jury in these matters. The proposed new clause in the amendment seeks to address the issue by requiring that approval is obtained from the Secretary of State before OFT guidance is published, and that the OFT consults relevant parties on the content of that guidance. That builds in essential safeguards, by enabling the Secretary of State to ensure that the OFT acts in accordance with Parliament's wishes, while not interfering with the detail of that work, and ensures that those affected have the chance to influence the OFT's direction before it is set in stone.
The Minister in the other place said that, in his view, the proposed new clause would undermine the independence that Parliament gave to the OFT under the Enterprise Act 2002. That independence may have been attractive to legislators at the time, but matters have changed with this Bill and with Hampton. I mentioned earlier the extensive array of new and far-reaching powers that the OFT would have, and I shall not bore Members of the Committee again with a list of them. Those and other aspects of the Bill would make the OFT a different regulator from that before Parliament when it considered the Enterprise Billa regulator with inappropriate powers. Accordingly, I beg to move.
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