Enterprise and Culture Committee, 09 Jan 2007

Meeting date: Tuesday, January 9, 2007

Official Report 136KB pdf

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Consumers, Estate Agents and Redress Bill

I call the meeting to order. Welcome to the Enterprise and Culture Committee's first meeting in 2007. I wish committee members and all present a happy new year. This will be a very interesting year.

On a couple of housekeeping points, I ask everyone to switch off—rather than just switch to silent—their mobile phones and BlackBerrys. I have received apologies from Stewart Maxwell, who is unable to join us through illness. I welcome Fiona Hyslop, who is here as his substitute. I have also received apologies from Jamie Stone, who has been delayed but hopes to join us at some stage later.

We have only two items on our agenda today. Item 1 is consideration of a legislative consent memorandum on the Consumers, Estate Agents and Redress Bill that is currently before the United Kingdom Parliament. We will take evidence on the bill from two panels of witnesses.

I welcome the members of our first panel: Douglas Sinclair, who is the chair of the Scottish Consumer Council; and Martyn Evans, who is the SCC's director. Their submission has been circulated to members, but I ask them to say a few words by way of introduction before we move to questions from committee members.

We welcome the opportunity to give evidence to the committee.

The SCC strongly supports the bill for two reasons. First, the bill will reduce fragmentation in consumer representation by bringing together three major consumer advocacy bodies, which are the National Consumer Council, Energywatch and Postwatch. That will be good for consumers because it will not only maintain sectoral expertise, but provide us with an additional capacity to consider consumer issues in a broader context. In effect, the bill will create a stronger advocate for the consumer. Secondly, the bill will deliver best value in the use of scarce consumer advocacy resources, particularly by amalgamating the back-office resources of the three organisations.

We were delighted to see the commitment in the bill to continue to have, within the UK structure, a separate Scottish body with an office in Scotland. However, we were initially concerned that the bill as introduced might not adequately safeguard the SCC's important function of championing change in Scotland through independent research and policy development. In our letter to the committee, we stated that we would seek minor, hopefully non-contentious, amendments to the bill first, to ensure that our current functions and remit are secured, secondly, to clarify our relationship with the Scottish ministers and the Scottish Parliament and, thirdly, to deal with our funding arrangements. Those amendments were debated during the committee stage of the bill in the House of Lords. It is fair to say that, after a very useful debate, we no longer have concerns about the drafting of the bill in respect of the latter two issues—our relationship with the Scottish Parliament and the Scottish ministers and our funding arrangements. On the remit and functions of the new Scottish consumer council, we are still concerned that the bill as drafted does not reflect the active policy development role that is currently delivered by the SCC.

It is important to make the point that we have at no stage sought to increase the powers or remit of the SCC but have tried simply to enshrine in statute our current role. The bill describes our remit as advisory, whereas it is not simply advisory. In Scotland, the SCC undertakes all the functions of the NCC, including representation, research and information provision. However, I am glad to say that, since we first raised the issue, we have received an assurance from the Government that it recognises, and will seek to address, our concerns about the clarity of our remit and function.

Good afternoon, gentlemen. My question is prompted by the submission from Energywatch Scotland. I do not ask for comments on that submission specifically, but I want to tease out a little more, in the light of those assurances from the Government, the SCC's concerns about its policy development and research role. Will that policy development and research role cover the functions of all three bodies that will be amalgamated under the bill?

As far as we are aware, the assurances that we have been given cover the new organisation and, therefore, all three of the existing organisations that, put together, will form the new Scottish consumer council.

I want to ask about particularly vulnerable consumers who, as we discovered during our consideration of the Bankruptcy and Diligence etc (Scotland) Bill, tend to have problems relating to multiple debt and fuel poverty and are often in hock to organisations that, sometimes, have dubious debt recovery techniques. Can you talk about how the new body will be able to support such people more appropriately?

In terms of vulnerable consumers, the first thing to say is that the bill sets out what we think is an improved complaints mechanism that makes service providers deal with complaints themselves under the direction of regulatory bodies. Further, there is an ombudsman service with real teeth, which will ensure that redress is made.

There is a concern about particularly vulnerable consumers who need to be supported through the process of complaint making, including taking the complaint to an ombudsman. The new organisation will have a duty to support those who are faced with disconnection and will also have powers to help others.

Through our work, and as a result of having worked closely with Postwatch and Energywatch, we are aware that, often, vulnerable consumers have not one but many debt problems. The new organisation faces a challenge to try to work co-operatively with others who have expertise on debt.

To answer your question, we think that it is appropriate that we have the duty and the powers that I described and we believe that the wider context of complaint making and redress handling is properly addressed in the bill.

What sort of representations do you want the committee to make to the Parliament and the minister?

We would like you to support our view that our remit should be included in the bill. The bill should set out our functions relating to representation, information and research, which will be devolved from the NCC to the SCC. That would reflect the current situation. We are not looking for anything extra; we are simply asking for the situation that currently pertains to be properly reflected in legislation.

I want to ask about your criteria for the changes that you would like to be made, particularly with regard to the inclusion of your remit in the bill. If those changes were not made, would you want the bill to come back to the Scottish Parliament to ensure that the remit is established? Quite clearly, we could do some of the things that you suggest. How strongly do you feel about having the remit in the bill?

We think that it is right that legislation should reflect the reality of the situation. The bill provides for the new NCC to devolve its functions to the new SCC and the new Welsh consumer council. However, rather than simply relying on that happening, it seems to us to be more sensible to have in the bill a statement about the powers of the new SCC and the new WCC.

Obviously, the wording of the remit could address some of the concerns about redress. Some of the points that were made by Energywatch related to the speed of representation and redress and it cited the Financial Ombudsman Service's scheme to ensure rapid response to complaints. Should redress be included in the wording about your remit that you would like in the bill?

No, redress is a separate issue from the remit and functions of the new organisation. We have received clear and strong assurances that the Government has understood our concerns and will seek to address them in the future stages of the bill as it goes through the legislative process in the United Kingdom Parliament.

I was interested in your comments about policy. I understand that the SCC has put forward policy suggestions about school transport and the parent forums. You said that there might be concerns about the policy function being restricted. If the amendments established policy functions, would that help to address those concerns?

It would. If the amendments that we have suggested were included in the bill, we would be comfortable. As I said, that would simply reflect what we currently do.

As there are no more questions or comments from committee members, I thank the witnesses for their evidence, which was brief but helpful.

I welcome Allan Wilson, the Deputy Minister for Enterprise and Lifelong Learning, and his team. I ask the minister to introduce his team and say a few words by way of introduction, after which we will ask questions.

I wish you, convener, and the committee the best of luck in the new year—you will need it. On my right is Neel Mojee and to my left are Andrew McConnell and Andrew Campbell, who are, happily, here to answer any questions that the committee may have on the legislative consent memorandum. I am grateful for the opportunity to speak in support of the memorandum.

The Consumers, Estate Agents and Redress Bill aims to strengthen the position of consumers. As the committee is well aware, much of the bill deals with reserved matters. As you have just heard, the part that has devolved aspects is the creation of a new national consumer council, with a committee for Scotland, to be known as the Scottish consumer council. The core functions of the council in relation to consumers will involve representation, research and provision of information. It will have certain powers to investigate consumer complaints, but it will not have regulatory powers. Its remit will extend to all consumer areas, including food safety, which is a devolved matter. Any activities of the council that go beyond the consumer protection reservation in the Scotland Act 1998 will also be devolved.

It is essential that the new council can exercise its functions in any area of consumer activity, as the present Scottish Consumer Council does. Therefore, as you have just heard, a legislative consent motion is required. If it was not passed, the council would be unable to represent effectively the interests of Scottish consumers, which I am sure none of us wants. The Department of Trade and Industry, which is leading on the bill, at present provides core funding for the NCC and, through it, for the SCC. I know that the DTI wishes to ensure that the current excellent work of the SCC continues. We have made it clear to the DTI that the bill should enable the SCC to continue the work that it does now.

The detail of how that is to be achieved is being debated at Westminster. I am sure that the peers and members of Parliament will listen to the views of the SCC, which have been shared with the committee this afternoon. Last week, Lord Truscott, the DTI minister in the House of Lords, wrote to Lord O'Neill of Clackmannan, who is known to several members, to say that he will consider whether anything further ought to be done on the remit of the new SCC. The report stage will possibly be on 22 January. I will speak to Lord Truscott about the issue to reinforce what we have just heard.

The bill will also merge the UK consumer bodies Postwatch and Energywatch into the new council. As was discussed, the council will exercise an important Scottish function in relation to postal and energy customers, which should strengthen the Scottish consumer voice in those sectors.

I hope that the committee supports our view that a legislative consent motion is necessary. I am happy to deal with any questions that arise.

I will pursue similar questions to those that I asked the Scottish Consumer Council representatives. Given their replies to me, which you heard, what will you now say to Lord Truscott when you meet him, particularly on the remit and powers of the new body in Scotland in policy making and in dealing with the Scottish ministers?

At the risk of repeating myself, we support the Scottish Consumer Council's approach. The DTI and the Westminster Government have no wish or intent to dilute or otherwise fragment the existing remit and responsibilities of the Scottish Consumer Council. In fact, the thrust of the bill is to improve and increase the consumer's voice, to ensure that it is adequately represented and, as you say, to ensure that disadvantaged consumers may have advocates to represent their interests. There is certainly no intent on the part of the DTI, the UK Government, the Scottish Executive or anybody else associated with the bill to do otherwise. That is the context in which Lord Truscott wrote to Lord O'Neill last week.

Energywatch raised a number of concerns in its submission. The first was about resources; the second was about the widening of the duty in clause 12 of the bill to ensure that the new consumer advocacy body can intervene on behalf of all consumers who are off supply or at risk of being off supply. Another of its concerns was about the ability of the SCC to interrogate company performance on consumer complaints. What is your attitude to Energywatch's points?

Energywatch has been in discussions with DTI officials. I understand that the DTI is considering Energywatch's points closely.

Does the Scottish Executive have a view?

We are keen to ensure that vulnerable consumers are protected, to maintain the current provision and to increase protection for vulnerable consumers.

Is it fair to say that you have some sympathy with the broad thrust of Energywatch's comments?

Yes, if you extend what I said generally about all consumers to include specific groups of consumers, whether they consume energy services or other utilities. That is our position and that of the DTI. I do not anticipate any issues in that context.

Do committee members have any other questions or comments?

I am slightly concerned that we are being asked to recommend agreement to a motion on a bill that has not yet completed its progress. We are not absolutely certain that the amendments that the SCC asked for will be included. What redress will there be for us in Scotland if what is asked for is not granted?

That is a fair point. Given that the legislative consent motion per se strengthens the voice of consumers more generally, the outcome would have to be balanced with the product of the discussion to which I referred. I repeat the reassurance that the outcome of those discussions about the amendments that we all wish to be adopted will be positive.

In the unlikely event that the amendments are not adopted, we will require to return to the process to make alternative provision. I reassure members most strongly that nobody here wants in any way to dilute, fragment or undermine in any other circumstances the existing powers and remit of the Scottish Consumer Council. It is a question of ensuring that the wording in the bill reflects that policy intent.

If everybody is happy, I suggest that we recommend that the motion be agreed to, subject to the qualifications and assurances that the minister gave us. Is that reasonable?

Members indicated agreement.