12 May 2009
Geoffrey Clifton-Brown raises a number of issues including the purchase of new properties, tour operators and ABTA, and scams involving fraudulent 'lookalike' websites.
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): As I said in the previous debate, it is a great pleasure, Mr. Sheridan, to serve under what is I believe your first chairmanship in this Chamber. It is also good to see the Minister; and I congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on the very reasonable way in which he put across the problems in his constituency involving dealing with a property company at Corinthian Quay, the holiday company, First Choice, and look-alike websites. I want to deal with all three problems in the brief time available to me. I am also pleased to follow the hon. Member for Solihull (Lorely Burt).
Of course, consumer affairs is a tremendously broad term, covering all interactions between the entities that consume—principally, the general public and small businesses—and those that supply, which are often large firms. There is quite a lot going on, both by way of Government changes and, as the hon. Member for Solihull said, through the European consumer rights directive. We welcome the merging by the Government, on 1 October 2008, of Energywatch, Postwatch and the National Consumer Council, to form a new statutory consumer watchdog, called Consumer Focus. The new organisation fights to secure a fair deal for consumers throughout the United Kingdom. It has the right to investigate any consumer complaint, provided that it is of wider interest to the public, the power to conduct research and the ability to make an official super-complaint about failing services. It would be interesting to hear how the Minister feels the new, merged organisation is doing, particularly as there is now such a narrow focus in the ownership of the energy markets. Some accusations have been made of cartel activity in the energy markets and energy pricing, particularly in relation to fuel poverty.
The hon. Member for Solihull referred to the consumer rights directive, which the current European Commission is considering, although it will of course probably have to be put through by the new Commission when that is adopted, probably in November. For the record, the proposal represents the most far-reaching change for European consumer law to date. It brings together four existing pieces of community legislation—on unfair contract terms, sales and guarantees, distance selling and doorstep selling—into a single horizontal consumer rights directive. It would be interesting to hear whether the Minister feels that the legislation on doorstep selling indeed deals with the points raised in an intervention by the hon. Member for Richmond Park (Susan Kramer) about the differences between guarantees affecting doorstep selling and selling on the internet.
The Minister for Trade, Development and Consumer Affairs (Mr. Gareth Thomas): I should perhaps have intervened a little earlier in response to the query by the hon. Member for Richmond Park (Susan Kramer). My understanding of the legislation on doorstep selling is that it offers the same right as in any other case to reject goods if they are not as they were described. The doorstep selling law also gives people a seven-day cooling-off period after the making of the agreement, in which to cancel it. I hope that that will deal with the concern raised by the hon. Lady; but if she or any other hon. Member taking part in the debate has further information or concerns about the working of the provisions, I shall be happy to discuss them in more detail.
Mr. Clifton-Brown: That clarification is helpful. The problem with the legislation is enforcement. We all know about fly-by-night doorstep sellers, and although I am wary and would not expect to be sucked in by such a salesman, many people are; if those people receive faulty goods, how do they know who the salesman was? How can they find him again and enforce any law against him? That is the difficulty for consumers. No doubt, the hon. Member for Richmond Park will contact the Minister if I am not correct.
The hon. Member for Edinburgh, North and Leith raised an important subject: the Corinthian Quay development in his constituency, the parent company, Elphinstone, and the fact that the subsidiary company providing the building contract, Holyrood Services Ltd, went into administration. That continues to be a problem in the building industry, because of the recession, among other things, and the fact that many building companies have difficulty in making ends meet. People make quite a number of complaints about the buying of new homes. I declare at this point that I am a fellow of the Royal Institution of Chartered Surveyors. I have a few general comments to make about the purchase of new properties.
The purchase of a property is not subject to the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982, which cover the majority of purchases, and consumers are left without adequate protection in a high-value risk field. At present, most regulatory protection is aimed at sellers rather than buyers. Since the Consumers, Estate Agents and Redress Act 2007 came into effect on 1 October 2008, which I welcome, every residential agent selling property in the UK must be registered with an approved redress scheme. As estate agents act principally for the seller, the buyer has relatively little redress under the scheme. Although estate agents are not obliged to tell buyers every last detail about the property—they are, after all, making a sales pitch—they must answer buyers’ questions accurately and to the best of their ability.
We have a list of typical complaints, to which the hon. Gentleman alluded, which broadly fall into the following categories: time taken to finish a building; misdescription or misrepresentation of the property or area; the contractual process after the exchange of contracts; inability to gain access to snag the property before completion; quality of finish on moving in and the time taken to come back and rectify the faults; absence of customer care; no legal right to damages or compensation, even if major problems with the property cause significant disruption or loss of amenity; and dissatisfaction with the actions of the National House-Building Council—however, when I had a complaint about one of my own properties, I found that the NHBC could not have been more helpful.
In July 2007, the Government announced an increased target of 3 million new homes to be built by 2020, so we will probably get even more of those types of complaint. It is incumbent on the Government to see whether consumer protection is adequate in that area, particularly in the light of the hon. Gentleman’s remarks.
The hon. Gentlemen mentioned a company in his constituency, First Choice, and the role of the ABTA, which is the industry regulator for the holiday sector. It publishes a code of conduct that requires, among other things, tour operators and travel agents to provide consumers with relevant and accurate information to help them make choices on their holiday and related products, including insurance. However, as the hon. Gentleman probably knows, in 2006, ABTA lost its Government seal of approval after it reduced the amount of financial protection that it offers holiday makers: the organisation that represents the majority of UK travel agents and tour operators will no longer refund tourists who have been sold non-existent holidays by fraudulent agents. The Office of Fair Trading has stated that, given that change to ABTA’s code of conduct, it cannot back the revised scheme because it does not offer the same financial protection to consumers.
Current trends in the holiday market, as reported by ABTA members themselves, show that 68 per cent. of people are prepared to increase their holiday budget this year and that the average spend on holidays this year is expected to be £600 per person. However, despite the number of people willing to spend their money, even during the economic recession, there appears to be an issue—I would be grateful if the Minister addressed this point—and indeed a legal loophole whereby ABTA members can subcontract the provision of travel insurance, which is not unusual in itself, to non-ABTA members who do not subscribe to the code of conduct. Therefore, someone who thought that they had bought insurance to cover the failure of their holiday could suddenly find that they were insured with a company that would not provide for that. That allows for the provision of insurance that does not provide the same information or that supplies reduced cover.
I have already quoted from ABTA’s website, but it would be interesting to give hon. Members another quote from it:
As I have pointed out, there is probably a legal lacuna in that, which the Minister will need to look at carefully.
The third subject that the hon. Member for Edinburgh, North and Leith mentioned was the cloning of Government websites and lookalike websites. Many Members might have seen the horrific story reported by Matt Warman in The Daily Telegraph on 6 January 2009 about a fake Government website:
That seems to be a horrific scam, and the Government need to take it very seriously indeed. Having lost large amounts of data, the Government need to reassure the public and the consumer that data on Government websites is secure and that there is a clear way of knowing whether those sites are genuine. The penalties for that type of cloning should be severe when proved.
There is a related issue of counter-espionage cyber attacks on both Government and commercial computer systems in Britain, Germany, Australia, New Zealand, India and the USA, and they are though to have probably originated in the far east. Such an attack caused a cyber riot that shut down banking and Government websites in Estonia for weeks after the deployment of new and sophisticated software, such as the so-called storm worm. Some threats to personnel and to commercial and national security are known to exist. Much of that cyber crime feeds on cyber carelessness and companies underestimating the risk.
The Government need to take aggressive, intelligent and persistent action against those threats, but some commentators have said the Government’s approach to the increased threat of cyber crime lacks co-ordination, focus and urgency. Perhaps the Minister ought to look to the United States, which has had its Internet Crime Complaints Centre, IC3, for seven years. It was established as a partnership between the FBI and the National White Collar Crime Centre. IC3’s mission is to serve as a vehicle to receive, develop and refer criminal complaints regarding the rapidly expanding area of cyber crime.
Those are just some of the large number of areas relating to consumer protection. The hon. Member for Solihull raised other areas—it is a big field. New scams are coming along all the time, and it is impossible for any Government regulatory authority always to be ahead of the game, but I have no doubt that clever people are looking at all those things. There used to be an insufficient number of technical people within the enforcement agencies to keep ahead of the game, so we now need to ensure that we have some of the best people in IT and in other skills to counteract those increasingly widespread scams. The problem is that they are now not only domestic in the UK, but tend to have a world-wide reach. Information gained, as the hon. Lady said, through credit card and banking scams means that large amounts of money can be shifted around the world merely at the touch of a button. I do not envy the Minister, because he has a huge job to do, but it would be interesting to hear his views on some of the issues raised today.
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Mr. Geoffrey Clifton-Brown (Cotswold) (Con): As I said in the previous debate, it is a great pleasure, Mr. Sheridan, to serve under what is I believe your first chairmanship in this Chamber. It is also good to see the Minister; and I congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on the very reasonable way in which he put across the problems in his constituency involving dealing with a property company at Corinthian Quay, the holiday company, First Choice, and look-alike websites. I want to deal with all three problems in the brief time available to me. I am also pleased to follow the hon. Member for Solihull (Lorely Burt).
Of course, consumer affairs is a tremendously broad term, covering all interactions between the entities that consume—principally, the general public and small businesses—and those that supply, which are often large firms. There is quite a lot going on, both by way of Government changes and, as the hon. Member for Solihull said, through the European consumer rights directive. We welcome the merging by the Government, on 1 October 2008, of Energywatch, Postwatch and the National Consumer Council, to form a new statutory consumer watchdog, called Consumer Focus. The new organisation fights to secure a fair deal for consumers throughout the United Kingdom. It has the right to investigate any consumer complaint, provided that it is of wider interest to the public, the power to conduct research and the ability to make an official super-complaint about failing services. It would be interesting to hear how the Minister feels the new, merged organisation is doing, particularly as there is now such a narrow focus in the ownership of the energy markets. Some accusations have been made of cartel activity in the energy markets and energy pricing, particularly in relation to fuel poverty.
The hon. Member for Solihull referred to the consumer rights directive, which the current European Commission is considering, although it will of course probably have to be put through by the new Commission when that is adopted, probably in November. For the record, the proposal represents the most far-reaching change for European consumer law to date. It brings together four existing pieces of community legislation—on unfair contract terms, sales and guarantees, distance selling and doorstep selling—into a single horizontal consumer rights directive. It would be interesting to hear whether the Minister feels that the legislation on doorstep selling indeed deals with the points raised in an intervention by the hon. Member for Richmond Park (Susan Kramer) about the differences between guarantees affecting doorstep selling and selling on the internet.
The Minister for Trade, Development and Consumer Affairs (Mr. Gareth Thomas): I should perhaps have intervened a little earlier in response to the query by the hon. Member for Richmond Park (Susan Kramer). My understanding of the legislation on doorstep selling is that it offers the same right as in any other case to reject goods if they are not as they were described. The doorstep selling law also gives people a seven-day cooling-off period after the making of the agreement, in which to cancel it. I hope that that will deal with the concern raised by the hon. Lady; but if she or any other hon. Member taking part in the debate has further information or concerns about the working of the provisions, I shall be happy to discuss them in more detail.
Mr. Clifton-Brown: That clarification is helpful. The problem with the legislation is enforcement. We all know about fly-by-night doorstep sellers, and although I am wary and would not expect to be sucked in by such a salesman, many people are; if those people receive faulty goods, how do they know who the salesman was? How can they find him again and enforce any law against him? That is the difficulty for consumers. No doubt, the hon. Member for Richmond Park will contact the Minister if I am not correct.
The hon. Member for Edinburgh, North and Leith raised an important subject: the Corinthian Quay development in his constituency, the parent company, Elphinstone, and the fact that the subsidiary company providing the building contract, Holyrood Services Ltd, went into administration. That continues to be a problem in the building industry, because of the recession, among other things, and the fact that many building companies have difficulty in making ends meet. People make quite a number of complaints about the buying of new homes. I declare at this point that I am a fellow of the Royal Institution of Chartered Surveyors. I have a few general comments to make about the purchase of new properties.
The purchase of a property is not subject to the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982, which cover the majority of purchases, and consumers are left without adequate protection in a high-value risk field. At present, most regulatory protection is aimed at sellers rather than buyers. Since the Consumers, Estate Agents and Redress Act 2007 came into effect on 1 October 2008, which I welcome, every residential agent selling property in the UK must be registered with an approved redress scheme. As estate agents act principally for the seller, the buyer has relatively little redress under the scheme. Although estate agents are not obliged to tell buyers every last detail about the property—they are, after all, making a sales pitch—they must answer buyers’ questions accurately and to the best of their ability.
We have a list of typical complaints, to which the hon. Gentleman alluded, which broadly fall into the following categories: time taken to finish a building; misdescription or misrepresentation of the property or area; the contractual process after the exchange of contracts; inability to gain access to snag the property before completion; quality of finish on moving in and the time taken to come back and rectify the faults; absence of customer care; no legal right to damages or compensation, even if major problems with the property cause significant disruption or loss of amenity; and dissatisfaction with the actions of the National House-Building Council—however, when I had a complaint about one of my own properties, I found that the NHBC could not have been more helpful.
In July 2007, the Government announced an increased target of 3 million new homes to be built by 2020, so we will probably get even more of those types of complaint. It is incumbent on the Government to see whether consumer protection is adequate in that area, particularly in the light of the hon. Gentleman’s remarks.
The hon. Gentlemen mentioned a company in his constituency, First Choice, and the role of the ABTA, which is the industry regulator for the holiday sector. It publishes a code of conduct that requires, among other things, tour operators and travel agents to provide consumers with relevant and accurate information to help them make choices on their holiday and related products, including insurance. However, as the hon. Gentleman probably knows, in 2006, ABTA lost its Government seal of approval after it reduced the amount of financial protection that it offers holiday makers: the organisation that represents the majority of UK travel agents and tour operators will no longer refund tourists who have been sold non-existent holidays by fraudulent agents. The Office of Fair Trading has stated that, given that change to ABTA’s code of conduct, it cannot back the revised scheme because it does not offer the same financial protection to consumers.
Current trends in the holiday market, as reported by ABTA members themselves, show that 68 per cent. of people are prepared to increase their holiday budget this year and that the average spend on holidays this year is expected to be £600 per person. However, despite the number of people willing to spend their money, even during the economic recession, there appears to be an issue—I would be grateful if the Minister addressed this point—and indeed a legal loophole whereby ABTA members can subcontract the provision of travel insurance, which is not unusual in itself, to non-ABTA members who do not subscribe to the code of conduct. Therefore, someone who thought that they had bought insurance to cover the failure of their holiday could suddenly find that they were insured with a company that would not provide for that. That allows for the provision of insurance that does not provide the same information or that supplies reduced cover.
I have already quoted from ABTA’s website, but it would be interesting to give hon. Members another quote from it:
“As you can see, it’s not always easy to know whether your money’s safe when booking a holiday or other travel arrangements. You should always ask when making your booking. If your arrangements aren’t automatically protected, ask if your travel company can offer you an insurance policy that will protect your money. ABTA has arranged a policy specifically for this—the ABTA Protection Plan—which is available to buy through most ABTA Members.”
As I have pointed out, there is probably a legal lacuna in that, which the Minister will need to look at carefully.
The third subject that the hon. Member for Edinburgh, North and Leith mentioned was the cloning of Government websites and lookalike websites. Many Members might have seen the horrific story reported by Matt Warman in The Daily Telegraph on 6 January 2009 about a fake Government website:
“The site looks identical to HMRC.gov.uk, using the same graphics, fonts and styling, and is being used to gather web users’ names, addresses and credit card details. Once the information has been obtained, the site then redirects people to the real HMRC website. Many victims have no idea that they’ve been conned until alerted by their banks. The fake site, set up from Denmark, has been recruiting users by sending a spam email, reminding people of the impending tax deadline on January 31, and then directing them to what appears to be a legitimate link. The page that comes up, however, is not the real HMRC.gov.uk.”
That seems to be a horrific scam, and the Government need to take it very seriously indeed. Having lost large amounts of data, the Government need to reassure the public and the consumer that data on Government websites is secure and that there is a clear way of knowing whether those sites are genuine. The penalties for that type of cloning should be severe when proved.
There is a related issue of counter-espionage cyber attacks on both Government and commercial computer systems in Britain, Germany, Australia, New Zealand, India and the USA, and they are though to have probably originated in the far east. Such an attack caused a cyber riot that shut down banking and Government websites in Estonia for weeks after the deployment of new and sophisticated software, such as the so-called storm worm. Some threats to personnel and to commercial and national security are known to exist. Much of that cyber crime feeds on cyber carelessness and companies underestimating the risk.
The Government need to take aggressive, intelligent and persistent action against those threats, but some commentators have said the Government’s approach to the increased threat of cyber crime lacks co-ordination, focus and urgency. Perhaps the Minister ought to look to the United States, which has had its Internet Crime Complaints Centre, IC3, for seven years. It was established as a partnership between the FBI and the National White Collar Crime Centre. IC3’s mission is to serve as a vehicle to receive, develop and refer criminal complaints regarding the rapidly expanding area of cyber crime.
Those are just some of the large number of areas relating to consumer protection. The hon. Member for Solihull raised other areas—it is a big field. New scams are coming along all the time, and it is impossible for any Government regulatory authority always to be ahead of the game, but I have no doubt that clever people are looking at all those things. There used to be an insufficient number of technical people within the enforcement agencies to keep ahead of the game, so we now need to ensure that we have some of the best people in IT and in other skills to counteract those increasingly widespread scams. The problem is that they are now not only domestic in the UK, but tend to have a world-wide reach. Information gained, as the hon. Lady said, through credit card and banking scams means that large amounts of money can be shifted around the world merely at the touch of a button. I do not envy the Minister, because he has a huge job to do, but it would be interesting to hear his views on some of the issues raised today.
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