I am grateful, Mr. Sheridan, for this opportunity to discuss consumer rights. I shall highlight three constituency cases, in each of which an individual or group has been treated badly as a consumer, and then suggest how each problem might be dealt with. They are very different, and there is no common theme, but this is too good an opportunity for me not to raise issues that have caused me and those constituents great concern. Although there is no common theme, I shall conclude by making some general comments about and suggestions for improving consumer protection.
The first issue that I want to cover is the problems frequently faced by people who buy newly built houses from a developer. I raised the issue first in a debate in April 2002, less than a year after I became an MP, and again just over a year ago in February 2008. The problems may be numerous and include lengthy failure, sometimes over years, in getting snagging work completed; dates of entry being delayed time and again; serious defects, such as flooding, not being dealt with; problems with property management companies, and so on. I will not go into all of them in full detail this morning as I have covered them before.
The particular problems that I want to raise this morning were highlighted for me in the case of the Corinthian Quay development at Granton harbour in my constituency, to which I referred at length during my debate in February 2008. There were water supply problems, sewage coming through floors, and external finishes and areas not completed. I will not go into all the problems, except to say that some of them were first reported by residents in early 2005 but have still not been dealt with.
After I highlighted the specific case of Corinthian Quay in my previous debate, there seemed to be some movement. Two senior directors of the development company came to my office and promised action. For a while, things seemed to improve, but that did not last long and residents told me that the situation deteriorated again. Earlier this year, on 20 February, there was a dramatic development. My constituents discovered that the company from which they thought they had bought their houses and would receive after-sales service was not Elphinstone, but its wholly-owned subsidiary, Holyrood Services Ltd, even though all communication with residents had been from a company going by the name of Elphinstone, and its name was on all the sales and marketing boards around the site. The original seller’s brochure made no reference to Holyrood Services Ltd, but referred only to Elphinstone, saying that over 10 years it had built up an enviable reputation for its ability consistently to initiate and manage high-quality residential projects. All correspondence seemed to come from Elphinstone, as did the packs given to would-be buyers. Indeed, my correspondence was with Elphinstone and not the mysterious Holyrood Services Ltd. However, it turned out that the eventual contract between the purchasers and the building company was with Holyrood Services Ltd, not Elphinstone, with which they thought they had been dealing.
On 20 February, matters moved on dramatically, and the residents discovered that Holyrood Services Ltd had gone into administration, while Elphinstone had escaped scot-free from any liability, reducing the chance of a satisfactory outcome for the residents. The National House-Building Council became involved and, to be fair, seems to be actively dealing with the problems, but the residents are not certain whether all the outstanding issues will be dealt with because, for example, they complained not to Holyrood Services Ltd, as they should have done formally under the terms of the NHBC guarantee, but to Elphinstone, the parent company, which seems to have walked away from the problems.
That experience highlights three issues. First, there are clear questions about the way in which Elphinstone seems to have been able to escape its responsibilities using a front company, Holyrood Services Ltd. That happens in areas other than building, but I would like a request to be conveyed to the Minister that his Department urgently investigate the circumstances in which builders—in this case, Elphinstone—are apparently able to evade their responsibilities by using a subsidiary. Will the Minister investigate whether that arrangement is legal, and whether his Department can take any action in this case?
I understand that Holyrood Services Ltd is a wholly-owned subsidiary of Elphinstone, the builders, and not a separate property management or factoring company. It seems to be Elphinstone in another guise, but the eventual contract and deed of conditions was with Holyrood Services Ltd, although the preceding material had come from, and many of the subsequent dealings had been with, Elphinstone.
The second issue is wider, and relates not just to the Corinthian Quay development, but to the long-running issue of how purchasers may assert effective rights against builders who do not fulfil their side of a bargain. Owners may in some circumstances have the right to cancel a purchase if defects have arisen, but that is often not an effective remedy if people have sold their existing house and moved job, and would have to get involved in lengthy litigation to try to cancel the contract.
There have been five such developments in my constituency. The one at Corinthian Quay is the worst, but there are others. One problem is that owners may be able to pursue good legal avenues, but may be fearful of entering what may be very expensive proceedings against a large and powerful opponent. My constituents have found that no independent body can provide even initial free advice, and there is clearly a gap in the representation available to consumers. I will return to that, but I hope that the Minster will address the matter today, or write to me in due course.
The third matter concerns NHBC cover. In the particular case in my constituency it now seems to be doing a good job in actively trying to sort out the problems that it has inherited. However, through no fault of its own, but because of arrangements under which it operates as a backstop for problems with developments, it could become actively involved only at a fairly late stage in the process because residents must first go through a number of other steps. Is there a way of encouraging the NHBC—I understand that it is an industry body—to have a more proactive role in such cases, perhaps with a mediation or ombudsman role at an early stage, to try to persuade developers to deal with problems such as those that my constituents have suffered for far too long?
The second issue is very different, but also involves consumers thinking that they have bought something from one company, only to discover that they have bought it from another, connected company, as a result of which they lose protection. The issue concerns a holiday in Mallorca booked by one of my constituents and his elderly parents. I do not have time to go into the details of what was wrong with the holiday. Basically, it was the holiday from hell, and it was made worse because the facilities were entirely unsuitable for a person with a disability, which one of the parents is, even though my constituents had made it clear when booking the holiday that they needed an appropriate hotel.
As I said, my constituents had many problems and the upshot was that they wanted to claim compensation from the company with which they had booked the holiday—First Choice. At least they thought that they had booked the holiday with First Choice; after all, they bought it from a shop calling itself a First Choice hypermarket. Their correspondence, when they complained, was with First Choice. However, when they started to complain, it turned out that the contract was apparently not with First Choice, but with a subsidiary company—First 4 Hotels. Although First Choice is bonded with the Association of British Travel Agents, apparently First 4 Hotels is not, so when my constituent complained to ABTA, it said that it could not do anything about the problem as First 4 Hotels was not an ABTA company.
That appears to me to be a complete abdication of responsibility by ABTA. It seems clear that the company arrangements in this case have the effect—whether by design or not, I cannot say—of allowing First Choice to wash its hands of complaints made by customers by saying that the arrangements are with a different company, even when the customers believed that they were booking with an ABTA-bonded company. I believe that ABTA should investigate this case and withdraw its endorsement from any travel company that appears to make use of subsidiaries in a misleading way, as certainly seems to have happened with First Choice in this case. If ABTA is not prepared to investigate or take action, I urge the Minister to do so.
When the Minister wrote to me on the issue a few weeks ago, when I first raised the problem, he invited my constituents to raise their complaints with ABTA, but as I have pointed out, they have already tried to do so, only to be met with the response that ABTA cannot get involved because they did not book their holiday with an ABTA company. The whole point is that the holiday was in effect with an ABTA company. In my view, ABTA should not be able to get out of its responsibilities as a trade body in that way.
I am sure that the hon. Gentleman has looked at the ABTA website. I would be interested in his comments on its credo, which is at the top of its website:
“For more than 50 years ABTA and its Members have been helping holidaymakers to get the most from their travel plans”.
It refers to “Great Service”, stating:
“Because ABTA Members follow our Code of Conduct, you’ll receive a high standard of service, fair terms of trading, and clear and accurate information.”
What does the hon. Gentleman have to say to that credo?
I am sure that it is true in many, many cases, but the problem is that in this case it was not what happened to my constituent and his family. My constituent did not have that pleasurable experience, and ABTA seems to have managed to wash its hands of any involvement, which to me is unacceptable.
As I said, when the Minister wrote to me, he suggested that my constituents raise the issue with ABTA, but they have done so without any joy. He also pointed out the possible legal avenues open to my constituents, and indeed there are some, but just as in the case of my unfortunate constituents at Corinthian Quay, it is not so easy for individuals to make use of those rights. Particularly when it comes to package holidays, legislation is often complex and the consumer may not be able to pay for the legal backing to assert their claim against a powerful company that will want to exploit the complexity of the regulations to its advantage.
There is a shortage of legal and other information resources to help consumers in their battles with those who have sold them faulty goods or offered poor services. A strong customer advocate needs to take up that role. From my experience with the bodies that do have that role to an extent—such as trading standards, which is excellent, if I may say so, at Edinburgh council, or Consumer Focus—it is not their role to be an advocate in respect of particular cases in the way that is needed to help consumers in the circumstances I have described. Somebody needs to be encouraged and empowered to do that. Perhaps the way to deal with the issue is to give support to some of the non-governmental organisations to take up the role. Perhaps the Minister can address the issue in the consumer White Paper, which is expected shortly. He may be able to say something about that paper also when he replies to the debate.
I cannot pretend that my final issue has any real connection with the previous two, but I would like to address it briefly as I have the Floor to do so. I am sure that hon. Members are familiar with what are called look-alike websites. Such a website appears to be from a governmental or other public agency, but in fact is not. It may be designed to mislead the consumer, the member of the public, into parting with money in some way or otherwise getting involved in something that the consumer did not wish to be involved in.
Last year, I raised in questions with one of the Minister’s colleagues an official-looking website to which a constituent had logged on and paid money to get a birth certificate. She paid more than twice as much as she would have if she had gone to the official website. She got her money back eventually, after a number of complaints. That company was not bogus: apparently, people would get their document if they paid the money. However, it was charging two or three times more for documents that were easily available from public websites or other public sources.
There has been some publicity recently about credit advice websites—an issue on which I know the Office of Fair Trading has been active. Those websites give the impression of being linked to bodies such as Citizens Advice, other credit advice agencies or, indeed, Government Departments. I am pleased that the OFT has taken some action to try to deal with the websites in recent months.
A website to which I want to draw attention today because it has recently been raised with me by one of my constituents represents itself as providing an opportunity for members of the public to obtain the European health insurance card—the EHIC. A website whose address, I believe, is www.ehic.org is one that people who do a search are referred to. People can go to that site and pay a much higher price than by going to the official NHS website. I draw attention to that case because it is one of many. I understand that the Government cannot totally control bogus or scam websites that are set up not necessarily from this country, but from many other parts of the world. However, the issue should be monitored closely.
In relation to the website that was providing genuine Government certificates but at a higher price, the response that I received from Ministers here and from the Scottish Justice Minister, to whom the matter was also referred, was in effect that not much could be done about it. Although I accept that not much might be able to be done about it in many cases, the Government and Government agencies should be proactive in trying to monitor the growth of such websites. Where they can take action to shut them down, they should do so. Where proceedings can be taken against individuals who are misleading the public, they should do that. The Government should at least ensure that people cannot get documents through those websites, thereby driving the websites out of business.
That concludes my tour of consumer affairs problems. They are all different, as I said, but they highlight the ways in which consumers can be misled and prevented from obtaining adequate redress. They emphasise the need for the excellent legislation introduced by the Government in this area to be accompanied by effective means of allowing the consumer to make use of it. I hope that by raising the subject today, I have not only highlighted cases affecting some of my constituents—I hope that the Minister will be able to investigate those in detail—but highlighted issues that need to be addressed, because we all know that when it comes to scams, shams, bogus websites and bogus activity, it is a moving target: we have to keep moving to try to catch up with what is going on. I hope that by drawing these matters to the House’s attention today, I have contributed to the debate about how we can tackle these important issues.
I congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on introducing this important debate. He has three bees in his bonnet, but lots of other bees are buzzing around on all sorts of consumer protection issues, and I want to address some of those issues in addition to the hon. Gentleman’s points.
The Office of Fair Trading reports that 3 million people a year fall victim to scams using post, text and e-mail. With the credit crunch, the scammers’ target has become some of the most vulnerable people in our society. Although we do not want to take a nanny-state attitude to protection and regulation, it is clear that such unfair practices must be sorted out.
I wish that I could have made a speech, but I have to attend a meeting. Is my hon. Friend aware, however, that the protection available to consumers who make purchases from salespeople who come to their property—the salesman might have come to see them after they answered an advert—is far weaker than that available to those who make purchases over the internet or by post? If the salesman comes to their property, consumers no longer have the right to cancel their order if the goods are not what they expected, although they would have that right if they purchased the goods over the internet or by mail. The problem often impacts on vulnerable people.
A salesman from Willowbrook, which provides recliner chairs, visited an invalid in my constituency, who ordered some chairs. When the chairs arrived, they were not of the right dimensions and did not provide the therapeutic effect that the customer thought they would. However, she could not cancel the order and get her deposit back, because she had ordered from a salesman who came to her house. I wonder whether my hon. Friend can work with the Minister to see whether this egregious loophole can be remedied.
I am grateful to my hon. Friend for that example. The answer to her question is that I was not aware that there was less protection for someone who orders from a salesperson at the door. I hope that the Minister will specifically address the issue, because that loophole clearly should not exist, particularly given that door-to-door salespeople often target more vulnerable people with their sales patter.
We have all been told that we have won a prize draw and that we have to send a fee to get the money. When we read the small print, however, we see that we are only being entered into the draw. We have all had e-mails saying that we have won a foreign lottery prize, but anyone who takes up the matter—I have not—discovers that the prize does not exist. We have all heard of the entreating e-mails from Nigerian business people who cannot spell and who need our help to get a large sum out of the country. We have also heard of boiler room scams, with cold callers offering shares and property investments, which might exist, but which are usually wildly overvalued if they do.
Another trend is the increase in pyramid selling. The practice is illegal, but it is thriving, especially on the internet, and the credit crunch makes it particularly tempting. Bernie Madoff is one example. Ponzi schemes are widespread, and one in my area of Birmingham targets women, telling them that they can make £21,000 in weeks. Pyramid selling is already illegal, but we need a lot more consumer awareness, particularly among vulnerable groups who do not realise what is involved.
The hon. Member for Edinburgh, North and Leith mentioned builders, and everyone probably knows somebody who has fallen victim to cowboy builders who have done a job that is incomplete or of insufficient quality. If the consumer pays the bill, there is, as the hon. Gentleman said, no redress and no incentive for the company to come back and make good the work, which should have been done properly in the first place. One lesson that I recently learned at the hands of a builder is that people should never pay the final sum until they are completely satisfied.
A constituent ended up with a bill of £30,000 for a new drive. The builder kept finding more little jobs to do, saying, “I’ll just do this for you,” and my constituent ended with a huge bill. I intervened. Trading standards said that everything was perfectly legal, but the threat of being exposed by an MP had some effect, and my constituent did not end up paying the whole amount.
The hon. Lady is giving very good advice, which applies to many builders, but will she deal with the situation that I highlighted of people who move into new properties? They do not have the option of retaining the money, because they have to pay to get into the property. They then have the problem of dealing with any difficulty, but they have no easy way of forcing the builder to do so quickly.
I listened carefully to what the hon. Gentleman said about new build. As he said, the national house builders body is supposed to deal with the issue, but the time and energy involved in getting redress on behalf of properties’ new owners is totally inappropriate. Will the Minister tell us how the situation could be more appropriately and speedily dealt with?
A constituent of my hon. Friend the Member for Montgomeryshire (Lembit Öpik) was a victim of an internet scam after he ordered a mini digger from eBay. When all the paperwork was done, it was agreed that there would be a five-day trial. He thought that he was giving the money to the eBay solicitor, and everything was documented. He paid £5,900 and was told that the digger was being shipped, but it never arrived. According to eBay, the problem was nothing to do with it, because the payment did not go through its approved system.
The European Commissioner for Consumer Affairs, Meglena Kuneva—apologies to her if I have pronounced her name incorrectly—said that the privacy rights of internet surfers are abused by companies that amass personal information and supply it to advertisers that target consumers without their knowledge. I loved the quote from her in which she said that
“the World Wide Web is turning out to be the ‘world wild west’”.
Again, this is a serious problem, and we need to address it in what are changing times in the area of communication.
The hon. Member for Edinburgh, North and Leith mentioned holidaymakers and a company acting as a front for a more well-known company, which then takes no responsibility when things go wrong. I am sure that the Minister will have some comments to make about how that can happen.
My concern is about holidaymakers who book their holidays themselves. When things go wrong, they are not covered by ABTA. The hon. Gentleman talked about First Choice and First 4 Hotels, and I agree that ABTA should take more responsibility—it cannot be a fair-weather friend. It is hugely important that the issue be addressed.
Another issue about which we have had a lot of complaints in Solihull is mobile phone contracts. The contract details look good—in fact, they look great, with cash back and all sorts of other offers—but the small print ties people into long contracts with the same phone. The cash back never materialises unless people meticulously pay the relevant amount on the exact day. In 2007-08, Consumer Direct received more than 100,000 complaints about mobile phone contracts. The terms of those contracts and all other credit contracts should be made clear and understandable. Perhaps an organisation should have the responsibility for scrutinising small-print contracts; if they are not up to scratch, they should not be legally valid.
Businesses are not exempt from scams, including free listings in business directories, which however mean that a company unwittingly signs up to pay for advertisements in bogus charitable publications, hard selling and grossly overpriced goods.
There is also, of course, the problem of companies going into liquidation, described by the hon. Member for Edinburgh, North and Leith. There is an answer that we could use simply and cheaply to expose serial liquidators of all kinds in business: a requirement for the director of a company that goes into administration to register in a centrally kept register of administrations. Someone thinking of supplying or being supplied by a company could go to the register to see how many times its directors appeared there. That would be a simple way to help companies that might lose their livelihood because of the cynical financial manipulation of bumping a business and going on to create another.
We can welcome two things this morning: first, the consultation on the European consumer credit directive, which has many good elements, including a general clause on defining unfair practices. Secondly, as the hon. Member for Edinburgh, North and Leith said, we can look forward to the White Paper on modernised consumer rights. We do not want to stifle innovation or bring about a nanny state, but somewhere in our consumer regulation, there should be a principle of basic fairness, which should not be contravened.
As my hon. Friend the Member for Richmond Park (Susan Kramer) mentioned, we need protection with respect to door-to-door salespeople and the time allowed for goods to be returned. We also need the register of administration for serial liquidators, and better consumer advice, especially about communications media such as the internet, particularly for young people who buy things on the internet and discover, if those things are faulty and do not reach the required standard, that they are not confident about getting redress.
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.
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.
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. Gentleman mentioned a company in his constituency, First Choice, and the role of 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 holidaymakers: 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 they had bought insurance to cover the failure of their holiday could suddenly find 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 are 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 thought 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 worldwide 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.
I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate and on how he campaigns on consumer issues more generally. I also welcome the interest shown by my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) and the hon. Member for Richmond Park (Susan Kramer), as well as the chance to follow the contributions made by the hon. Members for Solihull (Lorely Burt) and for Cotswold (Mr. Clifton-Brown).
Even in this relatively short debate, a series of issues has been raised, and I will try to do justice to at least some of them. My hon. Friend the Member for Edinburgh, North and Leith—I apologise for missing the start of his remarks—raised a series of specific constituency cases, not least some of the problems with new homes. Some of his constituents have found it hard to assert their rights because the firms that built their houses perhaps contracted out responsibility for completing the work to subsidiaries.
One of the issues that we are concerned about is the continuing high number of complaints about home improvements and the completion of work by those who operate in that sector. Year on year, Consumer Direct continues to report high levels of complaint in that area. That is one reason why I wish to bring together key players in that sector—for want of a better phrase—to hold a home improvement summit to consider the scale of the problems and what further collective action might be taken to improve the experience of consumers.
As my hon. Friend knows, whether specific action can be taken depends upon the particular circumstances of the case. However, I would be happy to have a further conversation with him if he wanted to explore whether anything else could be done to help his constituents.
My hon. Friend also mentioned First Choice holidays. I hope that he will understand when I say that I cannot comment on individual cases at this stage. His concerns about the ABTA code of practice were echoed by a number of other hon. Members. From what I have heard about that case, it seems that a package had been purchased. That is significant, because rights under package travel regulations may enable civil action to be taken to secure redress for those consumers who have lost out. Again, we are dealing with specific circumstances in that case, and I would be happy to discuss them in more detail.
I turn to the other matter raised by my hon. Friend—misleading websites. The Government recognise that there has been considerable concern of late about misleading websites, particularly those that appear to be similar in design to Government sites or debt advice agency sites. New protections in law protect consumers from unfair commercial practices, should misleading statements cause consumer loss. Those regulations have strengthened protections—for example, introducing a general duty on traders in all sectors not to treat consumers unfairly. They came into force in May 2008, and they prohibit unfair marketing practices, both online and in the high street. If the attention of the Office of Fair Trading or trading standards officers is drawn to specific cases, action can be taken.
I shall give an example of such action being taken on the question of misleading websites and debt advice. The OFT has recently taken action against firms posing as Government-endorsed or other sorts of official debt advice service. The OFT has initiated action against 27 websites, closed a number down and forced improvements in how others present themselves. The OFT is working closely with Citizens Advice and other consumer organisations to monitor what is going on in the sector and will continue to take action to shut down rogue websites.
The Minister mentioned one enforcement agency and one advice agency—trading standards officers and Citizens Advice. In my constituency, although I suspect that it is a national problem, council budgets are being squeezed. The budgets of trading standards officers and consumer advice centres are therefore being squeezed. As a result, they are becoming less effective, particularly in the enforcement work of trading standards and the debt advice of citizens advice bureaux. Will he consider that question carefully, because I believe that consumer protection is being weakened?
I have similar concerns, but responsibility has to be taken by local authorities. They have to make a judgment on the service required in the area. As the House would expect, I always hope that local authorities will prioritise support for trading standards and Citizens Advice. Action was taken in the pre-Budget report to make further funding available for debt advice, and agencies can bid for additional money. There is a series of extra advice surgeries, and surgeries are being opened for longer or at more convenient times. Further debt advice is being provided through citizens advice bureaux as a result of Government action.
[Mr. Martyn Jones in the Chair]
A number of hon. Members raised the issue of scams, either on the internet or simply through the activities of rogue businesses and more generally. Some hon. Members will know that, following the introduction of a series of pilot scambuster teams, we have rolled out the model of regional trading standards officers working with other enforcers to all parts of the United Kingdom.
So far, that approach has led to 19 successful prosecutions, with an estimated saving to consumers of more than £3 million, and £2.5 million-worth of criminal assets have been seized. Clearly more needs to be done, but although many of the scambuster teams are relatively new, they are already bedding down and making a difference.
The hon. Member for Solihull raised the question of mobile phone contracts. I am aware of the considerable concerns that arose last year, some of which continued into this year, about the complexity of mobile phone contracts, the difficulty of judging one service against another and whether cash-back and other contracts were being honoured. The hon. Lady may not be aware that Ofcom has taken action. Indeed, Consumer Focus, the new body to which a number of hon. Members referred, has also prioritised some of its work, putting pressure on the mobile phone industry to get its act together. We will continue to watch for progress. Given the huge concern expressed by the media and the House, we hope that the industry will realise that there is a spotlight on it and that it will continue to work to improve its performance.
We are taking a series of other measures to provide real help to consumers affected by the downturn—not only with the additional debt advice to which I alluded in response to the intervention from the hon. Member for Cotswold, but in dealing with some of the emerging practices that we have seen, such as in the credit card industry. We also realise that we need to help consumers not only by cracking down on rogue businesses, but by helping to deliver a level playing field for reputable businesses—the vast majority in the UK—that do not want their relationship with the consumer to be undermined by the rogues.
New markets have developed in recent years, particularly on the internet, which may lead to a need for changes in how regulations are introduced and managed in the UK.
The Minister is being generous in giving way. Does he recognise the final point that I made in my speech, which is that it is incumbent on all Government organisations to have people of sufficient expertise to be able to counter the growing world threat of cybercloning and so on—people with IT skills and forensic accountancy skills? Such people need to be well paid, as they need the ability to counter such international scams.
I accept in principle the point that the hon. Gentleman makes. We want to take action to increase our capacity to crack down on rogues—be they loan sharks, those perpetuating scams or those operating on the internet.
I referred to our additional investment in scambuster teams, which are beginning to make a difference regionally. We have also established regional illegal moneylending teams to target those who are often vicious thugs who operate as loan sharks and target the most vulnerable members of our communities. Those teams have had considerable success in bringing loan sharks to justice. They not only take victims’ harassers to court and prosecute them, but direct victims to more affordable credit, be it in the form of credit unions, social fund grants or loans, or support from debt advice charities. We have been aiming at a holistic response to people’s needs.
The marketplace in which consumers operate has been changing steadily as a result of globalisation, and the hon. Member for Cotswold alluded to additional work done in the United States. We recognise the need to update and modernise our consumer law and enforcement regime to reflect the internet era. With that in mind, over the past 18 months, my officials, at my request, have been reviewing the relevant consumer law with a view to introducing a series of reforms.
In particular, we recognise the need to improve internet enforcement. Many of the issues discussed today will be reflected in the consumer White Paper, to which my hon. Friend the Member for Edinburgh, North and Leith alluded, and we are busy working on those, although hon. Members will forgive me if I do not reveal the full contents of the White Paper at this stage.
Will the Minister comment on my suggestion of a register of administrators to help businesses seeking to trade with other companies to assess the risk-worthiness of such trade and to establish whether there might be any serial liquidators? That suggestion was made to me by an industry body and I have mentioned it a number of times in Parliament. Will he take it into consideration?
I shall consider the hon. Lady’s suggestion when working on the White Paper, but, if she will forgive me, I make no promises.
With that, I again congratulate my hon. Friend the Member for Edinburgh, North and Leith on securing the debate, and I look forward to the opportunity presented by the consumer White Paper to continue today’s conversation.