moved Amendment No. 41:

My Lords, I thank my noble friend Lord Razzall, and I certainly could not improve on his ability to introduce the amendment. I should apologise to the House because I was delayed briefly in the Minute Room. Following our earlier discussion, I realise that the Government are intransigent on this matter. The purpose of this amendment is to highlight water issues. I do not want to repeat my previous comments because the Report stage should not be used for repetition. However, since we considered these issues in Committee some more material has become available about the link between the price review and the timing of river basin management plans for the water framework directive.

The regulator operates on a five-year cycle for the water price review and is therefore out of sync with the six-year cycle governing river basin management plans. The consumer is caught between those two processes, which is an uncomfortable place to be. This issue, which is a complicated one if you are not part of the water process, is as imperative for customers as the Post Office. It is vulnerable to the fluctuations that will take place as the Consumer Council for Water, which was created only very recently, is subsumed into the NCC. The Government have recognised some of the issues here because they have built a delay into the Bill. I therefore suggest to the Minister that there would be advantages in putting back this merger at least until after the next price review and the river basin management plan are put into effect. By then we will have one river basin management plan under the belt, so to speak, making it a much more auspicious moment to bring this provision forward.

My Lords, Amendment No. 41 seeks to delay the consultation on the merger of the Consumer Council for Water into the new council until 2011. We had a thoughtful debate on this issue in Committee and perhaps I may reiterate some of the key points that were made. One of the fundamental objectives of the Bill is to create a stronger cross-sectoral consumer advocacy body while making consumer representation and redress simpler and more effective. Key to the success of the new body is the retention of sectoral expertise, and this will be equally as important in the water sector as it is for the energy and postal services sectors. The new council will also benefit from the ability to share best practice from different sectors. So, for example, if the Consumer Council for Water is merged with the new council after the consultation in 2008, the council will have the benefit of not only the existing sectoral expertise in the water sector but also experience from other sectors of representing the consumer interest in a price review.

The public consultation held by my department this time last year sought views on the best time to consider the question of the inclusion of the water sector in the new arrangements. Some respondents suggested that the consultation should be later than the proposed date of 2008. However, as I said in Committee, many other respondents believed that the water sector should be included from the outset. We considered carefully the representations made to us and took the view at the end of the consultation that we would consult on the inclusion of the water sector in 2008, recognising that the Consumer Council for Water needs time to establish itself and to start tackling the important objectives it has been given before assessing whether these arrangements are the most effective for consumers. I repeat, though, that the commitment is that we would consult on the inclusion of the water sector in 2008.

I recognise that there are many important forthcoming issues in the water sector, as mentioned by the noble Baroness, Lady Miller. There is a price review in 2009 and the ongoing work on the water framework directive will require a strong consumer advocate to represent the consumer interest. It is important that we hold the consultation on the merger of the Consumer Council for Water with the new council earlier than 2011 to ensure that the most effective arrangements are in place to represent the consumer interest.

I also acknowledge the concerns that the noble Baroness, Lady Miller of Chilthorne Domer, raised in Committee about the important environmental role assigned to the Consumer Council for Water and her belief that that role should not be lost. I believe that our earlier discussion on the new council’s sustainable development objective will have demonstrated to it the importance of that role. I can assure noble Lords that if the Consumer Council for Water is merged with the new council after consultation, we will seek to ensure that the crucial and very best elements of the current body are retained in the new council.

I am therefore still not convinced that the amendment represents the best way forward for consumers in the water sector at this time.

My Lords, I thank the Minister on behalf of myself and my noble friend Lord Razzall for giving the most cheering reply we have had all day to any of the amendments. His reply has significantly recognised the issue, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 37 [Removal of the Council's functions in relation to Northern Ireland]:

moved Amendment No. 42:

moved Amendments Nos. 43 to 46:

moved Amendment No. 47:

moved Amendments Nos. 48 to 53:

moved Amendment No. 54:

moved Amendments Nos. 55 and 56:

moved Amendments Nos. 57 to 59:

moved Amendments Nos. 60 to 64:

moved Amendment No. 64A:

My Lords, Clause 46 allows the Secretary of State to make orders requiring regulated service providers to belong to a redress scheme. It specifies that such a scheme must be approved by the relevant regulator or be administered by the Secretary of State or a person appointed for this purpose, and designated as an appropriate redress scheme. Before an order can be made under the clause, the Secretary of State must consult the relevant regulator and others with an interest in the matter.

A redress scheme is defined as a scheme under which consumers’ complaints may be made to, and investigated and determined by, an independent person. The independent person must be independent of the service provider against whom the complaint is made and the relevant regulator in relation to that service provider. The Secretary of State must be satisfied that there is at least one redress scheme in existence that service providers who are required by any order to belong to a redress scheme are able to join before making such an order. In the event that there is no scheme established by industry, this clause makes provision for the Secretary of State to establish one.

Subsection (5) requires that the Secretary of State seeks the consent of Welsh Ministers before making an order that relates to a water undertaker or sewerage undertaker for an area that is wholly or fully in Wales.

I recognise the concerns that have been expressed on this point and in Committee, especially by the noble Lord, Lord Newton. I understand that some noble Lords would prefer that the Bill provided for only one redress scheme to be established in each sector. As drafted, the Bill leaves open the possibility of a sectoral regulator approving just one scheme for its sector. That is indeed our policy preference; I make that clear to noble Lords. However, we do not feel that it is appropriate to prescribe that as a requirement on the face of the Bill, as it may not be appropriate in all sectors or in all circumstances. We believe that the sectoral regulators are best placed to decide the appropriate number of schemes to be approved within each sector.

In approving a redress scheme, the provisions in the Bill place a requirement on a regulator to have regard to the total number of qualifying redress schemes available to the relevant service providers. That is intended to avoid any undue proliferation of schemes in a sector. A regulator could indeed decide that the interests of consumers would not be served by multiple schemes, and so might only approve one scheme. I consider that that would provide the greatest degree of clarity and efficiency for consumers and service providers alike. I am happy to reassure your Lordships’ House that the Bill does not require there to be more than one scheme in each sector.

We should recognise that the market sectors as they are today will inevitably change over time. What is appropriate today may well be unduly prescriptive and damaging in the future. A redress scheme set up by the current market incumbents may prove to be entirely unsuitable for new entrants in the years ahead, and could well represent a barrier to entry into developing markets—a barrier that is avoidable today.

This clause introduces a statutory requirement for service providers in the energy and postal sectors to belong to a redress scheme, and will give consumers in those sectors greater assurance of achieving certainty of resolution of complaints.

My Lords, the Minister has probably spotted by now that I am not a natural born troublemaker, so I do not intend to seek the opinion of the House on this matter. I draw some encouragement from what he said. I cannot say that I found it wholly persuasive, when certain arguments that could have been adduced in other fields have certainly not been in the way that I touched on in my earlier remarks.

I take some comfort from the Minister’s remarks. In planning what I might say in gracefully withdrawing, more or less regardless of whatever he said, I intended to say that I took some comfort from the fact that the Bill did not make a multiple-ombudsman situation compulsory. I harbour a good deal of hope that common sense will prevail with the suppliers, the regulator or both. Indeed, I have been encouraged by the Minister’s speech to think that what I regard as common sense has spread to some degree to the Department of Trade and Industry, if it is the department’s declared policy preference that there should be only one ombudsman. I hope that the department may use whatever influence it has on the outcome to achieve a situation in which, whatever the legal provision, the consumer ends up with a single high-quality scheme.

I thank the Minister for that small bit of encouragement and for the trouble he has taken over his reply. I gracefully beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 47 [Membership of redress schemes: supplementary]:

moved Amendments Nos. 65 to 67:

moved Amendment No. 68:

moved Amendment No. 69:

moved Amendments Nos. 70 to 73:

moved Amendment No. 74:

My Lords, I congratulate the noble Baroness, Lady Wilcox, on how she introduced the amendment. We agree with the amendment and have added our name to it as an indication of that. I shall not go over the points she made—they were all good ones—save to say that I, too, was very impressed with the information provided by Energywatch, backing up the need for this amendment.

My Lords, I support the general approach. It is very important, as the noble Baroness, Lady Wilcox, said, that the total strategy is taken into account. This Bill will not work unless effective mechanisms are in place to ensure that the companies meet the requirement to handle complaints far more effectively than, frankly, either the post or energy sector does at present.

My only query about the amendment is whether it is in the right place; it might be made to Clause 46, which sets out the requirements on the redress scheme and the regulator. I was also slightly surprised that the leverage in Clause 42 had not attracted any amendments from the Government or anyone else in which a requirement on the regulator to ensure better complaints handling would be necessary to ensure that the companies can absorb the kind of complaints which, at the moment, are dealt with only by Energywatch and, to some extent, Postwatch. If the Government suggested that the amendment should be to another part of the Bill, I would not object, but it seems a crucial part of the approach of the Bill that we have something like this amendment in the final version and that the Government recognise that they should use all leverage on the regulator, via the redress scheme, to ensure that companies comply with a high standard of complaints handling; otherwise, the whole strategy falls. I hope that the Government, if they cannot accept the amendment, come forward with one that achieves the equivalent objective.

My Lords, the amendment requires that the existence of a functioning and effective internal complaints-handing procedure in the case of each supplier and prospective member be made a prerequisite of the approval of these schemes. The current provisions take fully into account the importance of service providers establishing effective internal procedures for handling consumer complaints. The redress provisions are based on the premise that, except in exceptional circumstances in which immediate intervention is warranted, service providers will have the opportunity to resolve disputes first hand.

Although we understand the motivation behind the amendment, we feel that the approach we have chosen is in line with better regulation principles, a point to which I shall return. We are giving regulators the power to make regulations to prescribe complaint-handling standards that would be binding on suppliers. Information about suppliers’ levels of compliance with any prescribed standards would be placed in the public domain. This is a fundamental aspect of the new model for consumer redress being introduced by these measures. We consider that, between this requirement and the requirement to belong to a redress scheme which industry must fund, suppliers will face strong incentives to introduce effective internal procedures for handling complaints.

My Lords, I am delighted that the noble Baroness, Lady Miller of Chilthorne Domer, thought it right to put her name to this amendment, and I thank her very much. The noble Lord, Lord Whitty, stood up and said it all as chairman of the NCC.

I got very worried during the Minister’s response that he was going to say that he would not take the issue away and look at it, but I think that that is what he said. If he does not come back with an amendment to this part of the Bill perhaps, as the noble Lord, Lord Whitty, suggested, there may be a better place for an amendment to be made. In the belief that he will come back, having looked at this matter, I shall wait for Third Reading and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendments Nos. 75 to 87:

moved Amendment No. 88:

My Lords, I repeat the declarations of interest that I made in Committee. I am a director of a large private property investment and development group, Emerson Development Holdings, which builds about 450 homes a year and operates its own customer charter. I have a declarable shareholding in Pochin’s plc, a quoted public company in property development and building services, which has a small house-building division.

These Benches offer broad support to the noble Earl, Lord Caithness, in his Amendment No. 88. I pay tribute to what he has tried to achieve in protecting the public both in this Bill and previously. He brings his years of professional experience to this subject.

I do not wish to repeat the arguments that we made in Committee; essentially, we seek to expand the scope of the Bill to include both property lettings and direct sales from builders/developers to the public. On lettings, many tenants, particularly of cheaper properties, are by definition far less likely to be able to afford to employ qualified advisers when contemplating a tenancy. Our contention is that they need protecting from unscrupulous agents. In addition, in recent years there have been a substantial number of purpose-built flat developments for letting, particularly in our major cities. Buy-to-let investors, often with limited property experience, have bought blocks of individual flats hoping to benefit from their capital appreciation rather than developing a genuine, long-term landlord/tenant relationship. Should the property market turn down and/or interest rates rise, as they have done recently, those investors may well have to dump the properties on the market, cutting their losses and perhaps allowing an unscrupulous landlord/investor to come in. As agents of mixed qualifications and integrity are likely to be involved at a number of stages, we believe that tenants should have a right of redress. I am particularly pleased that the National Association of Estate Agents supports bringing residential lettings into this legislation.

On sales, the approach by the noble Earl effectively enables the activities of builders/developers selling directly to the public to be classified as estate agency work and therefore subject to the redress scheme. Although the majority of such developers are usually covered by HBF or NHBC charter, we still feel that a redress scheme would provide additional protection for the public.

My Lords, I support the amendment although I shall reserve my comments about lettings until we reach the next amendment. I declare an interest in that I am in the process of trying to sell a property and buy one, so I have direct experience of a number of estate agents. But perhaps those anecdotes should be recounted in the bar rather than in the House.

My noble friend the Minister is very lucky that the NAEA seeks to raise standards through qualifications not in order to impose a closed shop but simply to improve the reputation and standing of the industry so that people like me can be provided with a better service when buying or selling a property. I should say that I am getting a good service; I do not want to cause myself more difficulties. It seems to me that the NAEA has made a sensible suggestion. I understand that since the launch of the scheme some 2,500 people have passed the NAEA’s technical qualification. That has opened up access to the industry, has encouraged younger people to come in and is a way of raising standards. This measure seems to me a good idea and I hope that my noble friend will consider it sympathetically.

My Lords, Amendment No. 88, tabled by the noble Earl, Lord Caithness, introduces minimum standards of competence for estate agents. I am grateful to the noble Earl for his explanation of his intent behind the amendment. As he mentioned, we discussed this before. The amended Section 22 would require the Secretary of State to designate certain approved bodies that estate agents must belong to. Membership of those bodies would be conditional on agents signing up to the rules and code of conduct of the body concerned, which must include certain competency standards and requirements.

I appreciate the points made by the noble Lords, Lord Lee of Trafford and Lord Dubs, but as I have explained before, positive licensing was looked at in detail by the OFT, which concluded that its benefits are not justified by its costs. The Government share this view. Giving trading and professional bodies control of access to the market could reduce competition and result in rising prices, to the detriment of consumers. There is little evidence that such controls would prevent rogue agents entering the market or remove those agents whose misconduct is predominantly the result of a lack of integrity, rather than a lack of qualifications.

However, the Government support moves to develop national quality standards for residential estate agents in the UK. We see merit in that as, properly done, it can provide an incentive to raise standards. But this is a matter primarily for the industry. We do not support the imposition of compulsory qualifications and standards, which would amount to positive licensing. I recognise that the noble Earl feels passionately about this issue, which he has raised on a number of occasions over many years. I reassert the Government’s intention, which is to improve the current negative licensing regime. The fact that we are setting up redress schemes has been widely welcomed. Requiring agents to join approved redress schemes and making it easier for enforcers to prove misconduct and take enforcement action is the most effective way of tackling problems in the industry without driving up costs for consumers.

The noble Earl mentioned the European issue. At the moment, no decision has yet been taken on whether an EU directive is needed in this area.

My Lords, I am very grateful for the support of the noble Lords, Lord Lee of Trafford and Lord Dubs. There are many on the government Benches who dislike the view that the Minister is taking. He has to take his brief, and that is right; but the noble Lord, Lord Dubs, has put his name to a number of Bills wanting to control estate agents. The noble Lords, Lord Grocott and Lord Davies of Oldham, have both put their names to Bills trying to deal with estate agents. Everyone knows that there is a problem, and the Government are too pathetic and weak even to try to tackle it. They are very happy to try little redress schemes; but that is shutting the stable door after the horse has bolted. We need to grasp this nettle, and this is the ideal Bill in which to do it.

The Minister said that it is not justified by the cost. I take issue with him on that. Is he prepared to let thousands of consumers be ripped off for a licensing scheme that will not cost the consumer any money at all? There are lots of estate agents out there and there is a big market working. All we are saying is that there should be some form of licensing to raise standards, as the noble Lord, Lord Dubs, said.

I was very disappointed not to receive any support from my Front Bench. That is in marked contrast to what happened in the previous Parliament, when I received very enthusiastic support from my Front Bench. Quite rightly, I have not asked my noble friend Lady Wilcox what she thinks about it; she has a job to do. But since she has been such a doughty supporter of the consumer in the past, it must gall her that the consumer is not about to be given the protection that he, and she, so badly want.

On the European issue, I know that no decision has been taken on a directive; that was not the question I asked. I asked the Minister two other questions, which he has not been able to answer. I did not give him notice of what I was going to ask him, but it is right that he ought to be able to reply and give me a chance to consider his thoughts. For the time being, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 89:

My Lords, I support the amendment. I declare a recent interest, in that I have been asked to become a member of the council of the Ombudsman for Estate Agents, and I have accepted that invitation, although I have not yet taken up any duties.

I feel sure everyone would agree that if we are regulating or providing redress in relation to estate agents, letting agents working out of the same establishments should have the same cover. The new proliferation of unregulated lettings agents is a strange phenomenon which, sooner or later, is certainly going to require some regulation. This must be the moment at which it would be easiest to incorporate that into legislation. As the noble Lord, Lord Lee of Trafford, made so clear, the buy-to-let market has increased private lettings from 9 per cent of the total stock in the UK to 12 per cent since 1979, when this early definition of what an estate agent did was set out in the Estate Agents Act 1979. Things have changed completely over the past 30 years, and frankly it is simply a mistake to omit the managing and letting of properties rather than the sales thereof.

I was proud to play some small part in bringing the tenancy deposit protection scheme, as it is now known, into being. As the noble Earl, Lord Caithness, said, it covers only tenancy deposits, which is a relatively small part of the total workload of those who are handling lettings. It certainly does not go nearly far enough to embrace what is needed in terms of regulation of new letting agencies. I am told by the Brent private tenants’ association that there are now, in the mushrooming of these new lettings agencies, four lettings agents within 50 yards in Wembley, all operating in competition having been set up virtually overnight to take account of the growth in the market of private lettings. Surely it is relatively easy to correct in this new measure what is, in effect, the mistaken description of estate agency that dates back to 1979. I strongly support the noble Earl in his amendment.

My Lords, I support the amendment. It is my understanding that there are far more queries and complaints about lettings through estate agents than there are about sales. One has only to talk to people or to read the newspapers to realise that people are greatly concerned that they have been dealt with badly when they have let properties and they are unhappy about that.

We all congratulated the Government on the Bill, despite our reservations about details—and I introduced a Private Member’s Bill in the previous Session. That also did not concern lettings, but that was an oversight on my part and there were some drafting difficulties. I understand from my noble friend the Minister that there are some technical difficulties with including lettings in this Bill. On the other hand, we have come such a long way in improving the situation with regard to estate agents that it would seem a pity not to deal with lettings as well. Even if there are difficulties, it is not beyond the powers of my noble friend and the parliamentary draftsman to sort this out.

The amendment may be technically defective—I do not think that it is but that is the usual Front-Bench comment when one moves an amendment—but surely we should not miss this opportunity. It will be a long time before we get one again and if the Government are intent on dealing with the problem, why do they not deal with its totality? This is a serious issue. I urge my noble friend to look at this matter, consider whether he can support the principle and, if necessary, deal with the details of an amendment at the next stage—although I hope that he can accept the amendment as it stands.

My Lords, perhaps I may surprise the noble Earl by supporting his amendment. It is close to the dinner hour, but I like to create a little surprise on occasion. I do so because in Grand Committee the Minister said that the OFT report of 2004 did not deal with this problem, only with its remit of estate agency as then defined in the Estate Agents Act, which did not include the growing field of lettings and property management. I support the noble Lords, Lord Best and Lord Dubs, in saying that whatever technical difficulties there may be and despite the fact that the OFT did not consider this matter in 2004, a way should be found, either through this amendment or following the Government’s consideration between now and Third Reading, so that this opportunity, as the noble Lord, Lord Dubs, put it, is not missed. There is nothing terribly magical about redress schemes. The scheme that is being proposed in the Bill could easily be extended now, rather than in five, 10 or 20 years, to a related problem in the work of estate agents.

My Lords, the amendment would extend the scope of the Estate Agents Act 1979 to include lettings and property management. As I mentioned in Grand Committee, the Estate Agents Act 1979 applies only to those engaged in estate agency work, and the OFT report on estate agents did not consider the case for extending it to cover lettings and property management. Consequently, we do not have the evidence base to extend the provisions of the 1979 Act in this way.

As my noble friend Lord Dubs correctly acknowledged, amending the 1979 Act to cover lettings and property management would be difficult. Its scope is limited to issues specific to the buying and selling of land. This is clear in fundamental definitions contained in the Act, for example, “interests in land”, and from the duties owed by estate agents, such as information to be given to clients. Amending the Act to make it fit for the purpose intended by noble Lords would require a lot of detailed work.

I can assure the noble Lord, Lord Best, and my noble friends Lord Dubs and Lord Borrie that the Government take the issue of lettings extremely seriously. Steps have already been taken to tackle problem areas such as tenants’ deposits and houses in multiple occupation. I can assure the House that the Government will continue to monitor the lettings sector and take action where they find evidence of market failure. That applies also to the wider property sector as a whole.

However, given the views expressed in your Lordships’ House this evening, I undertake to consider this matter further.

My Lords, first, I thank the Minister for his final sentence. At long last we have a positive response from him and I am grateful. When he was appointed Minister, I was told that he would listen to and understand the House and he has shown exactly those qualities in the past couple of minutes.

I thank the noble Lords, Lord Best and Lord Dubs, for their support. I also thank the noble Lord, Lord Borrie, whose support is quite a change but a very pleasant change. I hope that he will continue to support me—and I will try to support him in future. The noble Lord, Lord Best, mentioned the increase in the lettings market, which is the great justification for my amendment. We have moved on since 1979 and it is time that we looked at this matter. The noble Lord, Lord Dubs, mentioned the technical problems and that point was taken up by the Minister. All I can say to the Minister is that he has a very good team behind him. I remember using such comments when I was a Minister: that a matter was technical, too difficult and that there were other amendments to be made. As soon as we realised that we were going to be beaten in this House, it was wonderful how those difficulties mysteriously evaporated and the Bill was soon in good shape.

As to possible defects in the amendment, I can always remember being told that such problems were not a major issue in this House—it was the principle of the amendment that mattered, and if that was agreed it was up to the Government to ensure that it was technically correct. So I am not worried about that.

Given what the Minister said, it is entirely appropriate that I withdraw the amendment at this stage. If he wishes to discuss it with me and the noble Lords, Lord Best, Lord Dubs, Lord Lee and Lord Borrie, between now and the next stage, I am sure that we would all be delighted to try to fix our schedules to see him. I have no doubt that, having given a commitment, he will fulfil it and we will get a nice government amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 6 [Estate Agents’ Redress Schemes]:

moved Amendment No. 90:

My Lords, despite my noble friend’s lack of support for me, I support her.

My Lords, I shall speak to Amendments Nos. 90 and 91 to Schedule 6. The Government have already spelt out in the Bill the important requirements that they feel estate agents’ redress schemes must make provision for in order to gain approval. Beyond this, it is left to the OFT to assess what the more detailed criteria and the procedures for approval should be.

The minimum requirements for approval are set out in paragraphs 2, 4 and 5 of new Schedule 3. In addition, taking into account Amendment No. 92, to which I have just spoken, paragraph 3 of new Schedule 3 specifies that the OFT must have regard to whether the scheme will be in the interests both of scheme members and of potential complainants, and to whether the scheme follows generally accepted principles of best practice in the OFT’s opinion. Paragraph 4 requires the OFT to ensure that a scheme makes satisfactory provision for sharing information with other relevant bodies.

Apart from the requirements set out in the Bill, the OFT can issue any further guidance that it wishes on what it would regard as “satisfactory provision” and what it regards as applicable best practice. It is not clear to us what benefit would be gained from requiring redress schemes to comply with a code of practice in addition to the criteria set by the Government in this Bill and any additional criteria set by the OFT. We are confident that, at this Report stage, the Bill contains all the safeguards that are needed to ensure that only high-quality redress schemes are approved. Although I am sympathetic to the noble Baroness’s amendment, I am not inclined to support it.

Well, my Lords, there we are. I thought that it was a nice, simple amendment under which the DTI could whip up a code of practice. As that is not going to be, I shall just beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 91 not moved.]

moved Amendment No. 92:

moved Amendment No. 93:

My Lords, in Committee I moved an amendment suggesting that the figure be raised from £500 to £1,000. The arguments are similar here. The sum of £500 is too small; indeed, it is derisory in relation to the sums of money that are at stake in an estate agency transaction. I would have thought that anything the Minister could do to raise the figure above £500 would be sensible and welcome.

My Lords, I support the amendment. As the noble Lord, Lord Lee, says, a fine of £500 is nothing like the detriment that someone would incur were an estate agent to foul up the transaction. If the Minister and the Government are not prepared to accept the amendments of the noble Earl, Lord Caithness, on compulsory licensing, it is important that the leverage that they are prepared to accept via the redress scheme has teeth and is enforceable.

This is a general point of consumer law. In case I have not said this before, although a lot of noble Lords have pointed it out, I declare my interest as chair of the National Consumer Council as is. Across consumer law, the penalties are very low. It is important when we are enhancing consumer law that we set penalties that mean something and which ensure that the system works. I therefore ask the Government to give further consideration to the maximum fine leviable in these circumstances, so that the redress system can achieve what some of us would prefer to have been achieved via a licensing system. But if the redress system is the Government’s preferred mechanism, it has to be made to work. I think that £3,000 is a reasonable stab at a maximum level and will make most estate agents ensure that they are part of a reputable redress scheme.

My Lords, I supported the noble Lord, Lord Dubs, in Committee and I support the noble Lord, Lord Lee, now.

My Lords, this amendment seeks to increase the maximum amount of a penalty charge notice from £500 to £3,000. As noble Lords will remember, we discussed penalty charges in Grand Committee. As I said then, there needs to be a balance between the fine being a significant sum and our recognising that this is a fine that can be imposed on the spot with very little due process involved. We think that £3,000 goes far beyond what is reasonable for an on-the-spot fine and that a fine of that level would be appropriate to impose only after proceedings before a magistrates’ court.

In addition, in a magistrates’ court, the magistrate can exercise judicial discretion on the level of the fine, taking into account the circumstances of the case, whereas under a fixed-penalty scheme there is no scope for the exercise of discretion, and it would be unfair in principle to set a fixed penalty at such a high figure. That is not to say that estate agents should go unpunished. The ultimate penalty for not being a member of a redress scheme is, of course, loss of livelihood as a result of being banned.

The maximum for a penalty charge notice under the Housing Act 2004 is £500. It seems sensible for the penalty charge regime under this Bill to be consistent with the regime under the Housing Act, which is why we believe that £500 would be reasonable here, too. Of course, an estate agent could be subject to more than one notice, each up to a maximum of £500.

Another important point is that, although £500 may not appear at first glance to be a significant sum for estate agents, that does not ring true when we consider that a 2005 Key Note market report on estate agents found that 25 per cent of estate agency businesses did not make a profit in 2003-04. Also, many estate agency businesses are small and medium-sized enterprises. The OFT report quotes the Council of Mortgage Lenders research that found that 60 per cent of estate agents in England and Wales are small independent firms which tend to operate one office or a handful of offices in a local area.

We may be willing to consider raising the penalty charge in an amendment perhaps along the lines suggested by my noble friend Lord Dubs in Committee. I hope that, in the light of that suggestion, the noble Lord, Lord Lee of Trafford, will feel inclined to beg leave to withdraw the amendment.

My Lords, the Minister said that it would be unfair to set a limit of £3,000 for an on-the-spot fine. However, I heard him say nothing that justified that. Perhaps he could address that problem in writing to me.

My Lords, I am reassured by the support that I have had on this amendment from the noble Lord, Lord Dubs, from the noble Earl, Lord Caithness, and in particular from the noble Lord, Lord Whitty, as well as from the Which? organisation. I am somewhat surprised by what was said about the relative financial success of estate agents. I would have thought that, in the present buoyant market, the vast majority of them were doing very nicely indeed. Nevertheless, in all the circumstances and having heard what the Minister said, I am at this stage happy to beg leave to withdraw the amendment, although I suggest that we will come to this again at Third Reading.

Amendment, by leave, withdrawn.

Clause 64 [Extent]:

moved Amendment No. 94:

moved Amendment No. 95: