rose to move, That the draft regulations laid before the House on 3 March be approved.

The noble Lord said: My Lords, I shall also speak to the Business Protection from Misleading Marketing Regulations 2008. Both sets of regulations implement EC directives and are being made under Section 2(2) of the European Communities Act 1972.

The consumer protection regulations implement the unfair commercial practices directive. The regulations prohibit traders in all sectors from engaging in unfair commercial practices with consumers. Commercial practices are acts or omissions by a trader directly connected to the promotion, sale or supply of products to or from consumers. The regulations will operate flexibly to catch unfair practices. At their heart is a prohibition on the use of unfair commercial practices. A commercial practice is unfair if it amounts to conduct below a level that may be expected towards consumers in accordance with honest market practice or good faith. This is intended to act as safety-net protection for all consumers.

This broad category of unfair commercial practices is supplemented with more specific categories concerning misleading actions and omissions and aggressive practices. The vast majority of practices that would be considered unfair would fall under these provisions. For a practice to be unfair under these rules, it must harm, or be likely to harm, the economic interests of the average consumer—in effect, they make a choice that they would not otherwise have made.

The normal benchmark for determining the likely effect of a practice is the average consumer. However, where a practice is targeted at particular groups of consumers, or is likely to adversely affect the economic behaviour of only a clearly identifiable group of vulnerable consumers in a way that the trader could reasonably foresee, the average member of this group is the one who becomes the benchmark against which the effect of the practice will be assessed.

The regulations also ban 31 specific practices in all circumstances, irrespective of whether they may affect consumers’ economic behaviour. These include prize-draw scams, bogus closing-down sales, and preying on elderly people’s fears about their personal security to sell them burglar alarms. The prohibition on the use of unfair commercial practices will be enforceable through the procedure for the enforcement of Community infringements in Part 8 of the Enterprise Act 2002. This enables the Office of Fair Trading, Trading Standards, and designated—mainly sectoral—enforcers such as Ofgem to apply to the courts for enforcement orders to prevent or stop the use of unfair commercial practices.

In addition, with limited exceptions, a breach of the prohibition on unfair commercial practices will be a criminal offence. Most of the offences follow the general approach of strict liability, which requires proof only that a commercial practice is prohibited. However, there will be no offence merely because a commercial practice falls within the broad category of those falling below honest market practice or good faith, unless the trader knowingly or recklessly engages in this conduct. This is because of the wide-ranging nature of this category.

The Office of Fair Trading and Trading Standards will have a duty to enforce the regulations. However, where there are effective systems of self-regulation, such as those administered by the Advertising Standards Authority and PhonepayPlus, we would usually expect complaints to be referred to them in the first place for action, as established means under both these regulations and the business protection regulations. A supplementary objective in transposing the directive was to achieve some regulatory simplification, where that was possible without reducing consumer protection. The consumer protection regulations repeal provisions in a number of laws, including most of the Trade Descriptions Act 1968 and the provisions on misleading price indications in Part III of the Consumer Protection Act 1987.

The consumer protection regulations represent the biggest change to the UK consumer protection framework for almost 40 years. They will put in place a more comprehensive framework for tackling sharp practices and rogue traders who exploit loopholes in the existing prescriptive legislation. They will also deliver a big part of BERR’s simplification plan. This is a good law for both consumers and honest businesses. Consumers will obtain better protection from unfair practices. Honest businesses will no longer have to face unfair competition from traders who use underhand tactics. The changes will also simplify consumer protection, making it clear which commercial practices are, and are not, allowed.

I turn to the second instrument under discussion today. The business protection regulations implement the 2006 misleading and comparative advertising directive. That directive consolidated the previous 1984 directive on the subject with amendments made to it by other directives, including the UCPD. The previous 1984 directive is currently implemented by the Control of Misleading Advertising Regulations 1988, which will be repealed by the consumer protection regulations.

The business protection regulations prohibit advertising that misleads traders and set out the conditions under which comparative advertising is permitted. Comparative advertising is advertising that identifies a competitor or a competitor’s product. A trader who engages in advertising which misleads traders will be guilty of a criminal offence. The OFT and Trading Standards have a duty to enforce the regulations. Those enforcement authorities are given the power to apply to the courts for injunctions to secure compliance with the regulations. Making misleading advertising a criminal offence and giving Trading Standards a duty to enforce the regulations will ensure that there is no reduction in business protection following the repeal of certain laws, such as most of the Trade Descriptions Act, which protect businesses as well as consumers.

There has been extensive consultation on the transposition of the unfair commercial practices directive into UK law and on these two sets of regulations. I therefore commend the regulations to the House and beg to move.

Moved, That the draft regulations laid before the House on 3 March be approved. 13th Report from the Joint Committee on Statutory Instruments.—(Lord Tunnicliffe.)

My Lords, it is my pleasant duty to welcome the noble Lord, Lord Tunnicliffe, to his new responsibilities on the government Front Bench. There will be battles ahead, I assure him of that, but not this evening—just a little gentle questioning for clarification.

We took an overview of these statutory instruments. The consumer and business protection SIs, as the Minister has said, come as a result of the implementation of the European unfair commercial practices directive. I have consulted Malcolm Harbour MEP and the office of my honourable friend in another place, Mark Prisk, and for once we do not view these measures as gold-plating and regard them as relatively uncontroversial.

The Consumers, Estate Agents and Redress Act order brings into force the section of the Act that requires the National Consumer Council to produce a forward work programme before each financial year. That is my overview. At this point I will admit that I was chair of the National Consumer Council, and I am nervous about the idea of turning something that has been so good and productive under so many Governments for so many years into a great big organisation that is swallowing up other organisations. My worry is that it will get slower and slower.

My Lords, I apologise for leading the noble Baroness astray. When I said I was proposing one statutory instrument and speaking to the second, I meant both the consumer protection and business protection regulations. I shall be doing the Consumers, Estate Agents and Redress Act order separately.

My Lords, I have two points to make on this. One point is procedural—which is unusual, coming from me—and the other is substantive.

We ought to register the concern that a year ago we had the Consumers, Estate Agents and Redress Act, under which these regulations are laid. They are serious regulations that impose criminal offences on people, leading to two years’ imprisonment for people who are in breach of both sets of regulations. From these Benches I have long argued, in relation to consumer legislation, that there ought to be a prohibition on unfair commercial practices, and I feel, although this is not a point I often make, that this ought to be dealt with by primary legislation rather than by regulation. After all, we are not in a position to amend these regulations; either we throw them out, which I do not propose to do this evening and I know the noble Baroness, Lady Wilcox, will not, or we approve them. The imposition of a prohibition on unfair commercial practices, which from these Benches we have long argued for, coupled with significant repeals of Trades Descriptions Act legislation, is an important point, and I fail to understand why the Government, knowing that the directive was going to come out, could not have postponed the legislation on the Consumers, Estate Agents and Redress Act until it had.

My Lords, a moment ago the Minister explained to the noble Baroness, Lady Wilcox, that he has so far talked only about the two sets of regulations dealing with consumer protection and business-to-business transactions. He has yet to talk about the third set of regulations before us.

My Lords, as always, I am grateful to the noble Lord, Lord Borrie, speaking from the Back Benches, defending his new Minister. As far as I was aware, I was speaking to the Consumer Protection from Unfair Trading Regulations and the Business Protection from Misleading Marketing Regulations, both of which, having read them, contain the potential for fines and up to two years’ imprisonment. That is my point. It seems to me that that would have been better dealt with in primary legislation rather than forcing us into the position where we cannot amend, but only turn down or approve.

My second substantive point is on the difficulty in which I find myself. Noble Lords will have received representations from Which?, which the noble Baroness, Lady Buscombe, refers to as, “Oh God”. I have never thought of it in any divine capacity. It has made a sensible point, which should be the subject of debate. If these regulations are passed, which I support, and if an individual or a business has been subjected to an unfair commercial practice, why do the regulations not permit that individual or business to get out of the contract which they have been induced to enter into as a result of that unfair commercial practice?

It is a perfectly sensible point, which should be subject to debate. We cannot amend the regulations, so those people who might be persuaded that that is a good point have only the option to object to the regulations—which we do not object to. It seems that all the Government can do, if this is a serious point, is monitor the effect of the regulations, see how many cases in practice are uncovered where people ought to be allowed relief from onerous contracts imposed as a result of unfair commercial practices, and then bring back new regulations. Going back to my first point, that seems to be an unsatisfactory way to deal with this issue.

My Lords, first, I join the noble Baroness, Lady Wilcox, in welcoming my noble friend to his new responsibilities on the Front Bench and I congratulate him on his elevation. I join this debate primarily as the chairman of the Advertising Standards Authority and, in that role, I give a warm welcome to these two instruments. The Government have succeeded in implementing the European directive skilfully and in aligning business-to-business provisions alongside that. The directive of course primarily deals with business-to-consumer issues. They also have found the right sort of balance between protecting the interests of the consumer and the interests of legitimate business.

The Advertising Standards Authority is the UK’s self-regulatory body for regulating advertisements appearing in all forms of media. For the past 45 years it has been responsible for upholding standards in advertising and for ensuring that consumers are protected from misleading and unfair advertisements. On the whole, it has done a pretty good job, including under the distinguished tenure, as chairman, of my noble friend Lord Borrie, from whom I took over some nine or 10 months ago.

The ASA has been fully engaged with the Government, the Office of Fair Trading and consumer organisations in the discussions around the putting together of these two instruments. We have found the Government’s approach to be inclusive and constructive. We welcome the regulations. Under the existing consumer protection regime, the ASA is regarded as the “established means” for enforcing the Control of Misleading Advertisements Regulations 1988 and, where appropriate, we co-ordinate our work with the Office of Fair Trading to ensure that standards are maintained. Noble Lords may have noticed that in the past week we have had occasion, with some reluctance, to refer one particular airline to the Office of Fair Trading for consistent breaches of the advertising codes.

The ASA is very pleased to have had its status confirmed in both these sets of regulations as the “established means” for protecting consumers from misleading and unfair advertising. In doing that, the regulations acknowledge the important role that the self-regulatory ASA plays in protecting UK consumers and in maintaining a level playing field for business. The ASA responds to more than 24,000 complaints each year and conducts proactive monitoring and compliance work to ensure that advertisements are compliant with the advertising codes, regardless of whether or not a complaint is received. This generally leads to around 2,500 advertisements being changed or withdrawn each year as a result of ASA action.

The advertising self-regulatory system is an excellent example of better regulation at work. Our work on misleading advertising means that many cases do not have to be dealt with by the courts or by statutory regulators—indeed, trading standards officers currently refer quite a number of cases to us. This is an important point because our work saves the public purse a good deal of money: the advertising self-regulatory system is funded by industry via a levy on advertising space. The ASA is not only an example of better regulation but also a strong supporter of the Government’s better regulation agenda. We are encouraged that this agenda appears to have been followed in constructing these regulations.

However, I have to ask my noble friend one question. The better regulation agenda makes clear that enforcement action should be proportionate to the risk posed, but that is not entirely clear from the regulations, which touches on the point raised by the noble Lord, Lord Razzall. In the light of this, will the Government be able to confirm that it is their intention that enforcers of these regulations should follow Hampton principles when enforcing the regulations and so use the most appropriate mechanism to achieve compliance? Specifically, will the Government confirm that enforcers should normally seek to escalate their compliance action from low-level intervention and retain criminal enforcement for only the most serious of cases?

Certainly, in the case of advertising, this would lead to more frequent use of the ASA. Loath as I am to increase our workload, none the less, we would welcome the role that this would place on us. The reliance on a single regulator will lead to more consistent regulation, thus achieving another Hampton principle. It would also have the added benefit of leaving trading standards officers with more time and resources to pursue serious cases of infringement. The Advertising Standards Authority is very pleased to be recognised in these regulations, welcomes them and would be grateful for the assurance that we have sought from my noble friend.

My Lords, I, too, congratulate my noble friend Lord Tunnicliffe on the clarity of his first performance from the Front Bench; no doubt we shall hear much more from him in future. I should declare an interest as a vice-president of the Institute of Trading Standards because I want to say something about that body of noble men and women up and down the country employed by local authorities to enforce a great many consumer protection measures.

I welcome the comprehensiveness of the regulations before us in prohibiting unfair commercial practices. They are much more all-embracing in terms of dealing with rogue trader activities than was the case in the past. But perhaps I may express some sadness at the passing of older consumer protection measures, especially the Trade Descriptions Act 1968, which has its 40th birthday this year. In the 40 years of its life, trading standards officers throughout the country have been able to prosecute traders for misleading descriptions of goods, services and prices, and during this period it has been a most useful measure. I do not think there should be any condemnation of it just because its time has passed. It is now being absorbed into something larger, and although the noble Baroness, Lady Wilcox, does not like things to be absorbed into things that are larger, in this case, whatever she says about the National Consumer Council, she has not disagreed with the broad nature of the new regulations.

As the Explanatory Notes state, the unfair consumer practices directive, which underlines these regulations, will strengthen consumer protection considerably and improve cross-border trade by making it a good deal easier for consumers from all parts of the Community to shop all over the Community with the greater confidence that is so desirable. The duty of enforcement on the Office of Fair Trading and trading standards officers and their continuing ability to prosecute in the criminal courts is invaluable. But as the noble Baroness and the noble Lord on the Liberal Democrat Front Bench know very well because they have been taking an active part in the debates on the Regulatory Enforcement and Sanctions Bill, these powers of prosecution under the criminal law are to be combined with civil sanctions. That is useful because criminal proceedings and the stigma of criminal conviction are often not warranted, so the greater flexibility of the new Bill is highly desirable. I am sure that they, as I do, look forward to the Third Reading of the Bill in this House on Monday next.

OFT research shows that the losses suffered by consumers as a result of defective goods, inadequate redress and poor information run to some £8 billion a year, not taking account of the emotional costs and stress that may be suffered. Needless to say, low income consumers are particularly vulnerable. The only question I have for my noble friend the Minister is this: can he ensure that the enforcement offices I have referred to, the Office of Fair Trading and trading standards officers of the local authorities, will be adequately resourced to carry out their more wide-ranging and useful consumer protection and business protection duties in the future?

My Lords, I begin by joining all noble Lords who have already spoken in congratulating the noble Lord, Lord Tunnicliffe, on his new responsibilities. I should say, though, that in another part of your Lordships’ House, we have just been discussing the speed with which Ministers seem to age on the Government Front Bench. I throw that one across just as a warning to the noble Lord.

My Lords, I hate to interrupt the noble Baroness, but some of us get younger after the event.

My Lords, we did agree on that as well. I agree with the noble Lord, Lord Smith, that it is incredible how people lose those years when they leave the Front Bench.

I declare an interest as chief executive of the Advertising Association, and as such the chief executive of an association which represents all parts of the advertising industry: the advertising agencies; media owners, broadcast and non-broadcast; as well as the advertisers. In fact, it is our members who fund the self-regulatory system, the Advertising Standards Authority, albeit very much at arm’s length.

The Advertising Association has engaged fully over the past couple of years in the process undertaken by the Government of transposing and implementing into UK law the unfair commercial practices directive and reimplementing the misleading and comparative advertising directive in the form of the Consumer Protection from Unfair Trading Regulations and the Business Protection from Misleading Marketing Regulations respectively. They have broad implications for business to consumer and business to business advertising in the UK. Indeed, the Advertising Association, as an interested party, has engaged at various times in the past at the European level in the development of both the directives from which the regulations being debated this evening derive. I thank the Minister for reaffirming in his opening remarks the status of the ASA and PayPhone Plus as “established means” for the purposes of both the Consumer Protection from Unfair Trading Regulations and the Business Protection from Misleading Marketing Regulations. The ASA has enjoyed “established means” status for many years, and so I am pleased that the noble Lord has stated for the record that the authority will retain this status with the coming into force of these new regulations. The Minister’s statement serves to provide certainty and continuity.

I am also grateful for the Minister’s comments about the pursuit of best regulatory practice generally and in the context of these new regulations specifically. It is important that between now and 26 May, businesses both large and small continue to familiarise themselves with the implications for them of the new regulations in both business to consumer and business to business contexts. To assist the process of familiarisation, it is essential that the Department for Business, Enterprise and Regulatory Reform and bodies such as the Office of Fair Trading continue their own ongoing programmes of educating businesses, enforcers and others both in the run-up to and in the months following the coming into force of the two sets of regulations before us.

Finally, I look to the Minister to provide comfort that one longstanding UK marketing practice that is extremely popular with consumers will continue to be acceptable under the new legislative regime that comes into being next month. I speak of the “buy one get one free” offers, or to use what sounds like rather unparliamentary language—forgive me, but I have been looking forward to this—BOGOFs. Such offers are extremely popular with consumers here in the UK; indeed we have all seen them. In my view, it would be a great pity for both marketers and consumers if any interpretation could be placed on the Consumer Protection from Unfair Trading Regulations whereby such offers and similar marketing practices could be considered in breach of them. I hope that the noble Lord will feel able to provide comfort on this subject when he winds up the debate.

My Lords, I join everyone else in welcoming my noble friend to the Front Bench. He looks a lot younger to me after an hour of this debate. Following in the steps of the noble Baroness, I need to declare my chairmanship of both the existing and new National Consumer Council.

I welcome these regulations. While on behalf of consumers and others I have had doubts about some aspects of the better regulation agenda—some of which seem directed more at reducing the burden on business than on protecting consumers or the environment—in this case it has managed both to reduce the burden on business and to extend and simplify protection for consumers. That consists of two parts: first, the nature of the directive, in which the UK Government were very involved, has a principled-based objective—it is the kind of thing we like to see come out of Brussels—and, secondly, the transposition has removed a great deal of detailed regulation from the statute book. Consumers should benefit from this good example of better regulatory practice.

I had two reservations. The one in relation to the effectiveness of the resourcing of the TSOs has been covered already by my noble friend Lord Borrie. My second point, however, is that this is all very well—it provides simplification for consumers and should give them more power and more ability to enforce their rights—but none of it is very good if they do not know about it. It must be incumbent on the Government to ensure that there is effective consumer education and information in this area. Some information is beginning to go to business and I understand that consumer education is coming, but it will have to be on a fairly wide basis. After all, a lot of people vaguely know about the Trade Descriptions Act, but I doubt whether there is one in a thousand consumers out there who knows about these regulations. We need to turn that round within a matter of months and I would welcome some assurance that the Minister’s department has this in hand. Otherwise I very much welcome these regulations.

My Lords, I thank noble Lords and the noble Baronesses for their kind words of welcome. I feel it is something of a snare because from now on it is going to go downhill.

Let me start with the points raised by the noble Baroness, Lady Wilcox, particularly on the issue of international uniformity. This is a problem which we face in many areas but this minimum or maximum directive has to be written across international legislation—it cannot be embellished—and this gives it a better chance of a uniform introduction across the Community. The European Court of Justice will have a responsibility for ensuring a consistent approach and the Commission is chairing a series of working groups on transposition and consistent enforcement which, it is to be hoped, will ensure the kind of uniformity the noble Baroness seeks. Certainly the Government have the same aspiration.

On small and medium enterprises, we agree they are important and share the concern that the publicity and guidance should be on a particularly grand scale in order to reach such enterprises, as the noble Lord, Lord Whitty, said. However, the regulations are intrinsically simpler than all the laws they replace, which is very important. It was a mighty task to incorporate in these regulations a comprehensive knowledge of the predecessor laws and we commend the people who did it. Now we have a single concept of fairness and specific examples of regulations which can be seen on one or two pages. I hope that business will find these regulations easier to understand and easier to comply with.

The noble Baroness asked whether the regulator, the OFT, and the local regulators, trading standards, will have sufficient resource. In both cases we believe that their current resource will be sufficient because of the change from many laws to a simple law. The Government are not convinced that the implementation of the unfair commercial practices directive will create new burdens on either the OFT or local authorities. It will replace many existing legislative provisions which trading standards authorities had the duty to enforce. We accept that the regulations also contain new protections which will need to be enforced but, beyond the need for training on these new rules, which the Government are funding, we do not believe they should inevitably lead to additional enforcement costs. Rather they will provide local authorities with a greater flexibility to prioritise their enforcement work and to tackle areas causing maximum consumer detriment and will provide more effective and flexible sets of enforcement options.