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Stronger protection for UK consumers

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (Reference 2007/007) issued by The Government News Network on 5 July 2007

Consumers are set to benefit from powerful redress schemes, which guarantee them complaint resolution and can award compensation. Proposals on the schemes are being consulted on by the Department for Business, Enterprise and Regulatory Reform (BERR).

The new arrangements would initially cover the energy and postal services sectors. Currently, consumer bodies in these sectors can only seek to resolve the thousands of complaints they receive through persuasion. They have no powers to enforce resolution and cannot specify redress or compensation.

BERR Minister Stephen Timms said:

"For the first time, consumers will have guaranteed access to redress schemes which have the teeth to enforce their awards. Our proposals will give people certainty that their complaints will be resolved and that they will receive compensation when it is warranted."

The Government also intends to place a duty on Ofgem, the gas and electricity regulator, and Postcomm, the postal services regulator, to prescribe new complaint handling standards for their sectors. Suppliers will have to work hard to resolve complaints themselves in the first instance, with the redress schemes available if agreement cannot be reached.

These proposals are within the Consumers, Estate Agents and Redress Bill, which is receiving its final reading in the House of Commons today. The Bill contains a range of important provisions that will give greater protection to UK consumers.

Mr Timms said:

"The Bill contains a package of measures that will benefit consumers and give them a stronger voice. Estate agents will have to belong to an ombudsman scheme, and the Office of Fair Trading (OFT) will get new powers to detect and ban rogue estate agents. A new more powerful National Consumer Council will be set up, and consumers will get new rights in relation to doorstep selling."

The Government's consultation proposes the following scope for the redress schemes, and invites views on whether:

* All regulated providers in the gas, electricity and postal services sectors should be required to become members of a redress scheme

* Domestic consumers and the smallest businesses should have access to the redress schemes and

* The scheme should handle all types of complaint

Notes to Editors

1. The consultation can be found at http://www.gnn.gov.uk/environment/dti/ and will close on 27 September 2007.

2. The position of consumer representation and redress in the water sector will be the subject of a separate consultation in 2008.

3. Redress schemes provide consumers with resolution of their complaints against suppliers of goods and services, where the suppliers have failed to resolve the complaints to the consumer's satisfaction. They are independent of consumers and of suppliers. Redress schemes can reach an impartial judgement on complaints that are referred to them, and can reach a decision which is binding on the supplier.

4. Where a decision made by a redress scheme is in the consumer's favour, the decision may specify that the supplier should provide an apology or explanation; pay compensation; or take such other action in the interests of the consumer as may be specified.

5. This approach represents a departure for some sectors, where - for over twenty years - there have been public bodies charged with handling complaints which the regulated providers have not addressed to the satisfaction of their customers. The new arrangements give regulated providers an incentive to invest in resolving complaints through their internal procedures rather than having to take matters to redress schemes for resolution

6. Government will set out its response to the consultation by 21 December 2007. The relevant regulated service providers will then be able to complete the preparations for their schemes. The Secretary of State will need to make an Order before the schemes can formally commence.

7. It is envisaged that the redress schemes in the energy and postal services sectors will be in place by summer 2008.

Further information on the Consumers, Estate Agents and Redress Bill is available at http://www.berr.gov.uk/consumers/consumersbill/index.html

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