Group 10 is fixed-penalty notices. The lead amendment in this group is amendment 43 and I call on David Melding to move and speak to the lead amendment and any others in the group.

Amendment 43 (David Melding) moved.

Thank you, Deputy Presiding Officer. I'm happy to move both of my amendments in this group, namely 43 and 44. Amendment 44 stems from the same one that I brought forward at Stage 2 and builds on the amendments that the Government has already put in place, increasing the fixed-penalty notice from £500 to £1,000. My version increases the fixed-penalty notice from £1,000 to £2,000. I do welcome the fact that the Minister has moved somewhat with regard to a policy here, but I think that there was clear evidence from the sector that the proposed levels of fixed penalties were not high enough. It was really quite comprehensive in our evidence. It was surprising, indeed, that there was such unanimity from tenants and landlords and agents. I don't think £1,000 quite does it, however, and, in that regard, we need a more robust form of deterrent in this legislation so that rogue landlords and letting agents are truly deterred from any inappropriate action and it sends a very important signal.

The Minister did say that there would be provision to review the level of the fixed penalty and increase it in regulations. Indeed, I've just referred to that earlier. But I think that the initial fixed penalty has to be set at a level that is clearly a deterrent. Whilst, as I said, the Minister has shifted—let's remember £500 was set as the administrative cost to the local authority, and the model there was just to recover those costs. I do think that the extra £500 that is now proposed by the Government at least acknowledges there should be a clear element of deterrence beyond administrative costs, but I don't think that it's still enough to move to £1,000. So £2,000, I think, sends a stronger signal, and I hope that Members will agree. 

I do agree with what the Minister says that the ultimate deterrent is the potential loss of a licence from Rent Smart Wales. That, as far as the landlord is concerned, is a very powerful sanction. Because of that, I thought setting the fixed penalty at a higher rate still, say £5,000 as in England, wouldn't quite strike the right balance, because we should acknowledge the importance of Rent Smart Wales in Wales in the way we determine these matters. I'm pleased to put on record that I think it's a system that is now operating in practice with greater and greater efficiency, and it's an important part of our model to strengthen the rental sector in Wales and provide a fairer market. 

My second amendment, amendment 44, seeks to ensure that prohibited payments are recovered at the same point that a fixed-penalty notice is paid. This is, for me, central to this legislation. The context behind this Bill is that people were being ripped off with unjustifiable fees, making their housing costs more unaffordable than they already were. For most people, the least they would expect from this legislation would be for us to make those unscrupulous fees illegal and to put in place a repayment system that fixes the immediate issue and deters the landlord from undertaking such activity again in the future. As the Bill currently stands, immediate repayment does not exist. The court may order the fees to be repaid where there is a successful prosecution, but where there is no prosecution, if a prohibited fee is not repaid by the landlord or letting agent, a tenant will have to pursue the payment through the civil courts. There is consensus—I would say a very strong, overwhelming consensus—amongst all stakeholders that any prohibited fee should be repaid automatically, and there's a sense here that the Bill needs to do what it says on the tin. At the moment, it doesn't. Citizens Advice argued that—and I quote—we need, 

'An accessible method of redress', and that the courts are not—and again I quote them—

'necessarily the place for them.'

It is important that tenants should be able to recover fees that have been charged illegally in the easiest possible way. Otherwise, tenants will not see the full benefits of this legislation, which, again, I think, is highly perverse. We therefore want to see the Bill amended so that there is a requirement for any prohibited payment to be repaid when a fixed-penalty notice is paid. I'm not convinced by the evidence from the Minister and her officials on this issue. Expecting tenants to go through a legal process to recover fees that were charged illegally is unreasonable and unfair. It is a significant omission within this legislation, and I hope the Assembly will agree to rectify this lacuna. 

In the committee, we noted with interest section 10 of the Tenant Fees Bill in England provides the enforcement authority with the power to require repayment of the prohibited fee. Without a similar amendment being introduced here, tenants in Wales will be at a significant disadvantage compared to tenants in England, and I don't think that is acceptable. We should aim for best practice. Please support our amendments.

Clearly, we should not be in the business of canvassing for more jobs for the citizens advice bureaux or any other advice agencies who have to support vulnerable tenants to enable them to navigate their way through the legal system, so I—. David Melding makes some coherent points, and I appreciate there are some later clauses coming forward later that the Minister is proposing that ensure that the enforcement authority has to notify Rent Smart Wales if the landlord hasn't complied or has accepted a prohibited payment. So, I want to understand exactly how Rent Smart Wales, in combination with the local authority, is going to ensure that any landlord who persists in asking for a prohibited payment and doesn't then repay it is going to be sufficiently deterred not to do it and to return the money they have illegally levied, if it is not through the method that David Melding is suggesting. 

I call on the Minister.

Thank you, Deputy Presiding Officer. Amendment 44 seeks to enable enforcement authorities to use the fixed-penalty notice as a means to also request repayment of prohibited payments and holding deposits on behalf of contract holders. The matter was debated at some length, as David Melding said, at Stage 2, and the position remains the same. The primary route through which the recovery of prohibited payments should be pursued should be the court. To involve local authorities in these matters, even when they have been given the power to do so rather than being put under a duty, risks drawing them away from other enforcement matters. So, the first issue I have with this amendment is one of capacity. We should not forget that local authorities enforce a wide range of housing matters, many of which relate to the safety and well-being of contract holders, as well as the overall standards of properties in the private rented sector. These are vitally important and apply to everyone. They would now also be called upon to enforce the provisions under this Bill. Again, these apply to all existing and prospective contract holders, and the more resource that can be given to investigating offences, issuing fixed-penalty notices or bringing proceedings through the courts, the less likely the situation the amendment seeks to address is to occur.

The second issue is one of expertise, and who is best placed to undertake the work envisaged by the amendment. My response to this is that it is the court, as it is here where the contractual disputes are brought. The courts have the experience and capacity to deal with the type of dispute that might result from a prohibited payment having been made or a holding deposit not repaid. My view on this is reaffirmed by the fact that amendment 44 does not provide for enforcement of any requirement to repay. It is quite likely, therefore, that disputes would still be heard by the court if the landlord or agent chose to ignore the LHA's request for them to repay the prohibited payment. As such, the amendment does not provide any guarantee that the contract holder would be repaid the prohibited payment, as there would be no penalty for failing to do so and no means to require them to do so. This underscores my view that local authority efforts are best directed elsewhere.

I do, however, recognise entirely that there is a need to ensure that contract holders are supported in their efforts, if required. Currently, contract holders can take their own legal advice or can get free, impartial support from Shelter Cymru, Citizens Advice, or NUS Cymru if they are students. These organisations are highly skilled and experienced in dealing with redress for contract holders. But, I want to make sure that the process is made as easy to follow as possible for contract holders. In that regard, I want to draw attention to amendment 26 tabled by the Government, which places a requirement on local housing authorities to signpost and provide information to contract holders who may require assistance in obtaining repayment of a prohibited payment or a holding deposit, equipping a contract holder with all the information that they need, and putting them in touch with organisations who are experienced in providing advice, help and support that will ultimately help a contract holder in making a claim through the court, should that be necessary. For these reasons, I ask Members to reject amendment 44.

Amendment 43 seeks to further increase the fixed penalty to £2,000. Amendments made at Stage 2 responded to concerns that £500 may be too low to act as an effective deterrent. I firmly believe that, at £1,000, the fixed-penalty notice is set at a reasonable level and that further increasing it is unlikely to alter the behaviour of any landlord or agent. I suppose one could argue that a higher amount would create a revenue-making stream for the enforcement authority. However, receipts form fixed-penalty notices may only be used for the purpose of the authority's functions relating to the enforcement of the provisions of the Act, so there is little merit in making that argument.

Members may be looking across the border at the Tenant Fees Act 2019, highlighted by David Melding, which comes into force in England later this year. But their enforcement arrangements are entirely different to our own, and the Act itself is entirely different. Let us not forget that the enforcement authority has the option to move straight to a prosecution. In which circumstances, a person found guilty of an offence may face an unlimited fine. Our expectation is that the enforcement authority will select the most appropriate course of action—a fixed-penalty notice or a prosecution—based on their assessment of a specific case. Of course, the ultimate result of failure to comply with a provision of the Act could be, as David Melding acknowledged, the loss of the individual's or agent's licence, which is, in my opinion, a bigger deterrent and the reason why most people will not find themselves in this position.

Finally, should it become apparent that the fixed-penalty notices are not working as a quick and simple alternative to prosecution, which is what they are intended to do, we have the option of increasing the level of fixed-penalty notice under Section 13(3) of the Bill, should it become necessary in the future. The difference is that such a change would be based on the experience of enforcement authorities and the evidence of the effectiveness, or not, of this legislation. On that basis, I am unable to support these amendments and ask Members to vote against them both.     

Thank you. David Melding to reply to the debate.

Thank you, Deputy Presiding Officer. You know, at certain points in Stage 3, we get to the heart of the matter, and this legislation, this Bill, is supposed to be about protecting tenants from unlawful payments. The one thing it doesn’t do efficiently is refund the illegal payment, and I just think that anyone watching this would be mystified. At least in England, whatever the deficiencies the Minister may see there, it attempts to do that.

The Minister made reference to my amendment and, you know, implied that it still lacked the power to be enforced. Well, at least it’s on the statute, and you could have brought forward an amendment to ensure that it is strengthened in terms of its enforcement provisions. You have all that power behind you in terms of your legislative capacity and advice, but you’ve chosen not to do it. And I think it is utterly perverse that we will now have a system where tenants have to go through a convoluted legal system that is already part of the problem. They don’t have the confidence or the wherewithal, often, financially to embark on that. Even if they could get advice, they are not necessarily going to be aware of it or feel strong enough to take it on. They may fear the resources that will be against them in terms of the landlord or the agent.

I do thank Jenny Rathbone for what I infer is support, insofar as backbenchers can give it under the whip. I know it’s not easy. But I do think it’s a sad state of affairs that this central defect has not been sorted out by the Government. We needed a quick and efficient method to resolve this. That’s why we brought in fixed penalties, so that the offenders don’t go themselves through a full court procedure, but we accept a very different principle when it comes to the tenants, and, I’m sorry, I think that is perversity gone way too far. It’s dysfunctional.

The second point, on the level of the fixed penalty, setting that at £2,000 instead of £1,000, I do acknowledge that £1,000 is better than £500. It does contain an element of deterrence, because it goes beyond the administrative costs. But, you know, in committee, we heard from reputable landlords and letting agents that they thought that £500, and even £1,000, wasn’t probably the level it should be set at. They want a fair market. They want to be protected themselves from the rogue operators, because the rogue operators undermine the business model of those who are in the market for the best intentions. And they would welcome £2,000, rather than £1,000. I mean, £1,000 is not much of a deterrent, I think, really, for what’s happened here, is it—you know, setting an illegal payment from tenants in vulnerable positions, chasing sometimes scarce housing, and then, you know, the difference in the power relationship, if nothing else. And I just think we need to set a much stronger sign here and now. I realise it can be altered in the future by regulations, but I think it’s for this Assembly to send out a strong signal, and I urge Members, even at this late stage, to back our amendments. They clearly strengthen the Bill, and they’re designed to do that. I think it’s for all parties to sign up to this much-needed reform of the market to make it more fair and efficient. I so move.

Thank you.

The question is that amendment 43 be agreed to. Does any Member object? [Objection.] Therefore, we proceed to an electronic vote. Open the vote. Close the vote. For the amendment 20, no abstentions, 28 against. Amendment 43 is not agreed.

Amendment 43: For: 20, Against: 28, Abstain: 0

Amendment has been rejected

Minister, amendment 14.

Amendment 14 (Julie James) moved.

Formally.

The question is that amendment 14 be agreed to. Does any Member object? Therefore, amendment 14 is agreed.

Amendment agreed in accordance with Standing Order 12.36.

Minister, amendment 15.

Amendment 15 (Julie James) moved.

Formally.

The question is that amendment 15 be agreed to. Does any Member object? No. Amendment 15 is agreed.

Amendment agreed in accordance with Standing Order 12.36.

David Melding, amendment 44.

Amendment 44 (David Melding) moved.

I move.

Moved. The question is that amendment 44 be agreed to. Does any Member object? [Objection.] Therefore, we'll proceed to an electronic vote. Open the vote. Close the vote. For the motion 20, no abstentions, 28 against. Therefore, amendment 44 is not agreed.

Amendment 44: For: 20, Against: 28, Abstain: 0

Amendment has been rejected