|Previous Section||Index||Home Page|
I know that cold calling per se is illegal, but the excellent "debt on our doorstep" campaignno doubt my hon. Friend has engaged in plenty of consultation with its membershas brought to our attention the way in which sellers use shopping vouchers and go on to estates, especially at Christmas, trying to induce people to buy without clarifying their rights. Could that practice be dealt with more effectively?
Mr. Sutcliffe: That is not covered by the Bill, but as the Minister with responsibility for consumers, I am looking into doorstep selling. The OFT has produced a report on which we have consulted, and we will make recommendations in the near future on the whole issue of cold calling. My hon. Friend may know that the Competition Commission is examining the home credit market following a referral by the OFT. A great deal of work is being done to ensure that consumers are protected.
Consumers often suffer because of lack of information during the lifetime of a loan. Under the current regime they are often surprised by arrears or default fees, or are not told when they are behind with payments. The Bill will make lenders tell consumers when they default and when they are charged.
Ms Keeble: I believe that that applies only to longer-term debts. Will my hon. Friend consider making similar provisions to cover shorter-term debts, and to prevent debts from being rolled over year after year? People may find loopholes in the Bill as it stands.
Keeping consumers informed is an essential part of being a responsible lender. Consumers must know exactly what their debt is. The more informed consumers are, the more aware they will be of whether a product is appropriate for them. Improving the standard of regulation, however, will be of no use if
13 Jan 2005 : Column 461
regulation does not do the job for which it was designed. The Bill's third aim is to ensure that regulation is appropriate and measured, ensuring comprehensive protection for consumers while allowing industry the flexibility to innovate.
The Bill does ensure comprehensive protection, extending the protections in the 1974 Act to all consumer borrowing by removing the £25,000 financial limit above which consumer borrowing is not currently protected. It is appropriate and measured, maintaining the protections for business lending under £25,000. It allows industry the flexibility to innovate with an exemption for high net worth borrowers, enabling them to opt out of regulation. But lenders must also be confident that they are operating on a level playing field. The Bill makes the provisions in section 127 of the Act, on the enforceability of defective agreements, more proportionate. The remedy reflects the detriment.
Passing discretion to the courts will not remove consumer protection, because agreements can still be found unenforceable, but it will increase fairness across the sector and allow lenders to compete on the basis of best practice.
During our extensive consultations, we considered many other proposals. I am aware of campaigns to introduce an interest rate ceiling, which my hon. Friend the Member for Tyne Bridge (Mr. Clelland) mentioned earlier. The Government commissioned research on international practices, and decided not to introduce a ceiling in the UK credit market at this stage. We are not convinced that such ceilings help the consumers whom they are intended to protect. I stand by that decision, but as I told my hon. Friend, we are committed to keeping the matter under review.
Mr. John Battle (Leeds, West) (Lab): I am grateful to my hon. Friend, who has allowed many interventions. I join those who have given the Bill a warm welcome. I am particularly pleased about what it will do not just for those with credit cards, but for those in the sub-prime lending marketthe poorest of the poor, who pay the most.
Having campaigned for the Bill, should the Minister not include in it a power enabling him to act on the basis of his review of whether a cap on interest rates and charges is necessary? If he leaves that open, we may have to wait another 30 years for more primary legislation to get to grips with the issue.
Mr. Sutcliffe: I congratulate my hon. Friend on his work in the all-party poverty group and on behalf of the "debt on our doorstep" campaign. I know that we disagree about interest-rate ceilings, although I will keep the matter under review. I do not think that taking powers through the Bill will help at this stage, but I am happy to discuss what might be done. I hope that it will not be 30 years before the Bill is reviewed, because the issues affect our constituents. We must ensure that people are treated fairly.
David Taylor (North-West Leicestershire) (Lab/Co-op):
My hon. Friend the Member for Burnley (Mr. Pike) mentioned credit unions. I declare my interest as a member of the board of the Money Tree credit union in north-west Leicestershire. Does the Minister accept that
13 Jan 2005 : Column 462
credit unions have shown the way forward with interest rate capping, in that the loan rate used is capped at 1 per cent. per month and has been for a very long time? They do have a transparent, equitable and open approach to this subject.
Mr. Sutcliffe: On interest rate ceilings, which we can discuss in more detail in Committee, difficulties can arise in terms of what is included in the annual percentage rate. Hidden charges for late payment, for example, can be left out and the situation can become unclear. We will doubtless discuss the detail of the pros and cons of interest rate ceilings in Committee, but I acknowledge the work of credit unions. Part of the difficulty for some credit unions in trying to get people to save has been that they are unable to get access to credit for 12 weeks. We have looked at using the social fund and the new financial inclusion fund to assist credit unions in their efforts to help those who need early access to credit.
The Bill will empower consumers and encourage fair standards throughout the industry, and it drives forward an agenda based on responsible lending and responsible borrowing. It equips the UK credit sector to continue to lead in its field not only in Europe, but across the rest of the world, and it sends the direct message to the industry that for those who act dishonestly or unfairly, there is nowhere to hide. Our loan shark pilots are a prime example of this. But responsibility cuts both ways. Consumers have a responsibility to take control of their finances, to use credit sensibly, and to seek support and advice at the earliest opportunity when it is needed. The industry has a responsibility to provide consumers with the information that they need; to ensure that when it lends, it lends responsibly; and to make sure that support is available when customers get into difficulties.
We said that we wanted to improve rights and redress for consumers; the Consumer Credit Bill will provide for this. We said that we wanted to improve the regulation of consumer credit businesses; the Consumer Credit Bill will achieve this. We said that we wanted to ensure appropriate regulation across the market; the Consumer Credit Bill will secure this. It has been broadly welcomed and I commend it to the House.
Mr. Stephen O'Brien (Eddisbury) (Con): I note that the Minister hopes, with the leave of the House, to have time to make a further contribution in the wind-up. He will therefore have two bites of the cherry, so I have a number of questions to which I hope he can give an answer today, perhaps with the assistance of those in the Box, if required.
This is one of only two Department of Trade and Industry Bills in the Queen's Speech, the other being the Bill on equality, for which no publication date has been given. The Bill before us is therefore the only current DTI Bill, so it is somewhat surprising that the Secretary of State is not here to present her Department's flagship Bill. The Minister did not apologise for her absence. As he knows, this is not the first time that she has not deigned to come to the House.
The Secretary of State is in India on Government business. As the hon. Gentleman says, this
13 Jan 2005 : Column 463
is an important Bill, on which we have consulted widely, and I should point out that the DTI has confidence in its whole ministerial team. Strangely enough, under the Liberal Democrats, who want to do away with the DTI, or the Conservatives, who are not entirely sure how much spending they would allocate to it, we would not have a Bill such as this.
|Next Section||Index||Home Page|