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Ms Keeble : I read that part of the CBI's briefing, but I challenge the hon. Gentleman to say what evidence there is for that point. I have used the financial services ombudsman in both large and small cases. His office does seem to have the expertise and can provide a cost-effective remedy for people with specific complaints. It is an excellent way to gain assistance for the public.
Mr. O'Brien: I, too, have some experience of the financial services ombudsman on behalf of my constituents, and the response has often been very helpful. The CBI must answer for its own evidence, but it is my job on Second Reading to ensure that the concerns that have been expressed by all interested parties are given a proper airing. I do not have an answer to the hon. Lady's question, but the financial services ombudsman himself said, in an interview on the "Money Box" programme, that he had real concerns about his office's capacity to cope with the volume of work. The Bill would inevitably add to that volume, not least because those involved in smaller transactions are just as concerned as those involved in larger transactions, but the unit cost to the FOS will be disproportionately higher. We must at least consider whether we have the capacity to deliver the intent in the Bill. The hon. Lady asks a fair question. I do not have the answer, but it is now at least on the record.
The Minister said that there had been a lot of consultation. I was certainly aware of that, but the Government also claimed that they had consulted on the
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proposal to scrap community health councils. My campaign four years ago proved otherwise. The Prime Minister had to write me a three-letter page of apology on that point. We had a decent campaign, but the councils were still axedand something very much poorer was put in their place. Let me point out to the Minister that the CBI feels that it has not been consulted on these matters. We will naturally seek answers to these points in Committee, and we have already signalled that we will not vote against Second Reading.
Let me deal with the reaction of business to the Bill. We should not forget that all transactions have two sides. Members on both sides of the House have expressed their concern for people on low incomes and other vulnerable people. That is right and proper as part of the job we do on behalf of our constituents. However, that would not be an issue if there were not another party to every transaction. In broad terms, British business welcomes the Bill, but like us it has asked where the details are. I listened with interest to the exchanges about unsolicited credit card cheques with the hon. Member for Warwick and Leamington (Mr. Plaskitt) and my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), and I hope that that important issue will be explored in Committee.
"supports in general the principle of the approach in the Bill to provide greater transparency in consumer credit transactions and the ability to target those traders who deliberately set out to deceive consumers".
It is most unfortunate that the Liberal Democrat spokesmanthe only member of his party to attend the debatehas disappeared, as I am about to tackle the Liberal Democrats' irresponsibility about the whole matter. They will have to read my comments in Hansard. We may take business's general approval of the Bill as complete disproof of the Liberal Democrats' simplistic and erroneous belief in the permanent struggle of interest between business and the consumer. I trust that the Minister will not have to suffer the same extraordinary diatribe against the high street banks from the Lib Dem spokesmanwherever he may bethat characterised his party's reaction to the Queen's Speech, issued to the Times Online, on 23 November 2004. If the Minister responds to that, the Lib Dem spokesman will be surprised, as he will not have a clue about the question that is being answered, but we shall welcome him back when he returns.
There is, however, justified concern about some of the specifics of the Bill. The first is the lack of clarity throughout the draft legislation, with, consequently, an over-reliance on secondary implementing legislation that is not, as everyone in the House must admit, subject to the same degree of parliamentary scrutiny. As I mentioned, the Bill sets out three sources of protection
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for consumers facing unfair practices: the unfair credit jurisdiction of the court, in clauses 19 to 22; the consumer credit jurisdiction given to the financial services ombudsman, in clauses 59 to 61 and schedule 2; and the guidance issued by the Office of Fair Trading mentioned in clauses 19, 30 and 41.
How will those different jurisdictions work together as a coherent system of consumer protection? Is the OFT guidance on the fitness of consumer credit companies for a licence sufficient? Will it leave businesses feeling informed and prepared, when the primary legislation states only[Interruption.] Oh, the Liberal Democrat has returned; it is good to welcome him back.
businesses being carried on without a licence? According to the draft regulatory impact assessmentpeople such as me really do read those thingsthe estimated administration costs associated with the measures are £4.9 million a year. How can the estimate be so precise when the phraseology of the legislation is so vague?
The ambition of the legislation is justified, but the some of the drafting leaves much to be desired. As one interested party told me, the Bill is so vague that it is "not fit for purpose", with Ministers ducking their responsibility to propose the remit of the OFT, which Parliament should be setting rather than offloading it all on the OFT. There is a suspicionI say no more than thatthat Ministers are trying to avoid blame when the inevitable unintended consequences flow from a Bill in such an inadequately drafted state and/or that the Bill was drafted quickly so that it could be proposed today, to catch a passing headline in the run-up to a general election. However, we know how long the Bill's gestation has been, so I give the Minister some credit when I suggest that that may not be the answer.
I wanted to intervene on several of the hon. Gentleman's points, but resisted as I shall have a second bite at the cherry during the winding up. However, the time scale of the Bill is not about cheap headline grabbing; the issue affects many people in terms of poverty and financial exclusion. All parties welcomed the White Paper and the regulations that resulted from it. There were no votes against any of the relevant statutory instruments. The reason why the Bill has taken so long is that it is important that all stakeholdersthe industry, consumer groups and the voluntary sectormove forward together. That is why so much time has been taken, but I shall answer many of the points that the hon. Gentleman has raised when I wind up the debate.
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Mr. O'Brien: I am grateful to the Minister. The points about the length of time the Bill has taken to prepare were put to me by the interested parties we consulted before Second Reading, and I hope that I couched them in terms that suggested that the latter allegation was unfounded. Yet again, there is broad consensus at the Dispatch Box.
To avoid the practice of Ministers and officials relying on secondary legislation to implement costly measures briefly and vaguely alluded to in primary legislation, I ask the Minister to take note of one of the actions recommended in the Conservative party's latest policy document on business deregulationit is one of which I am particularly proud, because I was responsible for it. We recommend conducting secondary regulatory impact assessments
Interestingly, that is not currently a power, so I invite the Government to adopt our policyin any case one of the Labour party's favourite pastimes, in words if not in actionas it would be so desirable in this case.
The Opposition's priority is always to ensure that any new regulation on British business, if it is judged necessary at all, is proportionate, and that we have the appropriate means properly to measure its proportionality. Over-zealous regulation of the consumer credit industry would result in the consumer ultimately suffering a lack of choice, accessibility and affordability, as creditors withdrew products and the market shrank. We share the CBI's concern that
A regulator does not have the same accountability to Ministers, and through them the electorate, as a Department of State such as the DTI. A recent academic study found that the budgets of the main Government regulators have tripled since 1997, and the headcount has more than doubled. The Government's own quango, the Better Regulation Task Force, recently complained that there are now so many regulators that it is impossible to establish precisely how many there are. That was confirmed by the response to a parliamentary question that I received on 8 July 2004 from the current Minister for Trade and Investment, when he was in the Cabinet Office. It is an incompetent and unaccountable way to govern.
Given the significant new enforcement and law-making powers that the Bill awards to the OFT, it seems sensible, as the Consumer Credit Association suggests, to place a legal requirement on the OFT similar to that which currently applies to the FSA: that the regulator should take into account the need for proportionality, and the need to promote innovation and maintenance of the UK's competitive position. That is especially relevant since, according to the World Economic Forum, under Labour, the UK has fallen from the fourth to the 11th most competitive economy in world rankings.
Another major complaint from a range of interested parties is about the timing of the legislation. Interested parties could now consult Hansard to read the Minister's opening remarks; in the light of what he said, I need not develop the comments that I had prepared for
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Second Reading. As the Trading Standards Institute has noted with some concern, however, there is not much "room for error" in getting the Bill on the statute book before a general election, if it is right, as we learn from The Sun, that the Prime Minister has scheduled one for 5 May.
The Prime Minister described the Consumer Credit Bill as an important piece of legislationlike his Chancellor, let us not go down the track of whose word we can believe these daysyet despite those assurances, the Secretary of State for Trade and Industry is not in the Chamber. We hoped that the Bill could have been introduced earlier, although I accept that the Minister has been working hard to build consensus. There is an absence of the detail that would have helped us to scrutinise it, which is surprising given the length of time that the Bill was in preparation.
In September 2003, the DTI published a research study, which found that 80 per cent. of people would welcome more information on their consumer credit rights; 56 per cent. of respondents deemed the language used on credit agreement forms hard to understand; and an overwhelming 84 per cent. believed that consumer loans should be subject to the same regulations regardless of sizein other words, that the £25,000 threshold should be removed.
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