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Mr. Plaskitt: The hon. Gentleman is trying argue that if there were a standard APR calculation, customers could use it to make comparisons about the cost of credit. Does he accept, however, that they could not do so, because the APR is only a small part of the picture? They would have to look at the whole range of features of the deal to work out the cost. In fact, the only way in which a consumer could access a useful assessment of the cost of credit would be if a cash-based illustration
 
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were available—not one based on APRs—but the industry is vigorously resisting the provision of such information.

Malcolm Bruce: That is a fair point. I agree that the APR is an imperfect measure that does not provide the whole answer. Nor would I suggest that we should back off from going down the route that the hon. Gentleman suggested. People need a clearer illustration of how they can make comparisons between different cards, so that they can make rational judgments.

People should also be apprised of the fact that a credit card might not be the appropriate instrument for their credit requirements. The chief executive of Barclays bank let the cat out of the bag in that regard. He was making the perfectly reasonable point—although it probably did not sound too good from his board's point of view—that there are horses for courses. A credit card is not an appropriate vehicle for long-term borrowing, yet many people are seduced by the 0 per cent. offers and the cheques and get themselves into debt. In reality, however, they could probably alleviate their problems simply by transferring the balance to an organised bank loan. After all, if the banks are prepared to offer all these different rates, they ought to be able to provide them. Yet people are not advised that these options exist unless they go to a CAB or some other useful adviser. Why should we not require a notice to be added to a credit card application to say, "Please inquire whether there is a cheaper, more appropriate way of dealing with any loan that you require over any period longer than the very short term", along with introducing a duty to give impartial advice on that. That could help the consumer.

About a year ago, I made a calculation on store cards and credit cards, just using the average costs of repayment. I did not examine the extreme rates; I just looked at the medium ones. On credit cards, the difference between the highest and lowest averages meant that consumers were paying £3 billion a year more than they needed to. The financial services industry, through its own inertia, was benefiting from that amount each year. I am not suggesting that it is improper to make a profit or that banks should not be profitable, but they are sitting back and making profits from people who are paying well over the odds and who could easily and quickly find cheaper forms of credit. We should provide those people with assistance, and I am simply making a few suggestions as to how we might do so. The Minister will find out that if the Bill—or any alternative measures introduced simultaneously—does not really do anything to address these anomalies and abuses, the people for whom this is a big problem will turn round and ask, "What was this Bill all about?"

The hon. Member for Wallasey (Angela Eagle), who has now left the Chamber, was obviously concerned about the penalty proposed in the Bill. Another penalty—perhaps the nuclear option—would be the withdrawal of the licence. Yet another would be for the   lender to lose the entire repayment because the agreement was not enforceable—although that might not be a penalty, if the agreement were really extortionate. I share the hon. Lady's view that the amount set for the penalty does not need to be in the Bill.

Certainly, I would be interested to see whether some different mechanism could be used. Legislation lasts for a considerable time, and the impact of the penalty could
 
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diminish. I accept, however, that individual transactions are concerned, so I guess that in a class action, or in a number of different but related actions, a company could be fined £50,000 several times over, in a cumulative hit, which might make the penalty much more significant.

Mr. Stephen O'Brien: The way in which the hon. Gentleman has raised this point suggests to me, given the interactions that we have had so far, that the Minister might want to consider matching the idea of a nuclear option, albeit with a much more sensible, confined option whereby one can close down a branch of a company where there has been a transgression, rather than exercising the much more draconian option of closing down the whole company. A £50,000 capping rate could be applied, if for some reason the Minister persuades us that that needs to remain in the Bill, per branch rather than per corporate entity. That might have a proportionate effect, depending on the scale of the damage.

Malcolm Bruce: Actually, it is possible to interpret the Bill as worded in that way, and clarification would be helpful. It would be extreme to act against a company with 200 branches and fine it £50,000 times 200. It would be right to fine the branch, or the company on its behalf, that perpetrated the offence. Certainly, the issue needs to be explored a little further.

The hon. Member for Dundee, East (Mr. Luke) asked about time orders as they affect Scotland. As I understand it, lay representation is possible in relation to time orders in England and Wales but not, apparently, in Scotland. If the Minister has not done so, I suggest that he consult the Scottish Executive, as a Sewel motion, or some simple mechanism, might allow us to bring the legal position into line. It seems to me that there is a desire for that change in Scotland, and there is no point in the Scottish Parliament having to deal with the issue separately. If the Scottish Executive are agreeable, I urge him to report back on that.

As I said at the beginning of my remarks, uncertainty about the effects of the Bill can only be resolved by practice. The hon. Member for Eddisbury has suggested, and will no doubt produce, amendments to try to tie down some of the terms of the Bill more specifically. My experience of dealing with the Office of Fair Trading, on which he and I have had a number of exchanges, is less than satisfactory in a number of cases. It does not regard itself as a consumer association but as a competition agency, which belies its title and people's expectations of its title.

If I may stray marginally, to illustrate this point, I have been exercised by a concern about estate agents and the need to license them. In my view, the OFT examined that and came up with a totally windy and weak response. There is an estate agents association, which has its own terms of reference that could have been adopted for all estate agents. That association would have acted as a consumer protection agency. The OFT concluded that it was not its job to protect the consumer, but only to determine whether there was fair competition. I am concerned that the OFT's psyche is not always what I would expect it to be. Giving it too much discretion may mean that it even disappoints the
 
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Minister in terms of what it is required to do. Certainly, some clarification and debate in Committee would be necessary, to put it no higher than that.

On my final concern, I accept that the compliance costs as stated in the Bill do not appear unduly large in relation to the total value of the industry. Nor do I have any special brief on behalf of the companies which, in most cases, would probably have little difficulty in meeting them. Nevertheless, that can only be an estimate, as there are too many uncertainties. I am not suggesting that the Department has not made its best estimate, but in many cases, the courts will decide, the matter will be referred to the ombudsman, or information may be required. We do not yet know the environment in which information will be required but we hope that the ombudsman and the spirit of the law will reduce court involvement and that many of the cases will be resolved long before they come to court. Surely that will be one of the great benefits of the legislation if it works properly.

Until we know how the balance works, we cannot be sure of the compliance costs. I urge the Government to review the arrangements in practice, to establish whether all the mechanisms are working cost-effectively, efficiently and not in too burdensome a way. Given that European legislation is emerging in parallel with the Bill, I also urge the Government to ensure that the two are complementary and that there is no duplication. We do not want costs to be doubled unnecessarily.

Although we all like to make a big issue of concerns about regulation for political purposes, I trust that the House in general accepts that legislation should not involve unreasonable compliance costs and should not be unnecessarily bureaucratic, but should be fit for the purpose and pitched at a level that will enable it to deliver the end result; and that we should review it to establish whether we have overdone it, or gold-plated it to a greater or lesser degree. In view of the uncertainties in the Bill, it would be helpful if the Government committed themselves to reviewing it, perhaps publishing a report in four or five years.

Having said all that, I will end by saying that I welcome the Bill. The general consultation has clearly produced a good deal of consensus. What the Bill will deliver is not yet entirely clear—I hope that the Minister's reply and, subsequently, the Committee stage and Third Reading will provide further elucidation—but I hope that it will genuinely deliver more protection for the consumer, a better-informed public, and an industry that, while continuing to innovate and to develop new products, remains conscious of its social responsibility and general duty to be fair. I hope that we will end up with a vibrant credit industry which, nevertheless, leaves people less prone to the dire debt into which some have got themselves.

3.46 pm

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