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Mr. Sutcliffe: Does the hon. Gentleman accept that there is unfairness throughout the financial services and that the code of practice relates to that? The concept of fairness exists, and the industry is trying to do something that we resisted in the discussion on interest rate ceilings. If the test is tightly defined, there may be omissions, and vulnerable consumers may be left in a worse position.
Mr. Robertson: I am grateful to the Minister, but I do not entirely accept that putting something on the face of the Bill means that something is left out. I suppose that by definition it is, but it is possible to put on the face of the Bill some examples of what the courts might want to give credence to. That does not mean that the courts cannot look at other things as well. Many Acts of Parliament contain clauses that end by saying, "and the Secretary of State shall do whatever else he thinks fit"—I paraphrase, but I think we all recognise that such a provision appears in very many Acts of Parliament. I think it is called a Henry VIII clause or something like that. So I do not accept that stating some examples of what the court should take into account means that it cannot take into account other things.
To summarise, I stress that we welcome the change from extortionate to unfair. We accept that some retrospection is necessary—perhaps even desirable—in this type of legislation, but we do regret the lack of detail as regards what constitutes an unfair agreement. We also regret the fact that retrospective legislation is effectively being introduced by the courts, and possibly the OFT and Ministers, but not Parliament. That is the point. It is, as I said in Committee, "a double whammy". It is retrospective legislation, introduced other than by Parliament. That cannot be the right way of carrying out what is generally appropriate legislation, and therefore I would ask the Minister to reconsider his approach in this respect.
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Mr. Alan Williams (Swansea, West) (Lab): I shall be brief. When I took the Consumer Credit Bill through Parliament in 1974, I did not expect to be able to stand here 31 years later discussing its amendment. I am amazed that it has lasted quite so long, and indeed that I have lasted quite so long—politically, I mean, not physically.
Mr. Williams: In which respect?
Mr. Williams: I have every sympathy with what the hon. Member for Gordon (Malcolm Bruce) said, and the spirit of the debate so far, but it seems to me that we are choosing the more difficult alternative of making increasingly complex definitions of what is fair without trying to cut through the knot.
When I was taking the 1974 Act through Parliament, I appalled the credit reference agencies by announcing that for the first time they were going to be subject to the law of libel. At that time they literally depended on gossip—the local milkman, the local bread delivery man and so on—without verification. I remember being asked to go to Croydon to discuss it with them. I put it to them that if they could not get their act together, it was for them to bear the consequences; it was not for me to exempt them. In fairness, despite all their protestations that the credit reference agency industry was about to collapse, they actually did get their act together, have become very professional, and could become more professional.
I hope that you will bear with me, Mr. Deputy Speaker, if you think that I am straying slightly from the amendment—I will be very brief. It seems to me that data sharing by the credit industry with the credit reference agencies is the way of cutting through the complexities of ever more amendments stating what is fair and what is not, trying to meet the manoeuvrings of the industry. Because if there is a focal point at which information is available, from which one is expected to obtain information on creditworthiness, and that body has collectively what no individual card issuer has—a knowledge of what other cards a customer has when he applies for his 50th or 60th or second or third—it would seem to me that that is the way through. I know that I have a very old-fashioned approach to legislation, but if it were me, I would be looking to credit reference agencies as a way of short-cutting to the objectives that we all hope to achieve.
That is all I want to say; my apologies to the Minister for delaying him.
Mr. Sutcliffe:
I am delighted that my right hon. Friend the Member for Swansea, West (Mr. Williams) is in his place, and I congratulate him on the 1974 Act, which has stood the test of time. I understand that it took nearly six years to put that Act together. I spoke earlier about the maturity of the credit industry. Who would have recognised, when my right hon. Friend introduced that legislation, that the availability of products would change so dramatically? I shall refer later to the data sharing that my right hon. Friend talked about.
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I want to speak briefly to Government amendment No. 8, which is a minor technical amendment to clarify the wording of proposed new section 140A(4) of the Consumer Credit Act 1974. The new wording is more precise and makes it clear that the court would be able to apply any provisions where all or any of the parties had no further duties under a credit agreement covered by the new unfair relationships provisions. The amendment will not alter the test or change the circumstances in which the provision applies to agreements. It will clarify the wording to improve understanding.
I understood clearly where the hon. Member for Gordon (Malcolm Bruce) was coming from when he outlined the proposals in his amendment No. 21. He spoke about marketing techniques and the need to provide education all the way through school about handling money and developing ideas about it, and it is amazing to me that although we teach youngsters about everything, money and how to handle it is not at the forefront of that. A lot of work is being done on that, not least with the new financial inclusion fund.
An aspect of the Bill that I am passionate about is the momentum that we have developed, through the White Paper and surrounding issues, and the fact that there is an acceptance that things must change. We affect people's lives. The hon. Member for Tewkesbury (Mr. Robertson) raised the issue of the "Today" programme and the unfortunate case of the man who committed suicide. I have, as a Consumer Minister, had too many approaches for my liking from hon. Members with constituents who have had great difficulties and in some cases have committed suicide because of the spiral of debt that they have got into. Surely we have a responsibility to promote legislation to help to avoid that.
The industry must have a job to do. The sentiments of the hon. Member for Gordon are right and proper. Perhaps he will expect me to say that the wording of the amendment is not quite right—I shall come to that a little later—but the message from all hon. Members is clearly that the industry must look at its marketing techniques and its responsibilities.
We can and will pass legislation, and we try to do that in a way that is as business-friendly as possible, but supports consumer groups and consumers. The industry has a major role to play. The availability of credit is important to all the groups that we have mentioned, but it must be available on a responsible basis. The Bill will enable us to look at instances in which the industry does not operate properly.
Data sharing is vital. At conferences that I have attended, the industry has raised the point that the Data Protection Act 1998 and other factors prevent the sharing of information, with, for example, credit reference agencies. I have made it clear that, as I have said already today, the 1998 Act should not be used as a barrier to the sharing of that information. I am pleased that work has been carried out with organisations such as the Finance and Leasing Association, that members of the Association for Payment Clearing Services agreed data-sharing principles in September 2004, and that the DTI has been discussing further measures to improve current levels of data sharing within the credit industry.
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As the Minister, I shall, as far as I can, ensure that we pursue the industry to honour its commitments to ensure that people cannot accumulate debts of low amounts on many different credit cards; I do not think that is acceptable.
Clause 19 is wide enough to allow the courts to take into account the factors that the hon. Member for Gordon listed, as well as any other relevant matters. Therefore, amendment No. 21 is unnecessary. The unfairness test is concerned not with specific types of behaviour but with the unfairness of the relationship between the debtor and the creditor. It allows the courts to decide on the basis of the widest possible range of behaviour without being constrained by market practices or issues of concern. We want the test to be able to deal with the ingenuity of those seeking to exploit and harm consumers. Therefore, the court can consider the types of practice that the hon. Gentleman identified, and can provide remedies when such practices make the relationship unfair.
4 pm
The hon. Gentleman's amendment might even be unhelpful. It is vital that the proposals do not limit the court's discretion in matters of unfairness. That would serve to do two things: narrow the range of matters that the court will consider in determining whether something is unfair, and encourage a culture of minimum compliance by businesses, which operate on the basis that if the practice is not expressly outlawed in law, it is permitted. The hon. Gentleman's proposals would not enhance the test, are unnecessary given the breadth of the test, and may prove to be unhelpful to consumers by limiting the test's operation.
I have set great store by this test. My hon. Friend the Member for Rhondda (Chris Bryant) said that it was a thin thread; I hope that it is more than that. It is a lower hurdle than the extortionate credit test in the 1974 Act, and will capture the core of what we are trying to achieve: responsible lending and responsible borrowing. If someone acts unfairly, they will be seen to be outside the spirit of what we are trying to achieve.
Amendment No. 22 proposes that the new unfair relationships provisions should apply only to agreements made after commencement of those provisions. We have consulted widely on the issue and considered it carefully. It might help hon. Members if I explain precisely what the Government propose. Unfair relationships provisions will commence in line with the other provisions of the Bill, and we will consult on when that will occur. That means that the new test will apply to new agreements made from the date of commencement. The new test will apply to existing agreements after the end of the transitional period. We believe that that will give businesses time to adjust. The transitional period will last for at least 12 months after commencement.
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