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Mr. Laurence Robertson: The transitional period may give businesses time to adjust, but the question is—adjust to what? That is not in the Bill.
Mr. Sutcliffe:
I fear that we will disagree on this issue. Let me move on and see whether the following helps the hon. Gentleman.
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As the transitional period will last for at least 12 months after commencement, existing agreements will not be subject to the new test for at least two years after Royal Assent. However, that is not set in stone; we will consult on whether the period should be extended. It is important to realise that provisions will not apply to agreements that come to an end before the completion of the transitional period. I understand the hon. Gentleman's concern about the effect of the new unfair relationships test on existing agreements, but the position that we have reached is not without precedent. When the extortionate credit test was enacted in 1974, it applied to all agreements whenever they were made. The new test, as I have said, does not do that. Moreover, the current test does not allow consumers to challenge post-agreement conduct effectively.
Mr. Robertson: The Minister refers to the 1974 Act, and yes, it was retrospective—but my point is that the items with which businesses had to comply were in that legislation. They have been repealed and replaced with nothing. That is my objection to the retrospective nature of this Bill.
Mr. Sutcliffe: They have not been replaced with nothing; they have been replaced with the unfairness test. I will resist until the end, and will not give a prescriptive list of circumstances.
Mr. Sutcliffe: Despite my hon. Friend's plea, I will not give a definitive list, because that would undervalue the test.
Mr. Robertson: It is not in the Bill.
Mr. Sutcliffe: As I have tried to explain to the hon. Gentleman—in Committee and this afternoon—the concept of unfairness is enshrined in many areas of financial services.
Mr. Robertson: It is not in the Bill.
Mr. Sutcliffe: The courts will be able to reflect and consider the issue of unfairness. The concept is well established, for example, in the banking code and the mortgage code, subscribers to which are instructed to act fairly in all their dealings. The Financing and Leasing Association's code of practice states that its members promise to
and the Financial Services Authority requires the businesses that it regulates to treat customers fairly.
Chris Bryant: Is not the truth of the matter that if businesses are uncertain or nervous about whether a product that they are about to sell, or a marketing process, such as direct mail marketing, in which they are about to engage, might be unfair, they would probably be best advised not to proceed?
Mr. Sutcliffe:
That was a better attempt to get me to say yes. I hear what my hon. Friend says.
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I have tried to show that we have consulted fully on the Bill and I have left the door open to further consultation with the industry. I do not think that amendment No. 22 will take us further forward, and I ask the hon. Member for Tewkesbury not to press it. I also ask the hon. Member for Gordon to withdraw amendment No. 21, although I accept and understand the principle of what he wants to achieve.
Malcolm Bruce: I appreciate the Minister's response and the terms in which it was couched. I did not say so when I introduced it, but I regard the amendment as probing. In fact, I agree completely with him about the unfairness test and the desire not to qualify it. On the other hand, I believe that when passing a Bill that updates 30-year-old legislation, it is important to have a proper debate about how it should be applied. In our debates, we are trying to give the authorities that are to implement the legislation some idea of our expectations regarding its application. The Minister is in a particular position, in that what he says carries some judicial force, whereas what the rest of us say has no consequence, but I am optimistic enough—some might say naive enough—to believe that the authorities that apply the legislation in such a specialist area will read the Committee proceedings and our debates to inform themselves about the thrust of what we are trying to achieve.
Without putting words in his mouth, I think that the Minister has, in essence, gone as close as he can—without restricting the test's application—to stating the Government's view that consideration of the unfairness test should take on board the issues that have been raised. He knows that my colleagues and I favour the principle of applying the duty to trade fairly, or the duty not to trade unfairly, much more widely. In the present context, I agree with him: there is no point in having a test and then surrounding it with qualifications.
Mr. Laurence Robertson: Does the hon. Gentleman agree, however, that there is a difference between the 1974 Act being retrospective when the details of what was required were on the face of the Bill, and the present Bill being retrospective when the details are not on the face of the Bill? Is it not wrong to pass retrospective legislation when the details of its application are to be left to the courts to establish in a piecemeal manner?
Malcolm Bruce: The hon. Gentleman puts me in a slightly difficult position—indeed, he is trying to do so, which is fair enough. As a general principle, I am not in favour of retrospective legislation. The difficulty is that we are trying to change a culture. I examined the amendment that he tabled—a similar proposal came across my desk—but could not support it, not because of what I felt about retrospectivity in principle, but because I was worried that there would come a time when people involved in long-term credit agreements would see that all new agreements applied a completely different test, but their own could not be revisited because of a hangover from an Act dating back 30 years or more, which had, in effect, been repealed.
The Minister says that there will be a transitional period, which might be extended. Although I have reservations and I understand the concern voiced by the hon. Member for Tewkesbury, my feeling is that we
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have identified many things that the industry has not got right and that there is a spirit of compromise in operation. In principle, retrospectivity is not a good thing; on the other hand, we are trying to change a culture. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 8, in page 13, line 25, leave out 'one or more' and insert—
'all or any of the'. —[Mr. Sutcliffe.]
Amendments made: No. 9, in page 18, line 33, leave out 'business' and insert—
'consumer credit business or a consumer hire business (as the case may be)'.
No. 10, in page 18, line 41 [Clause 26], leave out 'business' and insert—
'consumer credit business or a consumer hire business (as the case may be)'.
No. 11, in page 19, line 4, leave out 'business' and insert—
'consumer credit business or a consumer hire business (as the case may be)'.
No. 12, in page 19, line 21, at end insert—
'(8) This section (apart from subsection (1)) does not apply to a regulated agreement made by a person if by virtue of section 21(2) or (3) he was not required to be licensed to make the agreement.
(9) Subsection (1) does not apply to the enforcement of a regulated agreement by a person if by virtue of section 21(2) or (3) he is not required to be licensed to enforce the agreement.'.
No. 13, in page 19, line 22, leave out subsection (5). —[Mr. Sutcliffe.]
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