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Mr. Plaskitt: As the Minister said, it is indeed an evolving market. I am pleased that he opened our debate on Third Reading by quoting the objectives of the White
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Paper, because the Bill is an excellent measure that goes a long way towards meeting those objectives. However, as that quotation made clear, the Bill tries to deal with irresponsible lending. The White Paper gave as an example of irresponsible lending the unsolicited issuing of credit card cheques. When we debated that practice in Committee, the Minister undertook to take action to end it. Now that we have reached Third Reading, does he believe that the Bill will achieve that outcome, and if not, does he have other means of achieving it?

Mr. Sutcliffe: If my hon. Friend can wait a few moments, I shall come to credit card cheques and what the Government intend to do about them. However, I pay tribute to him and to the Treasury Committee for their work in exposing the issue in the context of responsible lending.

The Bill provides a regime that is based on fairness for consumers and competition for the industry, and which gives regulators the powers they need to keep it that way. Those proposals are not a luxury addition to the Bill but are vital and necessary foundations on which to build a modern and effective consumer credit market now and in the future.

Unfortunately, misconduct will be found in almost any market, and the consumer credit market is no exception, so the Bill ensures that proportionate sanctions are available to the regulators. The importance of those sanctions is not simply that they punish wrongdoing; it is that they are a flexible deterrent to unscrupulous lenders, now and in the future.

If we enable the regulators to penalise misconduct, we must also enable consumers to resolve disputes for themselves. That means introducing a system that is cheap, fair and easy to use. The alternative dispute resolution system is all of those things. Not only will it empower consumers to act with confidence in the market, it will ensure stable competition throughout the credit sector, now and in the future.

Hon. Members will be aware how successful the Bill was in Committee. That was due not simply to the hard work of my hon. Friend the Member for West Bromwich, East (Mr. Watson), who unfortunately is not in his place, but to the contribution made by all hon. Members with the detailed knowledge that they brought to the Bill at all its stages.

I hope that the Government listened to what was said—and we shall continue to do so. That is highlighted by two additional commitments that I have made in response to my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt). In any market there are often key factors beyond even the control of the regulators—factors that have the potential to cause consumer detriment. I have acted on the wishes of many and have committed the Government to looking further into the issue of credit card cheques and their unsolicited nature, under secondary legislation. In addition, comments from consumer groups and Members from Scotland have prompted me to act on the issue of lay representation in Scotland. That is another example of the Government listening to and acting on what people say.

It does not matter where one lives or what one does, consumers should all have the same rights. I hope that I have clarified and reaffirmed the Government's position
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on some of the more significant points of the Bill. I have no doubt that we will revisit them further, both now and as the Bill progresses through the other place. I hope that it progresses through the other place as swiftly as possible, whatever the Prime Minister's thinking on the date of the general election. I would be sad to see the Bill thwarted in the other place, for whatever reason. The momentum that we have established is important. The industry, consumer groups and all those affected by the Bill understand the need for the discussions to continue. If the Bill were not enacted, that would be to the detriment of consumers, and the industry would not be clear, and would be unable to deal with its rogues.

The Bill is an important package of reform. It caps the work that has been done over the past four years and brings together the Government's proposals for a 21st-century consumer credit market. It delivers everything that we set out to achieve. It benefits consumers, industry and the regulators, it promotes responsibility and fairness across the sector, it encourages effective competition, and it allows for comprehensive and unbiased enforcement. I commend it to the House.

4.18 pm

Mr. Stephen O'Brien (Eddisbury) (Con): I pay tribute to the Minister for his steadfast conduct of the Bill on the basis of careful consideration and patient dealing with the questions raised. I also pay tribute to my hon. Friend the Member for Tewkesbury (Mr. Robertson), who has worked diligently to ensure that the issues have been properly considered, as well as to all my right hon. and hon. Friends who have served on the Committee.

It has been just over 30 years since the last Consumer Credit Act. Since then the credit market has undergone a process of rapid and radical transformation. The liberalising reforms of the last Conservative Government not only opened up financial markets, but brought new opportunities and new sophistication to consumer behaviour. In general, and importantly in the context of this Third Reading debate, during the past 30 years consumers have become more and more powerful in driving the marketplace. Effective access to credit is indispensable to economic growth. It not only provides a way for people to manage their finances; it enables risk taking and entrepreneurialism, which in turn, via Government revenue, pay for schools and hospitals.

The present legislative framework governing the consumer credit market might have been adequate for a world in which only one type of credit card was available, but it is certainly not adequate for a world in which there now exists a choice between more than 13,000 such cards. In particular, it is apparent that the extortionate credit test provides, at worst insufficient, and at best unclear, protection to consumers. Indeed, only 10 cases have succeeded under that test since the Consumer Credit Act 1974 was passed.

As the legislation has become increasingly dated and unsatisfactory, the problem of consumer debt becomes more acute. I am sure that we all know from our constituency casework of debt-related problems tackled by citizens advice bureaux, which do an outstanding job, especially on managing debt that has become difficult or unsustainable, on behalf of our constituents. The number of problems with which the CABs deal has risen by 75 per cent. since 1997. Under the Government, the
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savings ratio has almost halved and, in 2004, household debt broke the £1 trillion barrier for the first time. As the Bank of England recently warned, with consumer credit running at approximately £1.5 billion a month and increasing by 15 per cent. every year, we are

For all the reasons that I have outlined, I made clear on Second Reading my strong support for a new consumer credit Bill to crack down on unscrupulous lenders, make credit agreements more transparent, and provide consumers with an effective means of redress for unfair credit agreements. However, the support of Her Majesty's Opposition was not—and never is—unconditional. There are genuine and important anxieties about the Bill's timing, the manner of its passage through Parliament, and the significant but somewhat ill defined powers that it will transfer from Parliament and thereby from people—the consumers—to a policing regulator, who, by definition, is remote from consumers.

The Prime Minister described the Bill as

but the Secretary of State for Trade and Industry was not here either for today's debate or on Second Reading. However, like me, she was here for Trade and Industry questions earlier today. Her absence is therefore by choice. Of course, I cast no aspersions on the Under-Secretary who is in his place, but we must draw our own conclusions about why the Secretary of State felt that it was not important to present and defend her Bill, which the Prime Minister described as

I fear that the problems of consumer credit and debt are too low a priority for her to trouble to come to the House and take responsibility for the measure.

Although I am conscious of the strong tone of happy consensus on many aspects of the measure—I am not necessarily about to fracture that spirit—it is our duty to point out when things are not what they seem and especially when they are not supportable. The delay in introducing the Bill to tackle the menace of unsustainable delay can be explained by the fact that the Government are demonstrably incapable of maintaining spending in line with the growth of the economy, with the inevitable tax rises that that would entail should they be re-elected. I hope that that will not happen.

The delayed and subsequently somewhat hurried timing—I am sure that that has nothing to do with the proximity of a general election—is at least partly because the EU Commission has just announced a consultation on a new draft consumer credit directive. Consumer credit legislation is like buses: you wait for more than 30 years for a new law and then two come along at once. Moreover, the proposed new directive will cover unfair terms, contractual information requirements, licensing of creditors and credit intermediaries. The directive and the Bill therefore deal with similar if not identical issues.

Parallel legislative proposals from the UK Government and the EU Commissions hold a danger of creating a confused and duplicating legislative structure
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that places unnecessary burdens on business. That is an especially sensitive matter, given the Government's serious reservations, which I acknowledge, about the draft consumer credit directive. The Department of Trade and Industry's consultation on the directive, which was published last month, stated that the Government

It goes on to press for

One such provision that the Government would like deleted from the directive is the proposed duty on lenders to advise consumers of appropriate credit products. I hope that the Minister will confirm that the Government, for once, will stand up for British business and make it clear to the Commission that they will not implement the directive in the UK if the amendments that they seek are not adopted.

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