Clause 10
Notice of sums in arrears underrunning-account credit agreements
Question proposed, That the clause stand part of the Bill.
Mr. Sutcliffe: Let me put on the record the Government's views about the important issues relating to arrears. As hon. Members will appreciate,
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getting behind in making regular payments is often the first step towards major debt management problems. The Government believe that consumers should be informed about the situation as soon as possible. Clause 10 will require creditors to provide debtors with a notice when their running-account credit agreement such as a credit card or store card falls into arrears.
The following are the conditions set out when arrears notices must be sent. The debtor under an applicable agreement is required to have made at least two payments under the agreement before that time. The last two payments which he is required to have made before that time have not been made. The creditor has not already been required to give a notice under this section in relation to either of those payments. Finally, if a judgment has been given in relation to the agreement before that time, no sum is payable under the judgment by the debtor.
If all those conditions are met, new subsection (2) requires that:
''The creditor shall, no later than the end of the period within which he is next required to give a statement under section 78(4) in relation to the agreement, give the debtor a notice under this section.''
New subsection (3) requires that:
''The notice shall include a copy of the current arrears information sheet under section 86A.''
New subsection (6) states:
''Regulations may make provision about the form and content of notices under this section.''
The Department will consult on those matters before the regulations are made.
New subsection (4) states:
''The notice may be incorporated in a statement or other notice which the creditor gives the debtor in relation to the agreement by virtue of another provision of this Act.''
New subsection (5) states:
''The debtor shall have no liability to pay any sum in connection with the preparation or the giving to him of the notice.''
The clause is important to ensure that consumers are made aware of the problems with their account as soon as they fall into arrears.
Question put and agreed to.
Clause 10 ordered to stand part of the Bill.
Clause 11
Failure to give notice of sums in arrears
Question proposed, That the clause stand part of the Bill.
Mr. Sutcliffe: I should read out the detail on clause 11, which covers particularly important areas that we should put on the record. The clause sets out the consequences for the creditor or owner offering to give an arrears notice. The Government have carefully considered appropriate sanctions where there has been a failure to provide notices, and the best way to make creditors or owners give arrears notices is to penalise them for non-compliance in a way that hurts them most.
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Subsections (1) and (2) set out the periods in which a creditor or owner will not have complied with the requirement to send an arrears notice. For fixed-term credit agreements that will be either after the 14-day period when the conditions in clause 9(1) have been met or for further notices after the six-month period. For running-account credit agreements, it will be after the time when the next statement was due. The creditor or owner will comply with the relevant requirements when they have sent a notice to the debtor or hirer.
Subsection (3) and (4) establish the consequences for the creditor or owner during the period when they should have provided an arrears notice to the debtor or hirer. They will not be entitled to enforce the agreement, charge any interest and impose any default sum for a breach by the debtor or hirer that occurs during that period. Clause 11 ensures that creditors or owners cannot profit from an agreement when they have failed to comply with the arrears notice requirements.
Question put and agreed to.
Clause 11 ordered to stand part of the Bill.
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Clause 12
Notice of default sums
Mr. Robertson: I beg to move amendment No. 22, in clause 12, page 10, line 23, at end insert—
'(6A) The debtor shall not be required to pay a default sum unless the liability to do so is clearly set out in the statement as required under subsection (7) of section 6 of this Act.'.
The amendment takes us back to what I was saying about statements setting out exactly what a lender is entitled to charge. It basically refers to debtors who will not be required to pay a default sum unless the liability to do so is clearly set out in the statement. I made the case for the statement under an earlier set of amendments, and there is no need to do so again, but I really do think that that would form a very important part of the original statement, were there to be an original statement—
It being twenty-five minutes past Eleven o'clock The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned accordingly till this day at half-past Two o'clock.
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