|
The Chairman: Order. We are straying extremely far from amendment No. 8 and new clause 2. I appreciate that the debate is fascinating, but it may be more appropriate to raise those points under clause 19 stand part. If hon. Members wish to pursue the line they have, I shall probably rule a clause 19 stand part debate inappropriate.
Mr. Sutcliffe: Thank you, Sir John, for that excellent guidance. The difficulty with the situation that we are in is the relationship contained in clause 19, the unfairness test and issues that flow from that. To help the Committee and to follow your ruling, we wish to resist amendment No. 8 and new clause 2, not
Column Number: 56
because of how my hon. Friend the Member for Rhondda has moved those, but because they are not the appropriate avenues via which to reach where he wants to be. We want to do that through clause 19.
My hon. Friend the Member for Warwick and Leamington mentioned new clause 1, which we will discuss later, and that may be a more sensible route for unsolicited credit card checks. My hon. Friend the Member for Rhondda has expertly got us to go round the houses, and he nearly got me to say something that I did not want to say. In the spirit of what he has said, I will reflect on the issues that he raised, although the unfair credit test is the right way forward. I understand how strongly he feels about his amendments, but I ask him to withdraw.
Chris Bryant: I think what the Minister meant to say, as outlined by my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz), was that broadly speaking he hopes that those practices will not continue and that anything that might look like irresponsible lending or irresponsible marketing will come to an end. That is because, the clause having been drawn so widely, the courts will almost certainly feel able to deal robustly with anybody who has engaged in something that, prima facie, is unfair, in the most general sense of the term, because, for instance, there has been unsolicited pre-approved credit or irresponsible marketing of any kind.
My only problem with that—I still urge the Minister to look again before we come to Report to see whether there is a way to can put some element of this point more clearly into the Bill—is that it will lead to a period of uncertainty both for the industry, which is important, and for lenders, who will have to be involved in at least one court case to prove their situation. The simple reason that that still matters relates to the line in Richard II when John of Gaunt makes his wonderful speech describing this England—it does not apply to Wales of course—as
''This other Eden, demi-paradise.''
Of course, everybody remembers that glorious bit, but the last words are that this England, ''is now leased out''. If we are to put a proper stop on the degree to which this England, and the rest of the United Kingdom, are being leased out, the Bill will have to be more specific.
Having listened to everything the Minister said, and although still encouraging him to consider inserting some other wording on Report, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
3.30 pm
Dr. Tonge: I beg to move amendment No. 31, in clause 19, page 13, line 19, leave out
'matters relating to the creditor'
and insert
'whether the creditor lent responsibly'.
The Chairman: With this it will be convenient to discuss amendment No. 23, in clause 19, page 13, line 19, at end insert—
Column Number: 57
'(2A) In particular, when determining whether an agreement is unfair, the court should consider—
(a) whether the terms of the agreement, which the lender is seeking to enforce, were clearly set out in the pre-agreement statement provided by the lender to the debtor as set out in subsection 7B of section 6 of this Act;
(b) whether the lender has complied with all other requirements of this Act and the 1974 Act;
(c) whether the initial terms of the agreement might be considered to be significantly unfavourable to the debtor when compared with other similar agreements, when there are no compensating factors within the said agreement available to the debtor; and
(d) whether the running of the agreement might be considered to be significantly unfair to the debtor when taking into account the relative financial strength of the parties to the agreement.'.
Dr. Tonge: To continue John of Gaunt's speech, he said that England was:
''This precious stone set in the silver sea''.
If that is so, it indicates that there is a long way to go before we run out of credit. I began by thinking that this Bill was a good thing. It will control loan sharks: let us call them by that name because that is how we think of them. We must get to grips with loan sharks, and that is what we shall do.
Chris Bryant: I am sorry, but it is not. Loan sharks are a particular version of what some of us have become used to and, in the Bill, we have been careful to ensure that more people move to the responsible end of the market. It is tempting to use terms such as ''loan sharks'', but they are unhelpful.
Dr. Tonge: Such terms may be unhelpful, but the way in which many of the credit card companies behave is irresponsible. I am more and more sceptical as to whether this Bill will tackle that. We hear that the main control will be the unfair relationship test, but we do not know what unfair relationships are and will have no guidance on them. It will, therefore, be difficult for a debtor to take a creditor to court, because the creditor will have many more resources at his disposal.
Mr. Sutcliffe: The hon. Lady and the Committee must be careful not to throw the baby out with the bathwater. In the context of the whole Bill, and in relation to the regulations resulting from the consumer credit White Paper, we seek to ensure that there is responsible lending and borrowing, that there is education for the consumer and that the redress mechanisms, which at present do not exist, are in place. The extortionate credit test is too high a hurdle; the unfair credit test is better. It is right and proper that we discuss unfair credit, but it is wrong to say that the Bill will not help the situation. It has been welcomed by the industry, by consumer groups and, as I understand, by all political parties at Second Reading.
Dr. Tonge: I did not say that the Bill would not help at all. I said only that I was a little depressed that it would not help as much as I thought.
It was interesting that the Minister, in summing up the last two amendments, over and over again used the
Column Number: 58
phrase ''whether the creditor lent responsibly''. The amendment would insert those words into clause 19. It is simple: the clause would say that the creditor should be responsible.
We have heard a great deal about credit cards. The hon. Member for Rhondda told us—and I mentioned it this morning—about what comes through people's letterboxes. However, I wonder whether anyone realises how much housewives are preyed upon. I am not the sort of housewife who shops every week in a particular store; when I run out of something, I go to the place nearest to wherever I happen to be. I am not, therefore, someone who gives into store loyalty cards, but nowadays it is impossible to pass a checkout in any store without a conversation that goes: '' Do you have a loyalty card?'' ''No.'' ''Would you like a loyalty card?'' ''No.'' ''Well, if you have a loyalty card you can build up points and that means you can get your goods much cheaper.'' ''I do not believe that, and I am not interested.'' If people manage to run the gauntlet of the checkpoint and get away without signing up for a loyalty card, that is okay. If not, within days their post will bring offers of credit on loans for holidays or cars. That is another section of the market that puts pressure on people.
Why is it that the person whom we heard about on ''Today'' this morning can get another loan on his 22nd credit card when he is already in debt on 21 cards? That issue has not yet been mentioned in Committee. Why is there no cross-referencing? A student son of a friend of mine got himself into great difficulties and took out credit card after credit card. How can that happen? The Government talk a lot about means-testing for pension credit. Why can people not be means-tested before they take out loans on credit cards? I do not understand. We hope that the Minister will accept this modest amendment.
Mr. Plaskitt: The hon. Lady's amendment seeks to introduce the concept of whether the creditor lent ''responsibly''. If it were to be accepted, what mechanism would there be to determine what constituted ''responsibility''?
Dr. Tonge: People will be told, ''Don't worry, dear, if you get into debt, there's the 'unfair relationship' test in the courts.'' However, we do not know what the guidelines are for an ''unfair relationship''. I am in a total fog about this. We seem to be going around in circles. Nobody can tell us anything about the limits or what is expected of a credit card company. Is it an unfair relationship if someone is allowed to take out a loan on a credit card when the company knows that the borrower already has loans on 21 other credit cards? I would say that that is an unfair relationship, but we do not know.
Chris Bryant: I completely agree about responsible lending, and that has been the tenor of my amendments. In the light of what the Minister has said, the difficulty is that two broad concepts would be introduced into the Bill, neither of which is tightly laid down. In court, the two concepts might conflict. Therefore, it might be more sensible not to insert a provision into the Bill. However, it is entirely sensible to have had this debate.
Column Number: 59
Dr. Tonge: I accept what the hon. Gentleman says. However, in that scenario, there is no way to prevent people accruing horrendous debt. I am a medic; I am thinking of prevention rather than cure. The courts may be the cure-all to wrap up everything at the end, but that is no good to someone who is already in terrible debt.
|
