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Mr. Sutcliffe: Clause 22 (4) provides that debtors must allege unfairness on the part of the creditor before the creditor has to prove that no unfairness has taken place. Under the existing extortionate credit bargain test, the burden of disproving extortion is on the lender. The consumer must only make an allegation that the transaction is extortionate, and the consumer will succeed in his case unless the creditor can satisfy the court on the balance of probabilities that it is not.
There is, therefore, no change from the current law in the way that the existing onus on proof provisions works. That is essential to ensure that consumers do not find it prohibitively difficult to bring a case under the unfairness test. We are concerned that the unfairness test should remain accessible to consumers. There should be effective redress, too, against unfairness. The hon. Gentleman's amendment would place a higher burden on debtors to demonstrate unfairness before being able to bring a case.
Chris Bryant: I am grateful to the Minister, but I understand that we are still keeping subsection (7), which refers to ''extortionate''.
Mr. Sutcliffe: Extortionate will be in the framework of the unfairness test.
Chris Bryant: It would be better if the Bill was replacing subsection (8) with what was subsection (7) in the 1974 Act, because they are virtually the same, except that the 1974 Act refers to ''extortionate'' whereas in this case it refers to ''unfair''. However, there is no provision in the Bill to effect the replacement, so the two would stand next to each other.
Mr. Sutcliffe: That is not the intention. It that is the case, we need to put it right. If we need to make a consequential amendment, we will. I will write to my hon. Friend to ensure that what he has said is correct and then put it right.
Returning to the amendment of the hon. Member for Tewkesbury, it is not clear what is meant by ''demonstrate'' that a debtor will, in essence, have to prove his case. That raises the barrier when we are trying to lower it to make the unfairness test more effective. Lenders will be better able to confirm that their practices are not unfair.
Furthermore, consumers face problems such as access to relevant market information and documentation.
To raise the barrier is to head in the wrong direction. Unless the hon. Gentleman is clearer about
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what he means by ''demonstrate'' he will fail to achieve his objective.
Chris Bryant: I wish to correct my last intervention. Schedule 4 does repeal subsection (7) of the 1974 Act, which uses the word ''allege''. That will be helpful in rebutting the hon. Member for Tewkesbury. We are therefore not changing from the 1974 position.
Mr. Sutcliffe: I am grateful for that intervention. As I said this morning, it would take too long to go through the details of the Committee's experience of the issues raised, but I am grateful for my hon. Friend's explanation of how he got the first thing wrong and his ability to put the second thing right.
None the less, that bring us no closer to the meaning of ''demonstrate''. It is fair for the hon. Member for Tewkesbury to raise the issue, but on reflection he will find that it leads him down a path that he may not want to take as far as balance is concerned, because the existing tests will remain.
Mr. Robertson: There is the case that it is quoted in the 1974 Act, and I accept that. However, my amendment was not based on that. Normally, allegations must be proved; there is a legal difference in this situation. It would be easy to allege something without having to produce evidence—for example, without having to show that a loan was taken out at X per cent. when similar loans are at X minus 10 per cent. However, in the interest of time I shall not press the matter. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 22 ordered to stand part of the Bill.
Clauses 23 and 24 ordered to stand part of the Bill.
Clause 25
Credit information services
Mr. Robertson: I beg to move amendment No. 25, in clause 25, page 18, line 6, at end insert—
'(2A) It shall be the responsibility of individuals, partnerships, companies or organisations acting as credit information services as defined in section (7B0 of the 1974 Act, or acting as credit reference agencies as defined in subsection (8) of section 145 of the 1974 Act, to take all reasonable steps to ensure that the information which they store on any individual, partnership, company or organisation, and which they impart to a third party, is accurate, up-to-date, and gives a true reflection of the credit record of the said individual, partnership, company or organisation.
(2AA) Failure to take the steps identified in subsection (2A) shall give rise to the opportunity for the individual, partnership, company or organisation to seek compensation through the civil courts for the keeping of inaccurate information.'.
I attempted to address this amendment prematurely a few moments ago. It refers to credit agencies that store information on our behalf then pass it on to third parties when asked. I have always been concerned at how some of those companies operate, and I raise the issue seeking to strike a balance. As the Minister said, credit can be good and reasonable—for example, when people borrow for houses, motor cars or business purposes. However, many people cannot get credit or borrow money because of their credit references. It is important that people keep good credit records in order to avoid situations such as the tragic case that we
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heard about earlier of the poor gentleman with 22 credit cards. That is undesirable, but it might have happened because of inadequacies in a credit rating system rather than the system being too prescriptive. I regret those situations, just as I also regret the fact that good and decent people of reasonably sound financial standing are turned down for credit.
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We are all aware of how credit agencies work. Some years ago, just after I had moved house, I wanted to take out a short-term loan for some reason that I cannot remember. I was turned down, so I asked why. I was told that it was because of the credit reference. However, the credit reference had nothing to do with me; it concerned the people who had lived in the house previously. I examined their record, and it was disastrous. I could well understand why nobody wanted to lend them money. However, that was not my position. It was a very sloppy way to do business, and it could have become a problem for people who were trying to get credit at a time either of personal difficulty or, alternatively, at a time of great opportunity because their situation might have become worse or they could have lost that opportunity.
In other areas of life, the provision of incorrect information can often give rise to the right to seek compensation. Through this amendment I propose that credit agencies should be responsible for taking
''all reasonable steps to ensure that the information which they store on any individual, partnership, company or organisation and which they impart to a third party, is accurate, up-to-date and gives a true reflection of the credit record of the said individual, partnership, company or organisation.''
The amendment also proposes that
''failure to take the reasonable steps identified in subsection (2A) shall give rise to the opportunity for the individual, partnership, company or organisation to seek compensation through the civil courts for the keeping of inaccurate information.''
That is a departure from the present law—or the present lack of law. The issue concerns me greatly.
I do not know whether this is the best approach or whether my amendments are worded as well as they could be, but the issue must be tackled. It places no additional regulation or burden on companies. By analogy, other organisations such as banks, solicitors' offices or accountancy firms have a duty of care to the client. The question is: who is the client? A credit agency's client might well be the company that applies to them for the credit reference, but there is still a duty of care to the person on whom information is being kept.
Gregory Barker: My hon. Friend makes some excellent points. It is not just sloppy record-keeping that impacts on individuals: there is the more serious issue of fraud. We have already discussed the issuing of unsolicited application forms and credit cards. If that happens because of inaccurate data, it can give rise to fraud, and in certain cases individuals may have been caused great distress and may even have had to pick up bills. My hon. Friend's proposal has several benefits.
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Mr. Robertson: I thank my hon. Friend for that good point. In many ways it is more important than mine. The information may be inaccurate, the accounts may be sloppy, but fraud is also an issue. When I was in business, I had a dispute with a supplier who had given me faulty goods. I refused to pay for them, as was my right. The company took me to court, and the case was struck out. However, the credit reference company had recorded the case as a county court judgment against me—another instance of sloppy record-keeping. I only found that out while conducting another business transaction, and it became a problem. I told the credit company to remove the inaccurate information from its records. The company contacted Leeds county court, and it was taken off the record. However, on a subsequent occasion, the same credit reference company still had that judgment on my record, even though it was wrong. Given the amount of time I spent dealing with that problem, and the business opportunities I could have lost, because a company was saying things about me that were demonstrably untrue, I should have been able to say to them, ''I'm sorry, but you owe me some compensation. Not only have you done this once, but twice.'' That is the mischief that the amendment seeks to remove.
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