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Session 2004 - 05
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Standing Committee Debates
Consumer Credit Bill

Consumer Credit Bill

Column Number: 85

Standing Committee E

Thursday 27 January 2005

The Committee consisted of the following Members:

Chairmen: Sir John Butterfill, †Mr. Joe Benton

†Barker, Gregory (Bexhill and Battle) (Con)

†Battle, Mr. John (Leeds, West) (Lab)

†Bruce, Malcolm (Gordon) (LD)

†Bryant, Chris (Rhondda) (Lab)

†Burt, Alistair (North-East Bedfordshire) (Con)

†Farrelly, Paul (Newcastle-under-Lyme) (Lab)

†Keeble, Ms Sally (Northampton, North) (Lab)

Lazarowicz, Mr. Mark (Edinburgh, North and Leith) (Lab/Co-op)

Liddell-Grainger, Mr. Ian (Bridgwater) (Con)

†Plaskitt, Mr. James (Warwick and Leamington) (Lab)

†Quinn, Lawrie (Scarborough and Whitby) (Lab)

†Robertson, Mr. Laurence (Tewkesbury) (Con)

†Sutcliffe, Mr. Gerry (Parliamentary Under-Secretary of State for Trade and Industry)

Tami, Mark (Alyn and Deeside) (Lab)

Tonge, Dr. Jenny (Richmond Park) (LD)

†Watson, Mr. Tom (West Bromwich, East) (Lab)

Geoffrey Farrar, Committee Clerk

†attended the Committee


[Mr. Joe Benton in the Chair]

Consumer Credit Bill

9.25 am

Clause 30 ordered to stand part of the Bill.

Clause 31

Variation of standard licences etc.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe):

I beg to move amendment No. 3, in clause 31, page 24, line 2, leave out subsection (8) and insert—

The Chairman: With this it will be convenient to take Government amendment No. 4.

Mr. Sutcliffe: Welcome to the Chair, Mr. Benton. You will see that the Bill is making great progress, being properly scrutinised and being dealt with in a convivial manner.

Amendment agreed to.

Amendment made: No. 4, in clause 31, page 24, line 13, leave out

and insert

Clause 31, as amended, ordered to stand part of the Bill

Clause 32


Amendments made: No. 7, in clause 32, page 24, line 20, after 'step', insert

No. 5, in clause 32, page 24, line 27, leave out subsections (3) and (4) and insert—

Column Number: 88

Clause 32, as amended, ordered to stand part of the Bill.

Clause 33 ordered to stand part of the Bill

Clause 34


Mr. Laurence Robertson (Tewkesbury) (Con): I beg to move amendment No. 32, in clause 34, page 27, line 39, at end insert—

I, too, welcome you to the Committee, Mr. Benton. As the Minister said, it has been conducted in a professional and convivial manner. I am sure that that will continue under your chairmanship.

Amendment No. 32 deals with the length of time for which licences will be given. As I understand it, licences are currently renewed every five years. The clause will enable a move towards licences having effect indefinitely. However, there is a caveat, which is that the Office of Fair Trading can refuse to give an open-ended licence if it thinks that there is good reason why one should have effect for a limited period only. My amendment seeks to ask the OFT to state its reason for not giving an indefinite licence.

I accept that there are many instances when the OFT should look at the way in which a licensee conducts business. One of the Bill's general objectives is to allow the OFT to do that in between issuing licences, as legislation permits at the moment, but on a rolling basis when those licences are indefinite.

All I ask is that the OFT, when it varies the granting of indefinite licences, should give a reason for doing so. What I ask may be seen as yet another assault on the power of the OFT, and I make no apology for that. I have said previously, and will probably say again, that the OFT has too much power. It is rather a free spirit, and that has not always been to the benefit of the business that it is supposed to regulate. I make no apology for wanting to try to clip its wings a bit.

Mr. Sutcliffe: I recognise the spirit in which the hon. Gentleman moved the amendment—

Mr. Robertson: But?

Mr. Sutcliffe: The hon. Member for Tewkesbury (Mr. Robertson) is right; there will be a ''but''. The amendment is unnecessary, and I hope that he will bear with me as I explain why. I am aware of his
Column Number: 89
continuing diligence in watching the work of the OFT, and I have come well armed today with defences of that organisation's role. I am sure that we can look forward to further debate.

I agree that people should be told why they are granted a licence that is different from the one for which they applied. However, his amendment is unnecessary because the OFT already gives reasons for its licensing decisions. The decision to grant an indefinite or time-limited licence is no exception: that is good practice.

Section 27(1)(a) of the Consumer Credit Act 1974 requires the OFT to give reasons for issuing a licence on different terms from those of the application. The amendment also mentions OFT guidance, and clause 30 requires the OFT to have regard to the most recently published guidance. Therefore the OFT is already required to do what the amendment proposes. I hope that I have explained that to the hon. Gentleman and that he will withdraw his amendment safe in the knowledge that he does not have to clip the OFT's wings on this occasion.

Mr. Robertson: The OFT may give reasons, but I do not know that it is required to do so. The Minister referred to the 1974 Act, which requires the OFT to give reasons. However, the Act does not refer to open-ended licences as they did not exist in 1974; the Bill will introduce them. My amendment is desirable for technical reasons, but on this occasion I shall not press it to a Division.

Mr. Sutcliffe: I am not trying to be dismissive, because the hon. Gentleman has a point that we shall consider in greater detail to ensure that it is covered. The aim is to strike a balance between the 1974 Act and the guidance contained in clause 30. However, we shall consider what the hon. Gentleman has said and not dismiss it out of hand.

Mr. Robertson: I am grateful for that explanation. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 34 ordered to stand part of the Bill.

Clauses 35 to 37 ordered to stand part of the Bill.

Clause 38



Mr. Robertson: I beg to move amendment No. 46, in clause 38, page 30, line 30, leave out from first 'licensee' to end of line.

The clause gives power to the OFT to impose requirements on licensees. Proposed new section 33A(1)(a) will apply when the OFT is dissatisfied with any matter that is in connection with—

this is the crucial bit—

The implication is that if the behaviour of a former associate of a licensee has been inappropriate, the OFT can impose requirements and either rescind a licence or not grant it. That is possibly unfair and rather open
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ended. If by ''former associate'' is meant one who was an associate a month ago, the OFT probably has a right and a duty to investigate the relationship and perhaps to act on it. However, if an association ended a year, two years or five years ago, should the OFT still be required to investigate it? Should the OFT be given the same power to rescind the licence because of a relationship that existed a long time ago?

I raised a point at our last sitting on clause 29(2A)(d) at the last sitting, which sets out some of the criteria for deciding whether people are fit to hold licences. One example that the OFT was considering was somebody who has practised discrimination on grounds of sex, colour, race or ethnic or national origin and so on. That is an all-encompassing subsection, and at the last sitting, I condemned such behaviour; however, I did not see the relevance of the provision.

Under this clause, not only could the licensee be held responsible for any malpractice in that sense, but it seems that his former associates could also be held responsible. Again, I am concerned about the power of the OFT in that regard, especially when the clause and subsection seem rather vague and open ended. I would appreciate the Minister's explanation as to why that particular wording is in the Bill. It is not the only instance of it, but this is probably where it is of most concern.

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Prepared 27 January 2005