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Mr. Sutcliffe: My right hon. Friend chaired the Treasury Select Committee and I am grateful to him for the work that he and his colleagues have done on this issue. There is a team effort across government and across Parliament to ensure greater transparency on all these issues, and I undertake to continue to work with the industry in that regard. We wanted to introduce the Bill early in this Session in part because of the consensus that the industry and the various consumer groups reached on many of these issues. We have tried to maintain that consensus, and I agree with my right hon. Friend that we need to work with the industry on data sharing, for example. We will continue to do so.

Norman Lamb (North Norfolk) (LD): I endorse entirely the comments of the right hon. Member for West Dunbartonshire (Mr. McFall), who chaired the Select Committee in the previous Parliament. Does the Minister accept that although we have made progress in achieving one method of calculating APR, that will achieve nothing in terms of transparency so long as there are 10 different methods of calculating interest, depending on when the calculation starts? There is no transparency, and consumers are therefore unable to compare one product with another.

Mr. Sutcliffe: I look forward to debating transparency, the unfairness credit test and associated issues with the hon. Gentleman in Committee.

Several hon. Members rose—

Mr. Sutcliffe: I realise that various Members want to intervene, but I want to make a little more progress first.

As I was saying, many of us know from our constituency postbags the misery that can be caused by unscrupulous lenders who coerce people into credit agreements that they neither need nor understand. It is often society's most vulnerable members who are the victims. More than half of over-indebted households have incomes of less than £7,500 per year. Members of this House may be familiar with some of the worst examples of the shabby practices employed, such as the lender who coerced a couple suffering from mental illness into debts totalling £5,000; or the company that took advantage of a customer's mental health problems to sell him double-glazing, when all that he had
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requested was a cat-flap, saddling him with debts of £50,000. And as my hon. Friend the Member for Tyne Bridge (Mr. Clelland) said earlier, people have committed suicide because of the problems associated with debt. We simply cannot afford to stand idly by when faced with these predatory practices.

Mr. Graham Allen (Nottingham, North) (Lab): I apologise for missing the first few seconds of my hon. Friend's speech, and I congratulate him on retaining the skills that he displayed in the Whips Office and on ensuring that this Bill was discussed at earliest possible moment. Will he make it clear to the House that the proposals on retrospectivity are still contained in this Bill—a fact that will be of great concern to those who have been through the process, but who were still the victims of extortionate loans? Will he also leave a little leeway in his thinking? The Meadows case, which gave rise to some of the thinking behind the Bill, comes up for appeal on Monday, so we might need to build in some slack, depending on what that judgment brings.

Mr. Sutcliffe: We will watch that case with interest, on which I cannot comment as it is going to appeal, as my hon. Friend says. The issue of retrospection is dealt with, and I want to make it clear that we have discussed, and continue to discuss, with the industry the problems associated with it. We will of course return to this issue in Committee.

Mr. Nigel Dodds (Belfast,North) (DUP): The Minister is being very generous in giving way. I, too, welcome the reintroduction of this very important Bill, which will provide greater protection for consumers. I want to press him on the question of late-payment charges. A constituent of mine who had a late bill of £33 was recently charged a late-payment fee £25. Will this Bill address such problems?

Mr. Sutcliffe: It will in some respects but not in every respect. However, the work of the Financial Services Authority, combined with the banking code, should resolve some of these problems. I shall return to the question of interest rate caps and hidden charges. We are trying to establish a transparent process through which the borrower knows exactly what the charges are and when they kick in. Indeed, the annual written statement enables the borrower to understand their position. This is a wake-up call to those in the industry, to ensure that unscrupulous ones cannot operate those hidden charges in the way that some of them have done in the past.

Andrew Miller (Ellesmere Port and Neston) (Lab): I want to reflect on the exchange that my hon. Friend had with my right hon. Friend the Member for West Dunbartonshire (Mr. McFall) because a solution can be found with the industry. The savings sector of the industry publishes some very good, transparent information on websites and so on that helps people to make judgments about savings. A discussion between my hon. Friend's Department and the industry could achieve a vehicle to produce similar mechanisms to provide information to the consumer, perhaps using a web-based tool, thus making such things transparent and open for everyone.

Mr. Sutcliffe: My hon. Friend, who has an interest in these matters, shows that there are opportunities for
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discussion with the industry and consumer groups to try to achieve a consensus on data sharing. I have always said that data-sharing procedures should not be used as a blanket to stop things happening. I am happy to initiate those discussions with the industry, and I am sure that they will take place.

Mr. Iain Wright (Hartlepool) (Lab): My hon. Friend is being most generous in giving way. I wish to mention the principle according to which the more consumers borrow, the more that the credit card companies or other lenders allow them to borrow, thus pushing them to the very limit of affordability. Can he assure us that the Office of Fair Trading will look at that key issue when it considers lenders' credit competence?

Mr. Sutcliffe: Again, if my hon. Friend can contain himself, in a few minutes' time, I shall mention the OFT's powers in respect of what he outlines.

Mr. Stephen Hepburn (Jarrow) (Lab): I thank my hon. Friend for his patience in giving way. All hon. Members know of his dedication to this issue: he is a champion of the consumer. Will he consider the possibility of linking interest rates to borrowers' earnings? I hate to labour the issue of capping interest rates, but a line must be drawn somewhere. After all, there are caps on speeding. Drivers try to get around them—they have all sorts of devices to spot speed cameras up ahead—but the fact is that those limits exist and drivers are hammered if they are caught breaking them. Obviously, lenders will try to get around the legislation, but they should know that they will be hammered if they get caught. That is the interesting feature about those caps.

Mr. Sutcliffe: Well, it looks as though there will be competition for the places on the Standing Committee. Clearly, the interest rate cap will take a number of sittings to consider. I understand where my hon. Friend is coming from, but I am not convinced about the argument that interest rate caps work. Our research shows that other interest rate caps around the world do not necessarily work, but I am sure that we will have an interesting debate on that issue. I am grateful to my hon. Friends for showing interest in that matter so early in my speech, thus revealing our concern, because we all represent consumers and people who have had problems.

The Bill builds on the progress that we have already made in terms of secondary legislation, initiatives for tackling over-indebtedness and pilot projects to tackle illegal money lending. We have standardised the ways that APRs are calculated, so that consumers can compare the costs of credit deals with confidence. We have ensured that proper information is given in adverts and contracts for credit products.

The trading standards pilot schemes that we have introduced and funded in Birmingham and Glasgow are demonstrating new ways to get tough with loan sharks and illegal moneylenders. The Bill represents the next step towards our vision to provide protection for consumers in a fair, clear and competitive credit market.

Reform of the existing legislation is long overdue. When the House passed the Consumer Credit Act 1974, only one credit card was available, on which consumers
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owed a total of around £32 million at today's values. Today, overall credit card borrowing is counted in billions, not millions, of pounds. Consumers can choose from well over 1,000 competing products from a wide range of providers.

We have faced some criticism for the time that it has taken to introduce the Bill, but I make no apology for taking time to get it right. We need to ensure that our changes make this complex and important market effective not just for today, but for the future, too. That is why we have consulted carefully with business, consumer groups and regulators, and their input has helped to get the Bill right.

The Bill is built around three key themes: enhancing consumer rights and redress, improving the regulation of consumer credit businesses and ensuring more appropriate regulation. Our first key goal is to enhance consumer rights and redress. The current tools available to consumers to obtain redress or to solve credit disputes are, at best, limited. Where disputes arise, consumers often have no option other than court action, which can be costly and time-consuming. Moreover, the chances of people winning cases under the existing extortionate credit test are slim, and there are few effective mechanisms for those people trapped in unfair agreements or subject to unfair lending behaviour to obtain redress.

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