Norman Lamb: I join the hon. Member for Wealden (Charles Hendry) in thanking the Minister for the approach that he has taken throughout. He has been willing to discuss and debate, and to be constructive. We are slightly frustrated that he has not been able to go along with some of our constructive amendments to improve the Bill, but the whole debate on the Bill has been conducted in a civilised way. To that extent, I pay tribute to everybody who has contributed to that debate. It is a blessed relief sometimes to be able to discuss issues constructively, without seeking to score points at every possible opportunity. The Minister played a big part in that and I thank him for it.
I also wish to pay tribute to the officials who assisted the Committee and the Minister throughout the process. It was painful having to go through it all again just a few months after the last time, but I thank them for their hard work. I also join the hon. Member for Wealden in thanking the Chairmen of the Committee, the hon. Members for North-West Leicestershire (David Taylor) and for Old Bexley and Sidcup (Derek Conway).
The Bill follows an explosion in the availability of credit since the original legislation was passed through Parliamentit took some time to come into forceback in 1974. It is worth saying again that the availability of credit is a good thing. We all need credit, and it is often those on the lowest incomes who have the greatest need for it. It would be wholly wrong to adopt a sort of paternalistic approach and deny people access to credit when they need it. The whole issue comes down to the case for responsible lending, which should be combined with responsibility on the part of the individual borrower. However, so many people are vulnerable, for one reason or anotherbe it mental health, age or just the pressures of lifeso the industry bears a great obligation to act responsibly. The Bill, however, sets a modern framework within which the industry can operate.
The Bill is welcome, but it is long overdue. I pay tribute to the Treasury Committee, on which I served, for pushing the Department of Trade and Industry to introduce a Bill in Parliament. Such as measure was debated for a long time. The Minister said that there had been four years of hard work, but at one stage it seemed as if that would become five or six years. The Treasury Committee played an important part in pushing the Department in the right direction.
I very much hope that the Treasury Committee will continue to monitor the industry, because although there has been genuine progress and the Bill modernises the legislative framework, there is still a long way to go before the industry always behaves responsibly and consumers avoid getting into serious difficulty. There
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are some areas where progress still needs to be made. First, there are still unacceptable practices. I hope that the unfairness test will address some of our concerns, but pernicious charges are often imposed, as I have experienced myself. Payment may be due to go into an account but, for some reason, it does not. Consequently, the cheques that one writes are not covered. One might have to pay a charge of £30 a cheque, so if one has written five cheques one faces costs of £150. The equivalent interest rate would be a substantial one, and many people get into serious difficulty as a result of those exorbitant charges. That is the subject of an investigation, and I hope that the outcome will be a more competitive market. Remarkably, all the companies manage to charge roughly the same amount for going over the credit limit or for failing to pay on time.
Credit card cheques were mentioned by the Minister, and are a serious concern, as they tempt people to use their credit card inappropriately. I remember when Matt Barrett, the chairman of Barclays, had his wonderful Ratner moment in the Treasury Committee, but he was quite right to say that he would not advise his son to use his credit card as a means of borrowing over time. He would advise him to use it as a means of payment. However, sending people credit card cheques so that they use their credit cards to borrow on a long-term basis is wholly inappropriate. Most people do not realise that interest applies immediatelyit is therefore different from the interest on credit card purchasesso they are not aware of the problems that they will experience as a result of those charges. The Minister has undertaken to take a further look at that. I hope that he does so and produces an effective solution to tackle the problem. We may be able to discuss that at our joint meeting with the banks which, again, I welcome. The banking code is a voluntary means to address many of those concerns and avoids the problem of over-prescriptive regulation. I therefore urge the industry to respond positively.
The hon. Member for Hemel Hempstead (Mike Penning) raised the transfer of credit balances, which is another serious concern. People who have transferred a debt of £5,000 with nil interest for a year go out and make some purchases with their card. They think that they are paying off the purchases but, in fact, they are paying off the transfer debt at nil interest, and are paying interest on their purchases. Again, that is the sort of problem that is most appropriately dealt with through the banking code or by voluntary agreement, but the industry must respond. If it fails to respond, I hope that the Treasury Committee and the Department will be on its back demanding a positive response.
The second issue of principle that still has not been addressed and which the Bill fails to address is that for a genuinely competitive market, one needs informed consumers. On the cost of borrowing, we do not have informed consumers. Although we have sorted out the APR problem, we have not sorted out the problem of the calculation of interest rates. It is a pity that the amendment tabled by the hon. Member for Wealden was not selected for debate today. I understand how these things must be done, but that is a crucial issue. When there are 10 different means of calculating interest, no consumer will be able to compare one card with another. There will not be transparency until that
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problem is resolved. I hope that the Minister finds a way of addressing the problem and that we can discuss it directly with the industry.
The third issue is data sharing, the subject of a new clause tabled by my hon. Friend the Member for Argyll and Bute (Mr. Reid) and me today. Because it was not selected, the issue again remains unresolved. As has been said by others, the Bill is the golden opportunity to address these problems. While the Bill continues to progress through the other place, it is a time to put pressure on the industry to get its act together. However, as the industry says, it needs a legislative change in order for it to be able to share data under the historic agreements introduced before the implementation of the Data Protection Act 1998. It is a crucial issue, which the Government need to address.
The fourth issue is financial education. The changes will have little impact unless we increase the level of financial education generally in society. There has been an explosion in the availability of credit and credit products. We have not had a commensurate revolution in financial education. Schools and the Department for Education and Skills need to engage in that. The Minister can use his authority to engage with others to bring about real change.
The fifth issue is the availability of advice and assistance. In parts of the country there is access to a remarkably good service, often provided by citizens advice bureaux and other advice agencies, but there are gaps in the network that need to be filled. Our party has argued that the industry ought to contribute to a common fund. At present there are all sorts of different arrangements whereby, perhaps for competitive advantage, companies enter agreements with advice agencies to offer support and advice when needed. Unless that is done comprehensively, gaps will remain.
I had a case in my constituency, involving the Holt citizens advice bureau and two other bureaux in other hon. Members' constituencies. They have had their three-year lottery grant. Like so many similar organisations, they have provided an enormous amount of advice during that period. Some 40 per cent. of the advice that is given relates to debt. That is in a market town which many people would regard as reasonably prosperous, but there is hidden deprivation and lack of financial security in every part of the country.
What happens when that three years comes to an end, as it did earlier this year? An application for renewal was refused, so the funding came to an end. There is a cliff face. I am constantly frustrated by the availability of grants from central Government and from other agencies which have a defined life period, often helping to provide an essential service, and when it comes to an end the whole scheme collapses. That is not good public policy. Advice is no longer available in that part of north Norfolk and, although I have written to the Association for Payment Clearing Services and the British Bankers Association and asked them to help, the industry as a whole should ensure that a full network of advice is in place across the country, which would be a major advance. Again, I urge the Minister to engage with the industry on that front.