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Mr. Sutcliffe: The hon. Gentleman will be aware of the new consumer direct helpline, and his constituents
 
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can ring 08454 040506 to obtain advice. He is right that the network needs to be developed, but I know that he welcomes the £45 million contribution from the Government to financial inclusion funds dealing with education and financial support.

Norman Lamb: I welcome that contribution, but my point is that the industry should play its part and that we must urge them to make it happen.

We have not addressed the issue of an interest rate cap today, but it was passionately debated on Second Reading and in Committee—Rev. Paul Nicolson is a particularly effective advocate for the cause. I have not been persuaded of the case, and my position is based on research commissioned by the DTI, which has been heavily criticised for the lack of evidence. The Minister should ensure that more authoritative and deeper research is carried out to compare jurisdictions with interest rate caps with other jurisdictions.

None of us feels comfortable about the interest rates charged by some doorstep lenders and others, but the providers of mainstream credit often get people into difficulty because of the combination of charges and the lack of data sharing. The interest rates issue specifically relates to the most impoverished in our society, because the poorest members of society are paying the highest rates of interest. The Department should monitor the matter closely and commission further research so that we achieve a greater understanding and try to reach a consensus about the evidence before drawing further conclusions.

The Minister is mistaken about the unfairness test. There is serious concern about a lack of guidance for both the lender and the borrower on what "unfairness" means in that particular context. The matter comes down to the whether Parliament or an agency that is accountable to Parliament should decide, or whether a court should decide. The Minister has chosen the option of the court deciding, so we will be left with an uncertain wait, which may last for years, for an unaccountable court to provide the guidelines on how to interpret unfairness. That arrangement is unsatisfactory, and, in a sense, Parliament has abdicated its responsibility to provide clear legislation that lets everyone know where they stand.

I have raised a number of concerns and issues that are not dealt with satisfactorily in the Bill, for understandable reasons. However, those issues remain unresolved, and the Minister and his Department, together with others such as the Select Committee, must ensure that we make further progress to make the industry act responsibly for the benefit of consumers.

3.44 pm

James Brokenshire: I welcome the Bill, which introduces a reform that is long overdue and reflects changes in practice. The credit market has changed enormously since the Consumer Credit Act 1974 was introduced. It is pleasing that the Government have dealt with the matter so soon in this Parliament. It is important to provide greater protections to those who are seeking credit, and that is a key element of what the Bill tries to do in seeking to protect the most vulnerable members of our communities.
 
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I thank the Minister for the way in which he has handled interventions and awkward questions from me and from various other Members, and for his patience with us as new Members, which has been much appreciated.

It will probably come as no surprise to the Minister that I am left a little disappointed by the end result of our deliberations. As he knows, I am a lawyer by training, which means that I am picky and like Bills to be drafted in a particular way. Like other lawyers, I look for certainty in terms of the way in which legislation is interpreted. I fear that certain parts of the Bill still have elements of vagueness, particularly in relation to the unfairness test. We have discussed that on Second Reading, in Committee and today on Report, so I do not intend to go over old ground—the Minister is clearly familiar with the arguments.

The Minister proffered the olive branch of the Office of Fair Trading guidance, but that has certain limitations, as the OFT itself recognises in the guidance note that it has already produced. That says that it is ultimately for the courts to decide what happens in a case of unfairness and whether something is to be regarded as unfair practice, although it may give some pointers. I hope that that will help in providing the level of certainty that Members on both sides of the House are seeking.

On one level I can understand why one can advance the argument of keeping a general approach on the unfairness test: it is in order to say to lenders, "We've done it this way deliberately to keep you on your toes and on the right side of the line, and you've got to think about it very carefully." My only fear is that that could operate in the opposite way. As regards access to justice, the lack of certainty makes it difficult to bring a legal case or to force a lender who has not been abiding by the rules to reach an early settlement. There is an overlap with the OFT and the financial penalties for inappropriate practice, as well as the powers under part 8 of the Enterprise Act 2002. Again, that has certain limitations, as there has to be a sustained practice that can be regarded as unfair across the whole industry.

It is possible to look at the right to impose sanctions in a slightly different way. The OFT says in its notes on imposing financial penalties:

"Where . . . a licence holder voluntarily provides compensation to consumers, this can be taken into account by the OFT when considering the appropriate amount of penalty to be imposed. This would exclude situations where the consumer involved had already approached the courts or the Financial Ombudsman Service, because in this context that would not be a voluntary action by the licensee."

I acknowledge that that signifies an intent to try to force lenders to examine their actions carefully. If somebody approached the courts and the ombudsman's service, and the lender recognised that he had not acted appropriately, I would hope that the OFT has some flexibility to take that into consideration. I hope that matters are not so rigid that, simply because somebody started the process of going to the ombudsman or going through the courts, the OFT could not take such recognition into account, as the language in the guidance note suggests. We all agree that we want to avoid going to the courts if possible. Any mechanism for encouraging that must be a good thing.
 
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Many have spoken about denying credit and the fact that those on low incomes find it the most difficult to obtain credit. There has been a great expansion in the UK credit market and more people than ever have the capacity and opportunity to borrow. However, access to credit remains severely constrained and limited for those on insecure or low incomes.

The study that the Joseph Rowntree Foundation published in February is instructive. It states:

"People on low incomes have a higher risk of default than those who are better off because their circumstances are more likely to change. They also tend to want more weekly cash repayments.

Low-income credit users also want to borrow relatively small amounts . . . The costs of lending are largely fixed, so they tend to be high in relation to the amounts borrowed."

The final point is the most telling:

"Left to its own devices, the commercial market will continue to move away from lending to the poorest people. Many of the proposals to tackle high-cost lending are likely to accelerate this trend and leave poor people with even less choice and higher costs."

We are not trying to prevent people from having access to credit but to promote responsible lending.

I hope that the Government will continue to monitor the measure's effect. If they pick up trends of the availability of credit to those on low incomes and people who have uncertainties in their lives being taken away, I hope that they will ensure that the industry will not use the changes to say, "This is far too complicated. We'll pull out of that market." I am sure that the Under-Secretary shares those views. The credit industry must be regulated properly to ensure that it provides fair credit, but that must not result in financial facilities being denied to those on low incomes.

The last thing any of us wants is to give succour or    encouragement to those who abuse people's circumstances—rogue lenders who try to prey on and take advantage of those who are vulnerable and perhaps less able to make credit decisions themselves, and use unsavoury, aggressive and sometimes violent tactics to ensure that money is repaid.

I welcome the Bill. It is a step in the right direction but I hope that the Government will continue to listen, as the Minister has done throughout the process, and continue to monitor the measure's impact to ensure that it has the desired effect.

3.53 pm

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