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10 May 2006 : Column 316
Regulation of Mortgage Repossessions
12.33 pm
Mr. George Mudie (Leeds, East) (Lab): I beg to move,
That leave be given to bring in a Bill to provide that the repossession of residential property may be sought only under certain conditions; and for connected purposes.
Last year, 10,250 owners had their homes repossessed as a result of mortgage arrears. That figure, which amounts to more than 200 properties a week, was more than 60 per cent. up on the previous year, and that upward trend is forecast to continue. It is lower than in the peak years of the late 1980s and early 1990s, but it is worrying and is only the tip of the iceberg, as the number of owners actually served with a court order can be more than 10 times that number. In most cases, the matter is settled before court and some have the order suspended, but the process of court action or even the threat of court action is traumatic to most of the people involved. The Council of Mortgage Lenders complacently states that the numbers, although rising, are below record levels, but that ignores the devastating effects on the families concerned, particularly the children.
Before I detail those effects, I must make the point that the Bill is not a measure to protect those who can pay but, for their own reasons, fail to do so. It is designed to protect those who are hit by circumstances outwith their control that make it difficult for them to meet their mortgage payments.
Anyone can be hit by unemployment, ill health and temporary loss of income, but their situation, given understanding by the lender, can be recovered. It is fair to say that in the majority of cases, particularly with the more responsible lenders, good sense and flexibility mean that the problem is worked out to the satisfaction of both parties. However, it is recognised that many lenders do not show the necessary patience and good will, and court action for repossession is sought prematurely. It is also notable that where a borrower is dealing with a bank on their own, the voluntary mortgage code is not always adhered to. Amazingly, much better sense is shown when bodies such as citizens advice bureaux become involved.
I should also say a word about insurance, which at first glance can be suggested as an easy solution. A large proportion of the properties involved are right-to-buy properties at the cheaper end of the market. Here, every penny counts with the borrowers, and most find insurance too expensive. Moreover, as is sadly the case with so many insurance products, the exclusions in the policies often make them of little use.
All Members will have had constituents who have endured the process, and may not need reminding of the damage done to families. Nevertheless, I should like to place on the record some details of a Rowntree Trust report on the social consequences of mortgage repossession for parents and their children. It found that repossession hits six main areas of people’s lives: it alters their social status and identity, adversely affects personal and family relationships, affects their health and well-being, damages their quality of life, destroys future aspirations, and causes real problems for their children. Taking only three of those areas, the study lists the ways in which, for example, family
relationships were affected. It found marital breakdown, arguments, inability to invest trust in the partner perceived responsible, and parenting difficulties. It noted poor physical health, poor mental health, stress and depression. For children, it found problems with loss of friends, different schools, bad health and, understandably, emotional insecurity.
In the light of the continuing rise in the number of repossessions, the questionable and somewhat arbitrary behaviour of lenders and the huge personal cost to the borrowers, as well as the social costs to us all, the Bill seeks to strengthen and rationalise the regulation of mortgage repossessions. It would ensure that irresponsible lending had to be taken into account when repossession was sought. No one wants to inhibit the flexibility of banks, but if things go wrong, the lending history should be a factor in deciding whether repossession is warranted.
As has been found necessary in other areas of financial life, there should be one regulator. Some loans are currently regulated by the Financial Services Authority under its mortgages regime; others are regulated by the Office of Fair Trading under the new consumer credit legislation. In the eyes of professionals in the industry, that is leading to confusion and difficulty. The Bill would establish a single regulatory regime for secured loan products. There would be a requirement that repossession should not be sought when there is a given level of equity in the property. I recently had a case where one of the major high street banks was seeking repossession for debts totalling less than £5,000, yet there was £90,000 equity in the property. Clearly, there was no need for that bank to race to court under those circumstances.
Under the Bill, the length of time a borrower has been in the property would have to be considered by the court. Ironically, under current consumer credit legislation, a car that is bought by hire purchase cannot be repossessed once the borrower has made a certain number of payments, but that facility does not apply in the case of a home, which is more vital to every family.
The Bill would force courts to take into consideration the damaging effects on children of a forced repossession. It would also seek to regularise the approach of local councils, which often, regardless of a date being given for eviction, refuse to consider the family for alternative housing until the actual eviction has taken place, thus making hostel accommodation unavoidable.
As the National Association of Citizens Advice Bureaux pointed out, some lenders take court action for possession too quickly and with too little regard to good arrears practice or the costs and consequences of such actions for the borrower. The Bill would introduce a pre-court protocol for mortgage repossessions in keeping with the broad strategy of the Department for Constitutional Affairs for reducing unnecessary court action. It would also be modelled on the pre-court protocol for rent arrears possessions that the Department is currently developing.
The measures are all designed to strengthen the regulations so that innocent, hard-working people who have a temporary setback can be given every opportunity to keep the family home together and, when appropriate and by agreement, make good the default. The best building societies do that in the main, but sadly there are people in the industry who ignore the voluntary mortgage code and needlessly destroy people’s lives.
Bill ordered to be brought in by Mr. George Mudie, Mr. Kevan Jones, Mr. Phil Willis, Mr. Andrew Love, Mr. Jim Cunningham, Bob Spink, Mr. Elfyn Llwyd, Helen Jones, Colin Burgon, Mr. Nicholas Brown, Mr. Ian Austin and Alan Keen.
Regulation of mortgage repossessions
Mr. George Mudie accordingly presented a Bill to provide that the repossession of residential property may be sought only under certain conditions; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 14 July, and to be printed [Bill 180].
Orders of the Day
Police and Justice Bill
As amended in the Standing Committee, considered.
‘(1) ‘Section 107 of the Local Government Act 1972 (c.70) (application to police authorities of provisions about discharge of local authority functions) is amended as follows.
(2) After subsection (3A) there is inserted—
“(3B) Section 101 above, in its application to a police authority, shall have effect as if a reference in subsection (1), (2), (4) or (5) to an officer of an authority included a reference to a member of that authority.”
(3) For subsection (4) there is substituted—
“(4) The Secretary of State may by regulations make provision regulating the power of a police authority under section 101 above to arrange for the discharge of their functions by a committee, sub-committee, officer or member of the authority as respects part only of their area.
(4A) Regulations under subsection (4) may in particular—
(a) impose limitations or restrictions on the functions which may be the subject of arrangements of the kind referred to in that subsection;
(b) make provision as to the membership or chairmanship of any committee or sub-committee discharging functions under such arrangements;
(c) impose limitations or restrictions on which officers or members of a police authority may discharge functions under such arrangements.
(4B) A statutory instrument containing regulations under subsection (4) shall be subject to annulment in pursuance of a resolution of either House of Parliament.”
(4) Subsection (6) (members of police authority committees must be authority members) is omitted.'. — [Mr. Byrne.]
Brought up, and read the First time.
12.42 pm
The Minister for Policing, Security and Community Safety (Mr. Liam Byrne): I beg to move, That the clause be read a Second time.
Mr. Speaker: With this it will be convenient to discuss the following amendments: Government amendments Nos. 46, 47 and 54
No. 2, in page 66, line 32 [Schedule 2], leave out ‘appointment' and insert ‘election'.
Government amendments Nos. 55 and 56
No. 3, in page 66, line 36 [Schedule 2], leave out ‘appointed' and insert ‘elected'.
No. 4, in page 66, line 37 [Schedule 2], leave out ‘appointment' and insert ‘election'.
No. 5, in page 66, line 42 [Schedule 2], leave out ‘re-appointment' and insert ‘re-election'.
No. 6, in page 66, line 43 [Schedule 2], leave out ‘appointed' and insert ‘elected'.
No. 7, in page 66, line 48 [Schedule 2], leave out ‘appointment' and insert ‘election'.
Government amendments Nos. 58 and 59
No. 8, in page 68, line 46 [Schedule 2], leave out ‘appointment' and insert ‘election'.
Government amendments Nos. 60 and 61
No. 9, in page 69, line 2 [Schedule 2], leave out ‘appointed' and insert ‘elected'.
No. 10, in page 69, line 3 [Schedule 2], leave out ‘appointment' and insert ‘election'.
No. 11, in page 69, line 8 [Schedule 2], leave out ‘re-appointment' and insert ‘re-election'.
No. 12, in page 69, line 9 [Schedule 2], leave out ‘appointed' and insert ‘elected'.
No. 13, in page 69, line 14 [Schedule 2], leave out ‘appointment' and insert ‘election'.
Government amendments Nos. 63 and 64
No. 82, in page 73, line 18 [Schedule 2], at end insert—
‘Referendums on proposals to alter police areas
20A After section 33 (Objections to alterations proposed by Secretary of State) there is inserted—
“33A Referendums on proposals to alter police areas
(1) Before making an order under section 32 the Secretary of State shall by order cause a referendum to be held in every area affected about the proposed alteration in police areas.
(2) The Secretary of State shall make an order under subsection (1)—
(a) in relation to a proposed alteration made under section 32(3)(a), after he has received a request under that subsection;
(b) in relation to a proposed alteration made under section 32(3)(b), after he has given further notice to objectors under section 33(4)(b).
(3) The question to be asked in a referendum to be held in pursuance of an order under subsection (1) above shall be agreed by—
(b) each police authority affected by the proposed alteration, and
(4) The Secretary of State shall, in consultation with—
(a) each police authority affected by the proposed alteration, and
ensure that an order made under subsection (1) above makes such provision as is necessary to secure the proper conduct of a referendum.
(5) No order shall be made under subsection (1) above unless a draft of the order has been laid before and approved by resolution of each House of Parliament.
(6) The Secretary of State shall not exercise his power to make an order under section 32 unless a majority of votes cast in a referendum held under this section in each of the existing areas affected supports the proposed alteration.” '.
No. 14, in page 74, line 11 [Schedule 2], leave out paragraphs 24 to 26.
No. 15, in page 74, line 14 [Schedule 2], after ‘Where', insert
‘following a recommendation of the Chief Inspector for Justice, Community Safety and Custody, or a request from a police authority responsible for maintaining a police force,'.
No. 16, in page 74, line 21 [Schedule 2], after ‘Where', insert
‘following a recommendation of the Chief Inspector for Justice, Community Safety and Custody, or a request from a police authority responsible for maintaining a police force,'.
No. 19, in page 75 [Schedule 2], leave out lines 7 to 18.
No. 17, in page 75, line 36 [Schedule 2], after ‘Where', insert
‘following a recommendation of the Chief Inspector for Justice, Community Safety and Custody'.
No. 18, in page 75, line 41 [Schedule 2], after ‘Where', insert
‘following a recommendation of the Chief Inspector for Justice, Community Safety and Custody'.
No. 20, in page 76 [Schedule 2], leave out lines 17 to 27.
Government amendment Nos. 72, 73 and 75.
Mr. Byrne: I shall first deal briefly with the Government amendments.
Government amendment No. 75 is consequential to new clause 4. As hon. Members know, police authorities can delegate powers to construct committees, but only those that are organised across the entire geography of a region. New clause 4 and the associated amendment No. 75 will enable police authorities to delegate their functions either to a member of the authority or to an area committee of the authority. They would therefore provide police authorities with the flexibility to establish area committees and delegate some of their functions to such committees. That is important in the context of combined working with local authorities.
Government amendment No. 64 and the associated consequential amendments will enable police authorities to appoint more than one individual to the office of deputy chief constable when there is a compelling operational case for that. I have tabled the amendments to enable police authorities to delegate to area committees in response to strong representations by my hon. Friends the Members for Wrexham (Ian Lucas), for Alyn and Deeside (Mark Tami), for Clwyd, South (Mr. Jones), for Vale of Clwyd (Chris Ruane) and for Ynys Môn (Albert Owen). They have made the powerful case that, in the light of the special circumstances in Wales—including its geography and its transport infrastructure—an all-Wales police force could require more than one deputy chief constable and more than one police authority area committee.
Amendments Nos. 54 and 59 are technical. They reproduce the existing order-making power in schedule 3 to the Police Act 1996 that enables the Secretary of State to make regulations on the procedures to be followed by selection panels charged with identifying candidates for appointment as independent members of police authorities.
Amendments Nos. 55 to 58 and 60 to 63 correct a drafting error in the Bill to provide for the appointment of a chairman and one or more vice-chairmen from the membership of a police authority, as is set out in the Police Act 1996.
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