Select Committee on Regulatory Reform Third Report

6  Consultation

28.  One of the tests outlined in paragraph 24 relates to adequate consultation. The requirements here are laid out in section 13 of the LRRA. Section 13(1)(a) of the LRRA says the Minister concerned must:

"consult such organisations as appear to him to be representative of interests substantially affected by the proposals"

29.  The proposals contained within the draft Order were subject to a three month consultation which ran between 19 December 2007 and 12 March 2008. The consultation was sent to 101 interested parties. Twenty-two replies were received. The views of some consultees came via their trade associations. The overall response to the proposals was positive, although, in light of comments made, some changes were introduced prior to the draft Order being laid. The Explanatory Document states:

"The consultation confirmed our [BERR] view that the proposals would, in all cases avoid any unnecessary and unintended burdens on industry and would not be detrimental to consumers. The proposals were particularly welcomed for their simplicity and clarity'".[24]

30.  The only dissenting voices that arose from the three proposals in the draft Order came from the Money Advice Trust and Citizens' Advice (who are partners of the Trust). Their concern focussed on the proposed exemption from regulation for buy-to-let lending under the 1974 Act. They argued that this would remove protection for buy-to-let investors who run into financial trouble and are forced to sell the relevant buy-to-let property at a loss. The basis for this view is that there could be a risk to the investor's own home if proceeds fail to cover outstanding credit.

Welsh, Scottish and Northern Ireland Ministers

31.  Consumer credit is a reserved matter. The consent of Welsh and Scottish Ministers to the proposals in the draft Order are not therefore required. However, the consultation document was sent to both the Scottish Executive and the Welsh Assembly Government, neither of whom replied.

32.  Consumer credit is a devolved matter in Northern Ireland. But, with the consent of the Northern Ireland Assembly, the UK Parliament can still legislate for Northern Ireland with regard to consumer credit. Ministers agreed that the 2006 Act would apply to Northern Ireland. The Minister for Enterprise, Trade and Investment in Northern Ireland approved the inclusion of Northern Ireland in the draft Order. The Enterprise, Trade and Investment Committee of the Northern Ireland Assembly did not comment on the draft Order.

33.  We believe that the responsibilities relating to consultation procedures as laid out in section 13 of the LRRA have been duly fulfilled.

24   ED, p7, para20. Back

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