House of Commons Public Bill Committee Proceedings

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Session 2009 - 10
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Other Bills before Parliament

Public Bill Committee Proceedings: 14 January 2010
28

Financial Services Bill, continued

(2)
This section and section 2(2)(e) are without prejudice to the statutory

powers of the Office of Fair Trading and the Competition

Commission.”’.

No credit agreement to be enforceable if its total cost exceeds the statutory limit

Rob Marris

Not moved  NC10

To move the following Clause:—

‘(1)
No agreement regulated by the Consumer Credit Act 1974 shall be enforceable if

the total cost of credit charged under that agreement or the cost of transactions

linked to that agreement exceeds the relevant limits set by the OFT pursuant to

sections [Quanta of statutory limits] and [Limits on cost of transactions linked to

credit agreements].

(2)
Where a consumer credit agreement is found to be unlawful by virtue of

subsection (1) that agreement and any linked agreement shall be unenforceable

and the lender and any agent acting on its behalf shall be liable to:

(a)
a fine determined by the OFT in accordance with section [Level of fines];

and

(b)
the revocation of the lender’s Consumer Credit Licence.’.

OFT’s power to set statutory limit

Rob Marris

Not called  NC11

To move the following Clause:—

‘(1)
Where the OFT is satisfied that insufficient price competition in a defined credit

market is causing or may cause a detriment to consumers the OFT shall set a

reasonable limit on the total cost chargeable for credit by lenders in that market.

(2)
In setting the limit referred to in subsection (1) the OFT shall consider evidence

of:

(a)
the degree of price competition in the credit market; and

(b)
the level of consumer detriment caused by any identified lack of price

competition.

(3)
The OFT shall within three months of the date on which this Act or any Part

thereof comes into force and thereafter on each anniversary thereof decide

whether or not to set a limit on the total cost of credit for any consumer credit

market and shall publish that decision and the reasons for it.’.

Public Bill Committee Proceedings: 14 January 2010
29

Financial Services Bill, continued

Quanta of statutory limits

Rob Marris

Not called  NC12

To move the following Clause:—

‘(1)
The OFT shall set statutory limits which reasonably reflect the cost of providing

credit in a properly functioning competitive credit market.

(2)
To reflect variations in the amount of reasonable costs incurred by lenders

different statutory limits may be set for loans of different amounts and of different

durations.

(3)
The OFT may on not less than 14 days’ published notice vary any statutory limits

to reflect wider macroeconomic conditions including but not limited to changes

in the Bank of England’s base lending rate.’.

Limits on cost of transactions linked to credit agreements

Rob Marris

Not called  NC13

To move the following Clause:—

‘(1)
Where the OFT sets a statutory limit for a credit market it may also set limits on

cost of transactions linked to such credit agreements which costs are not included

in the total charge for credit.

(2)
Limits on the cost of transactions linked to credit agreements include:

(a)
the cash price of good which are being offered for sale on credit terms;

and

(b)
the costs of any related insurance or collection services.

(3)
The OFT may set reasonable limits on the cost of transactions linked to credit

agreements if it finds evidence that:

(a)
the statutory limit is likely to be avoided; or

(b)
there is likely to be a consumer detriment which is more than de

minimis.’.

Publication of limits

Rob Marris

Not called  NC14

To move the following Clause:—

‘When it sets a statutory limit or sets a limit on the cost of transactions linked to

credit agreements the OFT shall take reasonable steps to ensure that such limits

are timeously:

(a)
published in the London Gazette;

(b)
publicised throughout the credit industry;

(c)
notified to relevant consumer groups; and

Public Bill Committee Proceedings: 14 January 2010
30

Financial Services Bill, continued

(d)
notified to relevant advice agencies.’.

Level of fines

Rob Marris

Not called  NC15

To move the following Clause:—

‘(1)
The OFT may impose a fine on any lender who exceeds a statutory limit or a limit

on the cost of transactions linked to credit agreements.

(2)
A fine imposed by virtue of subsection shall not exceed 5 per cent. of that lender’s

annual turnover.

(3)
When setting a fine the OFT shall have regard to:

(a)
the length of time that the lender has been operating in the market;

(b)
the lender’s previous record regarding statutory limits;

(c)
the lender’s previous record regarding the cost of transactions linked to

credit agreements; and

(d)
the annual turnover of the lender in its most recent annual accounts.

(4)
A lender upon whom a fine is imposed by the OFT pursuant to this section has

the right to appeal to the Secretary of State for Business, Innovation and Skills

within 28 days after being notified by the OFT of that fine.’.

Definitions

Rob Marris

Not called  NC16

To move the following Clause:—

‘(1)
In the sections [No credit limit to be enforceable if its total cost exceeds the

statutory limit], [OFT’s power to set statutory limit], [Quanta of statutory limits],

[Limits on cost of transactions linked to credit agreements], [Publication of

limits] and [Level of fines] “OFT” means the Office for Fair Trading.

(2)
In sections [Quanta of statutory limits] and [Publication of limits] the “statutory

limit” means the limit referred to in subsection (1) of section [OFT’s power to set

statutory limit].

(3)
In sections [Publication of limits] and [Level of fines] “limits on the cost of

transactions linked to credit agreements” means the limits referred to in

subsection (1) of section [Limits on cost of transactions linked to credit

agreements].’.

Public Bill Committee Proceedings: 14 January 2010
31

Financial Services Bill, continued

Ian Pearson

Agreed to

That certain written evidence already reported to the House be appended to the proceedings of

the Committee.

Bill, as amended, to be reported.



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