| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Lord Clinton-Davis moved Amendments Nos. 2 and 3:
On Question, amendments agreed to.
Clause 2 [Contracts to which Act applies]:
Lord Clinton-Davis moved Amendment No. 4:
The noble Lord said: My Lords, I beg to move Amendment No. 4. It will be for the convenience of the House if I speak also to Amendment No. 16. During Committee stage I said that I would consider further whether it was necessary to exclude conditional sale and hire purchase agreements from the Bill. The purpose of the Bill is to prevent or deter late payment because it is wrong that a customer should use its suppliers as a source of unauthorised credit. It was never our intention to give a right to claim interest on authorised credit. For that reason conditional sale and hire purchase agreements were excluded, they being essentially a form of authorised credit. It was not therefore appropriate to include them in the Bill.
I reflected further on the matter and was persuaded by the argument that some such agreements might not include provision for a remedy in the event of late payment of an instalment and repossession of the goods might not be a practical or appropriate remedy in many instances. We accepted that such agreements should in principle be subject to the legislation. Where the agreement includes a remedy for late payment Part II will apply, thereby ensuring that statutory interest cannot be claimed on top of that contractual remedy.
I believe that my noble friend Lord Borrie and the noble Earl, Lord Home, referred in Committee to the question of conditional sale agreements which consisted of ROMALPA or retention of title clauses. It was argued that these agreements should not be excluded from the Bill. We looked again at the definition of conditional sale agreements in the Bill which came from the Consumer Credit Act 1974 rather than the Sale of Goods Act 1979. I am advised that such ROMALPA agreements were never excluded from the legislation, but this amendment now clarifies the position beyond doubt. I am glad to respond positively again to the points made by noble Lords. I also thank them for the representations that they made to me before Report stage tonight.
On Question, amendment agreed to.
Clause 4 [Period for which statutory interest runs]:
Lord Clinton-Davis moved Amendment No. 5:
The noble Lord said: My Lords, I beg to move Amendment No. 5. It will be for the convenience of the House if I speak also to Amendments Nos. 6, 12, 13, 14, 15 and 19. I seek to honour a commitment that I gave at Committee stage to review the excessive credit periods and how the Bill deals with them. The Bill as originally drafted provided a remedy for the circumstance where a debtor insisted upon an unreasonably long period of credit so as to avoid potential claims for interest. I do not intend to reiterate how the Bill achieves that end because that is already on the record. However, I understood the concern that was expressed that legislation should be as clear as possible. I recognised that that reflected the concerns of the wider business community.
This group of amendments seeks to clarify the position. I draw your Lordships' particular attention to Amendment No. 14. The new clause extends the operation of the Unfair Contract Terms Act 1977 for the purposes of this legislation to contract terms that are not contained in the standard written terms of the purchase. The response to the Government's consultation on these amendments has been positive. I believed that it was right to consult upon them, although I concluded that there was a great deal in what had been said. We believe that this group of amendments meets the concerns expressed at Committee stage. I hope that the amendments go a long way towards clarifying how the Bill will combat the setting of excessive credit periods.
The Earl of Home: My Lords, I am grateful to the Minister for looking again at the wording of this clause.
Lord Meston: My Lords, likewise we on these Benches believe that the amendments meet the concerns expressed at Committee stage.
On Question, amendment agreed to.
Lord Haskel moved Amendments Nos. 6 and 7:
On Question, amendments agreed to.
Clause 5 [Rate of statutory interest]:
Lord Ezra moved Amendment No. 8:
The noble Lord said: My Lords, this amendment has been grouped with Amendment No. 9 in the name of the noble Earl, Lord Home. It is a small but important amendment which I moved in Committee. It received a sympathetic response from the noble Lord, Lord Haskel. It replaces the word "may" with the word "shall" in line 9 on page 3. The simple reason for it is that if it were not an obligation on the Secretary of State, the whole purpose of the Bill would fall. I am glad that the logic of that argument was accepted. I beg to move.
The Earl of Home: My Lords, we support the amendment moved by the noble Lord, Lord Ezra. As my amendment is grouped with it, I say merely that I am concerned that the way in which the formula by which the rate of interest is arrived at should be seen to be agreed by that part of government mostly involved with finance; namely, the Treasury. It would make it much easier for suppliers to explain to potential purchasers, particularly overseas purchasers, that it is a formula worked out within government rather than one set by an individual.
The additional words in paragraph (b) of the amendment will also add credibility. I remain unhappy about paragraph (b) because I still do not see how the Secretary of State will publicise changes in the rate at the time of high volatility of interest rates in a form which will enable suppliers to pick up those changes easily. I suspect that my colleagues in another place will continue to press for an answer on that point in due course.
Lord Clinton-Davis: My Lords, the fact is that the Bill, as the noble Lord, Lord Ezra, said, could not possibly operate if the Secretary of State did not set the
Lord McIntosh of Haringey: I hope not!
Lord Clinton-Davis: My Lords, my noble friend who speaks for the Treasury in this House says that he hopes not. I am pleased that both noble Lords have retabled the amendments to Clause 5(1), and, of course, we are happy to accept them.
On Question, amendment agreed to.
The Earl of Home moved Amendment No. 9:
On Question, amendment agreed to.
Lord Clinton-Davis moved Amendment No. 10:
The noble Lord said: My Lords, again, in moving the amendment I am seeking to address the concerns raised by the noble Lords, Lord Ezra and Lord Meston, and the noble Earl, Lord Home, in connection with the powers of the Secretary of State to prescribe a rate of statutory interest and the factors which she should be obliged to consider in taking that action.
Amendment No. 7 obliges the Secretary of State to consider both factors in Clause 5(2) in reaching any decision to alter the rate of statutory interest. The words "among other things" and "inter alia" amount to the same thing. Apparently the use of a foreign language makes the whole thing illicit and would no doubt cause the whole Bill to collapse. The amendment makes it clear, as we agreed in Committee, that the Secretary of State will be free to consider other factors while deliberating upon changes to the interest rates. I beg to move.
Lord Meston: My Lords, again, I am grateful to the Minister. The wording proposed in Amendment No. 10 seems to be a great improvement on the Bill in its original form.
Page 1, line 9, at end insert--
("(1A) Interest carried under that implied term (in this Act referred to as "statutory interest") shall be treated, for the purposes of any rule of law or enactment (other than this Act) relating to interest on debts, in the same way as interest carried under an express contract term.").
Page 1, line 11, at end insert ("that would otherwise be conferred by virtue of the term implied by subsection (1)").
Page 1, line 21, leave out from first ("agreement") to end of line 22.
Page 2, line 32, after ("debt") insert ("(that is, the day on which the debt is to be created by the contract)").
Page 2, line 32, at end insert ("unless the debt relates to an obligation to make an advance payment").
Page 3, line 5, leave out ("contractual provision") and insert ("contract term").
Page 3, line 9, leave out ("may") and insert ("shall").
Page 3, line 9, after ("order") insert ("made with the consent of the Treasury").
Page 3, line 13, leave out subsection (2) and insert--
("(2) Before making such an order the Secretary of State shall, among other things, consider the extent to which it may be desirable to set the rate so as to--
(a) protect suppliers whose financial position makes them particularly vulnerable if their qualifying debts are paid late; and
(b) deter generally the late payment of qualifying debts.").
8.15 p.m.
Next Section
Back to Table of Contents
Lords Hansard Home Page