Clause 6 - Statements to be provided in relation tofixed-sum credit agreements
Consumer Credit Bill
10:00 am
Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)
I thank the hon. Member for Richmond Park for the way in which she moved the amendment. Unfortunately, I must disappoint her and say that the Government will ask the Committee to resist it.
The amendment would require an annual statement to be issued for agreements that continue for more than one year. It is not confined to those with a contractual term of one year or more. Therefore, if an agreement runs for more than one year, despite originally being for a lesser period, a statement will be required. The Government have considered at great length the need to provide consumers with relevant and clear information for the reasons that the hon. Lady mentioned.
I believe that we have found a balance between her concerns and providing the required information. Agreements of less than one year are generally for small amounts of money and are unsecured. Consumers with such agreements often use credit products that are more transparent in the handling of information, such as home credit account books. However, we recognise, as the hon. Lady says, that some are not and that consumers are entitled to receive information about arrears and default sums.
The requirements will bind lenders in all circumstances. In addition, the debtor is entitled, at any time, to request a statement of his account from the creditor under section 77 of the 1974 Act. The proposal from the hon. Member for Richmond Park also gives rise to practical difficulties for lenders: an agreement with a one-month term would require a statement to be provided after two weeks; a 40-week term would require a statement after 20 weeks or about four months and three weeks. The permutations are endless and can only serve to decrease the flexibility of loan products for consumers who seek short-term credit and increase their price, and the Committee does not want that.