Clause 6 - Statements to be provided in relation tofixed-sum credit agreements
Consumer Credit Bill
10:45 am
Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)
Although we have given some time to the amendments and have had a full debate, it is important to put on record the Government's position on clause 6.
Consumers are entitled to be informed about their credit situation. The clause ensures that debtors receive clear and concise information about their fixed sum credit agreements on a regular basis. Clause 6 inserts a new section 77A into the Act. It will require creditors to provide debtors with annual statements in respect of fixed sum credit agreements that have a duration of more than one year. A fixed sum credit agreement provides a facility to a debtor who is entitled to receive a credit, whether in one amount or by instalments. Subsection (1) states that a creditor must provide a debtor with annual statements. The first statement must be provided within one year after the day on which the agreement was made. Subsequent statements must be provided at intervals of no more than one year after the previous statement was issued.
The form and content of annual statements will be specified by the Secretary of State in regulations which will be made under the new subsection (2). New subsection (3) states that a creditor cannot impose a charge on the debtor of costs of producing an annual statement. New subsection (4) states that the creditor is not obliged to provide any statements after the debtor has made his final payment. Subsections (5) and (6) state that while a creditor does not give the debtor an annual statement when required, the creditor is not entitled to enforce the agreement until a statement has been provided. The creditor cannot charge interest during the time when no statement has been provided, and the debtor is not liable to pay any default sum that would have been payable during the period when the statement should have been provided. The default sum is defined by clause 18 and includes sums, except interest, that will become payable by the debtor in connection with a breach of the agreement.
New subsection (7) defines ''the period of non-compliance''. That is the period from the day after the last day on which a statement is required until the day when a creditor provides a statement. New subsection (8) makes it clear that the requirement for annual statements does not apply to non-commercial agreements. Non-commercial agreements are agreements that are not made by the creditor in the course of his business or for small agreements of less than £50. Debtors should be regularly informed of their financial situation. This clause ensures that they are.
Question put and agreed to.
Clause 6 ordered to stand part of the Bill.