Clause 19 - Unfair relationships between
Consumer Credit Bill
2:45 pm
Mr Chris Bryant (Rhondda, Labour)
Absolutely; that is one reason why I tabled amendments. My amendments sit alongside the one that my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) tabled, which we shall debate later. Changes in the banking code nod in that direction. Many banks and lenders have already decided that they will not send mailings and marketing products to people who are, for instance, aged under 25. However, Which? magazine's excellent report on the matter outlined significant details which remain to be considered. That report points to credit card checks, which we will debate when we come to new clause 1 and to the subject of mailings.
I had not expected to have much concrete evidence on this issue, until yesterday, when I received two letters. One was from Hfs Loans and announced:
''Congratulations Your debt busting Hfs loan could be just days away. Pay off your existing debts! Save over £288 a month''.
It is difficult to work out how that company arrived at a figure of over £288 a month.
At the bottom of the letter it stated:
''I would like a cheque for:''
and one can fill in the amount that one wants. That is perfectly legitimate under the banking code. Under last year's regulations, such letters should state that potential customers must think carefully before securing other debts against their homes, as their homes may be repossessed if they do not keep up repayments on a mortgage or any other debt secured on it. There should be a clear statement of the annual percentage rate, and so on. I note that such letters cite a typical repayment of £100.39 a month over 300 months for £10,000 borrowed. That is not what most people would term a mortgage, although it is paid back over 25 years. Getting such a loan requires writing out a cheque for oneself with which one is then able to start the loan process. Such marketing is irresponsible, and I know that many of my constituents get dozens of those letters, week after week. If such a letter lies on someone's doorstep when he has financial problems, that is the day he will take it up. Those loans do not pay off people's existing debts; they roll them up, possibly into something that is more expensive than the debt they already have.
That Hfs Loans letter was entirely unsolicited. At the same time, I got another letter from Capital One that asked: ''What's in your wallet?'' Remarkably little actually, but that is a minor detail. The letter stated that if the reader answered yes to certain questions, he or she would be guaranteed a card. One would think that those questions would be difficult—for instance, ''How much do you earn?'' or ''What is your state of credit?''—but in fact they ask whether the customer is aged 18 or over; a UK resident and able to prove their identity and address; whether they are bankrupt or listed on fraud databases; and whether they are able to provide a deposit of between £49 and £200 if required. I should like to tell the Committee that all those would be possible for me—