Clause 19 - Unfair relationships between
Consumer Credit Bill
4:30 pm
Mr Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations, Competition and Consumers), Department of Trade and Industry; Bradford South, Labour)
This has been a worthwhile debate on an issue that unites the Committee on a common objective. There is no difference between us on what we believe the end result should be. We have, necessarily, focused on the vulnerable who are most likely to be exploited. We must remember the context of the Bill: the UK has the most mature credit market in Europe. The principles that we are trying to adopt reflect the wide range in the market.
As my right hon. Friend the Member for Leeds, West pointed out, my word is law; therefore I shall keep my remarks short and I shall be very careful about what I say. The context of the debate is something on which we have all agreed: the extortionate credit test does not work, and it does not work because it is too prescriptive. Hon. Members mentioned several cases arising from the extortionate credit test. It was not working; there was a need for something else.
However, the something else—the unfairness test—is not without parameters. There is a spirit of fairness all the way through the various legislation and practices that affect the credit industry. The Financial Services Authority values highly the principle of treating customers fairly. The provisions of the Consumer Credit Act 1974 stipulate that a licensee must be fit to hold a licence, and the priority is that customers be treated fairly. The industry has its own code of practice on fairness. Therefore the parameters are very clear on how the test could be applied.
The failure of the extortionate credit test to meet all the requirements is a reason for not being too prescriptive about the unfair credit test. The extortionate credit test does not work.