Clause 59 - Financial services ombudsman scheme to apply to consumer credit licensees
Consumer Credit Bill
2:34 pm
Ms Sally Keeble (Northampton North, Labour)
I am grateful for the chance to ask questions about this important clause, which sets out the proposals for the extension of the ombudsman scheme to cover consumer credit licensees. In a sense, the OFT deals with the trade end of the regulations, and this provision deals with the consumer end. I have always found the ombudsman's services—in all matters with which it deals—extremely helpful and important because it provides a chance for people to get justice and redress without going to court.
I would welcome clarification of some of the terms used in the clause. It seems that it would be only in the cases of regulated credit, loans and debt that people will have recourse to the ombudsman's service. Will the Minister clarify that, because the clause states the condition that respondents must have possessed a standard licence at the time that the complaint relates to. Subsection (3) also states that the provision applies to firms that provide consumer credit, to businesses as they relate to debt counselling, and to businesses as they relate to debt collecting. Does that refer only to the consumer credit companies and any advice they might provide on debt management, or does it refer to a different category of business altogether?
Will my hon. Friend also explain how the scheme will operate and how much promotion there will be? I note that some statements on this matter refer to the provision of information, the relationship between the ombudsman and the Office of Fair Trading and the exchange of information between them. It is important that members of the public, who may be in debt and who may feel that this provision is a source of redress for them, understand how they can access it. It is important that they know that this big expansion of services has taken place. I suspect that the provisions will be extremely important for some of our constituents, particularly those who have had problems with credit, even in cases where that credit came from registered companies. I shall return to that matter later.
Will my hon. Friend explain the relationship between this clause and unregulated debt? I am thinking about two types of debt. Normally, if constituents come to us with debt problems, they have not only one debt, but a whole host of them. Some concern credit cards and other such loans, and some concern the public sector. I ask the Minister to address public sector debt, especially its relationship to private sector debt. I shall give an example, and I hope that it will not delay the Committee too much.
One of my constituents started with quite a small debt of £10 or £15 for a parking ticket and £53 for a second parking ticket, which he disputed. The constituent received income support. He did not pay the fines, and that was entirely his fault, but by the time Northampton council sent the bailiffs round, the debt had escalated to £600. Three days before Christmas, the bailiffs took his sofa, his dining table and chairs and his television set. Three days before Christmas, that is a disaster. He got a £600 loan to pay off the debt, which will take him a couple of years to repay.
Finally, I am also concerned about the article that my right hon. Friend the Member for Leeds, West (Mr. Battle) mentioned this morning, which I too saw in the Financial Times, which addressed debt management and the fact that people who are most in need get credit from pawnbrokers and informal money lenders. Those are businesses in which we want to prevent sharp practice. We wish to see an improvement in the way in which credit is provided. Businesses must conform to the best practice in the industry because people need credit. What happens when people have problems with a loan shark? Presumably, if a business does not have a licence, the debtors will not have any redress through the ombudsman. We must make sure that those people can be brought into the equation.
I welcome the extension of the financial services ombudsman's remit. I hope that we will receive enough information to ensure that when our constituents experience difficulties, they can benefit from the service.