Clause 4 - Exemption relating to businesses
Consumer Credit Bill
9:15 am
Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)
We have tabled the amendments to deal with procedural issues relating to declarations in respect of business lending. Definition is one of the big issues. Some borrowing can clearly be seen as personal, such as borrowing for expensive jewellery, and some is clearly business, such as borrowing for a new printing press, but some could be either. The Minister mentioned a helicopter. That helicopter could be for personal, or business use.
Under the clause, the credit agreement provided to businesses will be exempt from regulation unless it is for a value of less than £25,000. Again, we welcome that measure because it allows businesses the flexibility that they need to pursue their interests, to invest, to develop and to respond to natural peaks and troughs associated with trading.
New Section 16B(2), which will be inserted by clause 4, will provide that a credit or hire agreement will be presumed to be wholly or predominantly for business purposes where it includes a declaration by the debtor or hirer to that effect. New section 16B(3) provides for circumstances in which the presumption would not apply. We support the creation of such a presumption of exemption, but for the exemption to be effective, the provision requires the declaration to be made in the agreement. That is unnecessary and over-bureaucratic because, again, lenders will need to maintain a separate suite of agreements containing the specified declaration. That produces the same unnecessary burdens on lenders as referred to in relation to clause 3.
Amendments Nos. 7 and 8 are essentially similar to amendments Nos. 1 and 2 and may therefore produce a similar response from the Minister. They seek to reduce the red tape and costs on business by allowing the declaration to be made in a separate accompanying document. That provides greater flexibility and scope for quicker decisions, which must surely be our objective. Again, such a measure would have no detrimental impact on consumers. The mandatory requirement that the clause sets out to achieve remains in place.