Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

I shall spend a little time on clause 8 because it is about the powers of the Office of Fair Trading, and I know that hon. Members raised that issue on Second Reading.

The Government are committed to ensuring that all consumers receive clear, concise, independent information about debt management options, including debt advice. The best times for that are when consumers are told about being in arrears and when they receive a default notice. The clause requires the Office of Fair Trading to prepare and publish information sheets to be included with notices about arrears and default notices. Those sheets will be published by means of a general notice.

The arrears information sheet will include information to help debtors and hirers who receive arrears notices under clauses 9 and 10. The default information sheet will include information to help debtors and hirers who receive default notices under the 1974 Act. The type of information on each sheet may be specified in regulations made by the Secretary of State, and the Department will consult with interested parties before any regulations are made.

To give creditors and owners time to obtain the new information sheets, proposed new section 86A(5) of the 1974 Act states that a new information sheet will   take effect three months after it is published by the OFT in general notice. Proposed new subsections (6) and (7) state that the OFT may revise the information sheets. A revised information sheet will take effect three months after it is published by the OFT in a general notice.

Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)

I am grateful to the Minister for setting out in detail what is proposed, but there continues to be a lack of detail on which we can make an adequate decision. Who will the OFT consult with to decide what should be included in the sheets? The Minister says that the sheets may be revised, but how often does he expect them to be revised? Will that be done, say, six-monthly, annually or every five years? Will there be a rolling programme, or will revision be more sporadic?

Can the information be provided on-line, or will it have to provided in writing? Will lenders be able to adapt and amend the OFT sheets, or must they be provided as they are published? Some lenders might see the OFT information as a bare minimum and wish to provide additional information. Will they be in a position to do so or will they have to use the OFT information without adding to it? Perhaps the Minister can say how prescriptive the information sheets will be. For example, will they say that a certain maximum default fee can be imposed? Will they set out in what circumstances early payment could be demanded?

Finally, to pick up on the point that the right hon. Member for Leeds, West raised, the sheets should be clear to all who receive them. How will the information be made available to blind people, for example? How will it be made available to people whose first language is not English? Will the sheets have to be produced in a range of languages, or will the lender be required to find out the first language of the borrower and then determine what language the sheet should be written in? What about people who cannot read very well or who have literacy issues? How will the terms and conditions be made clear to them?

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

Again, I am pleased about the spirit in which the hon. Gentleman raised those issues, because they are important. It is important that consumers know exactly what their rights are. Consumers should be informed about the consequences of missing payments and that redress needs to happen immediately. That is a message that we cannot communicate enough.

Consumers should receive relevant information about how to manage debt issues at the most appropriate time—when they first fall into arrears or when they are in default. The best way to get the information to them is through the lenders. The most effective time is when a problem first develops, not later. The information sheets are designed to assist consumers who have difficulties paying their loans. The OFT will have to consult interested parties—the industry and the stakeholders who have been identified in consultation on the Bill—and publish the notices, to ensure that the information is both relevant and helpful. The Government want to help consumers with   debt problems. Informed consumers can make better choices. Giving them relevant and helpful information at an early stage will help them to prevent bigger problems from developing.

What kind of information will the sheets contain? Consumers should receive relevant information about how to manage debt issues at the most appropriate time. The information sheets will contain information about the possible consequences of not making payments, including the potential for court action by a creditor.

Charles Hendry (Shadow Minister, Trade & Industry; Wealden, Conservative)

I am sorry to interrupt the Minister when he is in full flow, but will the sheets be issued when the loan agreement is taken out or when people get into difficulties? He has talked twice about the most appropriate time being when someone starts to get into difficulties, but my understanding of the guidance is that the note is from the OFT and would be given to people when they take out the loan so that they know their legal responsibilities and liabilities.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

The hon. Gentleman is right—[Interruption.] Clearly, he is not right. To help clarify matters, I shall set out the context of what we are trying to achieve. We want the consumer to be confident and to have more information about the type of products that they are going to borrow. We want the products to be fully transparent and the rates and time scale of the loan to be clear, so that consumers have a great deal of knowledge about what they are letting themselves in for.

John Battle (Leeds West, Labour)

We have two images of the person taking out a loan. Sometimes we think that they can absorb incredible amounts of information and detail and analyse the fine print, and then are okay. That is not the reality. The hon. Member for Wealden mentioned languages, and the problem relates to the wider issue. Perhaps hon. Members remember that a strong emphasis was placed on the need for financial education for everybody.

We all have briefings from Nationwide, GE Capital and other big lenders who are keen to tell us that they are working in partnership with debt charities, credit action services and consumer credit counselling services. At the front end of the process, when the Chancellor puts up money to help with debt advice, can companies, such as Nationwide and GE Capital, the lenders and the credit agencies be consulted and get together, as they have for this Bill? They could discuss what more they could do to help consumers understand what they are getting into, how they present the material—including in different languages—and other ways of ensuring that there is proper, personal back-up for people taking out loans. I am anxious to reduce debt—

David Taylor (North West Leicestershire, Labour)

Order. Interventions should be brief.

Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)

I am grateful to my right hon. Friend, who speaks with authority on what happens at the bottom end of the credit market where people tend to be in the most difficulty. The whole reason for the Bill and the need to examine the 30-year-old Act was, at   the request of all stakeholders—the industry as well as consumer groups and those people affected by the legislation—to try to create the transparency that appeared to be missing on the products that are available and the details of those products.

Clause 8 is specific to the OFT and the information sheet that will be issued by it. All that lenders must do is to inform people when issues of arrears and default start to happen—that is not at the start of the agreement, as I indicated earlier, but at the default stage.

The hon. Member for Wealden raised questions that I do not have detailed answers to, so I shall write to hon. Members about those issues, such as people with disabilities. If my answers are insufficient, I am sure that he will come back to me on Report. However, we feel that the clause meets the necessary requirements. It was well discussed and consulted on with the industry and stakeholders, and we feel that it is proportionate.