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

I have pushed the point on several occasions but the Minister has dodged it without even trying to answer it. What evidence does there need to be that an arrears notice has been received? What system of delivery needs to be in place? Does notification have to be issued by registered post? Does it have to be hand delivered or can it simply be posted? How can we be certain that it has been received by the right person? So much in the Bill hangs on the ability of the lenders to prove that they have done what they should to make the borrowers aware of their responsibilities.

James Brokenshire (Hornchurch, Conservative)

May I amplify that point? It is common in some legal agreements to include a deemed notice clause specifying that the person, be it the borrower or the other counter-party, will be deemed to have received a notice so many days after it is posted. We are concerned about the need for certainty in all of this, so that the provisions cannot be used against someone who is already in difficult financial straits. They might then find out that something else is labelled on them. Will my hon. Friend comment on that?

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

I am grateful to my hon. Friend and I am grateful for the legal expertise that he brings to the Committee.

On occasion, it might suit the purposes of some people who receive documentation to say that they have not done so. Given that the Bill totally transfers the responsibility on to the lender—they have to produce evidence that the agreement was fair and it is assumed to be unfair unless they can do so—they will have to go to extraordinary lengths to prove that they have done everything possible to fulfil their side of the agreement. I do not believe that their company lawyers will be happy to say, ''You just put a letter in the post in an unmarked, typed envelope.'' I can see the hon. Member for Hastings and Rye (Michael Jabez Foster), who is an esteemed solicitor in the south-east of England, laughing at the back there at the thought that anybody believes that they might get away with that.

The evidence has to be that the companies would feel an obligation to protect themselves from future court cases. They would use recorded delivery and ensure that they have a signature from the person who is affected. They would go to incredible lengths to establish whether somebody was partially sighted or blind or whether they could understand English well enough to know what the letter said. They would ensure that if someone had learning difficulties, they understood the documentation's import.

We need some clarity from the Minister about how this process will be done. At the moment, we are debating these issues in a vacuum and he owes it to the Committee to explain how it will happen.

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

I am trying not to hide away from the issue. The hon. Gentleman is forgetting what I said about the way that the Bill has been consulted on and the way that we worked closely, not just in the past few months but over a number of years, with the industry and others to consider most of the issues. He is right; the notification has to go by first-class post or by hand.   That is the same way that any similar type of notice across the sector is handled. Nobody from the industry has said that they think it would have to be sent by recorded delivery. He is being unduly cautious. I do not know whether he has had discussions with the industry on this point. The approach of sending the notification by post or by hand is appropriate.

We have said that the relationship in these areas is quite a strong one.

The Interpretation Act 1978 states:

''Where an Act authorises or requires any document to be served by post (whether the expression ''serve'' or the expression ''give'' or ''send'' or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.''

We talked about electronic mail and sending things.

The safeguards are in place. Clause 16 deals with time orders, which we were asked for by Members on Second Reading and indeed during the previous discussion that we had.

Michael Penning (Hemel Hempstead, Conservative)

Something like 1 million letters go astray each year. I am coming at the issue from a slightly different avenue: from the point of view of a debtor. We have all received parking fines and different bits and bobs. I got something relating to the congestion charge the other day, when I had not even been in London. We assume that everything arrives and that it is all okay. The Government could bring through legislation to say, ''This has to physically happen''. Surely we must realise that at some stage it might not happen. Letters might not arrive. What would happen then? When the Minister read out something a few minutes ago, did he say that electronic communications are legal now?

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

We have to be very careful. I understand that Opposition Members think that there may be something that they can tie on to here in terms of lack of clarity, but default notices have been sent by post for over 30 years. The hon. Gentleman probably will not know this, but in the last Parliament I was the Minister responsible for the Post Office, so I am well aware of issues relating to Royal Mail. I can say with deep sincerity that it is unfortunate that I do not have that responsibility now.

John Battle (Leeds West, Labour)

I have a lot of sympathy with the Opposition position, not least because they are coming from a completely different angle from the one that they adopted in the days when we discussed the poll tax in this Room, when Conservative Government Members insisted that notices regarding poll tax and rent default should not simply be posted in letter-boxes, but should be pinned to doors with nails, and we argued about whether they should be pinned to doors in envelopes or with the name and address showing. Therefore I am delighted that we are agreed that the notices will be going in envelopes and through letter-boxes. That is welcome progress.  

The hon. Member for Wealden pointed out that clarity and guidance are needed, so that people are clear on the law. I put it to the Minister that unless there is slightly more guidance, the whole thing will become a legal event, the person receiving the bill will be no further forward, the company will be playing games, at worst, and we will not have delivered what we intend to with the Bill.

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

I have some sympathy with my right hon. Friend's views, but we are making heavy weather of this, although that may be down to ministerial inadequacy. There is nothing new here regarding how default notices are served. They have gone through the post for the past 30 years.

Following the consumer credit White Paper there is, throughout the Bill and regulations, the ability to make the whole process transparent. At a time when the Government and, I hope, the Opposition are looking to deregulate and ensure that they do not put burdens on business, there has to be clarity, but that clarity is there, and we may be trying to force a route on this issue that is not expected in other, equally serious, matters of finance.

I must say, Mr. Conway, that we are not really discussing time orders and clause 16, but the process of default notices which were the subject of the last clause that we debated, but in the spirit of what we are trying to achieve, I will say that I think that the issue is fine as it is, and that there has to be discussion with the sector about the statutory instruments that flow from the legislation. I hope that hon. Members support that.

I move on to time orders, which are a key element of what we are trying to achieve to assist people—

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

What we are talking about is directly related to time orders because one could not apply for a time order without having first received a default notification, so the two are directly linked.

The Minister says that the method of distribution has not changed, and he is right, but the burden of proof has changed. It has shifted from the borrower having to show that something is unfair to the lender having to show that it is fair, so it has shifted fundamentally. If a case were to come to court and the lender said, ''I've got a letter in my file dated such and such, so it must have been sent,'' but the borrower said, ''I never received that,'' a lawyer would not advise the lending company that it could adequately prove that it acted fairly. The fact that the Bill changes the burden of proof means that there will be much greater pressure on companies to show that letters have been received by the people for whom they were intended.

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

We are getting dragged into later issues, such as the unfair credit test and the burden of proof. The burden of proof in relation to time orders and default notices has not changed. As the hon. Gentleman said, it has changed in relation to the unfair credit test, and we shall discuss the merits of that later. For the time order, however, the burden of proof remains the same. I understand that one has to get the default notice in order to apply for the time order, but one has to know what the time order means. That is the point that I was making. We will discuss   the burden of proof and the unfair credit test later, and I anticipate that hon. Members on both sides will attempt to get me to make all sorts of definitions of that test. I look forward, Mr. Conway, to reaching those clauses.

A specific request was made to ensure that people had the opportunity to apply for the time orders. Time orders may enable debtors or hirers to have more time to repay the sums owed under the agreement, and give them more time to remedy any breach of the agreement other than non-payment. Currently, the time order provisions of the Act are not often used. Few are applied for and fewer are granted. A large part of the problem is the lack of information. Debtors and hirers are not aware of the time order provisions, and we are working on ways of informing them about the orders. That will involve including information in arrears and default information sheets to be produced by the OFT.

Another part of the problem is that people cannot apply for time orders at appropriate times. The clause therefore amends section 129(1) of the 1974 Act to allow debtors or hirers to apply for a time order after they receive an arrears notice. That will ensure that the debtor or hirer has the opportunity to apply for a time order when the problem is still developing, not when it is too late.

It is a matter for concern that people will use the opportunity to apply for a time order simply to delay the inevitable. They may also apply simply because they can. We will therefore require people who want to seek a time order to go through certain steps. A debtor or hirer can make an application if he has notified the creditor or owner of his intention to apply for a time order, and in doing so gives details of his proposals; and if at least 14 days has passed since the notification was given to the creditor or owner.

The requirements should not be onerous in practice. It is important that we have simple criteria that can be met by debtors and hirers. Compliance should be simple. The clause encourages creditors and owners to seek to resolve payment problems early. In addition, new subsections (4) and (5) provide that, in Scotland, debtors making applications either for or concerning a time order may be represented by a person who is not a solicitor or an advocate. That means that Scottish debtors will be in the same position as those in England, Wales and Northern Ireland.

Notwithstanding the concerns expressed by hon. Members—I am sure that we will return to them—I hope that the clause will stand part.

Question put and agreed to.

Clause 16 ordered to stand part of the Bill.

Clauses 17 and 18 ordered to stand part of the Bill.