Clause 20 - Powers of court in relation to unfair relationships
Consumer Credit Bill
3:45 pm
Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)
I will attempt to satisfy the concerns of the hon. Gentleman. You never know—late on a Thursday afternoon, when the House has adjourned, people may be accommodated by what they hear from the Minister.
In introducing the unfair test, the Government want to ensure that the courts have all the powers they need to deal with unfairness in credit relationships. With the existing extortionate credit test, most cases fall at the first hurdle, as we have heard, which is meeting the standard of an extortionate credit bargain. Having made the test more accessible, we do not want now to create a situation where the courts' powers are restricted. We also want to make it clear to the courts the extent to which they can go to remedy an unfair relationship.
To that end, new section 140B(1) sets out the types of orders that a court can make about unfair credit relationships. Those powers allow the court to do what is necessary to remedy an unfair relationship. The courts' powers include requiring lenders to repay money to a debtor; to cease particular conduct; to reduce the amount payable by the debtor; to return property provided for security; to set aside any duty imposed on the debtor; to alter the terms of the agreement; or to direct accounts between parties.
New section 140B(2) makes it clear that only a debtor or a surety can make an application for these remedies. The court cannot do so on its own initiative. They do not have to start their own proceedings to do that, but can do so in proceedings brought by the creditor. New section 140B(3) provides that the court may in imposing a remedy impose a burden on the creditor. The rules would apply in Scotland, and a sheriff could impose these remedies. They also apply in Northern Ireland where, if the agreement is less than £15,000, the debtor can go to the county court. If it is higher, he can go to the High court.
New section 140B(10) makes it clear that the debtor or the creditor can join other parties to the action. Therefore, where the creditor has sold the loan to someone else, the debtor could bring an action against both those creditors. New section 140B(11) reflects the existing law in relation to the burden of proof when challenging agreements. It is the responsibility of the creditor to prove he has not acted unfairly where the debtor makes the allegation and provides particulars of unfairness alleged. I hope that that explanation gives the hon. Gentleman confidence to support the clause.
Question put and agreed to.
Clause 20, as amended, ordered to stand part of the Bill.
Clauses 21 and 22 ordered to stand part of the Bill.
Further consideration adjourned.—[Mr. Dhanda.]
Adjourned accordingly at two minutes past Four o'clock till Tuesday 28 June at Ten o'clock.