Clause 9 - Notice of sums in arrears under fixed-sum credit agreements etc.
Consumer Credit Bill
2:00 pm
Gerry Sutcliffe (Parliamentary Under-Secretary (Employment Relations and Consumer Affairs), Department of Trade and Industry; Bradford South, Labour)
Not quite.
Charles Hendry: In that case, we have a little way to go, but we will continue to work on him.
A key point that we strongly endorse was raised by the hon. Member for North Norfolk (Norman Lamb). Under the amendment, we are talking about aggregate payments. We are talking not about four payments missed in a row, but about payments missed over the entire period of the contract. As a result, a different set of circumstances emerges for someone who is starting to miss repayments regularly, or for someone who makes payments sporadically. In the latter case, it is extremely likely that the person missed the repayments with the understanding and knowledge of the company from which they have borrowed. The company probably said, ''Fine, go ahead; we understand that you need to miss this week. We'll simply extend the period by one week. There is no further debt to you, and there is no penalty for extending the period by a week—or by two, three or four'' That is totally understood.''
The circumstances may be different if someone has missed four payments in a row, and we accept that. However, in relation to home credit, there is a case for saying that reasons for missed payments will be even better understood than they would be for monthly payments. That is because if someone goes to the debtor's door week in, week out, they understand the circumstances and that sometimes people simply cannot pay. It is not that they have chosen to miss the payment; they simply do not have the funds that week, although they are endeavouring to pay their creditor and are extremely conscientious about trying to do so. In those cases, the people collecting the payments probably have a better understanding of the circumstances and the reasons why payments are missed than they do of the reasons why someone has not paid a standing order or direct debit for a couple of months.
In his response to my earlier comments, the Minister said that he hoped that the companies concerned would approach the matter in a consumer-friendly way. That is directly at loggerheads with one of the key tenets of the Bill, which is that the relationship is presumed to be unfair unless the lender can prove it to be fair. Given that presumption, the lender cannot start doing things in a consumer-friendly way; they have got to go by the letter of the law. They must be certain that if they have to stand up in court they can say that they did everything possible to make the debtor fully aware of the delay. They should be able to say that they made it clear on the envelope that the letter was serious correspondence, and that they made it clear through the force of the letter that the debtor was in arrears. I do not see how that can be done in a consumer-friendly way when we are talking about something that could easily be brought to court, and on which the whole future of this debate will depend.