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

Good morning, Mr. Conway. I am hurt and saddened by that vicious attack, which was made so early during our deliberations today. I hope to be able to answer the many questions that the hon. Member for Wealden (Charles Hendry) will put today. With your   permission, Mr. Conway, it may be worth saying that many of the questions put so far related to general aspects of the Bill and the regulations that flow from it.

I do not want to teach the hon. Gentleman to suck eggs, but he will remember from his time serving on previous Committees that the legislation is there to set the framework, while the detail of the framework comes from secondary legislation that is subject to consultation with the industry and the stakeholders. I am sure that, when the secondary legislation comes forward, he will be able to get the answers to many of his questions. I undertook to meet him, if he remembers, to discuss a particular issue and I hope that any outstanding answers will be available by the time we have that meeting.

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

It will be a long meeting.

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

We will see how it goes.

The clause amends the definitions of consumer credit business and consumer hire business. These definitions are important, because under section 21 of the Consumer Credit Act 1974, anyone who wants to conduct a consumer credit or hire business needs a licence. Amending the definitions changes the activities for which a licence is required.

There is a problem with the existing coverage of the licensing regime. It is not clear that businesses that purchase a portfolio of existing loans require a licence. The Department of Trade and Industry, the Office of Fair Trading and advice bodies have received complaints about businesses that purchase existing debts. Consumers are often confused about who is responsible for the contract and what controls there are on those businesses.

That is important because consumer detriment can arise from the way in which agreements are administered. Administering agreements can include varying the interest rate or changing the terms of the agreement, and agreements regulated by the 1974 Act can continue for many years. It is appropriate that a licence should be required to administer agreements. The OFT can then check that the person is fit to do so and regulate that activity.

The clause also ensures that a consumer credit or hire business will not be able to enforce its agreements once its licence has been revoked. That will help to avoid the situation which arose in the recent case of Mr. and Mrs. Meadows. As the lender was only administering the agreements, the OFT was unable to intervene.

Hon. Members will see that the definition of consumer credit business now covers businesses relating to the provision of credit by a person, or otherwise being a creditor. A creditor is a person who provides credit under an agreement or a person to whom the rights and duties under the agreement have passed by assignment or operation of the law.

The new definition ensures that businesses will need a licence even if they are no longer making new agreements. They will need a licence if they only administer existing agreements by taking over the rights and duties of the creditor. The same logic applies for the new definition of consumer hire business. The   clause means that creditors exercising rights under an agreement are now within the regulatory regime. It means the OFT can ensure appropriate standards and protect consumers throughout the whole life of their agreement.