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

I beg to move, That the clause be read a Second time.

Although the new clause refers to credit card tokens, it concerns the issue of credit card cheques, which was raised several times on Second Reading in this Parliament and in the previous Parliament. The new clause is a simple, probing new clause. It is designed to outline our dissatisfaction with how credit card cheques work and to see whether something can be done to tighten the process up in the interests of the consumer.

The new clause is intended to stop the sending of unsolicited credit card cheques. I accept that some have some benefit. For example, in buying something, there is no transaction fee. If one uses a credit card to buy something, one sometimes pays a transaction fee to use the card; with a cheque that does not apply. It is also useful when someone needs money desperately: perhaps the plumber has come to do some emergency repairs, but will not take a credit card. A credit card cheque makes it possible to settle that bill without taking the money directly from one's account.

However, there is a great temptation to overspend. The credit card cheques are not time limited and can sit in a drawer for year after year, until, when times get a bit tough, they can be used. People might be inclined to use them at times when they are not thinking of the consequences. I recognise, however, that people cannot spend beyond their existing credit limit. [Interruption.] I am sorry that the hon. Member for Eccles (Ian Stewart) is finding this a bit tiresome, but it is important. I noticed that he was yawning while the Minister was speaking, too, so it is not just me.

David Taylor (North West Leicestershire, Labour)

Order. Could we return to new clause 3?

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

We want to make lenders more responsible. The banking code rules have been tightened to cover some of the relevant issues. Can the Minister confirm that the cheques can no longer be issued to people who are nearing their credit limit or struggling to pay? Those are the sort of assurances that we want. Will he also consider the idea that customers should have to opt into receiving credit card cheques, rather than opting out of them? At the moment, when they enter a new credit card agreement, they must say, ''I do not want to receive these.'' That means that they can be sent without ever being requested.

Michael Jabez Foster (Hastings & Rye, Labour)

Is not the bigger problem something that the hon. Gentleman has mentioned already—the fact that as long as spending is within the limit there is not an increased credit obligation, but that the practice is, I understand, sometimes to send the cheques with an invitation to increase the limit? That increased limit is   the problem. It is unsolicited, and that may be the aspect of the matter that should give rise to concern.

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

The hon. Gentleman may have seen that new clause 4 covers exactly those issues of the raising of credit card limits without the agreement in advance of the proposed recipients. I agree that that is where the practice is at its most dangerous. The fact that someone can still spend only up to their limit is protection, but if it is possible to spend significantly beyond that, there is a risk of spending money that cannot realistically be paid back.

The restrictions would not apply to invitations to apply for credit cards in general. They would specifically relate to credit card cheques. Many representations were made on Second Reading about the need to tackle this matter—as, indeed, happened when the Bill was introduced previously. I hope that the Minister can give the Committee some reassurances.

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

The Government will resist the new clause, but not because we do not know where the hon. Gentleman is coming from—we do. He admitted that the provision might be too widely drafted so that it would encompass all credit tokens, which was not his intention. He explained his focus and the reasons for it.

The hon. Gentleman will know, because he has read the debates and will have heard me say so on Second Reading, that during the previous Parliament a vast range of hon. Members were concerned about credit card cheques. In response, I undertook to consider the need for secondary legislation to improve transparency in the matter of credit card cheques. As I said then, the issue is more one of transparency than anything else. Just receiving a cheque will not increase a consumer's indebtedness, but consumers should know what they are about and the implications of using them. Consumers should have clear information when an agreement is made, including information about charges.

We are considering what information—including warnings—should be provided at the time when the cheques are provided. The DTI is having discussions with the industry and consumer groups to reach a solution that will provide appropriate protection for consumers. We are actively considering what to do and the best way of addressing many of the issues that the hon. Gentleman has mentioned, but I am confident that we can deal with that through secondary legislation.

James Brokenshire (Hornchurch, Conservative)

The Minister said that indebtedness would not increase as a consequence, but there could obviously be a difficult situation as consumers might not necessarily be aware that higher rates of interest may apply or that there could be shorter interest-free periods. Indebtedness could increase through that, hence the need for more warnings when the cheques are issued to protect consumers. I welcome the Minister's comment that he will look at that seriously, although we would say that it is better to act in the Bill rather than later.

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

I am again grateful for the hon. Gentleman's remarks, and I know that he is sincere in   his comments, as are the Government in our undertakings. The new clause is not drafted appropriately to work in the way that he would want, but we will deal with the issues that it raises. We believe that secondary legislation is most appropriate, and when we are in a position to consult on the regulations, that will be a useful time to speak to the Opposition parties about whether we were right or not.

With that assurance, I hope that the hon. Member for Wealden will not pursue his new clause.

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

I am grateful for the Minister's assurances. All Members will be pleased to know that the Government are considering how to address the issue. I accept that the new clause is not drafted correctly and, in the light of that, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.