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

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

We are making good progress, and we have perhaps reached the debate when the Minister will not just say that something is excellent but go along with us on it.

Again, the proposal deals with an issue raised on Second Reading. In that debate, I referred to my experience of having a credit card that I used only for petrol, perhaps spending £200 a month on it. Without any request from me, the card issuer has raised the limit on several occasions so that it is now £3,500. The issuer has never checked whether I could afford to spend to that limit, and the hon. Member for Hartlepool (Mr. Wright) expressed concern about that issue, too.

I recognise that the banking code has been changed, but I hope that the Committee will see that there are grounds for doing more. The banking code says that all issuers must assess a customer's ability to repay before increasing a limit and must make appropriate checks on the customer's risk profile and apply proportionate increases. They must not apply increases to accounts in arrears or those that fall below credit scoring thresholds, they must consider emergency limit increases individually—when a specific transaction will go over the customer's pre-agreed limit—and they must always assess the customer's ability to repay.

What the code does not include is any requirement to contact the customer. Banks can just go through records, contact credit agencies and find out what the   person's credit rating has been. They do not have to contact the person to ask whether such an offer would be welcome and reasonable or to ask what assurance they could give that they could repay the money. The new clause would put the onus on the lender to ensure that the customer can afford a higher limit and to get the customer's agreement in writing before finalising an increase.

The new clause must be seen against the background of concern about rising debt levels, which we discussed earlier. There is growing anxiety in the Bank of England about debt levels, and we are right to address that now. We are seeing a growth in the number of people who cannot pay their debt and a growth in mortgage arrears and repossessions. All that should make us wary of allowing a situation to continue in which people can simply have their credit card limit increased. As the hon. Member for Hastings and Rye (Michael Jabez Foster) said, before those people have such a limit available to them, it must be certain that they can repay the money. Currently, the debtor's circumstances are currently not checked when those limits are raised. That cannot be considered responsible lending.

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

It is appropriate that we end our deliberations on new clause 4. I thank the hon. Member for Wealden for drawing the attention of the Committee to this important issue. I know where he is coming from and where he intended to go, but he went too far, I am afraid. The new clause goes beyond prohibiting unsolicited increases and also bans solicited requests for increases not made in writing.

As for the sentiment underlying the amendment, the concern expressed by the hon. Gentleman is not new, as he says. Unsolicited credit limit increases have been an issue of concern for some time. During the last Parliament, the Treasury Select Committee examined the issue in some detail and expressed its concern, and businesses undertook to improve the processes through self-regulation.

As the hon. Gentleman said, the industry has done much through improvements to the banking code to improve the processes through which credit limit increases are made. The changes were included in the new version of the code, published in March. At the time the Government welcomed the new guidelines, as did the Committee. We look forward to seeing the industry's response to the Committee's recommendation to restrict unsolicited increases in credit limits.

The Government welcome effective self-regulation by business when it improves the quality of business practices, serves to protect consumers and enhances the services that they receive. Effective self-regulation is as critical to the proper functioning of the market as formal regulation through legislation. The industry is on notice on the matter, and we look forward to its taking an effective approach to address the concerns expressed by hon. Members, which have existed for some time.  

Michael Jabez Foster (Hastings & Rye, Labour)

Will the Minister assure us how he will present his position if the industry does not come good? This is the opportunity to do so, and it may not arise again.

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

As I have said, we believe there are opportunities to deal with the matter through secondary legislation. However, it is only fair that we give the banking code, since it came in in March, an opportunity to prove its worth as the industry reaction to the severe strength of feeling from the Treasury Committee and other hon. Members. The industry is on notice. If it does not deal with the issue in the way that the code offers it the opportunity to do, we will take action. I give my hon. Friend that commitment.

I hope that the hon. Member for Wealden, who was quite right to raise the issue in the way he did, will withdraw the new clause because of the assurances that I have given and the opportunities that will arise in future to take action if things do not improve.

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

We have come from every direction, and we now know that I have finally gone too far. In many ways, I am disappointed by the Minister's response. He referred to the banking code, but the code is still inadequate because there is no requirement to talk to the borrower or the debtor. All the research into finding out whether somebody can afford to repay a higher level of borrowing will simply be based on information that can be obtained from credit rating agencies and other people like that. No check is required to find out whether the person involved thinks it affordable.

The people we are most concerned are those who are most honourable and would not use credit most of the time. However, they will suddenly think that because it is Christmas, they want a holiday, or to buy a present, and because they know that their limit has been extended, they will go and spend beyond it. We have seen some terrible cases. The Minister referred, as did I, to one where someone ultimately committed suicide because they had over-borrowed and had a range of different cards—that leads us to issues of data-sharing, which we will come back to on Report. We know that there were not enough safeguards in place. The Minister says that the banking code has been tightened up since then, but I hope that he would be prepared to go further, and that if he believes the approach is right but the amendment goes too far, we might work with, say, the hon. Member for Hastings and Rye to find an alternative form of words in which to draft a Government amendment on Report. I believe that the whole House wants this issue to be addressed.

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

I see some merit in having a discussion not only with the hon. Member whom the hon. Gentleman identified but with the industry itself. Perhaps then we can persuade the industry to tell us why it believes that the banking code will meet the requirements, as it has already told the Government. It is not, however, practical to meet interested Members and the industry to try to hammer out a solution that we can bring back on Report.  

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

I am most grateful for that offer and that reassurance. In the light of that, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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

On a point of order, Mr. Taylor. It is usual at this juncture to thank you and your co-Chairman, Mr. Conway, for your excellent chairmanship of our proceedings on a Bill that has been brought before the House before but that needed to be scrutinised in detail by Committee members. I pay tribute to that scrutiny, to the amendments tabled by the Official Opposition and the Liberal Democrats, and to the contribution made by all Committee members in trying to get the Bill through appropriately. I recognise that there are some issues that we shall return to on Report, and I am sure that the Bill will be given a good airing in the other place.

I also thank the Committee secretariat, the Hansard reporters, the police, the Committee Clerks, my DTI team who have supported me throughout the proceedings, and the Labour members of the Committee, including my hon. Friend the Member for Eccles, who has a tendency to yawn on numerous occasions, particularly when I am speaking.

Ian Stewart (Eccles, Labour)

I was not yawning, I was stretching.

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

Whether yawning or stretching, he still has the propensity to do whatever he does.

This is an important Bill, which is likely to be the first to receive Royal Assent in the new Session, once all passages are complete. That shows the Government's commitment to ensure that consumer credit is made actively transparent in the way that we have set out.

I also thank the Government Whip, who is the most important person on the Government Benches, for ensuring that a majority has always been in place and that we have had a good discussion through the usual channels with the Opposition Whip.

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

May I associate myself and my hon. Friends with the Minister's tribute to you, Mr. Taylor, and to Mr. Conway for the way in which you have chaired the Committee? I, too, thank the Clerks and the members of the other House of Commons teams for the support that they have given us, and the DTI team for the support that it has given the Minister.

The Committee has been enjoyable and productive, and I am particularly grateful for the way in which the Minister has conducted it. He has been courteous at all times, as well as extremely open and friendly. He has, however, said no rather too often. He described one of   my amendments as excellent, and another as good but not excellent, so I was clearly getting worse as we progressed. ''Heading in the right direction'' has been the predominant comment, which is a little like ''could do better'' on my children's reports. At least we are heading in the right direction, which is something to be encouraged about.

We put a tremendous number of questions to the Minister, and I am grateful that he will reply in writing to some of them, because we do need greater clarity before the Bill reaches Report, and certainly before it goes to another place.

I am very grateful to my hon. Friends for their support. They have shown a tremendous amount of legal expertise and great understanding of the issues involved. All members of the Committee have brought constituency experience to the debate. These issues affect all our constituents, and I am particularly pleased that the Government saw fit to put on their side of the Committee people who might not always make helpful comments but whose sincerity cannot be doubted. I think particularly of the right hon. Member for Leeds, West, whose depth of experience in dealing with these issues has the admiration and respect of the whole House.

We are also grateful that the Liberal Democrats popped in from time to time—[Laughter.]

David Taylor (North West Leicestershire, Labour)

Order.

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

It has been a productive Committee, Mr. Taylor, and we have made progress. I am most grateful to you and Mr. Conway for chairing us so effectively.

Alan Reid (Shadow Minister, Trade & Industry; Argyll & Bute, Liberal Democrat)

It has been a friendly Committee, at least until now, and we have had some interesting discussions. I shall not rise to the bait, Mr. Taylor, but simply thank you and your co-Chairman, Mr. Conway, for the efficient way in which you chaired our proceedings. I also thank the Minister; he may always have said no, but he never failed to give a full explanation and he always handled matters courteously.

The Bill is important for our constituents. As someone new to DTI business, I found our discussions interesting. The Committee certainly dealt with the Bill effectively and efficiently. We shall return to the one or two items that remain outstanding on Report. I am pleased that, as the Minister said, it will be on the statute book quickly.

Bill, as amended, to be reported.

Committee rose at twenty-six minutes past Six o'clock.