Brooks Newmark (Braintree, Conservative)

I beg to move amendment No. 173, in clause 104, page 89, line 31, after ‘persons’, insert

‘approved by the relevant supervisory authority’.

The introduction of approved debt management schemes is welcome, but only in so far as the supervisory and approval regime is sufficiently rigorous. Subsection (5) establishes that the scheme must be operated

“by a body of persons”.

I presume that the intention is to prevent individuals from offering schemes. Our amendment goes further and would require the supervisory authority to approve not only the scheme, but the body offering it. That matters because the schemes will in time be marketed as approved. They will receive the seal of approval from the Government and presumably use their new status to drum up business. There will be no surprise if existing individual voluntary arrangement providers offered their own debt management schemes for that very reason.

Encouraging providers to seek approval for their schemes may well be a pragmatic alternative to regulating the entire IVA sector, although there are legitimate concerns that the Government have missed an opportunity by not choosing to regulate. Whatever the intentions behind the clause, the purpose of the amendment is to ensure that debt management schemes cannot be operated by individuals who are entirely unvetted by the supervisory authority. That would create a risk of unscrupulous providers operating one approved scheme, which they can market as such, among many others and thus leave the public to draw the inference that all their services have been given a Government kitemark. It is ultimately a matter of perception.

During the course of its investigation, prior to the approval of a scheme, the supervisory authority might look closely at the body offering it. In that case, nothing would be lost by the Bill stating explicitly that the provider, as well as the scheme itself, is approved. I therefore seek the Minister’s assurance on that point.

Simon Hughes (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark & Bermondsey, Liberal Democrat)

We support the amendment. I can understand that, in a free market economy, it could be left to anyone to run such a scheme, but there is benefit in having official trade-marked, branded kitemark schemes. Given our long debates about regulation bailiffs and the Security Industry Authority in respect of bouncers and security outside pubs and clubs, it would be sensible to think of such matters now and not wake up only after the Bill is enacted. I hope that the Minister will be sympathetic to my argument.

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

Amendment No. 173 would require those who operate debt management schemes to be

“approved by the relevant supervisory authority’.

The Bill contains what is in a sense a double-decker scheme. A scheme that wants to benefit from the powers set out in clauses 109 to 116 will have to be approved by the supervisory authority dealt with in clause 106. However, seeking such approval is optional; scheme operators will have to decide whether they want to offer an enhanced scheme. When schemes do not have the approval of the supervisory authority, they will still be able to offer debt management schemes, but they will not have the powers available to those who do have such approval. The schemes that do not have the new powers will operate as they do now and will be totally dependent on the voluntary participation of the creditor.

I hope that the hon. Gentleman accepts that there is a scheme for approval and that those who choose not to seek approval will have only a limited range of  powers available to them, although they will be able to offer a service based on the voluntary acceptanceof debtors. No doubt such acceptances will be forthcoming. I hope that that flexibility is sufficient for the hon. Member for Braintree, because it commends itself to the Government.

Brooks Newmark (Braintree, Conservative)

Again, the Minister has not really persuaded me. My concern is that if there is some sense or perception on the part a scheme that it has, even in law, the approval or Government backing for what it is doing, it may be out there marketing itself as a professional operation that has the stamp approval of a regulated body. That might open the system to some level of abuse. I appreciate that such abuses might happen only at the margin, but the whole point of having a regulatory body and of regulatory approval is to protect the innocent and the vulnerable from those that might prey on them. Will the Minister once again clarify, perhaps more formally than she has, what the schemes are and under what restrictions they will operate?

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

The operators of approved schemes have to be companies or partnerships, not individuals. It is likely that the CAB might itself go into such territory. The hon. Gentleman will know about the Consumer Credit Counselling Service, which deals with debt management concerning credit cards and personal loans, and Payplan.

Regulations will control and limit advertising,which might provide further reassurance to the hon. Gentleman, who suggested that people might misrepresent the supervision under which they operate when offering a scheme. For a company to misrepresent itself by saying that it has the authority of a court to offer a scheme when it does not, or by saying that it has powers that it does not have, would certainly be an abuse of the scheme and would likely be a criminal offence, probably under the terms of the theft Acts. I hope that that reassures him on the issue of false advertising. There is scope in the Bill to limit or control advertising.

I hope that I have reassured the hon. Gentleman, albeit not exactly how he envisaged—a depth of worry about the matter is unnecessary. Some schemes will probably be run by wholly virtuous bodies such as the CAB, which do not have powers. The input of the supervisory authority will be necessary before such bodies can have more powers.

Brooks Newmark (Braintree, Conservative)

The Minister’s words may be reassuring, and I take on good faith what she says, but I am still not overly convinced that there will not be some abuse out in the big wide world. However, I beg to ask leave to withdraw the amendment.

Simon Hughes (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark & Bermondsey, Liberal Democrat)

Subsection (2) states:

“The scheme must be open to some or all non-business debtors.”

My understanding is that a scheme could be set upthat dealt with all groups of people. I do not see from  the notes on clauses what sort of groups have been thought particularly relevant. I understand that the arrangement is a permissive one, so anyone could come up with a proposition, which would then be approved under the system, but will the Minister suggest possible sub-groups of non-business debtors? Might it be the category of women’s debt or debts of certain ethnic or other communities? I am trying to get behind the words to see what the thinking is, because it is not clear from the Bill.

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

I do not think that it has been thought through any further than it says—that schemes must be open to some or all non-business debtors. I have not contemplated that people would set themselves up particularly for black or minority ethnic debtors or women debtors, but I suppose that that is not impossible. Perhaps membership organisations might want to offer that kind of service to some of their members rather than to others. I think that the opportunity that is offered by the provision—although opportunity is rather too positive a word for what we are talking about, which is debt management—means that there will be organisations that are happy tostep into the breach and take on non-business debtors of various kinds. There is maximum flexibility in chapter 4, and particularly in clause 104, to allow for all that. I suppose that the kind of organisations that the hon. Gentleman has mentioned might become involved; there might be some who wanted to focus on women, disabled people or mentally ill people, and so on. I do not know, but the scope is there if they wanted to do that.

Simon Hughes (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark & Bermondsey, Liberal Democrat)

That is helpful. In relation to what is an embryonic concept, I hope that when those who avail themselves of the opportunity, as the Minister put it, refer to the debates, they will reflect on the probable wisdom of setting up schemes to be offered to all debtors rather than to some groups. It becomes invidious, often, if people knock on a door and are told, “I am sorry, but you do not qualify for the service if you are not in the relevant community.” We should try to encourage arrangements that are as inclusive as possible, not as exclusive as possible.