It is also the case that the APR is not necessarily a good way to make that judgment. If I borrowed £50 from the hon. Gentleman and paid it back in 20 instalments of £3 a week—a total of £60—that would be a reasonable way of repaying the debt, but it would have an APR of 153 per cent. We need to look carefully at the problem. What seems like a high APR is sometimes a reasonable approach because of the sums involved.
The picture of indebtedness in the UK makes clear the need for an effective legislative framework to ensure that consumers are given adequate protection and that the credit industry is sufficiently transparent and works fairly and efficiently for all persons involved. The Bill presents us with a valuable opportunity to create that framework. Its objectives to enhance consumer rights and redress, to strengthen the regulation of consumer credit businesses and to provide debtors with clear, accurate and regular information about their credit agreements are the right way forward. That is why the Conservative party offers its broad support for the Bill, but as it currently stands, it is far from perfect. Indeed, some significant issues must be addressed if it is to reach its potential and ensure that the interests of the consumer are not inadvertently damaged.
By far the most pressing issue is the lack of detail, particularly in relation to a number of the key proposals. That is disappointing to say the least. The same criticisms were made by the Conservative party, the industry and consumer groups when the Bill was first debated in January, but in five months nothing has been done to provide that detail. That must make us question the Minister's comments on Second Reading in the last Session, when he said:
"The reason that the Bill has taken so long is that it is important that all stakeholders—the industry, consumer groups and the voluntary sector—move forward together."—[Hansard, 13 January 2005; Vol. 429, c. 471.]
All of us will find it disappointing that we have not moved forward rather more since he said those words.
Clause 19 replaces current provisions on extortionate credit terms with a new unfair relationship test. It widens the scope of circumstances that the courts may take into account in deciding whether a credit agreement is unfair to a debtor. That is a welcome move, but the Bill fails to offer any definition or examples of what constitutes an unfair relationship. Without such definition, neither creditors nor debtors will ever fully understand their responsibilities and rights. For a Bill that intends to increase consumer protection, that is a fundamental flaw. As Lloyds TSB explains:
"The Bill introduces a new unfair credit relationship test, which means consumers can challenge unfair practices and terms in court. However, the meaning of 'unfair relationship' is vague and the scope of the provision is generally too wide for both consumers and creditors".
It goes on:
"The Bill contains no guidance for consumers as to what constitutes 'fair' or 'unfair' to enable them to identify when they have a valid claim. Similarly, there is no guidance for creditors on how they should conduct themselves to ensure that their actions are not 'unfair'. Unlike comparable legislation in respect of unfair contract terms or financial regulation, there is not even a non-exhaustive list of relevant factors."
The Minister talked today of his desire to change the system of redress and to remove that from the courts, but the lack of detail means that people will have to go to court, with the years of waiting and the stress that that involves, to find out whether they have been treated unfairly.
Both the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 demonstrate that it is possible to give significant guidance to consumers and creditors by means of a non-exhaustive list of the factors that are relevant to an assessment of fairness. There is, therefore, no reason why a clear standard could not also be applied for this Bill. The Government know full well that that was a major issue when it was introduced in the last Session. They have had five months to pad out the detail, yet they have done nothing. That is far from trivial. A legal opinion from Michael Beloff QC finds that the test as currently drafted breaches the requirement in the Human Rights Act 1998 of legal certainty in article 1 of the first protocol. I should be grateful if the Minister would clarify the situation.