I entirely agree with the hon. Gentleman, and I think that most would do so. As with most legislation, we are addressing the small percentage of cases in which that does not happen. Most borrowers would probably take an interest in what they were borrowing, examine the interest rate and assess whether they could afford it, but some do not, and that is the group whom we are trying to help. That is a difficult balance, and legislation needs to be shaped to take those different circumstances into account.
With regard to the proposal for an interest rate ceiling, I agreed with the Government in Committee and opposed that not only because it is my natural tendency to want to see the free market work, but because practical problems can also arise. The interest rate charged is not the only difficulty—other charges can be levied, such as a charge made when a loan is taken out, a charge made for running an agreement, a charge made for defaulting, and a charge made for sending letters to borrowers who have missed payments. I remember one example of a loan that I had many years ago. The lender claimed that I had missed the end payments, I said that I had not, and I had to take a solicitor's advice. I won the case— I did not owe the lender the money that it was suggesting. The lender, however, wrote to me and tried to charge me £20 per letter. I wrote back to it saying, "That is fine, I charge £30 a letter." Most people would not have my nerve or confidence, and would end up with a lot of debt because of that. My point, therefore, is that the interest rate is not the only factor about which we need to be concerned.
As I said earlier, I would have preferred a guideline—I tried to introduce such an amendment in Committee—under the unfairness test in the Bill perhaps considering prevailing interest rates at the time and the relative strength of the parties. Including such guidelines would not mean that other things could not be taken into account by the courts—the Minister's argument was that the court's hands would be tied if the Bill were too prescriptive. I do not think that that would be the case, however. The court could consider other factors if the wording of the Bill were right.
Maximum interest rates could have the effect of dragging up the average of the interest rates charged, and as the Minister said earlier, could exclude those who need to borrow at the lower end of the market and who take out short-term loans. I know that those tend to be the people whom we are trying to protect, but again it is a question of striking the right balance, and I do not think an interest rate ceiling is the answer. I do not think a Minister—not this Minister in particular, for I trust him entirely, but Ministers in general—should have the authority to introduce such a draconian measure.
A suggestion that I made in Committee does not seem to have been adopted in the new Bill. Under the "half" rule, someone can take out a four-year loan to buy, say, a car, with the option of returning the car after four years and ending the loan altogether. I have spoken to representatives of both sides of the argument, consumers and motor manufacturers, and I am convinced that that degree of uncertainty helps no one. I think that when people can get out of an agreement in that way, interest rates may become somewhat higher than they would be otherwise. The caveat emptor rule should apply, and those who take out a loan for four years should have to pay it off. We must have balance and fairness. I know that the Government consulted widely at the time, and I should like to know whether they have made any progress.
By and large I welcome the Bill, and recognise the need to update the 1974 Act. I hope that the Minister will be a little friendlier to the new Committee than he was when I was trying to get certain amendments past him, because I think the Bill could be improved. It needs a few more teeth in some respects, and needs to be less burdensome in others. It does not quite strike the right balance. Nevertheless, it represents a good step forward, and I wish it and the Committee well.