Consumer Credit

Energy and Climate Change – in the House of Commons at 10:30 am on 12 July 2012.

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Photo of Mary Glindon Mary Glindon Labour, North Tyneside 10:30, 12 July 2012

What assessment he has made of the potential effects on consumers of proposed changes to the Consumer Credit Act 1974 regarding early repayments and the green deal.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

The hon. Lady raises an important issue and we have taken a lot of care over it. Any green deal provider will be able to charge additional penalties only if it is genuinely able to prove that it will suffer a loss as a result of a consumer’s decision to repay early. In addition, all consumers will have the ability to challenge any additional penalties, with recourse to the Financial Ombudsman Service where necessary.

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

Given that the Department’s own impact assessment predicts interest rates as high as 9.5% under the green deal, does the Minister think the added possibility of a hefty penalty for early repayment will help to present a compelling case to families hoping to bring their energy bills down?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I understand the hon. Lady’s worries, which are why we have considered the matter so carefully, but there is a balance to be struck. If there are not penalties for those who repay early, the rest of the market will bear the additional risk and lack of profit, pushing up the cost of green deal plans for everybody else. I hope the interest rates will be significantly lower than she said, but we think we have got the right balance between consumer protection and a dynamic market.