asked Her Majesty's Government:

Whether they will put proposals to banks, building societies and financial services providers with a view to reducing the number of personal bankruptcies, mortgage repossessions and individual voluntary arrangements; and whether they will introduce legislation on these matters in the absence of co-operation from these lenders.

My Lords, this is an operational matter for the Royal Mail. Sunday postings are very low but add a huge amount of cost to the business—

Noble Lords:

Wrong Answer!

My Lords, I apologise. The Government take problem debt very seriously and are in regular dialogue with the financial services sector. Access to and supply of credit is a vital part of the functioning of a market economy. The Government do not propose to upset that. But we have legislated to increase transparency so that consumers are now better informed about their commitments throughout the lifetime of the loan and we continue to raise financial competence in the young.

My Lords, I thank the Minister for that Answer. Having said that, I was worried at first that I had the wrong supplementary. I was going to ask whether he remembered the Consumer Credit Act 2006, but of course he was not in the House at the time we debated it. Is the Minister aware—I am sure that he is—that I proposed a very modest amendment that would have required the lender to ask the borrower if he had the means to meet the commitment? The then Minister replied that it was certainly not necessary to have that on the face of the Bill. Given the indebtedness of individuals throughout the country and the fact that I never like to say I was right—nevertheless I am going to say that I was right—could the Minister please now tell the House what they are prepared to do to remedy the situation?

My Lords, I am grateful to the noble Baroness for indulging me and apologise for my incompetence at the beginning of my Answer. The Consumer Credit Act 2006 does contain important new safeguards for consumers. In particular, it will make it easier for the Office of Fair Trading to take action against lenders who do not take a responsible attitude to lending when considering who is fit to hold a consumer credit licence. But it is not just about addressing behaviour through legislation. Financial education, particularly of the young, has an equally important role in ensuring that a responsible attitude is taken to borrowing as well as lending.

My Lords, is the Minister aware that 80 per cent of the debt in the UK is in the form of a mortgage, which is asset-backed, and that we have one of the most efficient financial services industries in the world? I declare an interest as a senior adviser to the Royal Bank of Scotland. Is he also aware that it is not in the interests of any financial institution to lend money to those who are unable to repay?

My Lords, I am grateful to my noble friend for those remarks, which are helpful in providing a context to the debate. The vast majority of consumers are able to manage their debts well and the Government do not propose to interfere in those circumstances.

My Lords, does the Minister accept that, notwithstanding recent consumer legislation, unsolicited credit card applications still remain a problem?

My Lords, much is being done: we have reformed the regulations governing consumer credit advertising to make these clearer and fairer. We have also introduced pre-contract information to help consumers to make an informed choice before entering into a credit agreement. The implementation of the Consumer Credit Act 2006 will give increased powers to the Office of Fair Trading to safeguard the interests of consumers. Beyond that, £11.5 million is being spent on a package of support for schools to teach children financial skills.

My Lords, has the Minister had consultations with the citizens advice bureaux and other NGOs that expressed concern about the levels of debt incurred by vulnerable consumers during their evidence to sub-committee G of European Union scrutiny committee? Lord Jones of Birmingham: My Lords, I do not have the information to hand, but I will write to the noble Baroness with details of the communications we have had with such organisations.

My Lords, the issue of irresponsible lending has been widely canvassed. My concern is that the victims are the ones whose homes are repossessed. Does the Minister believe that the penalties for irresponsible lending are sufficient?

My Lords, my noble friend is referring to two kinds of lending, one where there is security involved and one where there is no security. On the latter, I referred to action the OFT might take against irresponsible lenders in an earlier answer. As far as mortgages are concerned, the FSA has been doing a lot of work in this area recently. It recently published details of a review into the behaviour of intermediaries and lenders within the sub-prime mortgage market. It discovered weaknesses in responsible lending practices and in firms' assessments of consumers' ability to afford a mortgage. As a result it referred five firms to its enforcement division. Potential remedies include withdrawal of their permission to operate and financial penalties.