Clause 7 - Further provisions relating to statements

Consumer Credit Bill – in a Public Bill Committee at 11:00 am on 25 January 2005.

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Question proposed, That the clause stand part of the Bill.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Hon. Members will be aware of recent concerns that some consumers make only the minimum payment on their credit cards. Clause 7 ensures that debtors are made aware of the potential hazards of such behaviour. Section 78(4) of the 1974 Act requires creditors to provide periodic statements in the prescribed form. Those should be given automatically to debtors and describe the state of their   running account credit agreements, such as credit cards and store cards. The maximum limit for those periodic statements is currently 12 months.

Clause 7(1) allows the Secretary of State to make regulations requiring additional information to be included in those statements given to debtors—for example, that additional information will set out the consequences of making only part payment, failing to make any payments, or making only minimum repayments. The Department will consult about the form of those warnings with interested stakeholders before the Secretary of State makes any regulation.

Subsection (2) ensures that changes do not apply to small agreements for less than £50. Subsection (3) amends section 185(2) of the 1974 Act where the agreement is with more than one debtor. Anything required by the Act must be done to all debtors, but one of the debtors can sign a dispensing notice authorising the creditor not to comply with the obligation on his behalf for a fixed sum annual statement. That avoids the need to send duplicate statements, and the notice is effective only if at least one of the debtors is still receiving statements.

Question put and agreed to.

Clause 7 ordered to stand part of the Bill.