Clause 8 - OFT to prepare information sheets on arrears and default

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

Alert me about debates like this

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury) 11:00, 25 January 2005

I beg to move amendment No. 18, in clause 8, page 6, line 35, at end insert

', but shall include—

(a) details of the rights of consumers under this Act and the 1974 Act with regard to defaults; and

(b) details of redress procedures available to debtors, with particular respect to the Financial Services Ombudsman and the Financial Services Authority.'.

Photo of John Butterfill John Butterfill Conservative, Bournemouth West

With this it will be convenient to discuss the following amendments:

No. 19, in clause 9, page 8, line 2, at end insert

', but shall include—

(a) details of the rights of consumers under this Act and the 1974 Act with regard to arrears; and

(b) details of redress procedures available to debtors, with particular respect to the Financial Services Ombudsman and the Financial Services Authority.'.

No. 21, in clause 10, page 8, line 37, at end insert

', but shall include—

(a) details of the rights of consumers under this Act and the 1974 Act with regard to arrears;

(b) details of redress procedures available to debtors, with particular respect to the Financial Services Ombudsman and the Financial Services Authority.'.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

The amendments follow on from amendment No. 17 and address the same problem. Amendment No.18 asks that the rights of redress procedures available to debtors be clearly laid out and that the rights of consumers under this Bill and the 1974 Act with regard to defaults be carried out. It seeks to reinforce the point that the company should be allowed only to do what it originally stated it would do. It should be set out very clearly to debtors what their position is under this Bill and under the 1974 Act,   what their rights of redress are, and what they are legally liable to pay. I spoke comprehensively on those matters in the discussion of amendment No. 17, so I shall allow the Minister to put forward his line of thinking.

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

By now it should come as no surprise to the hon. Member for Tewkesbury that we shall be resisting his amendments. That is not a personal attack on him, rather on the content of the amendments.

The requirement for the Office of Fair Trading to prepare and publish information sheets on arrears and default will be supported by regulation to be made by the Secretary of State. Those regulations will specify the types of information to be included, and the form of the sheets will be left to the OFT. The Government have left those decisions to be made in regulations to enable the OFT to decide the detail and to make further changes as and when necessary. It also enables the Government to develop that detail through consultation with consumers and the industry, and it ensures future-proofing. The matters mentioned in the amendments are able to be required in those statements. We are committed to consulting the industry and consumer groups on that detail and to ensuring that there is a balance between the types of information specified and the practical limitations of preparing useful information sheets. We will, therefore, resist the amendment. We will consult all interested parties on the types of information to be included in the OFT information sheets and ensure that they reflect a balance between the need to inform and the practicalities.

We resist amendment No. 19. The requirement for notices of sums in arrears in relation to fixed sum credit agreements is to be supported by regulations to be made by the Secretary of State. As I have said, the regulations will contain the content of the notices and their forms. Those matters are best left to regulations, which ensure detailed provisions for the form and content of the notices and which can be changed if necessary.

As I said in relation to the previous amendment, the Government will be able to consult with consumers and industry. The important point is that since the White Paper, and since the regulations that flowed from it came into force, the journey we have made is one that we have tried to undertake with stakeholders who represent all sides. That is beneficial, and we have set out the most appropriate way forward. We will consult further, and the issues raised by the hon. Member for Tewkesbury and the assurances for which he asked can be dealt with through those regulations. That is a better route.

On amendment No. 21, if we leave matters to regulation, we will move forward on important issues. The hon. Gentleman mentioned advice and redress options. Those will be required in the notices and are to be provided as part of the Office of Fair Trading   information sheets, which will be required to be provided with a notice of sums in arrears and default notices. We will consult all interested parties. The notices need to be able to be changed to take account of future developments in the consumer credit market. That will not add the burden of excess paperwork to consumers or lenders, and it is appropriate to follow our suggested route. To follow the hon. Gentleman's route would create further burdens and would not be in the spirit of what we are trying to achieve. We ask him to withdraw his amendment.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

Let me pick up on the Minister's closing comments. The amendments would not put a further burden on the industry. They are simple requirements. The details of the rights of consumers under the Bill and under the 1974 Act would be set out in a standard document. It would not place any extra burdens on businesses. I note that the Minister will consult with the industry yet again. I wish him well in those consultations, and on the strength of that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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)

To remove any doubts that the Committee may have, I will set out the Government's position on clause 8. The Government are committed to ensuring that all consumers receive clear, concise, independent information on debt management options, including debt advice. The best times to do that are when telling consumers about being in arrears and when they receive the court notice.

Clause 8 requires the Office of Fair Trading to prepare and publish information sheets to be included with notices about arrears and default notices. The sheets will be published by means of a general notice. The arrears information sheet will include information to help debtors and hirers who receive arrears notices under clauses 9 and 10. The default information sheet will include information to help debtors and hirers who receive default notices under the 1974 Act. The type of information included on each sheet will be, as I outlined in the discussion on the amendments, specified in regulations made by the Secretary of State. It is important that the Department consults with interested parties before any regulations are made in order to give creditors and owners time to obtain the new information sheets.

New subsection (5) states that a new information sheet will take effect three months after it is published by the Office of Fair Trading in a general notice. New subsections (6) and (7) state that the OFT may revise the information sheets, and a revised information sheet will take effect three months after the OFT has published it in a general notice.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.