Clause 10 - Notice of sums in arrears underrunning-account credit agreements

Consumer Credit Bill – in a Public Bill Committee at 11:15 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)

Let me put on the record the Government's views about the important issues relating to arrears. As hon. Members will appreciate,   getting behind in making regular payments is often the first step towards major debt management problems. The Government believe that consumers should be informed about the situation as soon as possible. Clause 10 will require creditors to provide debtors with a notice when their running-account credit agreement such as a credit card or store card falls into arrears.

The following are the conditions set out when arrears notices must be sent. The debtor under an applicable agreement is required to have made at least two payments under the agreement before that time. The last two payments which he is required to have made before that time have not been made. The creditor has not already been required to give a notice under this section in relation to either of those payments. Finally, if a judgment has been given in relation to the agreement before that time, no sum is payable under the judgment by the debtor.

If all those conditions are met, new subsection (2) requires that:

''The creditor shall, no later than the end of the period within which he is next required to give a statement under section 78(4) in relation to the agreement, give the debtor a notice under this section.''

New subsection (3) requires that:

''The notice shall include a copy of the current arrears information sheet under section 86A.''

New subsection (6) states:

''Regulations may make provision about the form and content of notices under this section.''

The Department will consult on those matters before the regulations are made.

New subsection (4) states:

''The notice may be incorporated in a statement or other notice which the creditor gives the debtor in relation to the agreement by virtue of another provision of this Act.''

New subsection (5) states:

''The debtor shall have no liability to pay any sum in connection with the preparation or the giving to him of the notice.''

The clause is important to ensure that consumers are made aware of the problems with their account as soon as they fall into arrears.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.