Part of Consumer Credit Bill – in a Public Bill Committee at 9:45 am on 27 January 2005.

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Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs) 9:45, 27 January 2005

I am grateful to my hon. Friend the Member for Northampton, North (Ms Keeble) for raising that matter. She did so in the same spirit as the hon. Member for Tewkesbury in tabling his amendment on the powers of the OFT. Hon. Members are correct to point out that the Bill will give increased powers to the OFT. It might, therefore, be helpful to explain why the clause is necessary.

As my hon. Friend mentioned, the clause enables the OFT to provide intermediate sanctions on licensees. Those sanctions are named ''requirements'' for the purpose of the Bill. Those requirements are a new and important tool for the OFT to ensure an effective, targeted licensing regime. Currently, OFT powers are limited to refusal of an application, or the granting of a licence on different terms. It can also vary, revoke or suspend an existing licence. The effect   of those sanctions can be severe; they can prevent people from trading.

The Office of Fair Trading adheres to the Cabinet Office enforcement concordat in that the regulatory action that it takes must be proportionate to any detriment caused. I have copies available for Committee members should they wish to look at that exciting enforcement concordat, which sets out how the OFT should operate. Currently, the OFT is able to act only in more serious cases where a person is not fit to hold a licence. In many cases, the OFT is powerless to address consumer detriment in cases where withdrawal of a licence would be disproportionate. For example, if there were problems with the sale of credit in only one branch of a national company, it would not be justifiable to revoke the whole of that company's licence. A similar situation occurs where only one employee intimidates customers when collecting debts. Those cases may not be serious enough to call into question the fitness of a person to hold a licence, but the OFT should be able to protect consumers. The clause provides that the OFT may impose requirements on licensees if it is dissatisfied with a matter related to the business.