Clause 59 - Financial services ombudsman scheme to apply to consumer credit licensees

Consumer Credit Bill – in a Public Bill Committee at 2:34 pm on 27 January 2005.

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

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I am grateful for the chance to ask questions about this important clause, which sets out the proposals for the extension of the ombudsman scheme to cover consumer credit licensees. In a sense, the OFT deals with the trade end of the regulations, and this provision deals with the consumer end. I have always found the ombudsman's services—in all matters with which it deals—extremely helpful and important because it provides a chance for people to get justice and redress without going to court.

I would welcome clarification of some of the terms used in the clause. It seems that it would be only in the cases of regulated credit, loans and debt that people will have recourse to the ombudsman's service. Will the Minister clarify that, because the clause states the condition that respondents must have possessed a standard licence at the time that the complaint relates to. Subsection (3) also states that the provision applies to firms that provide consumer credit, to businesses as they relate to debt counselling, and to businesses as they relate to debt collecting. Does that refer only to the consumer credit companies and any advice they might provide on debt management, or does it refer to a different category of business altogether?

Will my hon. Friend also explain how the scheme will operate and how much promotion there will be? I note that some statements on this matter refer to the provision of information, the relationship between the ombudsman and the Office of Fair Trading and the exchange of information between them. It is important that members of the public, who may be in debt and who may feel that this provision is a source of redress for them, understand how they can access it. It is important that they know that this big expansion of services has taken place. I suspect that the provisions will be extremely important for some of our constituents, particularly those who have had problems with credit, even in cases where that credit came from registered companies. I shall return to that matter later.

Will my hon. Friend explain the relationship between this clause and unregulated debt? I am thinking about two types of debt. Normally, if constituents come to us with debt problems, they have not only one debt, but a whole host of them. Some concern credit cards and other such loans, and some concern the public sector. I ask the Minister to address public sector debt, especially its relationship to private sector debt. I shall give an example, and I hope that it will not delay the Committee too much.

One of my constituents started with quite a small debt of £10 or £15 for a parking ticket and £53 for a second parking ticket, which he disputed. The constituent received income support. He did not pay the fines, and that was entirely his fault, but by the time Northampton council sent the bailiffs round, the debt had escalated to £600. Three days before Christmas, the bailiffs took his sofa, his dining table and chairs and his television set. Three days before Christmas, that is a disaster. He got a £600 loan to pay off the debt, which will take him a couple of years to repay.

Finally, I am also concerned about the article that my right hon. Friend the Member for Leeds, West (Mr. Battle) mentioned this morning, which I too saw in the Financial Times, which addressed debt management and the fact that people who are most in need get credit from pawnbrokers and informal money lenders. Those are businesses in which we want to prevent sharp practice. We wish to see an improvement in the way in which credit is provided. Businesses must conform to the best practice in the industry because people need credit. What happens when people have problems with a loan shark? Presumably, if a business does not have a licence, the debtors will not have any redress through the ombudsman. We must make sure that those people can be brought into the equation.

I welcome the extension of the financial services ombudsman's remit. I hope that we will receive enough information to ensure that when our constituents experience difficulties, they can benefit from the service.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme 2:45, 27 January 2005

I apologise for missing the start of the debate.

I welcome the extension of the ombudsman's jurisdiction to hear complaints against the holders of consumer credit licences and many of their nefarious, oppressive and exploitative practices—I do not intend to mince my words, Mr. Benton. The ombudsman will not be a panacea, but it will provide an alternative forum for consumers and another fount of bad publicity for bad behaviour. Regulatory competition might spur people on to improve their act. I do not include the Minister in that statement; he has done a great job in piloting the Bill. In particular, however, I do include the Office of Fair Trading. Let me tell my hon. Friend why I say that, and why I called for better enforcement during our discussions on Tuesday. I shall also tell him why I support additional powers and the involvement of the financial services ombudsman.

In various guises—as a business adviser, journalist and financial editor—I have had 20 years' experience of dealing with the OFT. Year after year, I have seen Sky television run rings around competition regulators. The only recent notable high-profile success by the OFT that I can remember was its busting up—wait for it—a price-fixing ring for replica football shirts. From the press, I now note that it is the Serious Fraud Office, not the OFT, that is pursuing alleged cartels of multinational drugs companies that are involved in the altogether more serious issue of fixing the prices of medicines.

The OFT started to examine penalty charges in 2004, after publication of the Select Committee's first damning conclusions. The OFT has now written to eight major credit card providers as part of that ''investigation''. The director-general of Fair Trading, Sir John Vickers, wrote to the Committee in October. His letter stated:

''We found that different card issuers use different accounting policies and bases for charging, some of which, in our preliminary analysis, are of questionable validity under the regulations on unfair terms in consumer contracts.''

In January 2005, in response to enquiries from The Guardian, the OFT said that it was still investigating the issue. Today, in response to enquiries from my office, the OFT said, again, that it was still investigating. It had contacted the eight companies, but it could not comment any further. It could not say how long the investigation would last, nor when a report might be drawn up or any announcement made.

Like other hon. Members, I appreciate the need for time and confidentiality to undertake serious inquiries such as this one. However, these well-known practices have dragged on for years. Only yesterday, Seymour Fortescue, the chief executive of the Banking Code Standards Board, condemned the charges as being indefensible. Have we seen, however, any conclusions or action from the OFT?

In 2004, one of the credit card companies, the US-based MBNA, told its shareholders that it might have to reduce late-payment charges in the UK, and that that might affect its profits. That was more to do with stringent reporting requirements in the USA, where they know a thing or two about cracking down on unfair trading practices, than the prospect of any imminent action by the OFT.

I understand the need to take proper legal advice, particularly when confronted by batteries of highly paid City lawyers and barristers from the banks on the other side. However, there is plenty of good free legal advice, and that has been the case since the 1974 Act. With regard to that issue, I draw the attention of Committee members to an article in The Guardian in August 2004 by the eminent barrister Richard Colbey.

We all remember, before 1997, how well the old Securities and Investment Board, as part of the City's self-regulation, kept the perpetrators of pensions mis-selling firmly under wraps, until this Government got in, and my right hon. Friend the Member for Airdrie and Shotts (Mrs. Helen Liddell) forced the board to do a U-turn on naming and shaming, and we all know what an effect that had.

That is the sort of spine that I want the OFT to have. It is the sort of spine the financial services ombudsman will have in dealing with consumer credit issues, and I hope that some regulatory competition from the ombudsman will do the OFT and consumers the power of good.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

I wish to ask the Minister for clarification on three areas. First, who will be the gatekeeper to the ombudsman? Will it be Members of Parliament, or will people be able to approach the ombudsman directly? Part of the issue concerns compulsory jurisdiction. It would be helpful if we knew how people will be able to approach the ombudsman.

Secondly, may we have some clarification on subsection (5)? It says:

''The approval of the Treasury is required for an order under subsection (2)(e).''

Subsection (2)(e) reads:

''at the time of the act or omission that type of business was specified and an order made by the Secretary of State''.

Is the Secretary of State then subservient to the Treasury, or will the Treasury be dictating rules on how an individual can bring a complaint to the ombudsman? I am not sure that I quite understand what either provision is intended to achieve. If the Treasury cannot deal with the matter, it seems to go back to the Secretary of State. If that is the case and there is a disagreement between both, the problem then arises that there is no one to make the decision. Would the Treasury and the Secretary of State then go to the ombudsman? I hope that the Minister agrees that that would be ridiculous.

Thirdly, under subsection (2)(f), if the complaint cannot be dealt with under the compulsory jurisdiction, what mechanism will deal with it? Will the complaint be automatically returned to the ombudsman, or does that provision relate to the period before the ombudsman becomes involved? If so, would the individual take the complaint, or would that be done through the Minister's office or by some other mechanism of which I am not aware? 

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

It is proper to spend a little time on this clause, because it introduces a new consumer redress system and is using the financial services ombudsman as the vehicle to do that. I will try to return to the specific issues raised by my hon. Friends the Members for Northampton, North (Ms Keeble), and for Newcastle-under-Lyme (Paul Farrelly) and the hon. Member for Bridgwater (Mr. Liddell-Grainger). Setting out the purpose and detail of the clause may help hon. Members in their appreciation of what we are trying to achieve.

The clause introduces a compulsory alternative dispute resolution scheme to hear complaints about consumer credit matters. Consultation showed that consumer and industry groups strongly supported the introduction of an ADR system for consumer credit. In most cases, consumers have no other option than to go to the courts to seek redress against unfairness. That often proves daunting and expensive for consumers and industry. Most credit provided by banks and building societies is already covered by ADR, and some trade associations run their own ADR schemes. However, access for consumers to ADR is not universal, and business can, in many cases, opt out.

ADR will provide wider and easier access to an efficient and cheap process of dispute resolution for both consumers and industry. It means that most consumers no longer have to be worried about going to court to challenge unfairness and will allow agreements to be settled quickly and simply. Consumers will have a better chance of obtaining fair redress against unfair practices, and it will encourage fair standards throughout the industry.

Ultimately, these changes will increase consumer confidence in the market, which in turn benefits the industry. As has been said, the ADR will be provided by the financial ombudsman service. The FOS was chosen as the ADR provider for consumer credit matters because it already deals with financial sector services generally. Under the Financial Services and Markets Act 2000, the FOS provides ADR for two existing jurisdictions: the voluntary jurisdiction and the compulsory jurisdiction; this clause adds a third—the consumer credit jurisdiction.

Around 80 per cent. of people who responded to the consultation said that they would like the FOS to provide ADR under the Consumer Credit Act 1974. The FOS's experience and expertise, which has been recognised by members, will ensure a smooth transition to the newer ADR scheme more than any other provider.

Clause 59 describes the conditions that must be satisfied for a complaint to be dealt with by the FOS. It also states how different activities will be made subject to the consumer credit jurisdiction. The Secretary of State for Trade and Industry will introduce types of credit businesses into the consumer credit jurisdiction by means of an order. It will be agreed with Her Majesty's Treasury Ministers and will set out one or more of the types of business in the new licence categories. These are: consumer credit   business; consumer hire business; credit brokerage; debt adjusting; debt counselling; debt collecting; debt administration; credit information.

Photo of Sally Keeble Sally Keeble Labour, Northampton North 3:00, 27 January 2005

I would be grateful for clarification on debt counselling and debt advice. Is the Minister talking about businesses that sell the services, such as independent financial advisors? Can he rule out bodies such as citizens advice bureaux and housing, money and advice centres, which may have a company structure, but which consider themselves part of the voluntary sector? If he does not know the answer, perhaps he could provide it in writing.

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

If my hon. Friend bears with me, the position may become clearer. To finish that list, I should add credit information services and credit reference agencies. Different types of businesses will be introduced on a staggered basis. The rate at which businesses are introduced into the consumer credit jurisdiction will be agreed with the Treasury after consultation with the FOS and the Financial Services Authority. That will ensure that the FOS can cope with the additional workload and will not be at risk of being overloaded, which was an issue raised on Second Reading.

When a type of business is introduced, the FOS will make rules setting out the activities that it will consider to be within the remit of that type of business. That will provide maximum symmetry between the existing compulsory jurisdiction covering banks and building societies and the new consumer credit jurisdiction covering consumer credit firms.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I am sorry to come back, but my hon. Friend may wish to write to me afterwards. I want to make absolutely sure that people who provide advice through organisations such as housing, money and advice services and citizens advice bureaux, which provide financial advice, will not be taken to the ombudsman.

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

That is the point. The hon. Gentleman said that they are not licensed; but they are licensed. Citizens advice bureaux have a group licence, and group licences will not be covered.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

So, they will not be covered?

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

No, they will not. The new rules will ensure that a consumer's ability to obtain redress is balanced with the FOS's capacity to deal with the extra work. The FOS will also make procedural rules regarding the operation of a consumer credit jurisdiction. The FOS must hold a public consultation before making any rules, and the rules must be approved by the FSA.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

Is the Minister saying that if the rules are changed after the order is made so that the Treasury can decide that it wants other things to be   included, that will be done as part of an amendment, so that the rules can go into jurisdiction within the existing orders.

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

Yes. That will become clear. The FOS must hold a public consultation before making any rules, and the rules must be approved by the FSA. For the FOS to become involved, the consumer must want the FOS to be eligible and to deal with complaints. A person is eligible if they are the individual, or are directly related to the individual through the agreement, and they are covered by the FOS rules.

The credit business must have held a standard licence at the time of the complaint; the complaint must fall under a type of business included in the consumer credit jurisdiction; the complaint must also be outside the FOS's compulsory jurisdiction. That ensures that businesses do not become subject to multiple jurisdictions.

Consumers can take complaints about firms to the FOS. On receiving a complaint from a consumer, the FOS will first check that the firm's internal complaints handling procedures have been exhausted. At present, firms have eight weeks to settle complaints before the FOS becomes involved. If at the end of this period a complaint has not been resolved, a firm will be obliged to let the consumer know about the FOS. If the criteria mentioned earlier have been met, the FOS will look into a complaint. The FOS will first try to settle a complaint informally before opening a case. If that is unsuccessful, the FOS will open a case to investigate a complaint.

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

I should like to continue. My statement may generate more questions, so it may be helpful if those who have questions wait until the end.

Much of the FOS's work is carried out by correspondence so that neither consumers nor businesses need appear at a hearing. After considering a case the FOS will issue adjudication. A member of FOS staff other than the ombudsman could handle that stage of a case. If either party is unhappy with the adjudication it can request that the ombudsman review the assessment and make a determination. The FOS's decisions are based on what is fair and reasonable in each case. The FOS takes into account the law, the regulations, the regulator's rules, the relevant codes and good industry practice. That ensures that within the legal framework, the FOS can come to a practical, common-sense solution that has a better chance of being accepted by all parties. The FOS can order a range of imaginative redress mechanisms from either party to effect a just and amicable solution.

If the consumer accepts the ombudsman's final decision, it is binding on the business. The FOS's decision can be enforced through the courts, and the FOS can inform the OFT of its determinations so that the OFT can take any necessary regulatory action. The clause is necessary to provide consumers with better and more accessible opportunities.

My hon. Friend the Member for Northampton, North raised the disturbing case of the parking fine that escalates to £600 that in turn goes to a loan shark. She was correct to point out that the Bill does not regulate public debt. The Government believe that that would be outside the scope of the Bill. None the less, such issues must be tackled. That is why the Government launched its indebtedness strategy last year. It brought together groups from the public and private sectors. Particularly in the public sector, in local government and in central Government, the strategy examined how government itself contributed to debt in how it collected its payments and how it tracked individuals.

The case that my hon. Friend raised, therefore, provides a good example of where things can go wrong, and I hope that that will influence the direction of that indebtedness strategy. To widen the scope to public debt would push the FOS too far outside its area of expertise, and it is outside the scope of the Bill. The FOS may take other debts into consideration but only in relation to the circumstances of the case and where regulated to other bodies.

My hon. Friend the Member for Newcastle-under-Lyme gave his view on the Office of Fair Trading and his experiences of it over many years. His comments are on record, and I am sure that the OFT will be clear on what he said about how he feels it operates. I think that he was a little harsh. The Government recognised, through the Enterprise and Competition Acts, that it was important to ensure that the UK has a strong competition regime, and according powers to the OFT and the Competition Commission develops that. The developing expertise has led to the UK's being recognised as one of the leading competition regimes in the European Union and beyond.

Photo of Malcolm Bruce Malcolm Bruce Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Trade and Industry

I do not wish to join in the collective OFT bashing, but does not half the problem lie in what the Minister has just said? There is understandable   confusion in the public mind about a body that is called the Office of Fair Trading, but which when one takes fair trading issues to it says, ''No, that's not our responsibility; it's competition that we are dealing with.'' The name is wrong, because it does not describe the function, and that leads to considerable frustration and disappointment.

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

The hon. Gentleman has put his comments on record, and I am sure that the OFT will look at that. There may be an opportunity if it is necessary—it is not at this stage—as we review the effects of the Enterprise and Competition Acts to look at how those organisations are working and how his comments fit in. It is an important move away from the idea that Ministers should take the final decision on competition issues. It is better that there be a detailed, professional look at the issues.

Ultimately, as I said earlier, the OFT must appear before the various Select Committees and must meet the Secretary of State for Trade and Industry. The OFT's developing expertise is important and progressive. The position of financial services ombudsman is established and works well in other jurisdictions. I hope that this will not be a soft touch. That would be a tragedy given the spirit in which we have worked on the Bill. We have worked with all stakeholders, be it industry or consumer groups, to get to the right level. We have talked about responsible lending and borrowing to ensure a fair approach and to ensure that, when people enter into agreements, they fully understand them for the lifetime of those agreements.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I am glad that the Minister said that I was only a ''little harsh'' rather than ''very harsh'' about the OFT. My OFT bashing was not meant to be a criticism of the Bill, which is a wonderful step in progressing regulation. I was pointing out that I hope that some regulatory competition, with a bit of backbone, will help the OFT to become a harder touch.

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

I acknowledge my hon. Friend's point. I assure the Committee that I meet regularly with the director-general of the OFT, Sir John Vickers. Sir John will leave his post later in the year, and there will be a replacement. We will have to look at how people see the OFT's role in the context of the Bill. I acknowledge the concerns raised and will pass those on to the OFT. The hon. Member for Bridgwater asked several questions. I am not sure that I have answered them, so I shall give him the opportunity to reply.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater 3:15, 27 January 2005

I have two supplementary questions. One concerns the delay in the FOS deciding what the outcome will be. One problem with such cases has always been that they can drag on interminably. The second issue is that the Minister said that either party can go to the ombudsman. As I said on the Select Committee on Public Administration, which deals with the ombudsman, the ombudsman is swamped most of the time. The problem is that either party   could decide that it is much easier simply to make their views known and pass the matter to the ombudsman, which would cause an enormous delay.

The hon. Member for Northampton, North very eloquently expressed how emotional the process is. The Minister knows that the longer the delay, the more the credit piles up, and the situation becomes much worse. There is the potential for a delay of three or four months, perhaps longer, if there is no agreement when it reaches the ombudsman.

Finally, I refer to the matter of a complaint being dealt with by the ombudsman on the condition that it cannot be dealt with under the compulsory jurisdiction. The Minister mentioned voluntary and compulsory jurisdiction. When does one become the other? If the complaint cannot be dealt with under the voluntary jurisdiction because one party does not agree, is the matter then resolved under compulsory jurisdiction? Could the Minister clarify that?

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

We are adding a third jurisdiction—the consumer credit jurisdiction. I take the point about the time delay. One of the industry's concerns was that many complaints would be piled on to the ombudsman, in the way that the hon. Gentleman mentioned. A levy is to be applied to the industry to deal with the costs of the issues surrounding ADR. Firms must deal with complaints with their own structures within eight weeks. They must prove that complaints have gone through all their in-house processes.

If the complaint has not been resolved after eight weeks, the firm must inform the consumer about the FOS, which can then become involved. A first attempt can be made to settle the complaint informally, not necessarily by the ombudsman himself. If that does not work, the ombudsman service will open a case and investigate. After consideration, an adjudication will be issued. If either party is unsatisfied, the ombudsman will make a formal determination. A benefit to the consumer is that if they accept the final decision, it becomes binding on the business and can be upheld by the courts.

With regard to the point about the additional workload associated with the consumer credit jurisdiction, the FOS is well resourced in terms of staff expertise in consumer credit issues. It already handles a large proportion of consumer credit business under its existing jurisdictions, because banks and building societies provide about 75 per cent. of consumer credit businesses in the compulsory jurisdiction. The additional workload is not expected to be large. Estimates based on research conducted by MORI indicate that the FOS might expect to receive a maximum of about 13,000 additional consumer credit complaints a year. Any such increase is unlikely to overburden the FOS. Furthermore, much of the current FOS workload is made up of mortgage endowment complaints, and it is anticipated that the number of those complaints will begin to fall. In addition, the gradual phasing in of consumer credit   activities to the FOS's jurisdiction will allow it to take on activities consistent with its capacity to handle the volume of complaints, given its workload.

There has been an increase of 57 per cent. in the number of cases received. The FOS has maintained its targets for dealing with complaints: 45 per cent. within three months, 80 per cent. within six months and 90 per cent. within nine months.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

The Minister has almost answered his own question about the level of complaints to the ombudsman. Every Member knows how difficult it is to get the ombudsman to deal with complaints. I have two suggestions for the Minister: first, will he examine the possibility of a credit ''holiday'' so that interest does not continue to rack up?

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

Yes, I thank the hon. Lady for her help. Given the delay on the ombudsman's part, can the credit holiday option be examined?

Secondly, will the Minister examine the possibility of a definition of ''seriousness'', so that cases can be categorised. The ombudsman has been trying to pigeonhole cases into levels of seriousness. The hon. Member for Northampton, North spoke eloquently about the desperation factor. Some people will be able to pursue their cases, but many others will not, and they will have no choice. I am aware of the complexities, but if there are some 13,000 running cases, the situation will simply continue to deteriorate, and many cases will not be resolved until it is too late.

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

I understand where the hon. Gentleman is coming from and what he is trying to achieve. The FOS can operate within its capacity with regard to targets. It will be able to cope with various businesses. During our discussions on other clauses, we dealt with accumulation of interest. I shall come back to the hon. Gentleman on that issue.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I understand that it is important to have a freeze on interest while a case is being progressed. The Minister has reassured us that the FOS can deal with the number of cases. Can he also reassure us that the FOS is geared up to deal with various types of cases? Does it have the necessary skills to deal with people who have small debts that they find it impossible to manage? Complaints about administration and technical issues may be well-founded, but the FOS may not be familiar with certain types of complaints. I have referred certain cases that I can well imagine would be difficult to deal with.

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

I refer my hon. Friend to my previous remarks about the consultation process and how we arrived at the FOS with regard to stakeholders working with the industry and consumer groups that understand the complexity of the disagreements and the ensuing problems. I strongly suggested that the FOS was the appropriate route because of its experience and its ability to operate in other jurisdictions.

Information on interest has not yet been forwarded to me. We must be careful not to micro-manage the FOS; we must trust its expertise and independence. I can only say to the hon. Member for Bridgwater that I think that we have covered the issue of accumulated interest and what can be done about it. [Interruption.] On the other hand, in news just in, I am now told that we have not examined situations when debt interest stops. The Bill has no provision to stop interest being charged in such situations. I shall investigate that issue.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater

Perhaps I could help the Minister. All members will agree that it would be unacceptable for that scenario to continue. When the situation becomes compulsory rather than voluntary, perhaps the Government should think about letting the guillotine down. The hon. Member for Northampton, North is right; this situation cannot be allowed to continue. We know that the FOS can run out of time and cases could continue for three or four months. The Minister decided voluntarily to take things to that stage. If it becomes compulsory, it is because it needs to be taken further. Perhaps the Minister could consider that as a cut-off time.

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

I am happy to do that. However, the ombudsman can deal with a complaint in various ways, and he may be able to deal with that matter through the consideration of cumulative interest.

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

In that spirit, we shall examine those issues in the context of financial ombudsman service solutions. I hope that that explains everything.

This has been an important debate, as the system that we are introducing is new. I hope that, in the light of the caveats that I have provided, hon. Members will accept the clause.

Question put and agreed to.

Clause 59 ordered to stand part of the Bill.

Schedule 2 agreed to.