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I will not detain the Committeevery long on the amendments. The clause deals with charging orders. I have a specific concern about the Consumer Credit Act 1974 and various issues relating to agreements under that Act. The amendments are designed to resolve a possible conflict between the Bill and the 1974 Act. As it stands, the Bill might permit an unsecured creditor to obtain additional security for the debt.
When an unsecured creditor lends money or provides goods they incorporate in the price of the overall arrangement the concept that the debt is unsecured. That is inherent in the contract and the deal that is being done. If a secured debt were created, no doubt the cost of it to the debtor would be cheaper. The Bill gives an unsecured creditor the value of security. Generally speaking, for people who are not very well off, it means a charging order on their home. The clause introduces changes to the Charging Orders Act 1979, which provide creditors with a way of enforcing a court judgment by placing a charge on the debtor’s property.
A creditor who uses that procedure can secure a previously unsecured debt. A creditor who obtains a charging order can obtain a court order to sell off assets, subject to the charge, although obviously such sale orders are pretty rare. The Bill proposes that, even though there is an agreement between the creditor and the debtor for the repayment of the debt by agreed instalments and the debtor is keeping up those instalments, the creditor can obtain a charging order and ultimately bear down against the debtor’s home and arrange to have it sold off.
That concern has been put to me and my hon. Friends by Citizens Advice and other organisations. It relates to the interface between the Bill as it stands and agreements made under the Consumer Credit Act 1974. If we are looking at a package involving a debt agreement, different guidelines and ground rules will obviously apply to that debt if it is unsecured. The creditor should not be able, however, to gain extra security through the backdoor.
These are probing amendments. I should be grateful if the Minister put my mind at rest about whether there is a conflict between existing legislation and the Bill as it stands. What we do not want is to give additional, unforeseen, unintended rights to creditors that could well apply at the expense of debtors.