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House of Lords
Wednesday, 14 December 2005.
The House met at half-past two of the clock: the LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.
The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Falconer of Thoroton): My Lords, before business begins, may I take the opportunity to inform the House that I will be undertaking a ministerial visit to Edinburgh on Monday 19 December and a private engagement on Tuesday 20 December? I trust that the House will grant me leave of absence.
Interest Charges: Store Cards
2.36 pm
Baroness Greengross asked Her Majesty's Government:
Whether they intend to include provision in the Consumer Credit Bill to prevent store card providers charging interest on the full statement value from the date of first purchase, in circumstances where the card-holder has already paid off most of the balance.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, there are no plans to include any provisions in the Consumer Credit Bill that would address the specific issue raised by the noble Baroness. However, in 2004, regulations came into force that require lenders to give consumers clear information about the key features of credit products, including the way in which interest is treated.
The Consumer Credit Bill will also improve consumers' rights by giving them more effective options to challenge unfairness in credit relationships, and to resolve disputes with lenders. It will also improve the powers of the Office of Fair Trading to take action against lenders who exploit or harm consumers.
Baroness Greengross: My Lords, I thank the Minister for that reply. Would he be prepared to look particularly at store cards that induce customers to believe that there is an interest-free credit period but do not say, except in the smallest of print—which I cannot read—that this only applies if the entire amount borrowed is paid off? This can result in customers paying interest as high as an APR of 70 to 80 per cent on the outstanding sum. Would the Minister not agree that this is scandalous and very unfair, and that some financial health warning, similar to the health warnings on tobacco packages, should clearly be written on application forms for this type of credit card?
Lord Sainsbury of Turville: My Lords, it is difficult for the Government to get into the position of trying to specify all
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the terms under which money is lent because that is likely to stifle competition and consumer choice. Our concern is to make certain that there is real transparency and we have brought in regulations to do that.
Noble Lords will also be aware that the Competition Commission inquiry into store cards has put forward some ideas about action that might be taken including an APR warning notice, where APR exceeds a specified threshold, but that is just one of their initial suggestions.
Lord Lawson of Blaby: My Lords, while I am not normally in favour of government regulation where it can be avoided, might there not be a case, particularly for those of us of a certain age, for saying that print below a certain size is not legally binding?
Lord Sainsbury of Turville: My Lords, it would be difficult to ascertain exactly what that level would be on a universal basis. Getting into that level of detail is exactly where regulation tends to go wrong.
Lord Higgins: My Lords, how does making things more transparent stifle competition?
Lord Sainsbury of Turville: My Lords, it is generally accepted that the basis of competition should be that consumers have a clear idea of the actual products they are buying. Transparency is therefore key to this.
The Earl of Mar and Kellie: My Lords, what can the Minister do to ensure that the principal terms of trade are printed boldly so that they can easily be understood?
Lord Sainsbury of Turville: My Lords, as I pointed out, the Consumer Credit (Disclosure of Information) Regulations 2004 set out in great detail what should be included in agreements.
Baroness O'Cathain: My Lords, I may be able to help the Minister in relation to the question asked by my noble friend about the size of print, some of which is very small. Most people take a newspaper; why cannot agreements be printed in that size print?
Lord Sainsbury of Turville: My Lords, specifying that documents have to be printed in a particular size print is probably over-regulation. After all, if print is very small, there are technical means, such as glasses and magnifying glasses, that can deal with it.
The Lord Bishop of Salisbury: My Lords, I wonder whether the Minister remembers when banks issued cards with the legend, "Access takes the waiting out of wanting"? Is he prepared to continue to justify leading some of the more vulnerable people in our society into overspending when there are means, which would not wholly reduce the unbridled competition that he so clearly desires, that could be put into effect?
Lord Sainsbury of Turville: My Lords, it is important that lenders behave responsibly when
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lending. Action has been taken to make certain that that happens. APACS is looking at ways to ensure that lenders adhere to the banking code and its best practice guidelines stop lenders lending to vulnerable people by sharing data and so on. That seems to be the way that we should deal with this issue, rather than trying to specify all the details on lending, because once one does that, one has to specify everything. If one hole is stopped up by, say, putting a cap on interest, it simply leads to action in other areas and that would not only stifle competition but would also lead to incredible bureaucracy.
Lord De Mauley: My Lords, why is it inappropriate to include in the Bill clear guidelines within which a creditor should keep so that all parties know where they stand and the creditor can be confident of not being in breach of the unfairness provisions? Further, would the Minister not agree that the amendments we moved in Committee in relation to the unfair relationship provisions would have clarified the position in situations similar to that referred to by the noble Baroness?
Lord Sainsbury of Turville: My Lords, we covered this in Committee. I hope that we made it clear that if we were to specify every kind of unfair relationship it would not be future-proof and it not would capture the next areas of unfair relationships. Therefore, a broad definition is a much better way to approach this matter.
Lord Clinton-Davis: My Lords, would my noble friend agree that a meeting between him and the relevant parties ought to be arranged as soon as possible? When I was in the Department of Trade and, later, in the Department of Trade and Industry, we frequently arranged such meetings on an informal basis. Why is that not possible now?
Lord Sainsbury of Turville: My Lords, we continue to have regular meetings on these issues. We produced a series of regulations covering these issues last year and we are now considering the Consumer Credit Bill which deals with these issues. A great deal of discussion is going on about them.
Ministerial Code
2.44 pm
Lord Jopling asked Her Majesty's Government:
Whether any action has been taken to review the Ministerial Code, in the light of the reported comments of the chairman of the Committee on Standards in Public Life that the code needs immediate review.
Lord Bassam of Brighton: My Lords, it is normal practice for the Ministerial Code to be updated and reissued after an election. A revised Ministerial Code was published in July 2005. It took account of
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comments and recommendations made by the Committee on Standards in Public Life and the Public Administration Select Committee. The Government do not see a need for a further review of the code.
Lord Jopling: My Lords, I thank the Minister for that reply. Is it not clear to everyone, including the chairman of the committee, that the code and the practice need urgently to be reviewed? When will the Government's familiar policy of dither, delay and review over a number of things end? Should we not be thinking of going further? Do the Government really think it is right that Ministers, whose behaviour causes them to resign, seem too often to go through a period of prosperous penitence and then get re-appointed to important positions in the public sector? Does the Minister agree that there would be more respect for the code and more public respect for both Parliament and politicians if the rule for Ministers who resign in these circumstances is "once out, stay out"?
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