Consumer Credit Bill

Well, it looks as though there will be competition for the places on the Standing Committee. Clearly, the interest rate cap will take a number of sittings to consider. I understand where my hon. Friend is coming from, but I am not convinced about the argument that interest rate caps work. Our research shows that other interest rate caps around the world do not necessarily work, but I am sure that we will have an interesting debate on that issue. I am grateful to my hon. Friends for showing interest in that matter so early in my speech, thus revealing our concern, because we all represent consumers and people who have had problems. The Bill builds on the progress that we have already made in terms of secondary legislation, initiatives for tackling over-indebtedness and pilot projects to tackle illegal money lending. We have standardised the ways that APRs are calculated, so that consumers can compare the costs of credit deals with confidence. We have ensured that proper information is given in adverts and contracts for credit products. The trading standards pilot schemes that we have introduced and funded in Birmingham and Glasgow are demonstrating new ways to get tough with loan sharks and illegal moneylenders. The Bill represents the next step towards our vision to provide protection for consumers in a fair, clear and competitive credit market. Reform of the existing legislation is long overdue. When the House passed the Consumer Credit Act 1974, only one credit card was available, on which consumers owed a total of around £32 million at today’s values. Today, overall credit card borrowing is counted in billions, not millions, of pounds. Consumers can choose from well over 1,000 competing products from a wide range of providers. We have faced some criticism for the time that it has taken to introduce the Bill, but I make no apology for taking time to get it right. We need to ensure that our changes make this complex and important market effective not just for today, but for the future, too. That is why we have consulted carefully with business, consumer groups and regulators, and their input has helped to get the Bill right. The Bill is built around three key themes: enhancing consumer rights and redress, improving the regulation of consumer credit businesses and ensuring more appropriate regulation. Our first key goal is to enhance consumer rights and redress. The current tools available to consumers to obtain redress or to solve credit disputes are, at best, limited. Where disputes arise, consumers often have no option other than court action, which can be costly and time-consuming. Moreover, the chances of people winning cases under the existing extortionate credit test are slim, and there are few effective mechanisms for those people trapped in unfair agreements or subject to unfair lending behaviour to obtain redress.