Consumer Credit Bill

I welcome my hon. Friend’s contribution. Under the regulations that were introduced in October last year, we addressed the issue of transparency and the need to make sure that advertisements and agreements made it very clear what the interests rates were that people had to pay. However, I give her the assurance that we will continue to look at the issue. I was referring to the lack of information to people during the life of a loan and especially when they fall into arrears. At present, lenders are not obliged to provide much information to consumers during the loan term, so the Bill has proposals to create minimum standards for lenders to provide regular account information and to tell consumers when they default and when they are charged. These reforms will ensure that lenders can be prevented from continuing any bad practices and, if necessary, excluded from the market, that responsible lenders can be regulated by light-touch regulation, and that consumers can have confidence in a competitive market. Improving the standard of regulation is of no use, however, if that regulation does not do the job for which it is designed, so this brings me on to our third aim—to ensure that regulation is appropriate. Regulation must be appropriate and measured, ensuring comprehensive protection for consumers while allowing industry the flexibility to innovate. The UK has one of the most dynamic credit markets in the world but, to keep it that way, regulations must meet the needs of the market, the consumers and the industry. Making sure that consumers are protected is an important part of creating that fair and effective credit market. So the Bill provides comprehensive protection for consumers by removing the £25,000 financial limit, extending the protections of the Act to all consumer borrowing. An extensive period of consultation has highlighted concerns about the impact of regulation on business lending and high net worth consumers. The Bill therefore provides protection where it is needed by maintaining the protections for small business lending up to and including £25,000, but excluding other business lending. The Bill allows industry flexibility, with exemptions allowing high net worth borrowers to opt out of regulation. It is also important that lenders are confident that they are operating on a level playing field. Currently, many lenders are unfairly penalised for minor and insignificant technical errors to an agreement. The Bill makes the section 127 provisions on the enforceability of defective agreements more proportionate. Passing discretion to the courts will not remove consumer protection, because agreements are still unenforceable unless the court decides otherwise. However, it will increase fairness across the sector, and allow lenders to compete on the basis of best practice. The Bill empowers consumers and encourages fair standards throughout industry.