Consumer Credit Bill

My right hon. Friend is right. Something needs to be done through education, especially for our young people. The hon. Member for North Norfolk (Norman Lamb), who spoke for the Liberal Democrats, mentioned his 17-year-old son. I have two daughters who are slightly older and it makes me somewhat anxious to hear them talking about their credit cards. I avoid asking questions in case I do not get the answer that I want to hear. It is all about being careful. Despite the Government’s valiant efforts to make our society more inclusive, some people still find it difficult even to open a bank account. Their financial circumstances are such that the banks do not want to know. Sometimes, perhaps because of where they live, there is no credit union. I applaud colleagues’ comments about the value of credit unions in many communities. Many people who fall into the category of being unable to join a credit union or have a bank account never seem to have much of a problem with securing debt. Contributions in the Chamber this afternoon make that abundantly clear. All too often, those people get into the hands of loan sharks or companies that have no conscience about a consumer’s becoming seriously indebted. In the past financial year, Dumfries and Galloway citizens advice services dealt with 905 clients with debts that totalled just over £11 million. In April alone, they dealt with 42 new clients with debts that totalled £401,430. They are currently dealing with 461 cases with debts that total just under £5.5 million. To some right hon. and hon. Members, those sums might seem very small in the grand scheme of things, but in reality, they are becoming increasingly worrying in an area that suffers badly from a low-wage economy. I want to put on record my thanks to Dumfries and Galloway citizens advice service and the local welfare rights staff who work so diligently to assist my constituents with their financial problems. The Government’s White Paper highlighted the fact that escalating consumer debt can be traced back to the lack of ongoing information on credit agreements being provided by lenders. This is of particular concern to consumers who fall into arrears, as they are often unaware of the consequent charges on their account, such as default costs for missed payments, compound interest being charged on the amount owed, or underpayment on the accumulation of their debt. These are specific problems. We have heard this afternoon about interest rates, but sometimes they are not the problem. Sometimes the problem is the default payments that have to be made, and many consumers tend to bury their heads in the sand in such circumstances. Although the Consumer Credit Act 1974 places some duties on the lender to provide information, they apply only when the consumer makes a request for it. I am delighted that the new Bill will require the lender to provide annual statements at no cost to the borrower, and that those statements will have to provide specific information to help the borrower. The aim will be to ensure that the borrower is kept fully informed of the status of their account throughout the entire life of the agreement. I also welcome clause 6, which requires businesses to issue annual statements for all regulated fixed-sum credit agreements with a term of more than 12 months. This debate has thrown up some important issues that have not been dealt with by the Bill. We have heard demands for interest rate capping, and the issue of unsolicited credit card cheques has also been raised. Changes relating to APR calculations were introduced in October 2004—I compliment my hon. Friend the Minister on the part that he played in their introduction—but there are still big questions to be answered on that issue. Responsible lending is important, and we must be critical of those lenders who exploit consumers, but, as my right hon. Friend the Member for Leeds, West said, we must also consider the issue of education, because responsible lending goes hand in hand with responsible borrowing. This is about the exploitation of the poor, but the whole issue of irresponsibility regrettably involves wider society as well, and if left unchecked it can attack communities and neighbourhoods of all different social backgrounds. I applaud the Minister for bringing this Bill back so quickly, and I echo the plea that we should not only place it on the statute book but ensure that it is implemented as soon as possible.