Consumer Credit Bill

My Lords, on making my maiden speech, it is a great pleasure to follow my noble friend, Lady Miller of Hendon and the right reverend Prelate. As an Anglican of the evangelical tradition, he will not be surprised that he and I take a broadly similar view of this piece of legislation. Last Thursday, along with many others, I attended St Margaret’s Church for the memorial service of my very good personal friend and former member of this House, Emily, Lady Blatch, of Hinchingbrooke. In the bidding Canon Robert Wright said that Emily Blatch rapidly came to adore the House of Lords. I empathise with that view. It is a great privilege to be elected to serve the people in the other place. In joining your Lordships’ House, I feel myself doubly privileged and doubly blessed. I thank Members of this House and the staff for the warm welcome and courtesy they have shown me in the past few weeks. It was much warmer and more embracing than the welcome that I was offered when I entered the other place in 1979. I seek only the traditional patience of your Lordships as I learn the details of the operation of the House, where there are snags aplenty for a new boy. I also thank my very old friends, my noble friends Lord Harris of Peckham and Lord King of Bridgwater for being willing to stand with me at my introduction. I commend the Government on introducing the Bill, and I thank the Minister for his careful exposition of it. It follows legislation enacted in 1974. Much has changed since then. I had access to the same information as others. Then, there was one credit card company and £30 million of debt; today, there are 1,300 credit cards and almost £50 billion of debt. As the right reverend Prelate pointed out, we also have a different view of debt today. We are less censorious. He rightly pointed out that there were down sides to that more liberal view, but it has also resulted in an improvement of life for many people. Financial markets have been liberalised and, as a consequence, choice has been extended, as we have heard and, no doubt, will hear further. That has been to the benefit of consumers, assuming always that they keep in mind the golden rule—the need to balance debt with the ability to pay that debt. The second golden rule is to remember that debt that is affordable this year may not be affordable next year. Not only has there been change since the previous legislation, the speed of change is startling. My noble friend quoted the remark made by our right honourable friend the Member for West Dorset about how we had had 600 years of banking history and eight years in which debt has doubled. That is a frightening speed of change. In June, at Second Reading in the other place, my honourable friend the Member for Wealden said:"““Research by Datamonitor reveals that consumer borrowing for each adult in the UK through credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to more than £4,000, which is an increase of . . . almost 50 per cent. since 2000””.—[Official Report, Commons, 9/6/05; col. 1417.]" The Bank of England has confirmed that household debt is rising at the rate of 15 per cent a year. The legislation is welcome in principle, not just because things have changed but because things are changing so quickly. There are four concerns that, I hope, will be addressed satisfactorily before the Bill makes its way to the statute book, as undoubtedly it will. I cannot be the only Member of your Lordships’ House who almost weekly receives through the mail unsolicited invitations to sign up for yet another credit card, each one of which has an advantage that makes that card the one that I always must have. I yield to no one in my admiration for the market place and for the freedom of the market place, but the right reverend Prelate was right: occasionally, in public interest terms, we must look at the operation of the market place. I for one would be happy to have fewer unsolicited invitations to get into debt, and I hope that the Bill will address that issue before it reaches the statute book. I am not quite sure of the procedures here, but I declare that I have one credit card. I used to have two, the second as a back-up, but at the moment I have only one. The second issue that I hope the Bill will address is the unsolicited increases in borrowing limits. No one has ever asked me whether I wanted my borrowing limit raised, but it has been raised regularly over the years. No one has ever checked whether I have the ability to repay the credit limit that the banks have so generously bestowed upon me. I hope the Bill will address that issue as well. As a former Member of Parliament, I know the destruction that can occur to individuals and families through a combination of those two events. People can, and do, get into the most enormous debt. Only the scariest stories appear in the media, but Members of Parliament can testify that they hear many equally scary stories in their surgeries and are not capable of offering the kind of help their constituents seek. The third issue I hope the Bill will address before it reaches the statute book is the necessity for much greater clarity about where financial responsibility lies when cards are fraudulently cloned. I have to declare another interest: twice in the past few years my credit card has been cloned. I pay tribute to the HSBC bank, with which I bank, that it spotted at least the first one before I spotted it. It is possible to take out insurance but there is a grey area, in my experience, between the bank assuming responsibility and the individual assuming responsibility. I hope that there will be much greater clarity on that point before the Bill reaches the statute book. Finally, I hope that, arising from this legislation, consumers will have much clearer, more jargon-free information about contracts, with greater transparency which makes it easier for consumers to understand what it is they are signing up to. I welcome the unfair relationship test but I would like more definition; I would like to know what it means. I hope we can find out what it means from the Minister during the passage of this legislation. I know from 26 years’ experience that most ordinary people do not instinctively think of going to the courts when they have a problem. Most of them are, understandably and correctly, very nervous about taking on big organisations with almost unlimited resources; many are simply financially not capable of resorting to the courts. So, for those reasons, we need new systems in place that are easier to understand, easier to work and easier to produce results, when appropriate, for consumers. In this legislation the unfair relationship test is crucial, but it needs more work. The 1974 Act took six years to achieve full implementation. It would be helpful to know at some point how long the Government think will be necessary to allow for full implementation of this Act and whether guidance will be offered towards the intermediate stages as the Act is implemented. I, too, welcome the legislation and I hope to take an interest in its passage through your Lordships’ House.