Consumer Credit Bill

Flattery will normally get you everywhere, except when it comes up against logic and reason. Clause 42 requires the OFT to publish guidance on how it proposes to exercise its powers to impose requirements. The OFT must have regard to it when exercising its powers under these provisions. The OFT has provided a note on the guidance—it has been placed in the Library—which provides an idea of the scope of the guidance, based on the clauses. Once the Bill is passed, the OFT will consult on the guidance, which will be expanded to give examples of requirements and more details of the procedure that the OFT will go through. The OFT will be able to revise the guidance based on practical experience, if new issues arise. The amendment requires that the guidance, setting out how the OFT will discharge its regulatory duties, must be approved by the Secretary of State. That undermines the independence that Parliament gave to the Office of Fair Trading under the Enterprise Act 2002. At the time that the Act was passed, Parliament concluded that the OFT should be independent of government and should exercise its functions independently of ministers. To that end, it was constituted as a non-ministerial department under the control of a chairman and a board. Such matters tend to blur with time, but I remember the noble Baroness arguing strongly that we did not want Secretaries of State intervening as regulators. That was why it would be good to have this as an independent body not subject to interference by the Secretary of State. This amendment goes against that approach. It would require the OFT to submit to Ministers its guidance on issues under this Act for their approval. This would mean that the OFT would, in effect, no longer be a regulator that was independent of Government, but would have to obtain ministerial clearance before it could publish documents which indicate how it would enforce the Consumer Credit Act and the issues that it would take into account when doing so. This would also set a dangerous precedent, where the independence bestowed on the OFT by Parliament through the Enterprise Act 2002, could be whittled away through successive pieces of legislation dealing with different subject areas. This could lead to a very piecemeal approach to enforcement by the OFT, as they had to have regard to whether they were an independent regulator under the Enterprise Act, or subject to ministerial oversight under the Consumer Credit Act, or any other subsequent piece of legislation that took account of that precedent. The only part of the Act that requires the OFT to obtain ministerial clearance is the statement of policy in relation to civil penalties. That is a special case. It allows the OFT to impose fines for breaches under the licensing regime. This goes beyond its normal role as a market regulator. The second part of the amendment permits the OFT to consult such persons as it thinks fit when preparing guidance. That part of the amendment is unnecessary because the relevant provisions of the Bill already require the OFT to consult on the guidance. I hope that this explanation will allow the noble Lord to withdraw the amendment.