Consumer Credit Bill

The Government recognise the need for consumers to receive information about the implications of not making repayments or only making part payments on running account agreements. Those were issues raised by the Treasury Select Committee in the other place and the Government have sought to address them through Clause 7. The noble Lord’s amendment on the allocation of part payments is timely, and the Government are aware of concerns about the practice and the degree to which consumers understand that it occurs and how it applies. The Government see transparency as an important issue. That is why—in the regulations concerning the form and content of agreements—the Government have required lenders to make clear the terms of the agreement, including how payments will be allocated, and to ensure that such key information is prominent so that it is brought to the attention of debtors. The intention of Clause 7 is to ensure that debtors are made aware of the potential hazards of behaviour associated with either not making repayments or making only part payments. Clause 7(1) allows the Secretary of State to make regulations requiring additional information to be included in the statements given to debtors. The power is quite broad, and the department will consult about the form of those warnings with interested stakeholders before the Secretary of State makes any regulations. We will take into account any views that emerge during that consultation to the effect that the regulations should, as the noble Lord suggests, contain a warning concerning part payments made in circumstances where that payment will be allocated to the lowest interest-bearing part of the account. If, having considered those views and any opposing ones, the Government believe that such a warning is necessary and justified, it may be prescribed. However, I cannot commit the Government to such a course at this stage. We believe that the clause is broad enough to cover a warning of the type proposed by the noble Lord. With that in mind, I ask the noble Lord to withdraw his amendment.