Consumer Credit Bill

My Lords, I regret that I was unable to attend Committee and therefore have not been able to speak on the important matter of Clause 19 and amendments to it. To my mind, Clause 19 is an extremely welcome change from the unworkable clause concerning extortionate credit agreements in the 1974 Act. I think that there is common agreement in the House on that. The hurdles for the debtor to prove an extortionate credit agreement were far too high. Indeed, I notice that a notable Conservative financier—the noble Lord, Lord Griffiths of Fforestfach, who was chairman of a commission on personal debt—took the same view in the report that was published a few months ago. Clause 19 covers any term or any conduct of the creditor that is unfair to the debtor. Its intention—if we leave aside the amendments for the moment—is that it should be for the courts to consider the circumstances in any particular case and to determine whether the creditor/debtor relationship is unfair. I see the amendment as having laudable objectives to make more certain and clearer to creditors what the circumstances may be in which a creditor/debtor relationship should be treated as unfair. As the Bill stands, the meaning of ““unfair”” is, as I suppose the noble Baroness would say, as broad as it is long. It is left entirely to litigation through the courts, which is inevitably haphazard as to whether it provides useful precedents, to determine in the circumstances of any particular case whether a relationship is unfair. Consumer organisations and others have, over the years, described considerable numbers of situations in which either the terms of the agreement or the way in which the creditor behaved to the debtor were harsh and unfair and the creditor ought to have been penalised. The noble Baroness, Lady Miller of Hendon, may think that these situations can be picked out from the examples that have been produced over the years and listed in regulations as amounting to unfair conduct or behaviour. The trouble is that how harsh or unfair such terms or conduct may be often depends on the particular circumstances of the creditor and debtor concerned. Regulations could not, I submit, specify all the possible circumstances and variations that might arise. Moreover, regulations would never be up-to-date because, unfortunately, creditors—or at least the worst kind of creditors—can be amazingly imaginative in developing fresh forms of harshness and unfairness. Further, if you list types of unfairness in legislative form, a court might well jump to the conclusion that other terms and types of conduct which are arguably unfair are not unfair. The Bill, rightly in my view, wants the court to look at the creditor/debtor relationship as a whole without being biased in one way or another by a regulatory list. Flexibility is needed. I call in aid two more Conservative Peers, as they are members of the Joint Committee on Human Rights—namely, the noble Lord, Lord Bowness, and the noble Lord, Lord Campbell of Alloway. In the report published in October on this Bill, they make the point that,"““some laws are required ‘by their subject matter’ to be flexible””." They say, as members of the House of Lords and House of Commons Joint Committee on Human Rights:"““We consider that the subject matter of the present law, namely consumer protection in the context of credit agreements, is such as to require a degree of flexibility””." They go on to make two other relevant points—I apologise for summarising them, but it is all set out in the report. They say that suitable guidance is available as to the meaning of the word ““fair”” in case law interpreting the same term in other closely analogous statutory contexts, which they set out. They also make the point that creditors of all kinds who may be affected by the law can be expected to obtain their own legal advice as to which way a court might go on any particular relationship that the creditor has with a debtor. I am sorry to go on at some length but perhaps I may just mention Amendment No. 3, which is linked with this. I do not really see value in saying specifically that plain, intelligible language should be used because, if the language is not plain and intelligible, the relationship between the creditor and the debtor is likely to be unfair. But if the language is plain and intelligible, the relationship may still be unfair. Amendment No. 4 is undesirable because it is much more consistent to say that the burden should always be on the creditor to prove that the relationship alleged to be unfair is fair in all the circumstances. Incidentally—this is a small point—why does Amendment No. 3 refer to the terms being ““plain”” and ““intelligible”” and Amendment No. 4 ““clear”” and ““intelligible””? Perhaps they are meant to be the same.