Consumer Credit Bill

My Lords, lending to someone who is already up to his or her neck in debt is one of the great mischiefs of a credit society. Some of the more extreme cases were cited not by myself, because I was unable to be present, but by the noble Baroness, Lady Howe of Idlicote, and others in Committee. I know that creditors use sophisticated computer modelling when determining how much to lend, at what interest, and so on, but they seem not to check whether repayments are affordable by looking at the borrowers’ income and      expenditure, including existing repayment commitments. On my behalf, the noble Baroness, Lady Howe, moved an amendment in Committee on the same lines as this amendment tabled by the noble Lord, Lord Razzall. It is to the effect that the OFT should include in its guidance on fitness to obtain a consumer credit licence from the OFT a requirement that in order to be fit to have such a licence, the applicant should lend responsibly. I commend this amendment to your Lordships. In Committee, the Minister said:"““The OFT can [properly] look at any evidence of irresponsible lending when assessing a lender’s fitness to hold a consumer credit licence””." He said that the Bill does not include a specific duty to act responsibly,"““as it is implicit in both the unfair relationships and fitness tests””.—[Official Report, 8/11/05; col. GC 178.]" He seemed then not to want an explicit duty to be imposed by the OFT’s guidance to the creditor to lend responsibly because there would be pressure to compile a list of what is and is not responsible lending. The Minister could and should withstand robustly any such pressure and leave it to the OFT and the Consumer Credit Appeals Tribunal on a case-by-case basis to determine the precise meaning of responsible and irresponsible lending in any particular case.