Consumer Credit Bill

My Lords, 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 sections. This is one of two pieces of guidance that the OFT is required to publish by the Bill, the other being the guidance on fitness. The OFT will be able to revise the guidance based on practical experience, if new issues arise. However, the amendment before us requires that this guidance, setting out how the OFT will discharge its regulatory duties, must be approved by the Secretary of State. That would undermine the independence that Parliament gave to the Office of Fair Trading under the Enterprise Act 2002. One problem of being a Minister and doing the same job for seven and a half years is that these issues come round at regular intervals. When we had the great debate on the Enterprise Bill, I remember noble Lords in the Opposition saying that it was absolutely fundamental that the Office of Fair Trading should be an independent body, which was why we have the various regulations, and that the last thing that was required was the Secretary of State intervening in this. Having made the right decision, it seems extraordinary to come back to the question and to go in exactly the opposite direction, saying that it is absolutely vital that the Secretary of State should have control over the guidance. At the time that the Enterprise 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. I am sure that noble Lords will remember that we had lengthy debates on just that issue. This amendment goes against this 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 set a dangerous precedent, whereby 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 it would have to have regard to whether they were an independent regulator as set up by the Enterprise Act, or subject to ministerial oversight under the Consumer Credit Act, or any other subsequent piece of legislation that took account of this 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, as it allows the OFT to impose fines for breaches under the licensing regime. This goes beyond its normal role as a market regulator, and therefore additional safeguards have been included. Also, as I have mentioned previously, there are already safeguards regulating the way in which the OFT must act in the discharge of its statutory duties as well as the usual range of accountability measures such as NAO scrutiny, appearances before House committees and the ultimate sanction of judicial review. These will also help to ensure that there are no problems with the guidance that would necessitate formal signing off by the Secretary of State. I hope that this explanation will allow the noble Lord to withdraw the amendment.