Consumer Credit Bill

moved Amendment No. 14:"After Clause 61, insert the following new clause—"    ““EXTRA-TERRITORIAL APPLICATION    In section 75 of the 1974 Act (liability of creditor for breaches by supplier) after subsection (5) insert— ““(6)   The liability of a creditor under this section shall also apply to a transaction effected after the passing of the Consumer Credit Act 2006 outside of the United Kingdom as well as to one effected within it.”””” The noble Baroness said: My Lords, I am returning to this amendment, which I withdrew in Grand Committee at the behest of the Minister, the noble Lord, Lord McKenzie of Luton. Section 75 of the 1974 Act provides that if the holder of a credit card has a claim against a supplier of goods or services paid for with that card, he has an identical claim against the credit card company, which in turn has a right of indemnity against the supplier. The objective of this provision, which has operated for over 30 years, is to give the customer additional protection against rogue traders and to take into account the far stronger position to obtain redress that the credit card company is in compared with the customer. I have no idea how many times customers have invoked the protection of this provision since the 1974 Act was passed. Mostly, I suspect, such claims have been quietly disposed of without recourse to the courts. A problem arises in the interpretation of this very straightforward provision. The credit card companies insist that it applies only to transactions taking place in the United Kingdom. The 1974 Act says no such thing. The amendment is designed to put beyond argument that the protection attaches to holders of United Kingdom credit cards no matter where a transaction takes place. Probably, financial muscle is even more necessary to a United Kingdom-based customer against some trader in a remote foreign holiday resort than in dealing with a United Kingdom trader, who may fall under the jurisdiction of the local trading standards officer. These days, many transactions with overseas suppliers are effected over the Internet with credit cards. A customer should not be involved in an esoteric argument when he presses the ““send”” button on his home computer on whether the transaction is taking place in the United Kingdom or in some foreign spot where the supplier’s computer terminal happens to be. The simple fact is that credit card companies derive considerable benefit and profit from the overseas transactions of their customers. They even derive extra profits by the manipulation of the rates at which currency conversions are made. This is not the time or place to discuss that topic. It is sufficient to say that credit card companies have ample resources to meet the comparatively few claims that are likely to arise, which is why they spend so much time and effort to persuade card holders to use their cards abroad. They place emphasis on the card being usable worldwide in a huge number of international outlets; you hear about that in their advertisements all the time. This provision would also ensure that the credit card companies will carefully investigate and ensure the integrity of the foreign suppliers on whom they bestow the cachet of being one of their accredited merchants. In reply to the debate in Grand Committee, the Minister was kind enough to say that I had raised ““an important issue””. The issue is still there. I was invited to withdraw the amendment, as there was a case before the Court of Appeal on the very subject. I regret that I do not know what has happened since last November. I suspect that nothing has happened; because I would have thought that any result would have been widely reported. However, even if the Court of Appeal has decided one way or another, I have no doubt that later, much later, your Lordships’ House will be required to give a final, definitive ruling. Customers have been waiting for more than 30 years for this issue to be settled. There is really no reason why they should be kept waiting any longer. However, there is a good reason why Parliament should not delay in resolving the confusion once and for all and right away. If it is not done now, when will it be done? It is likely that there will not be another consumer credit Bill for a generation. If we settle the problem now, it will not matter if the Court of Appeal, or even their noble and learned Lordships, come to the same conclusion. If we pass this amendment now, it will not affect or prejudice pre-existing transactions, because the legislation is not retrospective. It most certainly will not prejudice the Court of Appeal or this House, because the judges will decide the case on what the law was at the time of the transaction. I am certain that the judges are too sophisticated to think that Parliament was changing the law instead of merely clarifying it. Clarification is urgently needed, because we cannot afford to wait for the end of the present litigation. The Minister indicated in Grand Committee that in due course something might need to be done. I submit that the time has come. I very much hope that he will now accept the amendment. I beg to move.