Consumer Credit Bill

moved Amendment No. 1:"Page 24, line 6, at end insert—" ““(2B)   For the purposes of subsection (2A)(e), the business practices which the OFT may consider to be deceitful or oppressive or otherwise unfair or improper include practices in the carrying on of a consumer credit business that appear to the OFT to involve irresponsible lending.”””” The noble Lord said: My Lords, last week I tabled an amendment to Clause 29. At the same time I wrote to those noble Lords who had participated in our debates on this issue, explaining why I had done this. In Grand Committee and on Report noble Lords expressed their concerns about irresponsible lending practices. I have considered their contributions on this issue carefully and have some sympathy for the positions they have expressed and thought hard about how we could respond. I believe that the wording of Clause 29 would allow the OFT to take account of irresponsible lending practices. We now feel, in the light of noble Lords’ contributions, that there is merit in making the ability of the OFT to do this explicit on the face of the legislation. I turn to the form of the amendment: rather than introducing a duty on lenders, the most appropriate means of addressing irresponsible lending practices is in the context of the OFT’s powers to monitor and enforce the fitness of licence holders. With this amendment, the OFT, which is best placed to monitor changing practices in a dynamic market, will be able to provide guidance to licence holders on lending practices which, on the basis of the OFT’s knowledge and experience of the market, are likely to be regarded by it as irresponsible lending practices. The OFT would do that through its fitness guidance. That approach will allow the OFT to provide business with an indication of what types of things are considered to be irresponsible lending practices. Businesses would therefore have some guidance of the types of conduct that they should avoid, while not being discouraged from seeking out new ways of addressing customer demand. This would be backed by the sanction available to the OFT of reviewing a lender’s fitness to hold a licence if the lender engages in such practices. In taking this route, the Government have been mindful of existing OFT regulatory practice. For example, the OFT has published guidance on certain kinds of irresponsible lending practices that it is likely to regard as unfair or improper, most notably in its non-status lending guidelines, which are available from the OFT website. The noble Baroness, Lady Miller, has expressed some concern to me about the ambit of the term ““lending”” and that it might not embrace some forms of lending such as hire purchase. I reassure your Lordships’ House, as I have already reassured her, that ““lending”” in this context should have its natural, ordinary meaning, in that it connotes the existence of a lender-borrower relationship, and we consider that that natural meaning would include the granting of credit in all its forms. In tabling this amendment I recognise the contribution of noble Lords on both sides of the House in seeking a clear recognition in the Bill of the importance of discouraging irresponsible lending practices. The amendment does that in a way that accommodates the desire of those noble Lords on the opposition Benches to make clear the OFT’s power to provide business with some greater indication of irresponsible lending practices that should be avoided. The amendment does not—as has been suggested in the press—increase the powers of the OFT. It simply makes it clear that the OFT, in exercising its powers, may have regard to irresponsible lending practices in determining fitness to hold a licence under the Act. The Government have listened to noble Lords’ concerns and amended the Bill. I beg to move.