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Lending (Regulation) Bill

I am sure that the hon. Gentleman understands that those matters are for my colleagues in the Treasury, and that Ministers who tread on the Treasury's turf do so at their peril. However, I agree with him that the matters that we are debating today are in the House's purview, and I hope that will support me and others to make progress. Let me try to deal with the specific issues that hon. Members have raised. Clause 1 deals with unsolicited credit card cheques. As my hon. Friend the Member for Dumfries and Galloway has noted, there are a number of concerns about the use of such cheques. They are usually sent to consumers unrequested, tempting them into spending that they might not be able to afford. Such cheques typically carry a fee and a higher rate of interest. There is now worrying evidence that, rather than borrowing for what is referred to in the jargon as "discretionary purposes", consumers are using such cheques for essential expenditure and to deal with cash-flow shortfalls. In the light of that evidence, the Government welcome the measures proposed by my hon. Friend. Clause 1 also refers to unsolicited limit increases. It seems clear that the ease of access associated with credit that is granted automatically offers greater scope for irresponsible borrowing than credit for which customers must actively apply. Unfortunately, some consumers will take the view that since the lender has offered a limit, it must be affordable and within their means. It is right that we should seek to protect them from that risk. However, I should make it clear to the House that we have not held the usual period of consultation on the matter. The Government would therefore seek amendments to the Bill as drafted to take powers to address the issue in secondary legislation, once consultation had occurred. That is consistent with the approach to regulation taken in the Consumer Credit Act 2006 and would allow a proper period of consultation and analysis. On charging orders, I share the concerns that a number of hon. Members have voiced in the House, and to which my hon. Friend has given expression this afternoon, that home owners may not realise that defaulting on an unsecured loan could eventually lead to the forced sale of the family home. I am therefore supportive of the principle that underpins clause 2. However, we are already able to take such a step through existing legislative powers, so primary legislation is not required. We will soon be amending many of the statutory information requirements relating to consumer credit agreements, when we implement the new European consumer credit directive. The Government will consult later in the spring on our proposals on how to transpose that directive. I propose to consult then on whether to require warnings about charging orders to be part of that exercise. In the light of that, we should like to encourage my hon. Friend to withdraw the relevant provisions, should the House grant the Bill a Second Reading. Clause 3 deals with the standard interest rate calculation methods, which my hon. Friend also talked about. He will know that the issue was raised in a super-complaint to the Office of Fair Trading which resulted in an extensive market study. In its final report in February 2008, the OFT rejected the proposal that had been made. Therefore, the issue has been considered recently and I am not aware of any new evidence that has been presented. In the light of that, the Government cannot support that provision. Measures are being taken to strengthen consumers' ability to make an effective comparison among credit cards and products, so that they can shop around with confidence.