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Financial Services Bill

My Lords, I support my noble friend Lord Marlesford, whose concerns I share, but I have a few comments of expansion and anxiety. This is a huge problem. There is a big correlation, which I think that we have missed, between these amendments and the amendments tabled by the noble Lord, Lord Whitty. The credit card companies have been deliberate in where they have applied the highest interest and where they have found the most profitable areas to manage. People were using one credit card to draw down cash to pay off their liability on another card. Therefore, the companies introduced a penal rate of interest on the cash drawdown value of their cards. A simple means of controlling this to prevent it from getting worse would be to introduce legislation to stop credit cards being used as a cash drawdown facility, which is where the toxic element begins to take off seriously. My second concern relates to the due diligence that my noble friend Lord Marlesford mentioned. One point that is missed is that the companies often do not bother to do due diligence because they have done a tie-in deal with a body such as the Royal Society for the Protection of Birds. If you happen to be what I believe is called a twitcher, you get a credit card. I cannot see what being a twitcher possibly does to your credit rating to make you desirable to a credit card company. These things should be stopped. The tie-in is where the toxic element grows. The noble Lord, Lord Oakeshott, is entirely right about the toxic element. I end with a big warning. There is a huge risk that, in seeking a cure and trying to clear up the credit card system, we bring about a catastrophe that would go right to the core of the banking system and create a new mega-disaster for the banks, because they are the owners and backers of these cards. Incidentally, I have it on pretty good authority that the portion that was securitised was limited to those who had failed to pay even the minimum payment for three months in a row, so perhaps 10p in the pound was a very generous offer.