DEFERRED PAYMENTS PERSONAL CREDIT SCHEMES (SCOTLAND) (Hansard, 15 July 1959)

§ Mr. George Lawson (Motherwell)
I beg to move, That leave be given to bring in a Bill to regulate the deferred payment terms by which goods and services are purchased under forms of personal credit schemes in Scotland. My proposed Bill seeks to deal particularly with one type of such scheme, the personal credit scheme as operated by Messrs. N. G. Napier Limited of Prestwick Road, Ayr, and throughout Scotland. Most people must regard Napiers as a hire-purchase firm engaged in hire-purchase sales on a very large scale. It is certain that most of the customers of Napier's are exactly those people whom it was the object of Parliament to protect in their hire-purchase agreements. It is certain, too, that they are the type of person who goes to this shop or the many other Napier shops for the purpose of buying or hiring articles on some form of deferred payment terms.
I am not able to say what proportion of Napier's business is carried on under hire-purchase terms, but it is certain that a very large part of the business, and probably a rapidly growing part of the business, is not carried on under these hire-purchase terms at all, but is carried on under a scheme which evades the Hire-Purchase Acts of 1932 and 1954 and the Advertisements (Hire-Purchase) Act, 1957. This evasion or avoidance of the Hire-Purchase Acts passed by the House is carried through by means of a scheme which the firm itself describes as a personal credit scheme or a personal credit account scheme. The firm uses the term "unique personal credit scheme".
Perhaps hon. Members will appreciate something of the nature of this scheme and the efforts being made by this firm to make the scheme attractive to the people of Scotland—because I understand that its activities are confined to Scotland—if I read an advertisement issued by the firm, which took up half-a-page of the Daily Record of 5th March this year. The advertisement was headed in very large print, "The Simple Way to Better Living". It reads: Napier's Personal Credit Account. Everything you need … For yourself, Your Family and Your Home—whenever you need it. 415 It continues: What is Personal Credit? Simply the granting of credit facilities to you personally, so enabling you to buy whatever you require without any cash outlay whatsoever. No need to touch your savings—buy what you want, repay on easy terms to suit your convenience. Anyone who cared to look at this advertisement—and there are many such advertisements issued by the firm—would see at once that it violated the terms of the Advertisements (Hire-Purchase) Act, 1957—that is, if what was being dealt with was hire purchase; but the firm will insist—and, clearly, from the behaviour of the firm in court it is enabled to insist—that in this respect it is not engaging in anything which comes within the provisions either of the Advertisements (Hire-Purchase) Act or the main Hire-Purchase Acts. It is enabled to do this because of this personal credit scheme which it operates.
I might say that it would be exceedingly difficult for any ordinary person, anyone who has not a high pass in mathematics, to discover what, in fact, he or she will finally be expected to pay for any article which he or she buys under this personal credit scheme. It operates on the basis of a charge of 2 per cent. per month at compound interest. It is maintained by Napier's that there is no hiring of goods, and that is true. It is maintained by Napier's that the goods are, in fact, sold at cash prices, and that would seem to be true.
What happens is that the customer or client, on going into Napier's and asking for the article or articles, is encouraged to enter into this scheme and is given what Napier's call a credit account. Napier's say, "Open a Bank Account". The client is enabled to draw from this credit account the amount necessary to buy the article. Thereupon, that article becomes entirely the purchaser's article. There is no question of any agreement by which that article can be returned to Napier's. It has been sold.
The obligation which has been incurred is the obligation to go on paying the 2 per cent. per month on the principal and on the interest which is added every month to the principal. This is the basis upon which Napier's are operating this scheme. The operation of this scheme is undoubtedly giving rise to very 416 great misery to many thousands of people in Scotland.
I said earlier that there was no way of contracting out of the liability incurred, not even by death. When a person dies, the liability goes to that person's estate. This applies not only to the purchaser of the article, but to the poor person who has been tricked in many cases—I say "tricked"—into becoming the guarantor of the person who purchases this article. This guarantor, too, can be liable beyond death for the obligation which he or she has incurred. Napier's on all occasions exact their full pint of blood.
Perhaps the situation can be understood if I quote from a signed article which appeared in the People on Sunday, 5th July. The article reads: At Kilmarnock an average of 40 Napier customers a fortnight have been coming before the court for defaulting on this 'better living' scheme. At Glasgow Sheriff Court, on one day alone recently, cases brought against Napier clients filled five double pages of the official records. In every case, because of the agreement that was signed, the court had no option but to give judgment for the money. This meant that Napier's could sell up the customer's home to raise the money or follow the practice allowed under Scottish law of 'arresting' a man's wages. They can demand that an employer should hand over all his earnings except 35s. a week. This is the position in Scotland. I am sure that all hon. Members will appreciate how serious it is and how important it is that we find a way of overcoming it.
The purpose of the proposed Bill is simple. It is to treat Napier on the basis on what Napier is. Napier's has escaped from the provisions of the Hire-Purchase Acts. Napier's is behaving as a moneylender. If the Bill is passed, Napier's would be brought under the terms of the Moneylenders Act, 1927. If this were done, Napier's would not be able to tout for business. It would not be able to advertise in this way. Napier's would not be able to employ canvassers who go round the doors inducing people to take on these obligations. It would have to issue a signed document stating in simple interest per annum the amount of obligation incurred. Napier's would not be permitted to charge compound interest, if it was operating under the Moneylenders Act, 1927. Napier's would not be able to charge what it calls operating costs for running the account. 417 All these things are illegal under the Moneylenders Act, 1927.
Napier's would seem to be a moneylender operating on the basis of truck shops, because that is what is happening in point of fact. If the House gives us permission to bring in the Bill, we could speedily put a stop to this kind of practice and give much merited comfort to the people of Scotland.

§ Sir Thomas Moore (Ayr)
I have no interest whatsoever in this firm, but Mr. Napier lives in my constituency and his firm operates in it. Therefore, I feel that I must, in common fairness to the firm and its proprietor, offer a few comments, at any rate, on the speech which has just been made.
By a series of dogmatic statements and charges, the hon. Member for Motherwell (Mr. Lawson) has sought to create a spirit of prejudice against the owner of this firm, the firm itself and the conditions in which it operates.

§ Mrs. Alice Cullen (Glasgow, Gorbals)
Not before time.

§ Sir T. Moore
It is unfair to ask the House to pass a Bill, or accept a Bill, without hearing the other side of the story, such as probably would be given by Mr. Napier if he were present in the House.
I therefore think that it is not right. I am not arguing against anything that the hon. Member said, but he made this series of charges which must, and I am sure can be, answered in the proper place. Further, if the Bill is really required by the House or hon. Members feel that it is necessary, let them consult the Law Officers of the Crown, who I am sure will make certain that nothing illegal is done in Scotland, either by Mr. Napier or anyone else. I therefore oppose the Bill and the grounds submitted by the hon. Member.