CHATTEL MORTGAGES (Hansard, 27 July 1965)

§ Dr. Reginald Bennett (Gosport and Fareham)

I beg to move, That leave be given to bring in a Bill to make provision for the granting of mortgages upon personnal chattels; and for purposes connected therewith I realise that after what has just been said by the Chancellor of Exchequer this may seem a remarkably bad time to suggest a new practice in the production of credit within the country. At the same time, after what has been said, it looks as if there will be more people needing it. Anyway, my proposed Bill has, and has long had substantial support on both sides of the House. I must declare an interest. It is an interest which I have had throughout the debates on hire purchase. I hope that right hon. and hon. Members will acquit me of any charge that it has swayed my judgment in any improper way.

What I seek to do is to try to make good a defect, as I see it, in the present law on credit. At present, it is possible to obtain a mortgage on what is called fixed property—house property and the like—but one cannot raise loans of money against movable goods. The only alternative is hire purchase, for which we legislated in the last Parliament, or the new and increasing practice of the unsecured loan, which seems a mere evasion, and not a very satisfactory one.

One thing which is not possible is for a purchaser to raise a loan against goods which he has newly acquired. The reason is that the present law dates from way back in the last century when, owing to harsh dealings, no doubt, the Bills of Sale Acts were passed—that of 1878 which acted to protect creditors, and that of 1882 which acted to protect debtors. Raising money at that time was seen as a way, so to speak, of pawning the furniture, and restrictions were placed upon this. It was not then foreseen that people who were credit-worthy and in possession of good incomes would be considering acquiring chattels on credit.

The limitations are also due to the Moneylenders Acts, which prevent the lending of money except under very stringent conditions. It was the rigours of these Acts which led to the introduction 243 by a private Member 30 years ago of the concept of hire purchase.

The Bill which I seek leave to introduce would, first, permit mortgages on newly-acquired chattels only, thus making it quite different from the ordinary raising of personal loans. Secondly, it would authorise the advances of money on such mortgages by persons and businesses carrying on banking, insurance or other activities such as the Board of Trade may in future regard as proper for the issuing of loans on chattel mortgage. Thirdly, it would lay down a standard form of chattel mortgage which Parliament would approve as being fair to customers. Such a form would be suggested in the Schedule to the Bill.

If such a concept as I have mentioned is acceptable, the purchaser in the future would own the chattels that he has bought. They would no longer be the property of a finance company. He would, therefore, be able to dispose of them or to deal with them as he saw fit and he would be able to retain the proceeds of sale and any benefits that he was able to get for them in place of the difficult processes of repossession and other things which obtain under hire purchase.

Furthermore, the Bill would do away with an increasingly elaborate subterfuge, which, we must admit, is a legal fiction, of hire purchase, which is now being found increasingly cumbersome, especially after the recent additions to the law on the subject. The most worthy objective of all is that the costs to all the parties, especially the purchaser, would come down. For those reasons, I beg to ask leave to introduce the Bill.