§ 12.15 p.m.
§ Mr. Tim Renton
I beg to move Amendment No. 66, in page 39, line 27, leave out 'like' and insert 'joint
§ Mr. Speaker
It will be convenient to take also Amendment No. 67, in page 39, line 28, leave out 'accordingly'.
Amendment No. 68, in page 39, line 33, at end insert:
and any loss of interest under subsection (6)'.
Amendment No. 69, in page 39, line 42, leave out subsection (5) and insert:
'(5) Where under a credit-token agreement the creditor is not the supplier, the creditor shall be liable and the debtor may claim against the creditor under subsection (1) only where the debtor can show that he has attempted to obtain redress from the supplier, and a period of not less than four weeks has elapsed since that attempt was commenced.'
Amendment No. 70, in page 39, line 44, at end insert:
'(6) Where the debtor obtains judgment under this section, the debtor shall be relieved from any liability to pay interest to the creditor on the amount of that judgment as from the date the attempt to obtain redress from the supplier was commenced.'
§ Mr. Renton
In answering points made in the Standing Committee, the Under-Secretary of State said he felt it necessary to establish that credit card companies were jointly and severally liable with suppliers in cases dealt with under Clause 75. The Minister wanted to make it clear that there should not be a primary liability for the debtor to have redress on the supplier, but that the creditor 884 should stand pari passu jointly and severally liable with the supplier where people sought redress.
We have tabled those amendments to deal with the situation, but at the same time we seek to cover the situation where the debtor, the customer, may well be likely first to go back to the creditor, the bank, rather than to go first to the supplying company. We believe that this is a mistake from the point of view of the consumer as well as of the creditor. If a customer has bought goods and used his credit card to buy a deep freeze and that piece of equipment goes wrong, it is right that to gain redress he should go back to the supplying company, the deep freeze concern, which will have a technical service department available and will know the ins and outs of the deep freeze sold to the creditor. That firm should be able to deal with the complaint in a proper, technical and speedy manner. We have tabled these amendments to make certain that the first recourse of the debtor, the customer, is to the supplier rather than to the bank, the creditor.
It will be clear from the amendments, particularly No. 69, which in many ways is the most important, that the creditor is accepting liability. The wording of that amendment isthe creditor shall be liable…but, none the less, the debtor is put in the position that he should first obtain redress from the supplier; namely the company servicing the facility, the technical company. It is only after that redress has not worked that he is in the position of going back on a "jointly and severally liable" basis to the creditor.
In Committee the Minister referred to the credit card companies being in much the same position as are hire-purchase lenders, but surely they are in a different position. The hire-purchase lender often has owned the goods concerned and has good knowledge of them before he sells them to the customer. The credit card company is in a quite different position. It has never owned the goods but provides facilities purely in substitution for purchases by cash, thus enabling the card holder to acquire a large number of goods from many outlets. Against that background such companies do not know the goods, but are providing facilities for the consumer in place of cash. We hope 885 that the amendment will be helpful to the consumer and seek to put redress where it should lie—namely, with the supplying company.
Mr. Alan Williams
I am afraid I cannot give the hon. Gentleman any more helpful reply than I gave him in Committee. He made the point that credit card companies, unlike hire-purchase companies, do not own the goods. Nobody suggests they do, but nevertheless they decide which shops and traders will be allowed to make use of the credit card facility. They are, in a sense, putting the stamp of approval on certain traders. They carry a certain responsibility since they have a share in the deal so to speak.
§ Mr. Tim Renton
Does the Minister consider that objection to be feasible? Some credit companies have responsibility in relation to the shops they allow to accept their credit cards, but there is a wide chain throughout the country. We are dealing with a problem involving technical matters where a piece of electrical equipment goes wrong and where only the supplying company will know how to deal with that technical matter. We suggest by our amendments that the proper place to which the customer should have recourse for his own sake is not a bank, which simply lends the money, but the supplying company which knows the goods and has the technicians and facilities to put the goods right.
I fully appreciate the hon. Gentleman's point. Nevertheless put to him the argument, which seems to have little weight on the other side of the House nowadays, that it was his own Ministers who felt that our proposal was the appropriate way of dealing with things.
The fundamental difficulty is that the average consumer—this was discussed by the hon. Member for Gloucester (Mrs. Oppenheim) and myself, when discussing small claims courts—is nervous of legal action and does not want to get involved in difficult litigation. He is afraid of a court action. If we agree with what the hon. Gentleman is suggesting it would mean that a consumer, far from having to undertake an unwanted legal action on only one occasion, may have to do so on a number of occasions. It may be, for instance, that the trader involved has 886 gone into liquidation, or that the initial trader cannot be traced.
It is greatly to the convenience of the consumer that there should be a joint litigation. I assume, as a non-lawyer, that that is the appropriate term. This is clear when it is borne in mind that there is an indemnity under the Bill so that in the event of there being a default of the supplier the credit card company has an indemnity against that supplier. The position of the credit card company has been covered as far as we can go, but, on balancing all the problems so far as the consumer and the firm are concerned, we believe that it is right to minimise the amount of possible legal action which the consumer should have to take. The creditor is, after all, a party to the deal in which he gets a share of the profit, or a discount, as he may call it, and as such he has certain responsibility. We feel that this responsibility is fully met by the present arrangement, but the creditor then has a fall-back position of being able to get protection vis-à-vis the supplier, because the supplier will want to sustain a source of credit for his customer.
One would have thought that the credit card company was more likely to get an expeditious and a fair response from the trade than was the small consumer.
§ Mr. Tim Renton
I am not happy with the Minister's arguments. I do not think that what he says is likely to lead to a lessening of litigation. The amendments were designed to meet and went a long way towards meeting, the Minister's point about joint and several liability. But I have rehearsed the amendments previously, and in the circumstances I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.