HC Deb 15 December 1986 vol 107 cc987-98 6.16 am
Mr. Michael Cocks (Bristol, South)

If I get as fulsome a reply from the Minister as the hon. Member for Norfolk, North-West (Mr. Bellingham), I shall be extremely pleased.

I wish to draw the House's attention to the role and responsibilities of the operation of the Office of Fair Trading in relation to what are commonly known as loan sharks. They often take advantage of people who do not understand what is going on and make Shylock in the "Merchant of Venice" look like Santa Claus. Those people, who exploit others, not only charge high interest rates with an annual percentage rate sometimes over 1,000 per cent. but encourage people to roll up loans and take out further loans in order to try to meet their repayments. They are guilty of inaccurate book-keeping of the loan terms—I say inaccurate, not inadvertent—and of not keeping proper account to the borrower of repayments.

There are extremely dubious collection tactics, rought threatening approaches, threats, not only physical violence, but non-existent court orders, and breaches of the code about calling at people's homes. There is also the appropriation of benefit books in order to take the proceeds when accompanying the claimant to the local post office.

When this matter was first raised locally recently, I was approached by a number of people in the press and broadcasting about the allegations, but they are nothing new. In a July 1983 press release Sir Gordon Borrie, the Director General of Fair Trading, drew attention to moneylenders who charge excessive rates of interest, take family allowance or supplementary benefit books as security and resort to aggressive methods. Sir Gordon Borrie said: I deplore the activities of these 'loan sharks' who prey on the very people who can least afford to fall into their clutches. Then he referred to the cycle of debt into which they fall and gave some examples.

In reporting the director-general's statement, The Times announced that war had been declared on the loan sharks. I fear that it was a phoney war. It was similar to what happened between September 1939 and the spring of 1940. I do not wish to be party political, Mr. Deputy Speaker, so I shall not introduce, as an aside, the fact that had it not been for the good sense of the Scandinavian countries, at one time the Conservative Government of the day would have gone to war not only with Germany but with the Soviet Union. This war was so phoney that in 1985 the annual report of the Director General of Fair Trading contained the following paragraph: Cases involving moneylenders continue to arise. Abuses included: getting customers to sign uncompleted agreements; `re-loaning' without making borrowers fully aware of their additional obligations; failing to provide copies of agreements; improperly taking social security and child benefit books; and failing to make the rate of interest or the annual percentage rate of charge clear. That has continued, and the widespread misery that it causes surfaced recently in Bristol.

A local councillor, to whom I shall refer again, drew my attention to the problem. I pay tribute to the Bristol Evening Post, the local evening newspaper, which ran a series of articles on the problem. Reporting on 20 November, David Baxter said that I intended to ask questions in the House, that I should like detailed information from borrowers who are in the clutches of these sharks and that I should treat all information in confidence. The article stated that I had said that this would be difficult for the borrowers concerned but that they would be doing a great public service by giving me the evidence that I needed to highlight the issue.

Another outstanding article appeared in the Bristol Evening Post. That newspaper has been assiduous in pursuing the matter, but the response to the appeal for information was not good. That is a point to which I shall return later.

The councillor who first drew my attention to this problem has provided a very interesting piece of evidence. Councillor Vernon Hicks, who represents the Filwood ward in Bristol, where I live, is most assiduous; he knows the area very well and he has come across this problem. However, he says that it is extremely difficult to obtain evidence. He is particularly concerned about attempts to persuade council house tenants to take out finance to purchase their homes. I tabled several questions to various Departments, to which I received fairly bland replies. I shall weary the House with a few of them. I asked the Secretary of State for the Environment

if he will request local authorities to take steps to prevent private loan companies from operating on their housing estates to pressurise tenants into taking out loans with them to exercise their right to buy their houses; and if he will make a statement. The Under-Secretary of State for the Environment replied:

No: council tenants must be free to take their own decisions about borrowing, but they should, of course, think carefully whether they can afford to buy". That was a lemon, if I may put it that way.

I asked the Paymaster General if he will take steps to seek to protect recipients of unemployment benefit from the activities of private loan companies. The Under-Secretary of State for Employment replied:

I have received no complaints on this subject. The Secretary of State for Wales gave a fairly bland reply when I asked him if he would do anything about asking local authorities in the Principality to prevent private loan companies from operating on its housing estates. He replied: No. Council tenants with the right to buy their homes must be allowed to take their own decisions". — [Official Report, 27 October 1986; Vol. 103, c. 68–71.] That bears a remarkable identity to the question that I have just read out. So it goes on. There was no movement from the Government on those questions.

Last Sunday I called in to see Councillor Hicks, because he has been the subject of much abuse in an anonymous campaign which is being waged against him. I do not say that lightly, because the police are extremely worried about this case. Nevertheless, he has continued to do his best for the inhabitants in his ward. He has produced a leaflet which is very useful because it is the first real piece of evidence that I have. I have furnished the Minister with a copy, because it is important. The leaflet—a notice to all council house tenants—says: Have you ever considered owning the house you live in? If you have, and have not purchased it there is obviously a very good reason … lack of information, not knowing how to go about it, or simply thinking you cannot afford it. You can afford it with no cash outlay whatsoever and no obligation. Interested? For further information telephone". A telephone number in Bristol is given and there is a tear-off slip. The interesting thing about the leaflet, which I am sure the Minister will have already noticed, is that the upper part is in set-up type and is printed off, whereas the lower part has been done on a typewriter and is stencilled in. I do not think that that is the right word these days. That is a hangover from my days as a writer in the Navy many years ago. It is obviously done as a general leaflet, and then local details are added. Someone is operating on a much larger scale than in just one area. I ask the Minister to take that leaflet seriously because it was given to Councillor Hicks by a lady who lives probably about 100 yards away from my house in a road which consists of mainly council properties. She gave it to him at one of his advice centres. The lady said that it had come through her door. There had been a follow-up call by a man who asked her whether she was interested in the leaflet's proposals. She said no, but she then received a further call and was getting very anxious because she was elderly, lived alone and did not wish to be pestered over this matter.

Only this evening I received a phone call from a trading protection officer in Leicester telling me that the same thing was going on on council estates in Leicester and that people who had bought their houses were being pressured into taking out a second mortgage for various purposes. People who had bought the tenancy of the council house in which they had lived for a very long time suddenly ran into debt problems. They had a very heavy discount on the house, which of course is their right now. There are even cases of dispossession. So the sharks are getting a very cheap house and the people who were in it are adding to the council's housing problem. That is a serious problem of which we are seeing only the tip of the iceberg.

The people who are particularly preyed on by such sharks are the poorest in terms of the generally accepted standards of banks, finance houses and so on — low income groups, the unemployed, the elderly, pensioners and people who are unaware of their rights.

A report by the Policy Studies Institute issued in December 1983 on the 1980 reform of supplementary benefit found that in a sample which it took, 68 per cent. of claimants had to find money over and above their benefit, and of those in debt some 18 per cent. owed money for loans, and of that 18 per cent. three out of 10 had borrowed money from commercial lenders.

People who live at or near the poverty line have sudden and immediate needs for cash for items such as fuel, rent, food and emergencies which may arise. There is a nationwide debt problem because we are now substantially into the consumer credit era. In his 1986 report Sir Gordon Borrie referred to borrowing and the credit society. He dealt with why that situation has arisen and called for something to be done about the startling volume of consumer credit — £22 billion, leaving aside credit for house purchase. The size of the real debt rose 50 per cent. between 1981 and 1985. The average debt per household, excluding mortgage debt, exceeded £1,000 for the first time in 1984.

I shall not weary the House with too much detail, but Sir Gordon Borrie went on to call for more debt counselling, and that is a point that I hope to pursue later. It is extremely easy to obtain credit and, unfortunately, the people who fall into the hands of the sharks are not well versed in their rights. A particularly sad thing, which should be considered by the electricity boards, is that their high-pressure salesmanship — I do not know whether that is a sexist word these days, but I am too old to change my ways — for appliances and their offer to put the repayments on the bill sometimes leads families to the point at which they cannot meet their electricity bill because of the payments for appliances, not the amount of current used. Therefore, such people find their supply cut off in the extreme, and that is a most unsatisfactory situation when, if it were simply a matter of current used, they might well be able to meet the bill.

In trying to find out about the extent of the problem I put down a further set of questions and was referred to the Office of Fair Trading, quite reasonably, by the Government. I asked how many money-lending licence applications had been issued and received in the current year, and other such questions. Some of the replies were interesting. Since 1974 some 70,000 licences have been issued.

The definition of who is a fit person under the Consumer Credit Act 1984 is perhaps a bit sloppy. There does not seem to be any real follow-up or investigation except in the case of specific complaints. What astonished me was this part of a reply from the Office of Fair Trading, a copy of which was sent to the Minister. It says: Category A licences (permitting the holder to lend money for the purposes of consumer credit) are held by a wide variety of companies including banks, finance houses, pawnbrokers and retailers, as well as moneylenders. The way in which records are kept here does not make it possible to distinguish between these types of business". It is astonishing that the Office of Fair Trading cannot distinguish between licences given to banks, finance houses, moneylenders and pawnbrokers. One wonders what state of organisation there is in the department. The letter goes on: nor is it possible to break down licensees as between different geographical areas. It goes on to say how many licences were issued from 1 January to 21 November 1986. The numbers supplied are not relevant to what I am saying. However, of 4,265 applications received, 3,949 licences were issued. I went on to ask about numbers suspended during the current year and how many were in the Bristol district council area. There were 70,000 extant category A licences, and of those six were revoked in the whole of the United Kingdom. In Bristol one was revoked. One licence was suspended in the whole of the United Kingdom and three applications were refused. In both of those categories there were no cases in Bristol.

I asked how many licences were issued under the Consumer Credit Act 1984, and I was told: The number of Category A licences issued so far is over 70,000, but according to the Office's 'guesstimate', up to one third of all licences are no longer in use. In other words, it is not even known whether 23,000 licences are still validly in use. that is not satisfactory. In a written question I asked the Minister if he will review the law controlling the activities of private loan companies; and if he will make a statement. The Minister is courteous enough to be here this morning. In reply to that question, he said: The Consumer Credit Act 1974 provides both important safeguards for consumers who enter into credit agreements, and a system of licensing of loan companies, credit grantors, and credit brokers administered by the Director General of Fair Trading. Other laws provide additional protection in this area, particularly against harassment of debtors. I believe that existing legislation provides a comprehensive framework of protection for consumers but if the hon. Member is aware of undesirable practices not covered by existing legal controls I should be willing to consider whether further action is desirable."—[Official Report, 27 October 1986; Vol. 103, c. 59.] I appreciate his offer in the latter part of that answer, but I am trying to draw to the attention of the House the fact that undesirable practices are going on—practices that are supposed to be outlawed by existing legislation. It is in the implementation of that legislation that we come to the nub of the problem.

The person who approached me did so on the behalf of the Institute of Trading Standards and Administration. Mr. Babbs, from Leicester, rang me and said that one of the problems was that in July 1986 the Office of Fair Trading asked for an extension of the licence expiry time to 15 years. I shall not elaborate on this point, because my right hon. Friend the Member for Swansea, West (Mr. Williams) was intimately concerned in the passing of this legislation and I am sure that he would like to say something about it.

People in society who are least able to defend themselves, who are most susceptible to smooth talk and have most difficulty in reading small print, if even the small print exists, need more protection than is available. I suggest that a far more thorough clean-up is needed of the issuing of licences and, even more so, the follow-up of licences. A better debt counselling service is needed. The Minister will be aware that some towns are beginning to employ debt counsellors. There was even a meeting of the Money Advice Association in Sheffield in July 1986 which made that point. There is already one in Birmingham and a young lady in Bristol is doing very valuable work, but the service needs to be extended.

Sir Gordon Borrie's suggestion of a far greater education campaign should be taken up. Alternative sources should be considered for people on low incomes who need to borrow money to get over a period of temporary embarrassment and who have no proper security to offer such as would be demanded by a building society or a large bank. I ask the Government to consider this matter seriously. I believe in a mixed economy, but I also believe that there is a responsibility on us to try to provide some sort of safety net for people who are likely to fall into this difficulty. It is a nightmare that can bedevil a family for years, as the Minister will know from some of the examples provided by the Director General of Fair Trading. I ask the Minister to consider the plight of those people who fall into the clutches of these sharks.

Whilst I would not expect a solution tonight, the Minister may take heed of what I have said and come back with some proposals for trying to tighten up the mesh so that much better protection can be afforded to those members of our society who are least able to cope.

6.42 am
Mr. Alan Williams (Swansea, West)

I am grateful, as I think the House will be, to my right hon. Friend the Member for Bristol, South (Mr. Cocks) for raising this debate. It was thought by hon. Members on both sides of the House that action had been taken to eliminate this problem in the early 1970s. I was in one of those interesting situations where, having shadowed the Consumer Credit Bill while in Opposition, it then fell at election, and I had an opportunity to take it on again in Government and modify it in certain respects and then take it through. In that sense, at that stage in the 1970s there was a genuine consensus that the emergence of loan sharks had created enormous political and public concern, so much so that it was an incredibly complex Bill having 120 clauses, 23 schedules, and a language of its own. A special language training course was needed before going on the Committee stage of the Bill. Nevertheless, that was an indication of the complexity of a system that we were trying to deal with.

I suppose that it was inevitable that the Act would gradually be eroded by those who have an interest in getting round the provisions that were there to protect the consumer. As my right hon. Friend said, we live in a consumer society that is fuelled by the credit economy. The two go hand in hand. The growth of the Western consumer economy owes more to credit than to almost any other stimulus. I do not suggest that the use of credit is undesirable, but I believe that we need proper controls over the way in which credit is offered and marketed.

The sad fact is that what might have taken a long time —the erosion of some of the provisions of the Act—has been stimulated by the tragic circumstances of far too many people in recent years as their jobs have disappeared. I must say — I do not mean this in a political sense, although it will be seen in that way — that it is astonishing that, when the loan shark problem is emerging, the DHSS has decided to stop the special grants which, as we all know from constituency cases, have been necessary to many families. That has ensured that many people will be driven back, or many more people will be driven, into the hands of the loan sharks.

My right hon. Friend has done us a great service by researching the background so deeply. It is astonishing that the quality of information available to the Office of Fair Trading is so unrefined. I spoke to Sir Gordon Borrie about this issue several years ago. Despite modern computer and information techniques, we are told, as we have been by my right hon. Friend, that the Office of Fair Trading is incapable of sub-categorising sources of consumer credit. If my right hon. Friend is misleading the House, he is basing it on answers that he received. If it is true, it is astonishing and disturbing. Similarly, the same is true of the geographic breakdown. It would be useful to have available those pieces of information. With modern methods, it would not be especially expensive to have the information available if the basic system has been made available to the Office of Fair Trading.

Of course, one must make the point that the Office of Fair Trading is starved of staff and that it has been subject to cuts which have meant that the licensing system had to be delayed and also, as my right hon. Friend has said, the licences have had to be extended to reduce the work load.

It is similarly disturbing that one third of licences are currently not in use. It must be a function of the same manpower starvation at the Office of Fair Trading that it cannot give us an accurate figure and, furthermore, that there is no follow-up to try to revoke the licences that have lapsed in practice. In the long run, that would improve the quality of control. Secondly, it is fatuous to have as many as one third of 70,000 licences non-operational but still potentially live. The information is disturbing and it should be more than disturbing to Ministers, because it is three years since the director-general issued the press notice to which my right hon. Friend referred.

Under the Fair Trading Act, the Office of Fair Trading was given a special role in terms of collating information rather then dealing with it in individual cases. The individual cases must be dealth with at local level. The role of the Office of Fair Trading is that of the collator of information at the national level, recommending changes to the Government. There seems, however, to have been little initiative, and we are dealing with some of the most rapacious of whose who lurk at the edge of criminality. We are talking of whose who are breaking the law. They are not conforming to consumer credit legislation and they are able to get away with that because as they are feeding the needs of the most needy groups in our society they are parasitically leeching on those who have least motivation to shop the guilty parties. That is because they know that they may need to go back to them for further loans. These people get into incredibly complex messes with the rolling up of loans and evidence is hard to come by, as I accept readily.

It is three years, however, since Sir Gordon Borne issued his warning, when he announced that action was needed and would be taken. I have great regard for Sir Gordon, whom I consider to be a sincere and genuine man who wants to do a good job at the Office of Fair Trading, and in general has done so. It must be said that it has a wide-ranging remit, but it seems incredible that with all the enforcement facilities that are at our disposal—they are inevitably over-stretched — we have not been able to come forward with more firm evidence against the practitioners.

My right hon. Friend was kind enough to pass me a copy of the advertisement which circulated in Bristol. It would be way outside anything acceptable under consumer credit legislation. The mere proposition of no cash outlay whatsoever is a singularly dubious advertisement to be offering in the context of the law as it stands. I have little doubt that if the enforcement authorities follow up the advertisement they will find a rather intricate mesh rather than a clear identification of the person who is responsible for the advertisement. I shall be intrigued to know what happens if the authorities try to pursue that person right along the line, or those who were responsible. It would be interesting to know what has been done to follow it up. Thanks to the local newspaper at Bristol and the publicity that it, my right hon. Friend and his councillor colleague have been able to give, the police seem to be trying to take action. However, as was indicated in the response from Leicester, that which is happening in Bristol is not an unusual phenomenon. I think that we must recognise that that which is happening in Bristol is happening also in every community throughout the country.

There need be no party conflict here or difference. None of us wants to see people milched and destroyed in the way that the loan sharks destroy their victims. An indication of the difficulties is that even a newspaper offering the advantages of anonymity and wanting only to collect information has not even had information from a telephone tip-off.

Mr. Michael Cocks

Even as late as last Saturday the Bristol Evening Post made a further appeal and mentioned that a debate would take place in the House. It asked for individuals to come forward anonymously, but that appeal has not produced anything, because those involved are too afraid to break silence.

Mr. Williams

Another worrying but interesting spinoff is that fear is backed by dependence. The councillor, far from being praised for his activities, has found himself being threatened. Those who are trapped on 1,000 per cent. interest know that they may desperately need immediate cash in future and that the source may no longer be open to them.

Most of these people do not have telephones—we are talking about the most needy in the community—and the arrival in the letterbox of the electricity and gas bills can cause a moment of panic. We all know how unhappy we can be when we receive these bills. One has only to imagine what it is like if one lies at the edge of penury and these enormous bills drop through the letterbox, particularly after cold winters, when many people accumulate bills the scale of which they do not appreciate at the time.

We must ask the Government, as my right hon. Friend the Member for Bristol, South has done, what they intend to do about the matter. Opposition Members will give all possible support to positive action. Three years on, and three years after the warning from OFT, it is fair to say that the Government should have some response at this time. It is good to hear that local authorities are to set up debt counsellors, and so on. That is highly desirable. One is forced—this comment is slightly political—to observe that the Conservative party abolished the consumer advice centres. The Labour Government established a network of them. They were abolished before the hon. and learned Gentleman's involvement in this field. The right hon. Member for Gloucester (Mrs. Oppenheim) was the arch-villain in their abolition. The Government tried to starve the citizens advice bureaux of cash. There was a major war between the national CABs and the Government, before the Government eventually capitulated.

Far from showing a sense of urgency in trying to do something to alleviate the problem, the Government have exacerbated it. Their policies and their starvation of the control system, OFT, and of the enforcement system have led to a greater social need for this sort of immediate loan facility. As I am sure that enforcement officers have told the training standards officers and my right hon. Friend, they also have been under incredible pressure in the past few years.

The people of Bristol, like the people in many parts of the country, will want from the Government not just a recognition that a problem exists but some sign that they are aware of the scale, severity and urgency of the problem, and that they will bring forward proposals to try to eliminate from our society the scourge of loan sharks.

6.58 am
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Michael Howard)

With the leave of the House, I shall reply to the debate. I join the right hon. Member for Swansea, West (Mr. Williams) in congratulating the right hon. Member for Bristol, South (Mr. Cocks) on securing this debate. The subject raised by the right hon. Member for Bristol, South is an important one. I share his concern and the concern that has been expressed by the right hon. Member for Swansea, West, from the Opposition Front Bench about the plight of those who fall victim to loan sharks. I entirely endorse his condemnation of the practices that he described. Obviously, many of these practices go well beyond the bounds of legitimate commercial activity and, franky, are criminal.

Successive Governments have recognised the scope for abuse of consumers in the area of moneylending and the need to adopt special measures to protect some of the most vulnerable members of society in this area. The Moneylenders Act 1900 represented the first attempt to deal with this problem. It provided for the registration of moneylenders and empowered the courts to reopen harsh and unconscionable moneylending transactions. The Moneylenders Act 1927 went further and substituted a system of annual licensing for registration and imposed severe restrictions on methods by which a moneylender could seek business.

These provisions, a licensing system for moneylenders and control over extortionate credit bargains, are among the main elements in the system of control provided by the Consumer Credit Act 1974, with which the right hon. Member for Swansea, West was so closely associated, which replaced the Moneylenders Acts and, of course, went far beyond them in introducing, for the first time, a comprehensive framework of law governing consumer credit lending as a whole. A number of provisions of the Consumer Credit Act are relevant to moneylending, and I believe that, together with other provisions of the criminal law, they provide the necessary powers to deal with the abuses that have been catalogued by the right hon. Member.

The linchpin of the Consumer Credit Act system of control is the licensing system operated by the Director General of Fair Trading. All moneylenders, except those dealing in very small sums, are required to be licensed. In deciding whether to grant a licence, the director general has to have regard to an applicant's fitness and will take into account all relevant circumstances, including past convictions for fraud, dishonesty or violence, contravention of the provisions of the Consumer Credit Act, or related enactments, racial or sexual discrimination or deceitful or oppressive business practices. If an application appears to raise problems under any of those headings, the director general may refuse to grant an application for a licence. Similarly, where a licence has been granted, if the director general becomes aware of conduct by a licensee which he considers casts doubts on his fitness he may, after investigation, revoke the licence. Some 800 licences have been refused or revoked since the licensing system came into operation. I appreciate that that may not sound a great number when set against the total number of around 200,000 consumer credit licences, but, of course, the main value of the licensing system is as a deterrent. The threat of licensing action undoubtedly helps to maintain standards in the industry and the existence of a licensing procedure is likely to deter some unfit individuals from seeking to enter the consumer credit business at all.

It has been suggested by the right hon. Member for Bristol, South that some of the traders whose activities he is concerned about are operating without a licence. Trading while unlicensed is a criminal offence punishable by imprisonment. Agreements entered into by an unlicensed trader are also, in general, unenforceable.

In addition to its licensing provisions, the Consumer Credit Act provides other important protection for the customers of moneylenders and other creditors. Like the old Moneylenders Acts, the Consumer Credit Act contains controls over extortionate credit. If a court finds a credit bargain extortionate, it may reopen the agreement so as to do justice between the parties. In deciding whether a credit agreement is extortionate, the court will consider whether it requires the debtor to make payments that are grossly exorbitant or otherwise grossly contravenes ordinary principles of fair dealing. Of course, everything depends on the facts of the individual case, but I have little doubt that some of the cases to which the right hon. Gentleman has referred could be regarded as extortionate.

The extortionate credit provisions of the Act protect the consumer who has already entered into a credit agreement, but the Act also provides important protection for those entering into credit agreements. Under the Act and its regulations, written agreement must be in a prescribed form, embodying all the terms and conditions in a clear and easily legible form, together with a notice of the rights and duties of both debtor and creditor. The agreement must also contain a prominent warning to the borrower not to sign unless he wishes to be bound by its terms. In addition, both credit agreements and advertisements for credit must contain prescribed information, including the true cost of the credit on offer.

Finally, the Consumer Credit Act contains strict controls over doorstep selling of credit. It is recognised that the consumer may be particularly vulnerable when subject to high-pressure selling techniques in his or her own home. It is an offence under the Act to canvass debtor-creditor agreements or, in everyday language, cash loans, off trade premises. Traders may solicit the entry of an individual into such an agreement only when a written request has been made on a previous occasion. In those cases the consumer also has the benefit of a cooling-off period during which he or she may change his or her mind and cancel the credit agreement without penalty.

In addition to those specific provisions of the Consumer Credit Act, there are many other provisions of the criminal law, which may be relevant in the circumstances described by the right hon. Gentleman, particularly where physical violence or the threat of such violence is involved. Under the Administration of Justice Act 1970, certain forms of harassment of debtors by creditors are unlawful. They would include demands for payment that are calculated to subject the debtor to alarm or distress.

I am sorry to have catalogued the provisions of the Consumer Credit Act at such length, but it is important to demonstrate that there are, indeed, extensive legal controls governing moneylending, and in particular the licensing system administered by the Office of Fair Trading. The right hon. Gentleman has voiced his suspicion that many of the traders to whom he has referred are, in fact, unlicensed. Unlicensed lending is, as I have said, a criminal offence punishable by imprisonment, and I can only urge the right hon. Gentleman to pass on any information relating to trading without a licence to the local trading standards department, which will be prepared to take action when there is sufficient evidence to do so. When moneylenders are under licence, the Office of Fair Trading will be ready to take action if there is evidence that they are indulging in improper or illegitimate business practices.

I do not underestimate the difficulties, to which the right hon. Members for Bistol, South and for Swansea, West referred, in obtaining the information from the people who suffer from these practices so that cirumstances can be drawn to the attention of the trading standards officers or the Office of Fair Trading in appropriate cases. Clearly, it is not easy. Clearly, many of the people who suffer are very reluctant to come forward, but, with the best will in the world, it is notable that neither right hon. Gentleman came forward with specific proposals on how that problem might be tackled. It is perhaps a sign of the imperfect world in which we live that no system, however admirable, can in practice solve all the problems with which it is intended to deal, if people do not come forward with the information that would enable those who are entrusted with responsibility for enforcing these matters to take appropriate action.

Mr. Michael Cocks

The hon. and learned Gentleman is urging us to draw to the Director General's attention the activities of unlicensed lenders in our areas. But the letter of 5 December 1986 from his Department, of which he has a copy and from which I quoted a passage about not distinguishing between banks, finance houses and so on, continues: The way in which records are kept here does not make it possible … to break down licences as between different geeographical areas. How are we even to start deciding which of these people lending money in, say, Bristol, Swansea or Kingswood are licensed if the Director General cannot even tell what is the geographical spread?

Mr. Howard

With respect, the fact that information is not available on a break-down basis between different categories of lenders and between different geographical areas does not mean that it is impossible to determine whether a particular individual or concern is licensed. It is possible to determine that and that is the basis upon which proper enforcement acton can be taken. I agree that it would be desirable—although for rather different reasons — to have information about the categories of licencees as to which business category, geographical area, and so on they come within. That information will become available when the computerisation programme, which is under way in the Office of Fair Trading, is complete. It will have advantages. It is possible at the moment to identify whether a particular individual or firm which is engaged in the practice of money lending is licensed under the Act. If he is not licensed, the trading standards officers are empowered to take action.

Mr. Williams

I am grateful to the hon. and learned Gentleman for reminding me in some detail of how good a piece of legislation I put through the House in 1974. My recollection is not as favourable. Because the Act and the powers are there, three other matters are raised — the control system, the enforcement system and the evidence. We have all recognised the difficulty in obtaining evidence, but does not the hon. and learned Gentleman recognise that the starving of the control and the enforcement system has meant that the machinery does not have the time and opportunity to devote to the collection of that evidence that might otherwise be available?

Mr. Howard

No. That would be a justifiable criticism if there were in existence a number of examples where people had come forward with complaints and evidence that had not been properly investigated and properly used as the basis for enforcement proceedings. The difficulty about which the right hon. Member for Bristol, South was eloquent and accurate, is that even when a newspaper gives an offer of anonymity to people who are the victims of these practices, they do not come forward. I regret that every bit as much as the right hon. Gentleman, but until people can be persuaded to come forward no system of law can be administered. If we are to move forward in this area, people will have to be encouraged to make their complaints and bring forward the evidence so that the excellent system of law for which the right hon. Member for Swansea, West bears so much responsibility and can take so much credit can be put into action.

The mere existence of legal controls does not guarantee protection for the consumer. The law has to be enforced. I know that local trading standards departments and, where appropriate, the Office of Fair Trading will be very willing to take action against the kind of abuses described by the right hon. Member for Bristol, South, but they can do so only when there is hard evidence. Such evidence is not always easy to come by and we have exchanged remarks across the House about the difficulty of obtaining that evidence. All that I can do—I am happy to do so from the Dispatch Box—is to encourage people to come forward with the information that will enable action to be taken.

I have no doubt that this debate will be widely reported in the Bristol area. I hope that the reports will encourage those for whom the right hon. Member for Bristol, South is rightly so concerned to bring forward the evidence. I assure the House that any evidence brought forward will be acted upon by the responsible authorities with all due urgency.