INFORMATION TO BORROWERS (Hansard, 17 March 1997)

§ Mrs. Dunwoody
I beg to move, That the clause be read a Second time.
As the Minister has proceeded with great speed this afternoon, I am sure that she will happily accept new clause 4, which is straightforward. We have heard a great deal about tidying up the 1986 Act. I am asking only that we are fair to the innumerate.
The new clause requires: It shall be the duty of the Commission to prescribe in rules the information which must be provided and that In particular, and without prejudice… rules made by the Commission under that subsection shall prescribe that any notification of a change in the rate of re-payment … should include notification of any consequential change in the final date of completion". The issue arose because an extremely intelligent and sensible lady of my acquaintance had arranged to repay a 15-year mortgage with the final payment just before her retirement. She was considerably upset when she queried a particular rate change to discover that the term of the outstanding mortgage was two and a half years longer 665 than she had expected. The banking ombudsman took up her case and only then was it revealed that, because of the miscalculation by Abbey National, she had been underpaying her mortgage for more than 10 years. That would place anyone in a difficult position as it would require continuing to make repayments for a greatly extended period or doubling the repayments.
Many people would find it extremely difficult to cope with much larger repayments or an extended term. Abbey National contended that its old computer system had not alerted staff to the error. How do Abbey National customers know that the current system is working properly? Would it alert staff to a similar problem? How many others may face the same difficulty in repaying their mortgages with Abbey National or any other lending institution?
I make no apology for the fact that many borrowers are not particularly numerate. However, they are often clear about the date of the final repayment. Many of them have it engraved on their hearts. Therefore, particularly in view of the fact that all large companies will have to reprogram their computers in 2000, it would be simple to include in the information to borrowers my simple, straightforward proposals. The new clause would be of enormous use and protection to customers and it would be so simple to implement that I am sure the Government would like to do so. I am therefore very happy to give the hon. Lady the chance to accept new clause 4.

§ Mrs. Angela Knight
I have a great deal of sympathy for the case that the hon. Lady has made. However, there are three difficulties with new clause 4, so let me suggest another way of achieving its objective.
First, the new clause would require the commission to have a new statutory function to administer it. Clearly it does not have that statutory function. Secondly, the new clause applies only to building societies and banks also offer mortgages. Thirdly, even if an unfairness arose, the new clause provides no means of redress.
Shortly, the Council of Mortgage Lenders will be publishing its code of practice, which will cover such matters. In addition, it ties all lending institutions to the 666 relevant ombudsman. Therefore, should similar difficulties arise in future, I am sure that they will be covered by the code and there will be redress through the relevant ombudsman. I hope that, with that assurance, the hon. Lady will see fit to withdraw the new clause, although I respect the reason why she moved it.

§ Mrs. Dunwoody
I am grateful to the hon. Lady, but I should say that I tabled the new clause precisely because the banking ombudsman, having considered the case and discussed it, was unable to sort it out. I shall withdraw the amendment tonight, but I shall not forget it. I shall return to the issue again and again.
I am seriously disturbed by the inordinate speed at which the Bill has been rushed through the House. Experience tells me that any Bill, no matter what the subject, taken at such speed ends up having to be done again.

§ Mrs. Knight
I assure the hon. Lady that the case to which she referred was considered before the Council of Mortgage Lenders' code of practice, which has not been produced in its final form. I also assure her that I, too, will be looking carefully at these matters to ensure that unfairnesses are properly addressed in future.

§ Mrs. Dunwoody
I beg to ask leave to withdraw the motion.

§ Mrs. Angela Knight
I beg to move, That the Bill be now read the Third time.
Given the quality of debate today and on Second Reading, and given that the Bill has been published in draft form and has been the subject of extensive consultation outside the House, I believe that it would be for the convenience of the House to move its Third Reading formally.