MONEYLENDERS BILL. (Hansard, 11 July 1927)

§ LORD DARLING
My Lords, I greatly regret that it has fallen to my lot so soon again to trouble your Lordships with a Motion for the Second Reading of a Bill. This Bill is in much the same position as the Bill which your Lordships have just agreed to read a second time. It was introduced to the House last year by my noble and learned friend Lord Carson; it was read a second time in this House and sent to a Select Committee of members of this and the other House. A great deal of evidence was given to that Committee and the Bill came back to this House and was read a third time. Then the noble and learned Viscount opposite (Viscount Haldane) took objection to some provision which might have acted hardly, as he thought, upon pawnbrokers. The Bill could not be passed last year because of the adjournment of the House and this year it was introduced in the other House. It has been through all its stages there and has been read a third time. It now comes to your Lordships' House—of course in a somewhat different form. What it does now is this. It attempts to protect those who are forced to borrow money by improving the class of people who are permitted to lend it. They have to take out licences. If they misconduct themselves those licences may be endorsed and there is a prohibition against their soliciting people in many of the ways which they have been accustomed to do by sending them circulars and so on.
There is also a provision which prevents their charging, as they have been accustomed hitherto to do, compound interest 320 upon the money which they lend, and amendments are made in Clause 9 as to the rate of interest which may be charged. Your Lordships may know that at present moneylending agreements may be revised by a Judge if he comes to the conclusion that the terms of the loan are harsh and unconscionable. It has always been a matter of great difficulty for Judges to decide what were harsh and unconscionable terms. This Bill, which, as I have said, has passed the other House, now provides that if the interest exceeds 48 per cent. per annum there shall be a presumption—it is not more than a presumption—that the terms of the loan are harsh and unconscionable. The Judge may investigate them and he may decline to reopen the matter. He may come to the conclusion that in all the circumstances of the case 48 per cent. is a reasonable rate of interest. But if the rate of interest be over 48 per cent. then it is for the person who lent the money to satisfy the Judge that the transaction was not what a former Statute calls harsh and unconscionable. I think that is probably the greatest amendment of the present law which this Bill contains. I would call the attention of the noble and learned Viscount opposite (Viscount Haldane) to the fact that Clause 13 deals especially with loans made by pawnbrokers. Your Lordships no doubt will hear from him whether he is content with that or whether he would desire to move an Amendment to it should your Lordships read this Bill a second time, which I now ask you to do.

§ LORD CARSON
My Lords, as I originally introduced a Bill on this subject two years ago and again last year, which your Lordships were good enough to pass, perhaps I may be allowed to make one or two observations before the Second Reading debate in concluded. I feel very glad that the House of Commons have been able to pass this Bill, containing as it does very many valuable provisions which I think will be a great improvement of the law as regards moneylenders. I do not intend to go through them in detail, because most of them I discussed in this House and they have been considered very carefully by a Joint Committee of 321 the two Houses. I am very slow to make any criticisms of the Bill because my criticisms are more as to what is not in it rather than to what is in the Bill. I have observed the great difficulty which those in the House of Commons who had charge of the Bill had in getting it through the Committee owing to the various devices which were adopted by certain members of a Party who seemed to make an exception in protecting this class of capitalist. I am, therefore, very slow to do anything or say anything that might render the passing of this Bill into law more difficult. At the same time I am bound to draw attention to two or three of its provisions.
After a good deal of argument a clause was inserted in the previous Bill giving the Lord Chancellor power to increase the jurisdiction of the county court in relation to these claims by moneylenders. I am very sorry that that is omitted from this Bill. It is all very well to make enactments protecting the subject, or protecting the borrower in relation to moneylending transactions, but if a man who has been broken through moneylending transactions is brought before the High Court with all the expenses incidental thereto, I cannot see how he is to get the justice that this Bill pretends to mete out to him. To issue a writ in the High Court against a man who is at his last extremity (or the writ would not have been necessary), means that you are putting him in a position where he cannot assert his rights. The moneylender can ask for an order for summary judgment. If he wants to oppose the summary judgment the borrower has to employ counsel and solicitor and to engage in all the trouble and expense of an expensive action in the High Court. I think that probably is, in most cases, a negation of justice to men who are brought into this position by the particular method of these moneylenders.
So far as I am concerned, I would ask my noble friend the Lord Chancellor to consider whether it would not be well that we should restore what was Clause 3 in the Bill which was passed by this House last year, which gave an opportunity of enlarging as might be thought necessary from time to time the jurisdiction of the county courts, in which at very little expense the borrower could assert his rights. If the moneylender has the county court at his disposal, with the right to go to the King's Bench if any 322 point of law has been wrongfully decided, I think he is very well protected. I think it really is almost farcical to tell a man who has been ruined by moneylenders: "You can go and assert your position in the High Court and if necessary"—as the moneylenders could, no doubt, as regards their funds—"go on to get justice in the House of Lords." I do not think that is leaving open to a man in such circumstances the possibility of privileges which the Legislature would seem to have conferred if you pass this Bill.
There is another provision which I am very sorry has been left out. There was a provision in the Bill which passed your Lordships' House last year, respecting the rights of moneylenders in certain cases as regards public officers holding public offices or employment in certain cases which I will explain in a moment, and including officers in His Majesty's Naval, Military and Air Forces. There are a number of Acts of Parliament which provide that the pay, salary or emoluments of such persons as those cannot be assigned or taken in execution of any debt by any person suing them. The reason—it is a very plain one—is that this pay is given to public officers or to officers of His Majesty's Naval, Military or Air Forces for their sustenance, to enable them to maintain themselves in carrying out their public function and in carrying on the necessary work which is part of the office to which they are appointed. It has been thought necessary in order that they should have that money for that purpose, to protect them by saying in such cases that the pay, salary or emoluments cannot be taken in execution of any debt due.
I am sorry to say, as I said when originally proposing this Bill—I speak with some knowledge and experience—that when young naval officers in particular come into port, having had trying times at sea and no doubt wishing to have, what you would expect them to wish to have, a good time, there is a regular system of trying to get these young officers—and it has succeeded in a great many cases—into the hands of moneylenders. It is a common practice that men who are called "bookies" should procure them to enter into betting transactions—I know personally of a case at the present moment—and when they are unable to pay what naturally 323 every naval officer would want to pay as an honourable debt, they at once say: "I know a very good fellow who will lend you the money." They get the money at most exorbitant rates of interest. I am sorry to say that I believe there are a great many officers in that position. Young officers or officials who get into that position are not really able properly to discharge their public duties. They are pestered from day to day for the payment of these sums which they cannot possibly pay, and because of the fact that if proceedings in bankruptcy or proceedings by way of execution were taken against them they would lose not only their emoluments but their status as officers, the greatest possible pressure is put upon their relatives, who are told that if they do not pay up these debts then their relative must go down because proceedings will be taken against him in bankruptcy or under the Debtors Act, and, with a judgment against him, he will be unable to carry on the office he holds.
Last year your Lordships passed a clause which was numbered 11 in the Bill and read as follows:— No proceedings in bankruptcy or under the Debtors Act, 1869, shall be commenced or prosecuted in respect of money lent by a moneylender against any public officer holding a public office or employment, if the pay, salary or emolument of such person is forbidden by law to be assigned or to be taken in execution of any debt due by such person. For the purposes of this section any person in His Majesty's naval, military or air forces shall, whether on full pay or on half pay, be deemed to be a public officer holding a public office or employment, I do not want to imperil the Bill by putting down Amendments, because I realise that at this stage of the Session only the Government by giving time can enable this Bill to pass, but I would ask my noble friend the Lord Chancellor to consider seriously whether this is not a clause which might very well be inserted in the Bill with the responsibility of the Government themselves.
There is another clause which I am sorry these protectors of capitalism have determined to leave out. It is the old Clause 14, which provided that in the case of small loans within the sum of £3 no proceedings should lie at all. There is a vast amount of evidence, much of which has been quoted in former speeches in this House, that very poor 324 people borrow money at exorbitant rates of interest for week-end or short periods and then find the greatest possible pressure put upon them. They are threatened with proceedings, and often, as I have been told on very reliable information, with something worse. However, these protectors of capitalism have thought it well to strike out this protection of these poor people and of course there again I would be overweighting the Bill if I were to insist on the point. I commend these matters to the House and to the Government, and I must express my thanks to those who were in charge of the Bill in the House of Commons on having taken a great deal of trouble in examining this question in correspondence with people all over the country I believe that by the passage of this Bill they will have conferred a great benefit on the people of this country.

§ LORD DESBOROUGH
My Lords, I should like to repeat the apology of my noble friend Lord Darling for appearing so often on this occasion, but the Home Office is implicated in all these Bills and the Home Secretary made some remarks about the matter in another place. In regard to this Bill, the Government recognise the amount of time and the considerable effort that has been spent upon it, and would like to congratulate the noble and learned Lord who presided over the Select Committee and also all those gentlemen in the House of Commons who devoted so much time to the matter. The Government support the Bill in its present form, and I am glad to gather that it will be supported also from the Bench opposite. All that I need add on this occasion is that, when we come to Clause 6, the Government may possibly have to re-draft that clause, owing to certain criticisms made upon it in another place. In regard to the original Clause 13, which was withdrawn, a certain number of Amendments will be necessary in order to make the rest of the Bill read properly.

§ VISCOUNT HALDANE
My Lords, I do not rise to inflict upon the House another speech. All I wish to say is that I am glad that the Government have recognised the Bill, which I think is on the whole a good one, and that it has been a good piece of work to protect the pawnbrokers, who were hardly used under the 325 Bill as it stood and who are now safeguarded by the clause that has been inserted for their benefit. So for as I am concerned, I hope that the Bill will pass.