§ 4.11 p.m.
§ Order of the Day for the Second Reading read.
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DRUMALBYN)
My Lords, in moving the Second Reading of this Bill, I wonder whether your Lordships will forgive a personal reference. I find myself in an unusual position. This is the first occasion on which I have addressed your Lordships, otherwise than in reply to Questions. It is the second maiden speech I have made in this Chamber, for eighteen years ago I made a maiden speech here when this place was "another place". I am sure I am not the first to have made two maiden speeches from these Benches, but I doubt whether anyone else has done so in quite the same circumstances. The last time I made a speech on hire-purchase I was advising another place on behalf of Her Majesty's Government not to accept a Hire-Purchase Bill introduced by a private Member there, because we were then awaiting the report of the Committee set up in 1959 under Mr. J. T. Molony, Q.C., to review the whole field of consumer protection, including hire-purchase. I said then that there would be no undue delay in introducing legislation. The Final Report of the Committee was published in July, 1962, as Cmnd. 1781. To-day I am venturing on behalf of Her Majesty's Government to commend to your Lordships a Bill giving effect substantially to the Committee's recommendations on hire-purchase, which the Government have accepted subject to a few minor amendments and omissions.
1137 The Committee made recommendations over a very wide field. They also suggested an order of priority. They gave first place to the appointment of a Consumers' Council—which has already been set up under the Chairmanship of the noble Baroness, Lady Elliot of Harwood. As a close second they put reform of hire-purchase legislation. For the future there still remain the other changes which the Committee recommended—revision of the merchandise marks legislation, of the law on the sale of goods, and so on.
My Lords, the Hire-Purchase (No. 2) Bill deals with a subject which is of considerable importance in our economy and of direct concern to a great many ordinary people. The magnitude of hire-purchase and other credit-instalment business is demonstrated by the fact that at the end of September the total of instalments outstanding amounted to £934 million. Of this, the largest item, which accounted for £449 million, was private and commercial motor vehicles and caravans. Household goods came next, at £380 million; this category includes both furniture and household appliances like washing machines and refrigerators. And new business is being done all the time; the amount of new credit extended in the twelve months up to September was £785 million. Thus, in this Bill not only are we dealing with transactions which add up to very large totals, but where we lay down requirements affecting new agreements, those requirements will at once affect large amounts.
The basic Hire-Purchase Act in England and Wales is the one passed in 1938 and associated in the minds of many of your Lordships with the name of Ellen Wilkinson. It was amended in 1954, but remains in essence as it was passed. When it came into force, it effected a major social reform; in particular, it dealt with the worst abuses of the "snatch-back", particularly in relation to furniture and other household goods. Over the past 25 years the 1938 Act has proved its value; but experience has also suggested ways in which it could be improved and further areas of trade to which it could well be applied.
Turning to the Bill before your Lordships, may by way of preface, refer to the Explanatory Memorandum, which is perhaps almost long enough itself to 1138 require an explanation? We felt it important with a major Bill of this kind, linked closely as it is with a previous Act, to try to explain how the various provisions of the Bill would change the present position. Yet, despite the fullness of the Explanatory Memorandum, I hope that your Lordships will feel that some additional explanation will not be superfluous. I am afraid that it is bound to be lengthy if I am to deal with the salient points as your Lordships would wish.
The Bill is in five Parts. Part I amends the hire-purchase legislation already in force in England and Wales in two ways: it applies the existing provisions to a wider range of transactions; and it adds further provisions. The first major change (introduced by Clause 1) is to raise the monetary limit for hire-purchase and credit-sale transactions subject to the Act. Since 1954 the Act has applied to agreements under which the hire-purchase price, or in the case of a credit-sale agreement, the total purchase price, did not exceed £300; for agreements relating to livestock there was a separate limit of £1,000. The Bill raises the limit to £2,000 in all cases. Although the relevant provision in the Bill is short, in many ways this is the most substantial chance that it makes, and your Lordships will expect me to say something about it.
The Molony Committee recommended that all consumer hire-purchase transactions should be brought within the scope of the Acts. They themselves considered raising the monetary limit, but they rejected that as likely to produce anomalies; for example, they foresaw that the addition of accessories to a car might just put the transaction over the limit and so outside the Act. In paragraph 469 of their Report, they proposed a definition of "consumer sale", and later they suggested that their definition could be adapted for the purposes of the Hire-Purchase Act. We have found ourselves unable to agree with this recommendation. We believe that the first essential, when a transaction is being negotiated, is that all concerned shall know whether it is, or is not, covered by the Act. The approach adopted by the Molony Committee would not have been satisfactory from that point of view, since it turned on the intention of 1139 the hirer: that is whether he intended to use the goods solely for commercial purposes. Certainly neither the dealer nor the finance houses could know what the hirer's intentions were; indeed, the hirer himself might not know.
By putting the limit at £2,000 the Bill takes in practically all motor vehicles subject to hire-purchase agreements; which is what the Molony Committee were aiming to do. There is no exact limit in terms of the cash price. The limit refers to the hire-purchase price, which depends on the amount of the hire-purchase charges, and those in turn depend both on the amount of any deposit or trade-in and on the period over which the instalments are spread. As a rough guide, where a deposit of 20 per cent. is being made and instalments are being spread over three years, cars with a cash price of rather more than £1,600 will still fall within the limit of £2,000 for the hire-purchase price.
This is, of course, a most important extension of the scope of the Act, and I think it is worth while quoting a few words from paragraph 550 of the Molony Committee Report to show that, having inquired thoroughly into the whole matter, they came strongly to the view that that is what should be done. They said this:We consider a substantial extension of the Act to be necessary because we think it wrong that the bulk of consumer hire-purchase in terms of money should be uncovered by legal safeguards in the many respects we have referred to. Motor cars are no longer a luxury and caravans are sometimes a home. Hire-purchase is the only way that many consumers can afford to acquire such possessions. Indeed for a great number of people, unversed in business, the acquisition of a motor car will provide their only experience of hire-purchase. The transaction is too heavily loaded in favour of the owner unless the law intervenes protectively. This was recognised by the Act of 1938. We find it unsound and unacceptable that so high a proportion of consumer trade should now fall outside the ambit of the Act.It is true that raising the monetary limit will have the effect that commercial and industrial hire-purchase transactions within it will also be subject to the Acts. The Molony Committee were not directly concerned with such transactions. They thought that no harm would be done by the inclusion of such transactions up to a limit of, say, £1,000, which was the limit the Committee 1140 considered. We think that no harm will be done with the limit set at £2,000. We have no reason to believe that any practical problems will arise from including commercial transactions up to that figure.
In our judgment £2,000 is a monetary limit satisfactory for the foreseeable future. But, as the Molony Committee observed, it is the habit of monetary limits to get out of date. We have therefore included in the Bill a power to make further increases by Order in Council, subject to approval by both Houses of Parliament.
The raising of the limit would make the safeguards contained in the Hire-Purchase Act apply much more widely. What are these safeguards? First, there is the restriction on repossession of the goods by the owner if the hirer falls behind with his instalments. Once the hirer has paid in depositt or trade-in, if any, and in instalments more than one-third of the hire-purchase price, the owner cannot repossess the goods except under a court order. When considering an application for repossession, the court may take one of several courses. Depending on its assessment of the facts and prospects, the court can make an order for repossession of all the goods; or it can make such an order, suspended on conditions as to payments to be made by the hirer, which in effect allows the hirer longer to pay; or it can make an order under which part of the goods are to be repossessed by the owner and part are to become the property of the hirer.
The second basic safeguard of the 1938 Act is that if the hirer wishes to terminate the agreement and return the goods, he may do so provided he makes up what he has already paid to half the hire-purchase price, or pays all the instalments due to date if they amount to more than half the hire-purchase price. The effect of this provision is that both parties know or can readily establish from the terms of the agreement what the hirer's maximum liability is at any time during the life of the agreement. This is a simple and workable provision. As the Molony Committee said of it,in the vast majority of instances justice will be done".An alternative had been proposed to them—the so-called "true measure of damages" clause, which was included in 1141 the Bill introduced in another place. The Molony Committee considered it but preferred the simpler restriction in the existing Act which I have just described. In paragraph 548 of their Report they wrote this:In theory a more equitable result would be achieved by restricting the owner's right of recovery to the hire-purchase price less money received from the hirer and the value of the goods retaken or returned. Such a provision would inevitably lead to disputes as to whether the true value had been obtained on realisation, with subsidiary issues as to the necessity to spend money on repairs, etc.Having dealt at some length with Clause 1 of the Bill, I hope that I may now pass more quickly over some of the other changes.
§ LORD LUCAS OF CHILWORTH
My Lords, I do not know whether a Minister in a maiden speech presenting a Bill to your Lordships' House is immune from being interrogated about it. From nods of assent from other noble Lords I see that I may ask a question. Before the noble Lord leaves this point—and I am following his argument very closely—would he please explain for what reason there is inserted in the first part of this Bill, which, as the noble Lord says, is the important part, a provision that if a hire-purchase agreement for goods up to the value of £2,000 is signed in premises other than business premises the purchaser or the hirer of the goods has a right of four days in which he can repudiate his agreement, whereas if he signs a hire-purchase agreement at business premises the agreement sticks? In other words, if I buy a £2,000 car at a showroom, one part of this Bill says that I cannot get out of the agreement, and another part, Clause 3, says that if I sign it in ray house I have four days to get out of it. Why is there this distinction?
§ LORD DRUMALBYN
My Lords, I was coming to that point. I have dealt so far only with the most important clause, Clause 1, and not with Part 1. I was hoping to come to Clause 3 in a moment.
The Molony Committee were concerned about the problem of the man who commits himself to a hire-purchase agreement without realising that he is doing so or without realising what his obligations would be. Sometimes, they said, he was deceived or misled; sometimes 1142 he misled himself; sometimes he did not read or did not understand the document to which he put his signature. What the Molony Committee felt, however, was that action should be taken on the most fundamental point—the case where a consumer fails to appreciate that the document he is signing is a hire-purchase agreement. (For example, he may be told by the salesman that the document is no more than a receipt for goods to be supplied on approval.) They suggested that there should be a requirement that the hirer's signature to an agreement should be in a special place, a "box", in which would be clearly printed words to the effect that the hirer realises that, by his signature, he is offering to commit himself to a hire-purchase transaction. Clause 2 of the Bill gives effect to this recommendation. It empowers the Board of Trade to prescribe by regulation what the precise wording shall be and how the necessary prominence shall be achieved.
Clauses 3 to 7 provide the consumer with an opportunity to reflect and to change his mind if he has put his signature to the form of agreement anywhere other than at trade premises—that is, anywhere except at premises where goods of the type in question are normally sold or exposed for sale. This is something new. It is aimed at an evil which has been the subject of much complaint and about which the Molony Committee were much concerned—namely, the salesman who goes from door to door, exercises pressure on customers in their own homes and induces them to sign binding agreements. In many cases the complaint is that the salesman goes round during the day, catches the housewife on her own, and gets her to sign up before she has a chance to talk the matter over with her husband. But these are not the only cases: there are also cases where both husband and wife have been present but the sales pressure exerted on them has been excessive. Such transactions may result in the customer committing himself to more than he can afford. Sometimes, moreover, the article is something that he does not really want and would not himself have thought of acquiring.
The Molony Committee's solution was a 72-hour "cooling-off period". The Bill gives effect to this recommendation, but 1143 for practical reasons makes the period a little longer—it is the Molony Committee's three days, plus the balance of the day on which the hirer receives the statutory copy of the agreement. To ensure that the hirer then realises that he has the right to cancel the agreement, a statement of his right must appear prominently on the agreement. And to reduce the risk of trickery, the copy of the agreement must be sent to him through the post, not delivered by hand.
My Lords, I think there will be no objection in principle to these proposals. The activities of unscrupulous salesmen have caused unhappiness in many families, and I am sure that everyone will welcome a measure to check this. As the Molony Committee said in paragraph 521 of their report:It is not in the true interest of any party (save the disreputable) that hirers should undertake obligations which they cannot reasonably discharge.Some may feel that, in order to deal with what must be, comparatively speaking, a small proportion of salesmen, the Bill interferes with the business of a far larger number of traders against whom there is no complaint. I am sure that nobody wants to suggest that all salesmen who go round visiting customers in their homes are rogues. On the contrary, most of them are honest traders—indeed, this is an old-established and often welcome way of buying goods on credit, especially clothing and household goods, and one which is widely practised. The Bill is not aimed at that trade. The fact is that the slick salesman has done great harm to the image of that trade as a whole. Anything which curbs his activities will improve that image and benefit the trade as a whole. There is no intention whatever of disparaging or discriminating against the legitimate credit trader. In practice, I think these provisions would effect his trade much less than he fears. In particular, so tar as credit-sales are concerned, the "cooling-off" provision will apply only where the total purchase price exceeds £20, so that a great part of the traditional transactions—for example, credit-sales of clothes and blankets—will not be subject to it.
The credit traders take some pride in the personal connections between their salesmen and their regular customers; 1144 this mutual confidence should in practice ensure that the housewife will be buying only what she wants, so she will have no wish to change her mind. In cases of uncertainty it will of course be open to the trader to delay delivery of the goods, until the "cooling-off period" has elapsed. The Molony Committee recommended that failure to comply with the requirements about the "cooling-off period" should be a criminal offence. In our view, the major sanction—that is, that the agreement will not then be enforceable—is on its own sufficient and there is no need for a criminal sanction to reinforce it. I know that respectable credit traders were particularly uneasy at the prospect of a criminal sanction which applied solely in respect of their trade, and I hope that its omission from the Bill will help them to accept the "cooling-off period" as the desirable social safeguard that it is.
It has been suggested that these provisions should go wider and cover all transactions; and I think that is what the noble Lord, Lord Lucas of Chilworth, was suggesting. After all, there are glib salesmen in shops as well as on doorsteps. This is a question of proportion. To apply the "cooling-off period" generally would mean interfering with an enormous number of commercial tranactions and would result in many delays. The evil of door-to-door high-pressure salesmanship is a distinct and a particularly serious matter; the "cooling-off period" is a safeguard particularly designed to deal with it. The more general question, whether the customer should always have a right to change his mind, arises whether the transaction is on credit or for cash, and it is in the general context, I submit, of the sale of goods that it ought rather to be considered; and that is one of the points in the Molony Committee's Report that will have to be dealt with later.
Clause 8 deems the dealer to be the agent of the owner or seller as respects representations he makes concerning the goods. This clause deals with an unsatisfactory situation which can at present arise because of the nature of a hire-purchase transaction. The Law Reform Committee drew attention to it in their 10th Report (Cmnd. 1782). Because the hirer's contractual relationship is with the finance company, he may at present 1145 find himself powerless if the article turns out not to be as good as he expected from what the salesman told him that it would be. This applies particularly to second-hand cars. We believe that this change could benefit hire-purchase business considerably. It should cause some finance houses to be more careful than they have been in the past about the dealers from whom they accept business.
My Lords, I pass on to Clause 12. At present, it is common for finance houses to include in hire-purchase agreements a provision under which the agreement terminates if the hirer dies. By no means all enforce this provision; indeed, if there is someone prepared to go on with the payments, most finance houses will come to an arrangement with him. But, as things stand, they can terminate the agreement and recover the goods, even at a very late stage in the agreement, when the hirer had almost completed paying the instalments at the time of his death. This clause, following the recommendation of the Molony Committee, makes void any provision in a hire-purchase agreement terminating the agreement if the hirer dies. Clause 13 deals with situations in which Clause 12 is not enough to deal with those left behind.
May I refer briefly also to Clauses 14 and 15? The courts at present, as I have mentioned, have various courses open to them when the owner applies to repossess the goods because the hirer has defaulted on his payments. These clauses supplement the existing provisions and permit of certain remedies which we feel, in fairness to the owner, should be possible but may not be possible under the law as it stands—in particular, to recover by court order the balance of the hire-purchase price where the hirer has failed to comply with a previous court order to return the goods to the owner.
Before I leave Part I of the Bill, there are two general points to be made. First, it has been suggested that the increased number of agreements now brought within the Act will mean an increase in the number of cases before the county courts and that the hearing of these will be delayed. My noble and learned friend the Lord Chancellor has considered this aspect and is satisfied that congestion and delay in the courts are 1146 not likely. One factor which those who are worried on this score may not fully have taken into account is that only a very small proportion of the hire-purchase cases which come before the courts are defended. Generally speaking, undefended cases are taken before registrars, and the average interval at present between the issue and hearing of summonses is about five weeks. Defended cases are normally taken before judges, and the average interval is one week more.
Secondly—and this is a much more general point—there is the suggestion that, in amending the Hire-Purchase Act, we are tinkering with something which is basically unsatisfactory, and that what is required is an entirely fresh approach. Such legislation, it is said, should deal with the facts of buying and selling where the customer has not got ready cash on a realistic basis and in the light of modern conditions. Of course there is something in this suggestion. My right honourable friend has already indicated in another place that the Board of Trade are studying these deeper problems and would welcome the views of the bodies concerned. But the question is not simple. It is not just a matter, as I have seen suggested, of amending a few obsolete Acts. The hire-purchase laws provide a code of protection for the consumers. In devising a different system we must secure a comparable and proper balance between the different interests concerned in a transaction. Meanwhile, there is this great volume of business being done on hire-purchase and credit-sale terms.
The Molony Committee have shown how the Act can be improved. We are not prepared to delay in making these improvements. What is more, even if new systems are introduced, hire-purchase will remain. I should like to quote to your Lordships what the Molony Committee said in paragraph 568 of their Report:Our leading comment on the deeper criticism of hire-purchase law and the proposals for a fundamental recasting of the legal character of the transaction is that we are not interested in law reform merely for the sake of reform. If we felt that the existing legal structure was incapable of supporting consumer interests to the necessary degree we should have to probe more deeply into its theoretical deficiencies.I leave the matter there, and I turn now to Part II of the Bill, which deals with 1147 the amendment of the law in Scotland relating to hire-purchase and credit-sales.
At present, there is a separate Scottish code. The Hire Purchase and Small Debt (Scotland) Act, 1932, was a pioneering venture; it dealt with certain evils which had already arisen at that time. By 1938, when the Hire-Purchase Act was passed for England and Wales longer experience had made it possible to draw up a more comprehensive code of protection for the consumer. The Molony Committee recommended that, so far as possible, the same code should apply throughout Great Britain, including the minimum payment of one-half of the hire-purchase price, and this is what the Bill proposes. We accept that recommendation. It is logical, therefore, to frame our reforms on the basis of the law on hire-purchase and credit-sale in England and Wales, which is more detailed and comprehensive and confers on the courts extensive powers.
The effect of the Bill will be to apply in Scotland the 1938 Act as modified by Part I of this Bill. The differences which will remain arise solely from differences in Scottish legal terminology and practice. For all hire-purchase customers in Scotland this is a great advance, for the new safeguards and benefits they will enjoy far outweigh the loss of the one advantage they had over the customer on the other side of the Border—namely, the minimum amount which the hirer must pay if he wishes to terminate the agreement. In England and Wales it is one-half of the hire-purchase price; in Scotland it is one-third of the hire-purchase price. Under the Bill it will be one-half throughout Great Britain.
I am conscious that, having spoken at some length about Part I of the Bill, I may have appeared to pass too quickly over this sweeping change of the law in Scotland, the importance of which I naturally appreciate, if I may venture to say so, as much as any of your Lordships. The truth is that everything I have said so far applies no less to Scotland than to other parts of this island. In recognition of the far-reaching nature of the changes for Scotland we have set out in full in the Second Schedule the provisions of the principal Act as 1148 they will apply in Scotland, as amended by this Bill but not including the new provisions contained in this Bill. I trust this will help Scotsmen in Parliament and outside it to understand how the adoption of the 1938 Act would affect them.
Next, my Lords, I turn to Part III of the Bill. This again breaks new ground. It deals with a situation which is at present all too common and in which real hardship is caused to possessors of motor cars. A man is offered a car and pays for it. Later he finds out that the car was the subject of a hire-purchase agreement. Legally the car belongs to the finance house, and our unfortunate man has no right to it. The finance house can take it away. Often they will let him keep it if he pays them whatever balance was outstanding under the hire-purchase agreement; but that may be small comfort to him, since the outstanding balance may be substantial, and he has already paid once. His only remedy is to find the person from whom he got the car and try to get the money back. In practice, even when the man can be found, he rarely has the money to pay.
The Bill proposes a system designed to hamper fraudulent disposals of this kind. Under this system, to be operated under Regulations to be made by the Minister of Transport, a man who is acquiring a car under a hire-purchase agreement will be issued by the finance house with a licensing card, which he will use when he renews the road fund licence. It will be the duty of the finance house to retain the car's registration book. So, when the scheme is in full operation, anyone who is offered a car by a man who cannot produce a registration book will have fair warning that the car is probably subject to a hire-purchase agreement.
There is a further safeguard for the consumer. If the finance house fail in their duty and allow the hirer to have the registration book, then the buyer will have a good title to the car, and it will be for the finance house to go after the rogue to get their money back, and not, as at present, for the innocent, if gullible, person who thought he had bought the car. We considered other schemes, but we came to the conclusion that this scheme would afford a valuable measure 1149 of protection without causing a disproportionate amount of expense and paper work, though something of this kind is unavoidable.
One alternative which we considered and rejected was that each car should have a document of title, a kind of birth certificate, which would go with it and be passed from owner to owner from the time when the car is born in the factory to the time when it is buried in the scrapyard. To be workable in practice, this scheme would have to be backed by a national register of all cars and their current owners; otherwise impossible situations would arise when documents of title were lost, as from time to time they would be. We found that the cost in time and money would be quite disproportionate and the risk of fraud considerable.
Meantime, in the interval before the proposed scheme becomes fully effective, the would-be purchaser of a car is not without safeguard. The hire-purchase trade themselves maintain a register of cars in respect of which there are hire-purchase commitments. They believe that more than 99 per cent. of the agreements made are entered in this register. It is used by the finance houses and the motor trade to guard themselves against paying out money for cars on which hire-purchase commitments are outstanding. But any member of the public who is thinking of buying a particular car can also find out whether it is on the register. He can do so by inquiring through a citizens' advice bureau or through one of the motoring organisations. I cannot impress too strongly on anyone who is buying a car that, unless he is quite sure, he should make use of this safeguard even if it means he cannot have the car for a day or two.
I turn now to Part IV of the Bill which introduces two changes into the Advertisements (Hire Purchase) Act, 1957. That Act provides that, when an advertisement says that particular goods are available on hire-purchase or credit-sale terms and quotes some of the terms—for example, the amount of the deposit or the amount of one instalment—it must give all the relevant terms, so that the consumer can tell how much more he is going to pay by having the goods on hire-purchase terms than he would if he paid in cash.
1150 The first change which the Bill introduces is this. As the Act stands, the advertisements must show the cash price, the amount of any deposit and the amount and number of instalments. The consumer can thus work out what it is going to cost him to get the goods on hire-purchase terms. Clause 27 requires the advertiser to do the sum for him, by including in the advertisement, as well as the information already required, the hire-purchase price. This is a change which was recommended by the Molony Committee. The second change concerns the case where one of these advertisements represents the hire-purchase charges as a rate of interest. In paragraph 565 of their Report the Molony Committee drew attention to a number of ways in which this could be done so as to mislead the consumer. This Bill, through Clause 28 and Schedule 3, requires that if a rate of interest is shown, it shall be calculated in such a way that it avoids all these deceptions. We have included a formula by which traders can readily calculate the rate which they are permitted to advertise. I myself have tried it out, and, although I do not profess to understand how it is arrived at, it seems to give quite a good result. Part V of the Bill contains supplementary provisions with which I need not trouble your Lordships at this stage. The date of coming into force is January 1, 1965.
My Lords, this brings me to the end of my exposition of the Bill, and almost to the end of what I have to say. I would add this. This Bill is first and foremost a measure of consumer protection. The safeguards it introduces are ones which practical experience and careful examination by the Molony Committee have shown to be needed. This is not a Bill directed against any section of honest traders. Indeed, some of the things which will become obligatory when the Bill is in force are already practised by some, at least, of those who let goods on hire-purchase or sell them on credit-sale. It merely seeks to maintain a proper balance between the various parties involved in a hire-purchase or credit-sale transaction. It is true that the Bill brings large new areas of trade, particularly in motor vehicles, within the Act. But the provisions of the Bill must be looked at as a whole. We believe they will lead 1151 prudent finance houses to look more carefully at the business they accept: this includes the credit-worthiness of the hirer and the probity of the dealer.
If one result of the Bill is to stop finance from being available for transactions of the kind in which a man who cannot afford the money acquires a car through a dealer who conceals from him that it is not much of a car anyway, I, for one, shall be glad. This sort of change should reduce and not increase the number of cases in which finance houses lose money. Further, it should improve the public image of the hire-purchase business, to the benefit of all concerned—the customer and the trader, including the finance houses. I therefore ask your Lordships to welcome the Bill, and I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Lord Drumalbyn.)
§ 4.53 p.m.
§ LORD PEDDIE
My Lords, I should like first to express my congratulations to the noble Lord, Lord Drumalbyn, on his maiden speech in this House—although it seems presumptuous on my part to be congratulating him on the making of a speech. I find that I can extend congratulations with great sincerity, as I am in a great measure of agreement with the comments he has made on this Bill.
Twenty-five years have elapsed since the Hire-Purchase Act, 1938 was passed. Since that time there has been an enormous growth in hire-purchase and credit-sales. The noble Lord has given an indication of the extent of the hire-purchase debts, which I believe he quoted as £934 million. Over that same period there has been a great change in the field of operation of hire-purchase companies because of the great change in the social structure of society. I find it incredible that over that period of time there has been no major reassessment of the system of credit-trading in this country. I recognise that hire-purchase is important to the economy of this nation, as well as to the consumer, and I recognise that a knowledge of the abuses which exist must not cloud our recognition of the importance of hire-purchase. I am certain that there are many industries, 1152 particularly those dealing with durable goods and cars, which have found in hire-purchase a means of stimulating mass demand and of reducing their unit costs of production.
All this is quite true, but abuses there have been over the years; and abuses there still are. The records of the courts and of the social organisations, and the files of newspapers, give tragic evidence of the misery and distress born out of consumers' ignorance and the rapacity of less scrupulous hire-purchase companies. All this because of the inadequacy of reasonable legal protection. This Bill goes quite a long way towards correcting those abuses and enlarging the area of protection afforded by the 1938 Act and, therefore, can be welcomed. The Bill covers the two main features of my own Bill which I presented to the House a few days ago, and therefore it is my intention to seek the permission of the House to withdraw it.
It has been said that there is more joy in Heaven over the one sinner that repenteth than over the ninety and nine just persons who need no repentance. I can assure noble Lords opposite that the joy will be not unalloyed on earth, because the sinner was well aware of the swift inevitable punishment if repentance was delayed. This Bill does not provide the completely comprehensive approach to hire-purchase which was promised eleven months ago. A year ago my own Bill was defeated, and the argument used against it was the need for comprehensive legislation and the unsuitability of a money limit. Those arguments have been discarded by the Government. As far back as 1961 in another place Mr. Tom Williams had a Bill on hire-purchase rejected—a Bill which would have dealt with certain abuses, as did mine. Since that period nothing has been done. In the interim, serious abuses have been tolerated and protection withheld.
I have already said that I welcome the Bill, but I wonder at the mystery enshrouding the Government's attitude towards hire-purchase reform. Despite constant pressure, recommendations from Molony and a flood of evidence demanding reform, despite protestations that the Government have a deep interest in consumer protection, there was not 1153 a line about this question in the Queen's Speech. Because of that, my own Bill was re-presented. There was then a panic haste to present a Bill. I present my apologies to the legal draftsmen who burned the midnight oil, but I deplore the manner in which the Government have handled this matter. Twelve months ago there was a specific promise of detailed discussion with all the interests involved. Yet the speech of the Minister in another place, as well as the speech of the Minister this afternoon in this House, confirms that this has still to be done.
I support, as I am sure most noble Lords will, the extension of the area of application of the 1938 Act and the lifting of the financial limit to include a far greater range of hire-purchase transactions. In the past, as the noble Lord has stated, arguments have been deployed against a money limit. It is true that Molony rejected all money limits to the application of hire-purchase legislation as being arbitrary and liable to get out of date. This may be true; but "no limit" carries its problem of defining a consumer sale. The noble Lord opposite did not pay great attention to that point, but it is important. Even with a precise definition there would be excluded from protection those small business men and farmers who take up hire-purchase. The present Bill, I am glad to see, overcomes the difficulty of a money limit by providing for extension, as required, by an Order in Council approved by both Houses. But I would point out that, having accepted that principle, it would be logical to give the same power to vary the lower limit for credit-sales agreements which are now lifted from £5 to £20. That change is justified in consequence of the change in money values. If that be so, surely the same methods should be employed to bring about a variation in the amount when circumstances demand it.
The noble Lord opposite dealt with the problems that arise from the increase in the upper limit to £2,000, and made reference to the question of county courts. I, too, would underline the problem that exists in that direction. I must say, quite frankly, that I could not quite understand the reasoning behind the explanation of what was likely to happen. To-day, actions arising from hire-purchase are dealt with in the county 1154 courts, if the amount involved does not exceed £500, and I agree that the lifting from £300 to £2,000 will mean that many cases cannot come before the county courts and must be dealt with in the higher courts, with consequential delay and expense. I understand that the county court cases involving hire-purchase were 57,000 in 1962, as compared with 18,000 in 1951. Is it the intention of the Government to do something with regard to increasing the limit which determines the cases that could go before a county court?
I appreciate, my Lords, that many hire-purchase companies will not welcome the lift from £300 to £2,000, because this will involve the majority of transactions in cars. They will argue, as has been argued in the past, that their security is prejudiced under the operation of the 1938 Act, which states, as the noble Lord opposite indicated, that if one-third of the hire-purchase price is paid the owner cannot repossess except by court order, and the hirer is given the right to terminate his agreement by paying one-half of the purchase price. But in reply to an argument of that kind which is advanced by the hire-purchase companies, it is as well to remember that the majority of motorcycles are under £300 and presumably come within the 1938 Act, and it is difficult to believe that the purchaser of a motor car is less mature and responsible than the average buyer of a motorcycle. The Joint Committee of the Automobile Association and the R.A.C.—which, incidentally, supported my Bill twelve months ago—have stressed the need for urgency in extending the 1938 Act to cover hire-purchase of motor cars.
I know that there will be no shortage of advocates of the finance companies' view, that if higher-priced cars are to be put under the protection of Hire-Purchase Acts it will place a premium on customers defaulting. As the noble Lord, Lord Drumalbyn, mentioned, finance houses have suggested as an alternative what they call a "true measure of damage formula" in which if a customer terminated an agreement he would owe the hire-purchase company the difference between the value of the car as it then stood and the total hire-purchase price. I am sure that this point will be debated at Committee 1155 stage. There is also the argument which is advanced, and will be advanced with increasing force, so far as hire-purchase companies are concerned, that in the case of cars repossession without a court order should be permitted up to two-thirds instead of one-third. I would say to your Lordships that there is absolutely no justification for depriving the hirer of protection of the courts for so long a period.
On December 2, 1963, the Secretary of the Finance Houses Association stated thatto improve their security finance houses will need to be even more careful about their selection of customers".Why not? It is in the best interests of all that they should. The finance houses argue that the raising of the limit will mean increased charges to all users of hire-purchase. But is interesting to read the comment in a recent issue of the Economist—which was not unfavourable to the case of the finance companies—which says:The hire-purchase industry has on occasions in the past been a singularly bad judge of what is good for it, and the public it served.The Joint Committee of the Automobile Association and the R.A.C., to which I referred, confirmed a few months ago the point of view of the Molony Committee which completely rejected the anticipations of finance companies that the removal or the lifting of the limit would lead to higher prices and a harsher policy on the part of finance companies as regards repossession. In fact, they believed thatthe more likely outcome was that finance houses would be more careful in accepting business and more insistent on a higher deposit as an assurance of good faith and full performance of the hirer.It will be said that the present right to repossess exerts a discipline on the less credit-worthy customer, but I would suggest that it also invites hire-purchase companies to be indiscriminate in the offer of hire-purchase facilities without due regard to financial status. I believe that it would be of advantage to all if hire-purchase companies were forced to be more selective in the granting of credit. Indeed, if there is any question of the balance of consideration, that balance should be weighted in favour of the consumer, 1156 because in the long run such would be in the national interest.
On the question of credit-worthiness, it is as well to remember that finance houses already have under their control very highly organised facilities for checking the credit-worthiness of prospective customers. Perhaps the real fear is that the competitive scramble for motor business restricts proper care in selection. Indeed—I am sure this House will agree—most of the evils spring from over-eagerness to lend to those who cannot afford to borrow. In the jungle of competition there are many finance houses to-day which pay motor dealers commission for hire-purchase business. The stronger the competition, the higher the commission, and the higher the final price the customer has to pay. I think dealers should be made to be content with the profit on the car they sell, rather than seek commission upon the hire-purchase they transfer to another company. I believe the real argument in connection with this is that greater selectivity will ultimately mean lower costs, in the best interests of the consumer as well as the finance house itself.
I am not aware of the exact figure of the average loss on turnover of hire-purchase companies, but I am informed that it amounts to an average of 2 per cent. per annum since 1958. It is interesting to note that one co-operative society in England with a turnover of £1½ million in hire-purchase reports that for the last four years there was an average loss of less than one-tenth of 1 per cent. on turnover; and, incidentally, they gave better terms than many of these hire-purchase organisations. Indeed, not one of those societies has the iniquitous clause that on the death of a hirer an agreement is terminated, regardless of what has been paid by the customer. I was glad to see that this practice goes in Clause 13.
Only a matter of a few days ago I received a copy of an agreement from a person in Sidcup whom I do not know. In small print on the back, which I can hardly read, it says:Without Any Previous Notice or demand being given by the Owners, who shall be entitled to immediate possession of the Vehicle upon the happening of any of the following events:(a) Upon the death of the Hirer.1157 This man suddenly realised that he had almost completed the payments but in the event of his death his wife would not get the car. It would be immediately snatched by the hire-purchase company.
I welcome the applicability of this Bill to Scotland, because—I agree with the noble Lord opposite—there is good reason for the uniformity of hire-purchase legislation throughout Britain. But I would point out that there is a considerable difference, as we all know, between the legal system in Scotland and that in the rest of Britain. The consequential adoption of the 1938 Act as amended by the new Bill will involve very drastic changes in Scotland, and Scottish traders and consumers will need to familiarise themselves with these changes. I sincerely hope that the Board of Trade will be far more helpful in issuing explanatory booklets on this new legislation than they have been with regard to some legislation in the past.
I welcome indeed Clauses 3 to 7, which provide a hirer with the right to cancel hire-purchase transactions where an agreement has been signed at a place other than trade premises. I need not enlarge upon that: I have spoken on it before. This, I think, deals with the greatest evil of all. This "cooling off" period, as the noble Lord opposite indicated, will inflict no hardship at all on the legitimate trader, but will give a measure of protection to the consumer and, I hope, eliminate many of the bad practices that exist in that regard. But I would make this reference to one particular difficulty upon which I would seek enlightenment. Clause 5(1)(a) states that a notice of cancellationshall be deemed to be served on the owner or seller if it is contained in a letter sent by post …".But how will evidence on this point be produced unless the sender of the letter produces evidence of posting? It may be better if the letter were sent by recorded post, but I appreciate that the absence of the need for a recorded letter may possibly be in the interests of the consumer. I should like some enlightenment as to how this will be interpreted. If the consumer merely says, "I posted a letter", and the hire-purchase man says, "I never received it", what happens in that particular case?
I welcome also—and I am sure every Member of this House does—Clause 8, 1158 which quite rightly provides that a dealer is considered to be the agent of the hire-purchase company. This is commendable, for it gives protection to the consumer, the customer, who purchases goods from a dealer and then frequently finds that he has entered into an obligation with some hire-purchase organisation. The trader can then shed his responsibility for the goods, and if they turn out to be defective the hirer can sue the trader only if he has been fraudulent. I also welcome the attempt to deal with the advertising of H.P. terms. The charge is often made that some hire-purchase companies deceive the public by quoting a rate lower than that actually charged, and I think that is true. It is done by quoting a rate of interest calculated on the amount owing at the beginning of an agreement, and then, as instalments are paid, the original amount is reduced and, over the year, the real rate of interest is often twice as much as that originally quoted. Under this clause it must be an annual rate. But I was exceedingly interested to hear the noble Lord opposite indicate that he had not quite understood the formula. Nor have I, and I am quite sure a lot of other people, customers and hire-purchase people alike, will find a great deal of difficulty in understanding that formula.
§ LORD DRUMALBYN
My Lords, if the noble Lord would allow me to interrupt, what I did say on that was that I had worked out a sum on the basis of the formula. I do not think there is any difficulty in using the formula: the difficulty is only in understanding how it is arrived at. But that, I think, is immaterial. I think it can be accepted on its face.
§ LORD PEDDIE
I thank the noble Lord for that explanation, and I can commend his mathematical ability, which is obviously far greater than mine. Nevertheless, I accept the whole spirit behind the clause: I think it is quite good.
The clause to prevent the fraudulent selling of cars that are on H.P. is both novel and interesting, inasmuch as it is giving to the Minister of Transport the power to make regulations for hire-purchase firms to retain the log book 1159 and issue a licensing card. We are grateful for the detailed explanation which the noble Lord gave, but there is one point which I hope will be more closely considered—and if I wanted to be critical, I might suggest that this is evidence of the rather hasty drafting of this Bill. We have to remember that, if this clause is operative, the log books will apparently give a title and will be recognised as a title to ownership. That is not what is stated in the Bill, but that is how it will be considered by the consumer. But as the Act is not retrospective, there will be a great number of log books relating to hire-purchase "in the pipeline", already possessed by people who have purchased cars on hire-purchase before the Act was passed. I know it is not an insurmountable difficulty, but I should like some information as to how a solution can be provided.
My Lords, in conclusion, I have indicated that, in general terms, we welcome this Bill. We recognise that the 1938 Act met a real need and that the present Bill represents a useful extension, although I would repeat that many of the abuses dealt with in this Bill could have been tackled long ago. It is important to remember, too, that when this Bill is passed and becomes law, hire-purchase law will be contained in the following Statutes: the Hire-Purchase Act, 1938; the Hire-Purchase Act, 1954; the Advertisements (Hire-Purchase) Act, 1957; and then the Hire-Purchase Act, 1964. In addition to that, hire-purchase trade is subject to Control Orders which are made, not under hire-purchase law at all but under Defence Regulations going back as far as 1939. Surely it is incredible that, twenty years after the war, the Board of Trade are still using emergency powers to deal with hire-purchase. I would suggest that there is urgent need for the reform of consumer credits. The 1938 Act was a good Act, but we must make sure that in the course of time it does not become a straitjacket. There is need, an urgent need—and I hope that the Government are going to meet it—for a consolidating Act based upon a detailed inquiry and original thinking: original thinking which I should hope would come from all the interests involved in the practice and trade of hire-purchase.
§ 5.18 p.m.
§ LORD AIREDALE
My Lords, may I join with the noble Lord, Lord Peddie, in congratulating the Minister upon his maiden speech. I do not suppose that I shall ever have another opportunity in my lifetime of congratulating a Minister upon his maiden speech. Maiden speeches in your Lordships' House are usually short, and the Minister apologised to the House for having spoken at some length. On the other hand, he explained to us a Bill of 32 clauses and 7 Schedules at the rate of, I think, just about one minute per clause or Schedule, so I do not think we can hold longwindedness against him, certainly not upon this occasion.
May I also join with the noble Lord, Lord Peddie, in inviting the Government to consider extending the jurisdiction of county court judges in hire-purchase cases, if it is the fact, as the noble Lord suggested, that the raising of the money limit will mean that otherwise many of these cases will fall to be decided in the High Court and not in the county court? In this matter, county court judges begin with a flying start over their brethren in the High Court, because their knowledge of hire-purchase legislation must to-day be immensely greater than that of the Judges of the High Court.
My Lords, I should like next to say one or two words about what I may call the hire-purchase document, the document which the hirer retains in his possession and which explains to him the nature of the transaction he has entered into and certain ancillary matters. First of all, I welcome the Government's adopting one of the recommendations of the Molony Committee where, in Clause 2, subsection (2), they are seeking power for the Board of Trade to prescribe that the hirer's signature should be placed in a certain position on the document and that certain words, to be decided upon by the Board of Trade, are to accompany the place of the signature.
May I here quarrel on one small point with the Molony Committee, who have drafted a sentence of 23 words (I will not weary your Lordships by reading it) which they think should accompany, or be adjacent to, the place where the hirer is to place his signature on the document. I believe there are people who 1161 will not even trouble to read a sentence of 23 words while the salesman is hovering over them holding out his Biro pen and inviting them to sign. I should have thought that these 23 words could be reduced to three. All that is needed is: "Hire-Purchase Agreement". If those words were to accompany or be adjacent to the place where the purchaser has to sign, no dullard could then fail to appreciate that what he was signing was a hire-purchase agreement.
The Molony Committee were a little concerned about some hirers who have to terminate the agreement prematurely not being aware of what they were supposed to do with the goods. Clause 6 of this Bill makes it abundantly clear what are the hirer's duties in relation to the goods when the contract is terminated prematurely. I only wonder whether it would not be worth while to have the quintessence of Clause 6 incorporated into the document which the hirer retains in his possession, to enable him to know exactly what his duties are in relation to the goods if the contract is prematurely terminated. Otherwise, the hirer will have to look up the Act and read Section 6, as it will then be; and I do not believe that many hirers will be able to find their way to it.
We come now to the question of dealers' commissions. The noble Lord, Lord Peddie, referred to this as did the Molony Committee. These operate as secret commissions about which the hirer, out of whose pocket, of course, ultimately the commission comes, knows nothing. The Molony Committee say that these commissions are frequently of the order of 15 per cent. and sometimes a great deal more. I cannot think—and here I agree with the noble Lord, Lord Peddie—that these commissions are necessary at all. The finance companies confer a benefit on the dealer in any event by enabling the dealer to sell something on hire-purchase which often he would not otherwise be able to sell at all. Why there is any need for commissions to be paid to the dealer, I fail to see.
The Molony Committee thought it would be very difficult by legislation to stamp out these commissions. No doubt the best way to deal with this is for the Finance Houses' Association to try to get agreement amongst its members 1162 to forgo paying these commissions which do, eventually, come out of the hirer's pocket. But as an inducement, perhaps, to the finance houses to come to this conclusion perhaps it would be as well to require that the amount of any commission payable to the dealer be stated upon the document. That would, at any rate, remove the secrecy of this commission which is a very bad feature. Another bad feature is that the dealer receiving a commission in these circumstances is always tempted to induce the hirer to go into a hire-purchase transaction rather than a cash sale, on which no additional commission is payable to the dealer; whereas, of course, cash sales are to the benefit of the consumer if he can possibly afford them.
I should now like to say just a few words about the escape clause or "cooling-off" period. As I said on the Second Reading of the Bill of the noble Lord, Lord Peddie, in our last Session, I regret that this escape period is not being made available to both parties. I say this both on general principles and on the particular grounds of these particular cases. One starts with the general principles that there shall be freedom between people to make contracts one with another, and if Parliament is going to intervene and place limitations, then surely, whenever possible, Parliament should make equal limitations for both sides. It is not always possible, but it is possible in this case. It is possible to say that there shall be a four days' "cooling-off" period, both for the hirer and for the finance company, which really means the salesman.
When we take into consideration the particular facts of these cases, I believe it is really necessary for both parties. The salesman, to whom the householder readily opens his door, finds probably that this is not the first time that the householder has readily opened his door to a salesman. When he gets inside he probably finds many gleaming, new pieces of furniture and appliances and his suspicions may be aroused. He may start wondering how many of these goods are already the subject of hire-purchase commitment on the part of that householder. You cannot expect him to say to his prospective customer, "I am not going to complete a deal with you until I have checked up your credit worthiness because I suspect you." But it would 1163 be very useful if the salesman could have a four days' "cooling-off" period in which to check up upon this householder; because it is no use to either party that the householder should over-commit himself on hire-purchase. I very much hope that, if the Government are not themselves prepared to put down an Amendment, they will accept an Amendment in Committee to make the "cooling-off" period available to both parties to the transaction.
That is all I have to say, my Lords, except to join in the debate in miniature which has already taken place between the noble Lord, Lord Peddle, and the Minister about the formula in Schedule 3. Paragraph 6 of that Schedule decides the calculation of the rate of interest or charge. The Minister said—I think these were his words—that the traders can "readily calculate" from this formula. I dare say that the finance houses have mathematical wizards in their offices who would have no difficulty with this; but I am sorry for the dealer who supplies his own finance—and some dealers do. If he can readily work out the formula: 200md/p(n+1)+d/3(n-1) then I will eat my hat. With those few reservations, I welcome this Bill as being very well worth while.
§ BARONESS ELLIOT OF HARWOOD
My Lords, I have listened with great interest to three extremely interesting speeches, including a maiden speech from my noble friend who sits on the Front Bench, on which I wish to congratulate him, and an excellent speech from the noble Lord, Lord Peddie, from whom I expected an excellent speech, since he is a member of the Consumer Council and I have already discovered how expert he is on these matters, and I knew I would hear from him many things with which I was in agreement. I find myself in agreement with what has been said on both sides of the House, which does not often happen. The figures we have been given of the enormous sums involved in hire-purchase, totalling £934 million, show that it is high time—indeed, past time—that we should be placing safeguards on 1164 the Statute Book. I am told that in the United States of America the figure is £23,000 million. It is a much larger country than ours, but if we go in for this method of trading in as big a way, even our £934 million will increase in time. Therefore, this is a most important question.
The Minister has given a clear outline of the Bill and of how it affects the many millions of consumers who trade in this way. Many of these transactions are done on the doorstep. This can be a very simple operation, but it can also be very complicated, and occasionally it can go wrong. It can also be unwanted. In enabling the buyer to know exactly what he or she is buying, the Bill is very welcome. What I should like to see is that when a salesman and a householder come to an agreement about the purchase of an article, the seller should there and then produce for the buyer an agreement in duplicate. The buyer should have a copy of the terms of agreement in his hands. The Minister said that this is going to be sent through the post. That is one way of doing it, but I should think that a simpler and more practical way is to do it on the spot, by the simple process of writing the agreement in a book with a carbon copy and handing the copy to the buyer. Then, during the "cooling-off" period, the buyer would have exactly what was signed for in his hand, to show to husband or wife, as the case may be, what is entailed under the agreement. This carbon copy system is a way we all know, since it is done in shops every day, and I do not see why it could not be done on the doorstep.
The document left behind must describe accurately the terms of the agreement between the buyer and the seller and, in addition, should make the buyer aware of important points, such as, that in consenting to this agreement he potentially commits himself to buying goods on hire-purchase or by the credit-sales system. If it is hire-purchase, then the buyer must know that he does not own the article until he had paid all the instalments, and therefore has no right to sell the goods half-way through the payments without the consent of the owner, who may be a finance company or a dealer. Many people do not realise this, because they get so used to looking at the articles they buy, whether it be a 1165 motor car, washing machine or cooker. Familiarity breeds, not so much contempt, as a feeling of ownership. I feel that it is important that this point should be adequately stressed in the course of the transaction.
I am glad that the Bill insists on a three-day period in which the buyer can think over his purchase. This is most important. But I think that we might add one of two other things—for instance, that the buyer should not only contract-out, if in the three days he decides that he does not want the goods, but also that he should contract-in, if he wants to buy the goods. This could be quite simply done by the salesman, when he leaves the copy of the agreement with the buyer, also leaving a printed postcard or slip of paper, which the buyer can send to say whether he wants the article. This would help the salesman, since, if the postcard arrived before the contract became binding, he might be saved the trouble of going back to the house. It may be said that contracting-in may hamper the transaction. But if a buyer cannot be bothered to contract-in, he probably will not bother to contract-out. In any case, I am all for impressing on the purchaser his responsibilities—the need for him to take a positive step either way.
I support the clauses which deal with the raising of the ceiling, whereby a finance house or owner cannot "snatch back", as the Molony Committee put it, the goods which are being paid for under hire-purchase agreement. The £2,000 limit, which the noble Lord, Lord Peddie, has discussed, should cover most of the articles likely to be bought on hire-purchase. I suppose that motor cars are the most likely to come under this clause.
I have read in the Press that the finance houses are worried about this clause. They see the possibility of a purchaser defaulting after he has paid, say, 50 per cent. of the price, and handing in a car which is not worth the remainder of the purchase money. This could be obviated by a clause in the Bill allowing for a "true measure of damage" formula, which, in the case of motor cars and other mechanical vehicles, such as tractors, could be fairly easily assessed, because the second-hand value is generally agreed in the trade. I do not agree with the suggestion made by 1166 the finance houses, that they should have the right to recover a car without a court order when two-thirds of the price has been paid. In all probability, the customer will have paid a substantial deposit at the beginning, and he should get the benefit of the protection of the courts, as is the law in Scotland. The formula for damages should protect the seller from any dishonest intentions among buyers.
All that is in these clauses stresses the importance of both sides taking great trouble to see that transactions are carried out in good faith on both sides and not under pressure. I think that this is a good thing, a good thing for all, even though it may slow down a little the number of hire-purchase transactions. In the long run, it may prevent many of the troubles that the system has had to meet.
There are two points in connection with dealers which I welcome. The first is the proposal in the Bill to make dealers responsible for the statements they make about the goods they are selling. If, for instance, a car dealer persuades a customer that the car he is selling is a certain age or that the engine is sound, when in fact it is of an earlier manufacture than he thought and there is a fault in the cylinder, the buyer can pin responsibility on the seller and claim for the defects in the goods. Otherwise, under the present Acts, I understand that he may be left to the tender mercy of the finance house, who will in all probability disclaim any technical responsibility for the car.
Both noble Lords, Lord Peddie and Lord Airedale, have referred to the point that we want to discourage hire-purchase finance houses from offering competitive commissions to salesmen operating door-to-door sales. I entirely agree with what has been said about this. It should be perfectly possible for the commission, such as it is, to refer only to the normal commission that a dealer would get for a motor car on the ordinary margin of retail business. I think it would be most acceptable if some arrangement could be come to whereby this other series of commissions to retailers could be done away with.
I have not dealt with the clauses in the Bill which refer to the holding of car registration books. This is an 1167 excellent proposal and should provide a safeguard against transactions being made under false ownership. There are very useful clauses about advertising. I am glad that the Bill will cover Scotland as well as England and Wales. It is important that in this new and important trading system, the hire-purchase and credit-trading system, laws in the United Kingdom should be similar. This Bill is designed to deal with immediate problems, and there are wider issues which it does not cover. But we have an announcement by the Secretary of State for Trade and Industry in another place that further legislation with a more fundamental review of the exceedingly complex legal machinery of trading goods on security is to be considered at a later date. That, I am sure, is a welcome announcement. But, in the meantime, I would support most warmly the Bill we are debating to-day.
§ 5.40 p.m.
§ BARONESS BURTON OF COVENTRY
My Lords, I have a personal and financial interest to declare, in that I am a director of a firm engaged in the direct selling of domestic appliances, many of them on hire-purchase. Having said that, might I say to the noble Lord, Lord Drumalbyn, what I should have liked to say to him when I last spoke, but, unfortunately for me, he was not in the Chamber: that is to say, as I am sure the House knows, that in another place, when he was Parliamentary Secretary to the Board of Trade, he enjoyed a reputation on both sides of the House and among consumer organisations outside of having a very real interest in the consumer and the consumer's wellbeing. Because of that, many of us, while welcoming his promotion to Minister of Pensions, regretted his departure from the Board of Trade. That brings me to my final compliment. I am pleased to see him come to this House as Minister of State for the Board of Trade, and I very much hope that he will be able to answer favourably, after those compliments, some of the points I wish to put to him to-day.
Before proceeding to this Bill, I should like to say a word about the Bill which was brought forward by my noble friend Lord Peddle in the last Session. I opposed that Bill, and I opposed it on 1168 the principle that I thought the problem of hire-purchase was one which required a fundamental Bill dealing with fundamental reform. It did not seem to me that any Bill, however good, introduced by a private Member could cover this field, because I think the facilities available to private Members are obviously not comparable to those which are available to a Government.
§ LORD PEDDIE
My Lords, would not my noble friend agree that almost all, if not all, hire-purchase legislation, apart from this Bill, has been introduced by private Members?
§ BARONESS BURTON OF COVENTRY
I said that in my speech last time. But I also said that I thought the conditions obtaining at the time of Ellen Wilkinson's Bill were very different from those obtaining to-day, when there are varied views as to what these reforms should be.
Going on from there, I remember reading that the Secretary of State for Industry, Trade and Regional Development was having this whole field examined, and I should like to ask the Minister whether this means that we may hope for additions to this Bill before it becomes law—and I have read that it is hoped it will become law by Easter—or is this the utmost we can hope for in this Session of Parliament? I say that because in the Financial Times on November 29 last I read this:The Board of Trade, in fact, is conducting an inquiry into these more fundamental conclusions, and the present Bill is intended to be only an interim measure dealing with matters of urgent public interest.Having said that, I would concede at once, because I approve of the Bill, that this Bill does deal with most of the matters of consumer interest that arise.
It seemed to me, on looking at the Bill, that there were five matters on which I should like to touch quite briefly. The first is where the Bill requires a "cooling-off" period for all hire purchase agreements signed anywhere other than at trade premises. The second is where it introduces a system of licensing certificates for cars bought on hire purchase; log books would be held by the hire-purchase company and the fraudulent sale of such cars before hire-purchase commitments had been discharged would be made more difficult. The third point I want to look at is the extension 1169 of the protection of existing Acts to goods up to a value of £2,000 instead of the present limit of £300. The fourth point is to make hire-purchase companies—who are the legal sellers of goods—responsible for the representations and promises of shopkeepers and salesmen; and fifthly, to lay down special words of warning in hire-purchase contract forms in the space where customers sign.
To refer again to my noble friend's Bill, he, as he said, put forward two main provisions. The first was that there should be a 72-hour "cooling-off" period for all hire-purchase agreements signed anywhere other than at trade premises. I agree with the delay. The second main point he put forward was that there should be a ceiling of £1,000, instead of the present limit of £300. I disagreed with that. Molony recommended the first point I have mentioned, that there should be a 72-hour "cooling-off" period; but, as the noble Lord, Lord Drumalbyn, said, Molony opposed the ceiling of £1,000. I held the view, and I still do, that there should be no ceiling at all.
But coming to this Bill, and to the first matter with which I wish to deal—namely, the "cooling-off" period for all hire-purchase agreements signed anywhere other than at trade premises, which is covered by Clauses 3, 4, 5 and 6—what we have in the Bill to-day is a period of four days after the customer receives a copy of the agreement through the post. I should like to put a point to the Minister, because I think it puzzles a great many people. There is no mention in this Bill of recorded delivery or registered letters. Is proof of postage going to be taken as proof of delivery? If so, I see considerable difficulty on this point. To be quite frank, what I have always wanted—and I have wanted it for years—was that such a consideration should apply to all hire-purchase agreements signed anywhere, including, obviously, retail establishments. I heard what the noble Lord, Lord Drumalbyn, said, and I do not deny that this would be a major operation. But the fact that it is a major operation is not a reason for not doing it, and I should like to tell the House, even if I am in a minority, why I feel so strongly about this.
1170 During the ten years that I was a Member in another place I had, as we all had, many constituents' problems dealing with hire-purchase brought to me. I am speaking generally, but I think accurately, when I say that during those ten years I do not remember any cases which were brought to me in Coventry which concerned hire-purchase agreements signed other than at a retail establishment. That is the point I want to make. I know the Minister said that the cheap, flashy type of salesman was not confined to the doorstep, but could be met also in shops—and I use the word "cheap" in a sense which I think your Lordships will understand. I am most concerned with trying to protect the people who deal with this cheap type of establishment, where the salesman is so glib that the purchaser has not an earthly chance of getting out of the shop without signing an agreement. I feel that this point should be looked at, because I think that some firms, whether they sell direct or whether they sell retail, have reputable salesmen who would not dream of pressurising a customer. I should be glad if the Minister could comment further on the wisdom of extending this "cooling-off" period to trade premises.
The next point is on Part III, which covers the matter of introducing a system of licensing certificates for cars bought on hire-purchase. The Bill provides that log books should be held by the hire-purchase company, so that the fraudulent sale of such cars before hire-purchase commitments had been discharged would be made more difficult. This is Clauses 22 to 26 inclusive. I would agree with this. I think it is a considerable improvement, because it is obvious that anyone who buys a secondhand car in future must be better protected than now when the seller produces the log book. It seems to me that if, in the future, the seller produces only a licensing certificate, the would-be buyer should assume that the vehicle is still subject to hire-purchase commitments, and I do not think we can do much more than that.
Clause 1 deals with the protection of the existing Acts to be extended to goods up to a value of £2,000 instead of the present limit of £300. As I said last Session, I should have preferred no 1171 ceiling, and I think this is still the case. I understand the problem of the definition of "consumer sales", but the suggestion of a limit of £2,000 is obviously a considerable improvement on the one of £1,000, and I was pleased to see that Clause 1 gave power to raise the limit by Order in Council, to which the Minister has referred. I do not think it is good to have a limit, because money values change, and any ceilings tend to become out of date. The only point I would make about Clause 8, to make hire-purchase companies—that is to say, the legal sellers of goods—responsible for the representations and promises by shopkeepers and salesmen, is to say that I heartily agree with it.
I want to come now, if I may, to Clause 2, to lay down special words of warning on hire-purchase contract forms in the space where customers sign them. Obviously, I agree; but I want to raise something else here. Molony, at paragraph 517 said—and I want to quote three short sentences:In order to promote better comprehension of the obligations assumed, there has been a strong plea for the simplification and compulsory standardisation of agreements. In view of the necessity for legal precision we do not think simplification is possible. We doubt if standardisation is possible except for particular classes of goods where it would be in the interest of everyone and ought to be worked for.Their point 115, on page 308 says:Neither simplified language, standard form agreements, nor larger print would markedly restrain the over-persuaded or impetuous hirer from undertaking imprudent obligations.I do not agree with that. I am quite convinced that it would be possible to make simplification in these agreements, and I think it would be possible to have more standardisation. I am wondering whether the Government would feel able to look at this, because, as the Minister will remember, and as I have just said, Molony states:We doubt if standardisation is possible except for particular classes of goods where it would be in the interest of everyone and ought to be worked for.I would ask the Minister whether he could tell us in which particular classes of goods such standardisation would be possible, and whether the Government will look at the whole question. This is not a feeling of mine only. I have talked to a good many consumer organisations 1172 about this, and there is a feeling that this simplification could be achieved if the Government would have a look at the matter.
Now I come to something which I think is of very great importance, and which many of us have been trying to do something about for a great many years, and that is the matter of advertisements. This is covered by Clauses 27 and 28. I am quite sure that the whole House and, in particular, the noble Baroness, Lady Elliot of Harwood, will agree with me that nothing is more important than these advertisements from the consumer's point of view. I am wondering whether the Minister, when he come to reply, can spell some of these details out for my benefit, anyway, if not for the benefit of the House. Is there any way, when this Bill becomes law, by which hire-purchase firms can avoid letting the customer know the full hire-purchase price? If so, I want this made impossible.
I have tried very hard, reading this clause about advertisements, to see what it really means, and I should like to put to the Minister an example of an advertisement under the Advertisements (Hire-Purchase) Act, 1957. This is purely a fictitious one and no allusions to any current advertisements are intended. We might get: "Cash price £100; deposit £10; balance by 24 monthly payments of £4 2s. 6d." Amended by Clause 27 of this Bill we get: "Cash price £100"—which is the same—"Deposit, £10", and we get the addition, of course, of "Hire-Purchase Price £109; balance by 24 monthly payments of £4 2s. 6d." As the House knows the type of advertisement which I have just quoted is a "details of payments" advertisement. As I undertand it, the second type of advertisement, under the Act of 1957, as amended by the present Bill, in which the trader wishes to quote a rate of charge, would contain exactly the same information as the example I have just given, plus the charge which would then be shown as, in this example, 9.3 per cent. I would only add my remarks to those of my noble friend Lord Peddie and the noble Lord, Lord Airedale, and say that people who are much more knowledgable than I am and who have worked out this 9.3 per cent. for me were even more rude in their comments about 1173 the formula than was either of the noble Lords to whom I have referred.
The third type of advertisement, I gather, is a "non-details of payment" advertisement. As I understand it, a "non-details of payment" advertisement can say—and I quote an example—"Our hire-purchase terms, deposit, 10 per cent. of the cash price, balance by 12, 18 or 24 monthly instalments." I believe that I am correct in saying that if this present Bill becomes law it will make no alteration in practice to the information which is required to be given in a "non-details of payment" advertisement. I am rather labouring this point because I feel that it is quite obvious to everybody, whether engaged in the hire-purchase business or not, that if the hire-purchase price has to be stated on an advertisement the obligation should apply to all hire-purchase advertisements or to none. I do not think there can be a loophole.
What I am really asking the Minister to tell me when he comes to reply is, first of all (and it may be an ignorant query; I am quite prepared to admit that): Why is it necessary to have "non-details of payment" advertisements? Secondly, is that type of advertisement any real help to the customer? Thirdly, is it as much help as a "details of payment" advertisement? In the debate on January 31 last, I raised with the House something which the noble Lady has also raised to-day, and that was this question of a true measure of damage clause. I am not altogether happy about this matter. Without being tedious, or as we said in another place (I do not know whether we say it here), wishing to be guilty of tedious repetition, might I say that considerable sums of money are involved in this, and I think that we, as laymen, might try to find an answer to the problem. I think we all agree that real progress will not be made in this matter of consumer protection unless we are fair to both sides. I am not convinced that what is suggested in the Bill is equitable.
I am informed that the Memorandum on Hire Purchase submitted by the Law Society to the Board of Trade included the opinion:That in all cases where the owners seek damages against the hirer after the agreement 1174 has been terminated, the damages should be confined to his true loss in accordance with the Common Law principle …The view of the hire-purchase organisations, as I understand it, and certainly the view of the Hire-Purchase Trade Association, is that one should go further than this. If I am correct in assessing their attitude I would be prepared to agree with them. I think their attitude is that it should be made a statutory duty on an owner to repay to a hirer any excess which he may receive into his hands as a result of the sale of the vehicle. That is, of course, an excess over and above the hire-purchase price, and any sums which he may reasonably have to expend in regard, for example, to the sale of the goods.
I agree with the viewpoint expressed by Molony that the arbitrary 50 per cent. rule achieves a certain rough justice in ordinary consumer items. As I did during my many years in another place, I discussed these matters with the Hire-Purchase Trade Association; and I should like to repeat what I said in the last debate, that when I took problems from my constituents to them I received from the Association complete fairness of treatment even when finance houses were involved. I raised this matter with the Association and I know that they feel that in such cases, that is, where the arbitrary 50 per cent. rule applies, the advantage still lies with the consumer but that the damage to the owner is comparatively small owing to the relatively small sums involved. I gather they have been prepared to take this point of view because of the simplification it permits.
I have not sufficient detailed knowledge to comment on that, but I think it is right we should look again at this matter in connection with motor cars. As the Member of Parliament for Coventry, South I had a lot of experience with motor cars. I want to see justice being done on both sides. I would suggest to the Minister that where the loss to be suffered by a hirer who decides to terminate the agreement, especially at a very early or very late stage, or the damage suffered by an owner in other circumstances, may well be very great, I would tend to accept this. Therefore, on this point I should like to return to what I said on January 31: that unless, 1175 in respect of motor vehicles, provision is made so that, on the one hand, hirers are required to pay no more and no less than the actual loss which the owner has suffered, and that, on the other, owners are entitled to claim only their loss and are compelled moreover to repay any surplus arising on the sale of the vehicle, grave injustices will occur both to hirers and owners. I personally hope that the Government will feel able to look again at this matter. I repeat that I think we want to be fair to both sides of the counter—whether it is with goods in shops or with motor cars—and I feel, though obviously it is my opinion only, that further consideration of a "true measure of damage" clause along the lines I have suggested would meet with the approval of most people, with consumers, with traders and with finance houses alike.
I should like to make two points in conclusion. First, according to the Press the finance houses have said that if this Bill becomes law they will have to become more careful in their selection of customers. Personally, as other speakers have said, I cannot think of any better result than this. Useful though hire-purchase is to many people, I think there is little doubt that one of its greatest drawbacks is that some customers have taken on far too many commitments and have then found they cannot keep up with the payments, especially if they fall upon hard times.
The second point is this. Is there any reason why hire-purchase firms should wait until the Bill finally becomes law before finally implementing, say, the clause dealing with the "cooling-off" period? I feel that this "cooling-off" period is something that will benefit the consumer and help to curb the disreputable side of doorstep, or direct, selling. Certainly we intend to put it into operation as soon as the necessary printing can be done, early in the New Year. We hope that all hire-purchase firms will do likewise.
I wish the Bill well and I would appreciate it if the Minister in his reply could deal with the points I have raised. One, are there likely to be major additions to the Bill from the Government? Two, would the noble Lord consider extending the "cooling-off" period 1176 to all hire-purchase agreements? Three, will the Government look into the possible standardisation and further simplification of agreements? Four, can we have a clarification of the advertising position? Five, will the Government consider the merits of a "true measure of damage" clause? I thought that if I repeated the questions at both the beginning and the end the Minister would not forget them. It seems to me that such considerations would improve the Bill.
§ 6.7 p.m.
§ LORD CHORLEY
My Lords, like the other Members of your Lordships' House who have been taking part in this discussion, I welcome the Bill, which, I agree, effects noticeable improvements in the present law which, I agree with the noble Lord, Lord Peddie, are mostly very much overdue. The passing of the years has of course made the 1938 Act in some ways a little out of date, particularly from the point of view of the inflation which this Government have signally failed to deal with satisfactorily. Also, of course, the much greater profits which are now made out of hire-purchase transactions have led to increasing ingenuity on the part of the rather less respectable type of dealer, which has, in turn, called for new methods of tackling him and preventing him from "getting away with it."
However, as one of those in the Haldane Society Committee who helped Miss Wilkinson with her original Bill, I like to claim that we have been doing our best to keep the Government up to the mark in the interval, and I was gratified that the Minister in his opening speech paid some tribute to Miss Wilkinson's work, which I always feel was really one of the most important pieces of social legislation which this generation has witnessed. The Labour Lawyers' Society incidentally, have recently produced a volume, Law Reform Now, which I think must have been carefully studied by Conservative Party Headquarters, because a good deal in the present Bill seems to emanate from that source, although I quite agree that much of it is in the Molony Report as well. But I think that, in turn, the Molony Report got quite a number of its ideas from the discussions which have been going on in the 1177 Haldane Society and in the Labour Lawyer's Society during these past years.
The interesting thing is that, until we approach the General Election, the Government should have been quite unready to accept these obviously useful proposals. Bills have been introduced into the Commons and we have had the Bill of the noble Lord, Lord Peddie, which was, for one reason or another, turned down. Now of course, when it may be thought that there is some electioneering value in having the Bill, we get it. It is not uninteresting to compare this with the much-quoted remark of the Prime Minister, that eyes must be on the General Election during all the coming months. The Prime Minister is evidently a student of Disraeli and believes he can entice the electors on to his platform by picking out the most suitable planks from the platform of his political opponents. I dare say he chuckles to himself and recalls the famous remark of Disraeli about catching the Whigs bathing and stealing their clothes. Perhaps the electorate has increased a little in intelligence in the interval and will see through this rather blatant plan.
Obviously we shall want to give a Second Reading to a Bill which contains so much of our own policy and the policy we were advocating long before the present Government took any interest in it. It is clearly in the public interest to get these useful reforms on to the Statute Book as quickly as possible and not delay over it, although I appreciate very much what the noble Baroness said about the importance of fundamental reform. We are really dealing with a method of selling goods, and it is very unfortunate that in order to protect the interests in property the whole of this system of hire-purchase law has, so to speak, been built up and in many ways is out of step with the general law relating to the sale of goods. I think almost every lawyer who has considered the thing in a general way would like to see the integration of the two systems. Many very valuable reforms have been laid down in connection with hire-purchase which could well he incorporated into sale of goods legislation, as indeed I think the Molony Committee appreciated.
At the same time, it is obvious that this Bill could have been made very much 1178 better. When the noble Lord, Lord Peddie, brought his Bill here, the Government in effect asked the House to reject it on the ground, as he reminded us this afternoon, that they were going to produce a really comprehensive measure. They have done nothing of the sort. They have just picked out the valuable vote-catching proposals and put them into this Bill, which, as I have suggested, is really being passed through in order that the Government may be able to pride themselves upon it when they go before the electorate at the Election next year. It shows many traces of having been prepared in a very great hurry. The noble Lord, Lord Peddie has asked why it was left out of the Queen's Speech. No satisfactory explanation of that has been given. Obviously, when the gracious Speech was in preparation it was not seriously proposed to bring in this Bill during the present Session. It is really quite impossible to persuade any sensible person that if it had in fact been on the stocks it would not have been put into the gracious Speech.
This view of the matter I think receives strong support from the fact that the Bill contains very important provisions, which have been welcomed and which I think are welcome, to deal with the problem of the hirer who gets goods when the dealer has not the full legal title to them, a very difficult and important problem, of course, in the whole law of sale. But the point is that the general aspects of this very important problem have only recently been submitted to the Law Revision Committee. It is quite impossible to imagine that these two things should be going on, as it were, in parallel with each other, because obviously there ought not to be any very striking difference between the law relating to hire-purchase in regard to motor cars and other branches of the law relating to sale, and it is most important that the law should not, so to speak, get out of step in one field with the law which is to prevail in the other field. The Government lawyers must have been aware of this, and yet their right hand does not seem to have known what their left hand was doing. I think it is very important that this matter should be looked at carefully by the Law Revision Committee, and the time we have between now and Committee stage should be used 1179 carefully in order to make quite sure that any important divergence in the law does not occur as a result of the proposals in this Bill, welcome as they may be in themselves.
All these provisions—for example, for "cooling off" (there is not much about "snatching-back" here)—are certainly good as far as they go. But if the Government had really been working on this problem, they would, I am sure, have produced proposals for tackling some of the real anomalies which exist in the present law. I should like to mention two or three of these. Others of them which have been much discussed since the Bill was published will perhaps be better considered in the Committee. That does not mean that I am not concerned with some of the provisions in the actual Bill which is before the House this afternoon.
There is the £2,000 figure which the noble Lord, Lord Peddie, has discussed. There is quite an important point in regard to the bringing of actions within the jurisdiction of the High Court which, as he said, is much more expensive and a rather slower procedure. So far the county court has dealt with these cases. There are provisions in various Acts of Parliament which give the county court special jurisdiction to a rather higher figure than they have in the ordinary way, and I would suggest to the Government that they should seriously consider giving the county court full jurisdiction in respect of all these hire-purchase cases. I think in company winding-up cases they have jurisdiction up to £2,000, and if the noble Lord consults his legal advisers I believe he will find there are other respects in which the county court has been given special jurisdiction over particular kinds of case.
There is this question of the very welcome power given to the Board of Trade to deal with signature and other matters in the hire-purchase agreement—size of print and colours. I hope that will be fully and carefully used by the Board of Trade. I should like to see (it may be that this is already in the mind of the Minister) a provision that the dealer should himself sign a statement to the effect that he has fully explained the terms of the hire-purchase agreement to the hirer. That might indeed specify the particular points which he should, so to 1180 speak, guarantee. And while we are on that matter, I think it would be very useful that certain parts of these points, such as the one suggested by the noble Baroness, should be incorporated in the Agreement in letters of a certain size. Too many of these agreements, or large parts of them, are in extraordinarily small print. Even with a "cooling-off" period of three or four days, it might be difficult for the householder and his wife to master the small print which appears in some of these agreements, and I think something could be done there.
In regard to the "cooling-off" period, I would ask whether 74 hours is sufficiently long. There are many workmen who are away the whole week—long-distance transport drivers and men who go away to do structural work, and that sort of work. It may easily be that the four days will have been consumed before they get home and discover what the wife has done. So I think there is some case for extending this to an even longer period than the four days, which I agree the Molony Committee proposed.
To turn to some of the other more legal points, I think it is no disparagement to Miss Wilkinson's measure to say that it has given rise to a number of very difficult legal problems. Bills which have been constructed from the beginning by expert Parliamentary draftsmen have often done that. Of course, this particular section of the law is a growing point of the law, and English law grows through the decisions which are given by the courts in specific cases relating to difficult points. This is also an area of the law where there are usually three parties concerned—the hirer, the dealer and the finance company. It is my experience that in legal problems the complexity seems to increase in a sort of geometrical progression with the number of parties involved. The legal periodicals of recent years, as those of us who have to study them know only too well, are full of discussions on the cases which have been coming before the courts on hire-purchase contracts, and reflecting the often conflicting decisions which have come from the courts on these difficult cases. This law is what we call lawyers' law, but it is not the less important for that; because uncertainty is bad, especially from the point of view of the business angle, and it leads to a great 1181 deal if litigation, which is expensive and, as has been said, time-consuming.
I could give many examples to illustrate what I have been saying. Some of my colleagues in the Law Faculty of the University of London have been greatly exercised on these matters, particularly since this Bill appeared, and in particular, if may mention one name, Mr. Aubrey Diamond of the London School of Economics, who has been playing a most important part in the consumer protection movement and who is, I think, a member of Lady Elliot of Harwood's Consumer Council. He and one of his colleagues have provided me with a sheaf of most valuable material on this subject, upon which I could talk for much longer than your Lordships would like me to do. I should, however, like to mention just one or two points.
The problem of compensation on the termination or breach of a hire-purchase agreement, and a matter which is greatly mixed up with it, has been referred to by more than one speaker to-day—namely, how far the parties can themselves effectively provide for the ascertainment of this without getting themselves involved in the intricate legal laws relating to what I call penalties. These matters have been before the courts in a number of cases in recent years, and only last year in the case of Bridge v. Campbell Discount Company, two Members of your Lordships' House doubted an important decision which was given by the Court of Appeal as long ago as 1938 and has been acted on ever since. This, as your Lordships can imagine, has caused a great deal of uncertainty, because the Court of Appeal decision stands until it is overruled. This is just one example of a number of other cases of a rather similar type.
It is not only a question of what is technically the correct rule—what would be the most equitable and fair rule to lay down; it is a matter which, in the end, can be decided only by the Legislature. That is why I feel this is a matter which ought to have been given much more careful consideration before this Bill was introduced. We want a genuine improvement in the general law relating to hire-purchase rather than just an improvement of the Conservative Party 1182 prospects at the Election, which, as I have said, is what this Bill to a substantial extent is directed towards.
One of the most extraordinary features of the present situation is that, under the decisions given on the 1938 Act, the hirer who determines his agreement lawfully is actually in a worse position than one who terminates the agreement unlawfully. Moreover, whether he has terminated the agreement lawfully or not may be an exceedingly difficult question of law on which different views can be given—and, indeed, have been given—by the courts. So much is this so that, as I understand it, some of the finance companies have a clause in their agreements by which the hirer agrees that any determination by him shall be deemed to be lawful. This puts the finance companies in a better position than if in fact he terminates his agreement in an unlawful way. This really is a quite ridiculous situation and it shows, I think, beyond a peradventure how necessary it is that some of these legal points should be cleared up. Recently, within the last few weeks, the case of Baldock has introduced a further difficult refinement into this particular problem, so that the complexity is worse than it was at the beginning of the year. It would be too difficult and complicated for me to explain it at this time of night.
To a large extent these difficulties stem from Section 4 of the 1938 Act, which attempted to protect hirers in respect of paying exaggerated compensation, by removing the ordinary Common Law rule in relation to the actual damage, to which the noble Baroness, and I think other speakers, too, referred. On the whole, I believe that most experienced lawyers consider that it would be better to repeal Section 4, and to leave the question of compensation generally to be settled according to the normal Common Law rules, instead of, as happens now, applying the Common Law rules only in some cases. It is not a question of this rather special rule being applied always. Often, it is difficult to know whether you are going to apply the Common Law rule or whether you are going to apply the rule under Section 4. I think that most lawyers would agree that it is better to repeal Section 4 and to start again. I must say that the Molony Committee's remarks on this point, which 1183 were referred to by the Minister, are rather superficial. I find myself in full agreement with what the noble Baroness who preceded me said about this.
May I say one word about the "snatch-back", which has not been much referred to this afternoon except in a quite general way. It was, as the Minister said, one of the basic features of the Wilkinson Bill. The present Bill leaves it on the one-third payment basis. The interesting thing is that in Scotland this has never been the rule. You can go to a court in Scotland and get protection long before you have paid one-third of the purchase price. What is going to happen is that the people in Scotland will be deprived of this valuable rule and brought into line with the English. While I agree that in general it will be useful to the people in Scotland to have the English law on this particular subject, it seems to me that the one-third payment rule is not at all satisfactory; and now that the ceiling is raised to £2,000, the amount involved—one-third of £2,000—is a large sum of money. Quite obviously, the depreciation on these valuable motor cars and articles of that kind is nothing like that within a period of quite a number of months, and I personally should much prefer to see the Scottish rule incorporated into the English Bill, rather than vice versa. I hope that those who protect the interests of Scotland will have something to say about this aspect before this matter is decided.
There are many points of a similar kind which could be raised, some of which I hope will be raised on the Committee stage. We have quite a long time before we reach the Committee stage, and I hope that it will be possible for the Government and their lawyers to look into this Bill a little more carefully. From time to time I have very much regretted that we have not had the assistance of the legal Members of your Lordships' House on such Bills as this in which intricate and difficult problems of law are involved. I would suggest that there might be some sort of informal discussions, such as were held at the time of the 1948 Companies Act on the accountancy aspect of the Act. That aspect was worked out informally in a Committee presided over by the late Lord Jowitt, the Lord Chancellor of the 1184 day. There are so many points on which this Bill could be improved in that sort of way that I would commend to the Government the idea of initiating discussions of that kind. This is a Bill which hits citizens all the time, and it ought to be made into as good a piece of legislation as is humanly possible.
§ 6.30 p.m.
§ LORD SHACKLETON
My Lords, I desired to speak in this debate only to declare an interest as a simple member of the retail trade who welcomed the Bill. Indeed, by the time the noble Lord, Lord Drumalbyn, had sat down—and I should like to add my congratulations to those of other noble Lords—I felt that I understood all I needed to understand about the Bill. But, as the debate has gone on, I have found the waters lapping higher and higher until now they are clearly over my head. It now seems that it would have been much simpler to pass the Bill of my noble friend Lord Peddie because the present Bill is so imperfect that it ought not to leave this House.
I have not attributed any very wicked motives to the Government in regard to this Bill, but I realise that they are a very wicked Government and the view of my noble friend Lord Chorley that this is a pure electoral trick may have quite a lot to it. But we also recognise that this is a desirable Bill because it is important that some of these abuses should quickly be put right. I congratulate my noble friend Lord Peddie on his influence in bringing this about. I still do not quite understand the attitude of my noble friend Lady Burton of Coventry. I will not start re-debating, as she wanted to do, Lord Peddie's Bill. There was some justification for being doubtful about the Government. For years and years we waited for a Shops and Offices Bill, and it was not until a Private Bill had gone through that we got it. Then, interestingly enough, they waited over the period of a General Election. They did not think that was such a good Election winner as my noble friend Lord Chorley suggests this Bill might be.
Clearly this is a Bill which will be welcomed by all reputable traders; indeed, I have heard little criticism of it in the trade. I was interested by the arguments and the points made by my 1185 noble friend Lady Burton of Coventry. I shall be interested to hear the Government's arguments on those points, but I am quite sure that this Bill goes as near to the heart of the matter as can be dealt with in a limited measure. The speech of my noble friend Lord Chorley suggests that some more profound legislation is necessary, something which would clearly provide a lawyers' benefit for many days to come in both Houses of Parliament. I think that it is quite likely we shall be able to make some improvements to this Bill. I do not think it is necessary, as my noble friend Lady Burton of Coventry suggested, to extend this into retail premises. I am not suggesting that abuses do not occur, and it may be that a reputable trader is very much unaware of what goes on. The honest, reputable trader is not anxious in a shop, whether it be private enterprise or co-operative trading, to enter into unsatisfactory transactions of any kind—for the simple reason that he hopes to continue holding his customer, whereas the door-to-door salesman may not be in quite the same position.
I was interested in some of the points made about the nature of the actual contracts, and I should not have thought it beyond the power of the Government—though it probably would be beyond their power—or at least beyond the power of the legal profession, to agree on the standard forms urged by Lady Burton of Coventry. There are standard clauses for all sorts of things, and perhaps this is something in which the Consumer Council might bring a little pressure to bear. For all I know, there may already be a large measure of standardisation in this field. There is much to be said for this, and, as I have said, this is a matter on which the Government or the Consumer Council might use their influence, even if it is not incorporated into legislation.
I have only two other points. The first concerns the question of confirmation. As I understand it, the burden of proof will be upon the hire-purchase firm to prove that they have posted the contract. It would seem that recorded delivery will be a necessity if they are to show that they have posted it. I am not sure about this, and this is something upon which we can reasonably expect an answer to-day. I do not think 1186 we shall ever get this right to everybody's satisfaction. I think that four days is about the right period, although I do not disagree with the force of the argument of my noble friend Lord Chorley. But four days appears to be reasonable, if we are ever to get any business done at all. We do not want this sort of legislation to become a total obstruction of business.
My other point is this. If one has bought a motor car on a hire-purchase arrangement and is given one of these cards instead of the registration book, what happens when one goes abroad? I believe there are some situations in which it is necessary to produce the registration book. Are the Government opening negotiations on this point, through the international motoring organisations or the Board of Trade? Again there may be a single answer. It will be most irritating to be held up because one has not the proper document for the purpose. In general, I agree with my noble friend Lord Peddie and with those of my noble friends who have welcomed this Bill. It will certainly greatly reduce the number of really distressing stories, many of which were related on the last occasion we debated this matter, and the sort of cases with which we are familiar. There has been gross abuse in the field of hire-purchase, and this Bill goes quite a long way towards solving some of the problems.
§ 6.38 p.m.
My Lords, I shall keep your Lordships for only a few moments. I wish to give myself the pleasure of congratulating the Minister on a most interesting and extremely clear speech covering a very wide field. I also should like to confess some interest—not a present one, but one in the past. During the ten years before the war I was concerned in car hire-purchase and took my turn as chairman of the Society of Motor Manufacturers' hire-purchase section, which has now become a finance house association. The Minister told us that the bulk of hire-purchase related to motor vehicles. I would point out that, on the whole, as a trade they do not deserve all the slanderous things which are said about them in regard to hire-purchase. In the first place, I know of no respectable motor hire-purchase company which ever sends 1187 any salesmen on to a doorstep. That sort of selling is done by shops and retailers.
§ LORD SHACKLETON
My Lords, what does the noble Lord mean by "shops and retailers"? If he is defending his own house, he must be precise as to whom he is attacking.
I am only quoting instances from the last debate. I quite agree that the responsibility rests with the finance houses to be as selective as they can, and I can assure your Lordships that responsible ones are extremely selective and do take up very careful references before they enter into agreements. Indeed, the usual thing is for a proposed hirer to fill up what is called an application and agreement form, so that inquiries can be made on the basis of details given in the application. That wipes out the necessity for any "cooling-off" period for the hire-purchase company and they can select on the information received.
In the case of banks, if the hirer has a bank, they are good enough to give very short, terse answers. I believe that banks have only three answers to an inquiry: the first is "Undoubted", the second is "Should be good", and the third is "Cannot speak". But the trade references give a much clearer picture of the general reliability of the proposed hirer. I remember one rather unusual one which came into my hands, which said merely,This lady is guilty of over-oiling causing her throttle to advance",and we took particular care with that case.
I rose merely to say that there are highly respectable finance houses which have practically the same status as banks, or merchant banks, and that the real scandals occurred mostly in the old days and for very small items. With those few words, I should like to say that I support the Bill and I hope it will receive a Second Reading.
My Lords, I want merely to congratulate the Minister and to ask him a question now, as I do not want to interrupt him later when he replies. May I ask him whether or not Olympia, Earls Court, 1188 and any other places where exhibitions, such as all the agricultural shows, are held, and where a great deal of trade is transacted, come under the heading of "normal trade premises"? Could some clarification be given on that point?
§ 6.42 p.m.
§ LORD SHEPHERD
My Lords, all noble Lords who have taken part this afternoon in this debate have expressed their appreciation and their congratulations to the Minister, and I am sure that those who have not taken part would also wish to be associated with those comments. It must be very gratifying to a Minister to move in a maiden speech the Second Reading of a Bill which receives wide acclaim from all quarters. I hope that the Minister will be as receptive and forward-looking on Monday, when I raise another matter of consumer protection—namely, stamp trading. I hope he will be receptive and will listen to all the points that will be made. My Lords, time is running a little beyond what we had originally intended for to-day's Business, and therefore I will be brief. I have already asked the Minister's forgiveness if I should have to leave before he finishes his speech, and perhaps the time might equally explain the rather empty spaces behind me. I have three points to make. First, I am sure that the Minister will agree that this is a complex Bill and not easy to understand. It needs a great deal of careful attention and on many points, I think, legal advice. Therefore I hope that the Government will give us reasonable and ample time between this stage and the Committee stage. I think there are many on all sides of the House who are interested in consumer protection. As my noble friend Lady Burton of Coventry has said, we wish to see justice done not only to the consumer but to those who are in the business, and we should have ample opportunity not only to consult each other and our colleagues in another place, but also the many outside interests which are involved. I would draw the Minister's attention to the fact that we shall shortly be adjourning for Christmas and, as he well knows, it is very difficult to find anybody to talk seriously on any matter during that period. I therefore hope that he will try to persuade the 1189 usual channels on his side that we should have the Committee stage in, perhaps, the second week after our return. I think that this is a case where less haste will in the end mean more speed, and I hope that the Minister will do his best for us.
In regard to what is called the "cooling-off" period, of course I thoroughly agree that there should be this period during which the person who is entering into a hire-purchase agreement in his home, perhaps under pressure, should have time to think about it. But are we not, in fact, creating a very new principle in law? As I understand it, once a contract is signed, it is valid and cannot be broken unless there is the consent of the two parties. But what the Government are proposing is that the contract may be broken unilaterally by one party. I fully accept the reasons for this, but I suggest that we should not regard the document that the person may sign in his home as the contract, but should regard it merely as a notice of intention; and it should not be binding either on the hi re-purchase company or on the individual. Then the document to which the noble Lord the Minister referred—the one that is sent by the hire-purchase company to the individual in his home—would be the contract. The individual who is undertaking the hire-purchase agreement would then sign the document, tear off part, perhaps, and return it to the hire-purchase company. There would then be this period that we all want. It would mean the conscious effort in signing a contract free from any influence and, above all else as I see it, it would not raise many long-term questions about the validity of contracts.
I do not think my suggestion would create a great deal more work for the hire-purchase companies, and in many respects it would give greater protection to the individual and more time for thought before entering into a hire-purchase agreement. Like many of my noble friends, I wonder whether the mere posting of a cancellation is sufficient. If the Government believe that they should go forward as proposed in this Bill, then, in fairness not only to the individual who has entered the contract and wishes to break out, but also to the hire-purchase company or the agent, who may be a shopkeeper, I believe that 1190 the notice of cancellation should certainly be sent by recorded delivery or registered post. There would at least be some evidence that some matter had been sent through the post. As I see it, with the Bill as now drafted there could be considerable dispute, because you may not always be dealing with an efficient hire-purchase company recording incoming mail, and you may be dealing with a small shop which has very little administrative facility or knowledge of it.
My Lords, I would emphasise, particularly, the point that was made by my noble friend Lord Peddie in regard to the county court. I think it would be highly undesirable that, because we have raised the limit to £2,000 we should put the claimant, either an individual or a hire-purchase company, in the position of having to go to the High Court, involving not only delay in having the case heard but undoubtedly considerable extra expense. I understand that the county courts already take other items into their consideration, where there is a higher value than £500. I would therefore ask the noble Lord whether he would consider an Amendment to the Bill, to see that matters relating to this proposed legislation will be dealt with in the county court.
I have one last point and, because of his nationality, the noble Lord the Minister may be able to answer. I think it is recognised that some of the worst abuses of hire-purchase agreements are taking place in Scotland. It was put to me last night by a friend that there have been occasions where a person has been sick, perhaps on the point of death, and has called for a guarantor to guarantee the payments under a hire-purchase agreement. The person has died, and the hire-purchase company has taken back the goods; yet the guarantor, because he has guaranteed the hire-purchase agreement, continues to pay. My Lords, obviously under this Bill such a situation will not arise in the future, but I hope the Government will consider whether this particular part can be made retrospective, so that we can remove the obligation on such guarantors to continue payments even though the goods have been returned.
My Lords, those are the points that I wish to raise this afternoon. The noble 1191 Lord the Minister will appreciate that there will be much that we shall want to discuss on Committee stage. I think this is a type of Bill with which this House is eminently suitable to deal. We have the noble Baroness opposite, with all her vast experience, now on the Consumer Council, my noble friend Lady Burton of Coventry behind me, and many other noble Lords in all quarters of the House who take an interest. I therefore look forward to a lively and, I hope, constructive Committee stage, but above all I look forward to finding the Government very receptive to our pleas.
§ 6.52 p.m.
§ LORD DRUMALBYN
My Lords, my first task, I think, is to express to all those noble Lords and noble Ladies who have welcomed me personally to these debates my great appreciation of the way in which they have done so. I admit I am extremely fortunate in having had the opportunity to make my maiden speech on an occasion when I am presenting a Bill which seems to be, in general, universally acceptable. I should like to thank also the noble Lord, Lord Peddie, for the way in which he not only welcomed me to this Despatch Box but also welcomed the Bill.
It may be convenient, in view of what the noble Lord, Lord Shepherd, has said, if I just say a word or two in reply to him first. The first point he made, about ample time before the Committee stage, is, as he appreciates, not one for me, but I will certainly pass on to my noble friend Lord Carrington what he has said. On the subject of contract, I well understand the difficulties that he experiences in this regard, but, in the nature of the case, where we are talking of the "cooling-off" period, the document originally signed by the potential hirer is more in the form of an offer than in the form of a contract in its early stages. It does not become an agreement until that offer is accepted by the finance house. The finance house then sends back what is, in effect, a draft agreement for four days. I am not learned in the law, but I should have thought that it only certainly became a contract when the period for reconsideration, the "cooling-off" period, had elapsed. If I am wrong in that, we can certainly consider it during the Committee 1192 stage. The noble Lord, Lord Shepherd, also raised the question of whether the Bill should be retrospective. This is a point I should like to consider, but I believe the position is that all existing contracts within the limits established will be brought within the purview of the Bill in respect of the particular sections of the Act mentioned in the Bill. There is a clause in the Bill which deals with this.
The noble Lord, Lord Peddie, treated the introduction of this Bill as a sinner welcomed because of his repentance. But I must say to him that I think he almost exaggerates the capacity of the Government to do miracles in a very short time. The fact is that while it is perfectly true that the Bill was not mentioned in the gracious Speech, and while he presented his Bill on the following day, it was on the very next day, if my memory serves me correctly, that my right honourable friend made the announcement that we were going to introduce this Bill, and it was only fourteen days later that this gigantic Bill was laid. If he thinks it is possible to prepare a Bill of this kind and to go through the various consultations required in fourteen days, then he must consider that this Government can perform even greater miracles than they can.
§ LORD PEDDIE
But the Minister in another place has given a clear indication that those consultations never took place.
§ LORD DRUMALBYN
With respect, the consultations have been going on throughout the time since the Molony Committee reported. If I may remind your Lordships, the Molony Committee was appointed in July, 1959, and it reported in July, 1962. I think it would have been too much to expect that a Bill of this character could have been introduced at the beginning of last Session, and really this is the first opportunity that it could have been sensibly introduced. I hope that, that being so, it will not be regarded as any kind of last minute defence, but a very calculated and very carefully studied Bill indeed. The noble Lord, Lord Chorley, said that he had found a great many—I think he said—inaccuracies, or a word of that sort, but he did not venture to refer to any of them. Perhaps we shall get them when we come to the Committee stage.
§ LORD PEDDIE
My Lords, though one may accept the explanation the noble Lord has made, I wonder whether he would give some indication of the reason why the Bill was not mentioned in the gracious Speech, in view of the fact that the statement is now being made that the Bill was already in existence.
§ LORD DRUMALBYN
My Lords, there is no need to mention in the gracious Speech all the legislation that is coming forward, and there can be a great many reasons for not putting it in. One I may mention right away is that, for example, it may be that there were one or two points outstanding that had not been decided upon—and that is sometimes quite a good reason for not mentioning a Bill in the gracious Speech.
I come to the next point that I think the noble Lord, Lord Peddie, made—and it is a point that was also referred to by other noble Lords—and that is as to the court in which will be considered those cases which, when they arise, will exceed the normal purview of the county courts. I think if he looks at Sections 11 and 12 of the principal Act he will find that these cases are cases which are to be taken in county courts; and that, I am informed, covers the cases that will emerge, despite the increase in the limit, just as much as the cases below the normal limit for county courts.
The next point that he raised was the question of postage, and it is a point which was referred to by several other noble Lords. Surely the principal object of the provision here is to enable a fixed time for reconsideration (for "cooling-off", if you like) from the time of receipt of the agreement by the potential hirer until the time when he must post. This is the essential thing; and the great advantage is to give the hirer a fixed time. I should imagine that, if there is a dispute as to when he actually posted it, this would be a matter of evidence and proof in the ordinary way. But, again, this is a matter we can consider in Committee, if noble Lords have doubts about it on further consideration.
On the question of registration of log books, perhaps I may say this right away to the noble Lord, Lord Shackleton, because it is undoubtedly a matter 1194 which is of very wide interest. He raised the question of what happens to the licensing card so far as those who are purchasing their cars on hire-purchase and wish to take them abroad are concerned. Licensing cards will be as acceptable as registration books now are. What is really needed is an identification document; and a card will serve this purpose just as well as a registration book now does. I do not think any difficulty arises there. On the more general question of consolidation, one can look forward to consolidation but I should have thought—
§ LORD PEDDIE
My Lords, I hope the noble Lord will pardon this interruption. Before he leaves the point with regard to cars, I wonder whether he can give some indication of how he would deal with the retrospective aspect where log books are held by individuals who transacted hire-purchase prior to the passing of this Bill.
§ LORD DRUMALBYN
What the noble Lord said is quite correct. There is no obvious way to deal with this, and if he makes a suggestion we should be grateful. This is why I laid considerable stress on the facilities that are available through the register kept by finance houses themselves of all cars which are subject to hire-purchase contracts; and the facility that is available for any person who wishes to buy a car through hire-purchase to make application through the motor organisations or a citizen's advice bureau. He mentioned the question of emergency powers. I would only say that this question of hire-purchase controls is really quite a separate matter. This is a matter of economic controls coming under the emergency powers which lapse in any case in 1964, and naturally Her Majesty's Government are considering this whole subject at the present time. I would agree with a great deal of what he said as he is good enough to agree to what I said.
It seems to me that a great advantage of this Bill is that it will do two things: it will simplify to a considerable extent and it will cause finance houses to look more carefully at contracts, at potential customers and their dealers. I think the noble Lord said that greater selectivity will mean lower costs. We all 1195 hope for this and I think it will be the case. The finance houses may well find their costs, so far from going up, may even prove to go down.
I come now, my Lords, to what the noble Lord, Lord Airedale, said. He made some very interesting suggestions which I think we can consider in Committee with regard to the hire-purchase agreements, and the suggestion that we should insert into the hirer's copy of the agreement the rights and duties under Clause 6. As to the "cooling-off" period, I was not really certain whether he was asking for a "cooling-off" period for the finance house or for the dealer. There has been a certain amount of not unnatural confusion in the course of the debate, which is inherent in the nature of hire-purchase contracts, between the dealer (who, in a sense, is doing the selling) and the finance house which becomes the owner and is in effect in the end the person who is selling to the hirer under a hire-purchase contract.
I was not quite clear as to what the noble Lord had in mind; but I think it is worth while pointing out that in any case a copy of the agreement has to be sent to the hirer within seven days and this is in itself a very useful safeguard for the finance house and, indeed, for the dealer as well. The agreement has to be sent within seven days, and therefore gives a certain amount of scope for the acceptance or rejection of the offer that is made.
§ LORD AIREDALE
I thank the noble Lord very much. I was pleading for an opportunity for the finance house to make inquiries in cases where they suspect that the hirer is already heavily committed on hire-purchase transactions and may not be able to afford yet another.
§ LORD DRUMALBYN
My Lords, in that case it is open to the finance house to refuse the business. I should have thought this was quite a useful safeguard in itself.
My Lords, we have had two most interesting speeches from the noble Baroness, Lady Elliot of Harwood, and the noble Baroness, Lady Burton of Coventry. I should like to say to both noble Ladies how much I appreciated 1196 what they said about me. The noble Baroness, Lady Burton of Coventry, having put five specific questions to me, places me in a difficult position. Perhaps I could deal quickly with one or two of them. She asks whether we can hope for additions to this Bill before it becomes law. If any improvements can be made in the course of this Bill's passage we shall all welcome them; but if she means: Is it likely that we shall be able to overhaul the whole hire-purchase system and add these Amendments on to this Bill?—then I am bound to say that I think that that is unlikely.
She also asked about the "cooling-off" period for all hire-purchase agreements. I think this is the core of the limits we are putting on the additional protection—the "cooling-off" period. I ought to say that there is in my mind a very strong distinction between a person who goes out in search of goods, or at any rate goes into a shop with the object of buying goods (and probably knows before he goes whether he can afford to pay the full price right then or will have to buy on hire-purchase), and the person who is visited in his own home. It is better to make this distinction. It would immensely increase complications if we were to extend it to all kinds of transactions. Indeed, I think this cannot even be restricted to hire-purchase contracts, as such; but is a matter of whether you have time for reconsideration and that sort of thing whether you are buying on credit or cash; and is better dealt with under the Sale of Goods Act.
As to standardisation, the real difficulty is to find a kind of standardisation agreement that would cover all cases. We had looked at this and are naturally willing to look at any future constructive suggestions that may be made; but we have no evidence that to pursue a course of standardisation would result in greater protection for the consumer. It would need an immense amount of different kinds of agreements to cover different types of goods, and variations even for types of goods for various options open to the consumer.
As to the true measure of damages, a point raised by several noble Lords, this is, as the Molony Committee said, theoretically attractive; but surely it is better, as I said in my earlier speech, 1197 to allow both parties to know where they stand throughout the course of the agreement. There is always the objection that if, say, the car is handed back there will be a very strong feeling in the mind of the hirer who has handed it back that he has no real safeguard that the car will be sold to the best advantage. One cannot guarantee in all cases that the list of secondhand prices will be available; and that will be just as artificial and a good deal more unsatisfactory than that kind of clear-cut simple provisions in this Bill and in the legislation. I suggest to the House that simplification is one of the great virtues for which we should aim in this type of legislation.
I do not know whether I have covered all the points raise—
§ BARONESS BURTON OF COVENTRY
My Lords, could the Minister deal with the matter of advertisements and say whether it will be possible, when this Bill becomes law, to avoid stating the full hire-purchase price?
§ LORD DRUMALBYN
My Lords, the Advertisements Act is fairly specific on this. If goods are advertised at all, then the whole range of prices must be mentioned, and in this Bill we are adding the further provision that the full hire-purchase price must be stated, so that there cannot be any confusion on that.
§ BARONESS BURTON OF COVENTRY
My Lords, I gave the noble Lord three examples, and asked whether, if it was possible to avoid stating the full hire-purchase price, some companies might not disclose it.
§ LORD DRUMALBYN
My Lords, if a company advertises that it is prepared to sell goods on hire-purchase, then the advertisement must publish the full hire-purchase price. I think that is the best possible safeguard, in the circumstances. There can be no compulsion to advertise, but if there is advertisement, then the full hire-purchase price has to be shown.
§ LORD AIREDALE
My Lords, does that mean one could not have an advertisement which merely said, "Hire-purchase terms are available"? I 1198 should have thought that that was quite unexceptionable.
§ LORD DRUMALBYN
My Lords, if I may say so, these are really Committee points, and I think it would be wiser for the House to leave the Bill at this stage. I will certainly look forward to an interesting and searching Committee stage. In conclusion, I should like to thank your Lordships very much for the welcome they have given to this Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.