CONSUMER CREDIT BILL [H.L.]

HL Deb 30 April 1974 vol 351 cc33-82

3.58 p.m.

LORD SHEPHERD

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(Lord Shepherd.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1 [General functions of Director]:

THE EARL OF LIMERICK moved Amendment No. 1: Page 2, line 11, at end insert— (3) The Director shall appoint a deputy with the style of Credit Commissioner whose function it shall be, subject to the overall authority of the Director, to exercise day-to-day the duties laid upon the Director by this Act, and all references in this Act to the Director shall be construed accordingly.

The noble Earl said: On Second Reading, the noble Lord, Lord Shepherd, pointed out that this Bill commanded all-Party support, and that was borne out by our debate on April 9. He also offered assistance, in or out of the House, in dealing with the Bill's complex provisions. My colleagues and I are most grateful for the help that we have received, and look forward to more help in the future as we progress through the Bill. It is a complex measure. The number of Amendments in the name of the noble Lord, Lord Shepherd himself, shows that even the Government regard the Bill as it stands as something less than totally perfect. Our Amendments from this Bench have the same purpose—that is, the improvement in the clarification of a good Bill; and it is in that spirit that we shall move them.

This first Amendment goes to the heart of one of the essential features of the Bill—that is, in whom is the authority vested to exercise the very considerable powers which it confers—powers notably to admit and to exclude would-be credit givers from the business of giving credit and in substantial ways to confer exemptions from its provisions or to prescribe conditions under which the businesses of the credit givers are conducted. It would indeed be a good augury for our Committee if Government were to accept this first Amendment, for which I believe there is a good case. But my main purpose is to elicit more information about how the Director General will approach this very substantial new task, and Lord Shepherd may take it that I am most unlikely to press the Amendment this afternoon.

There are, as I see it, three strands to this debate. The first is the question of the public identification of an individual and a function. The Crowther Committee attached considerable importance to the establishment of a separate office of a Credit Commissioner. That is a debate which I do not propose to revive, but I think it is therefore all the more important that we should have a named official whose title identifies him specifically with consumer credit, and "Director General of Fair Trading" will not do this to the great majority of those concerned with giving—particularly the great majority of those taking credit. This is the more important because I understand that the Director will in some sense be acting as Crowther recommended: as a Credit Ombudsman to watch credit developments and to take steps such as the revocation of licences if practices injurious to the interests of consumers are identified. Obviously those aggrieved must know to whom to take their grievance; and to whom better than a very senior official styled the "Credit Commissioner"?

The second strand of the argument is the time which will need to be devoted to his task by the official concerned, under whatever style he may be operating. Crowther wanted a full-timer and this was reflected in the Bill introduced last winter. It is well known that the credit industry feel that the function will be a full-time one. I think it is also notable that one of the substantial criticisms of Part I of the old Bill, made perhaps most strongly by the present Minister of State, Mr. Alan Williams, and by others, was the possibility then envisaged that one day the function might be something less than a full-time function. As we now have it, the function is given to the Director General of Fair Trading, who I think we all agree already had a very full-time job before the question of his taking on this new one arose. So it is evident that he will properly and inevitably delegate the great bulk of the work. I was glad to learn from the noble Lord, Lord Jacques, in the Second Reading debate of the intention to appoint an officer of senior rank to take charge of the consumer credit branch of the Director's office, and also that recruitment would be open to experts in industry as well as to others—for example, lawyers or civil servants who had appropriate qualifications. Indeed, this practice, as the noble Lord pointed out, follows that adopted by the Director General for the recruitment of senior staff on consumer affairs. That of course is welcome, and it also seems to me to dispose of any difficulty there might be in identifying such an individual once discovered publicly as the Credit Commissioner, as this Amendment seeks to do.

The third strand in the argument is that of possible conflict of interest. In the Second Reading debate I suggested that there might be occasions when the Director had duties in relation both to consumers, as borrowers, and to lenders, in the fair trading category, which might lead to some conflict, and that in such a case each party should have a public champion. I recall that I was then chided by the noble Baroness, Lady Seear, who foresaw an unequal contest between the Director and one of his deputies, but I then saw it differently and I still see it differently. The Director is now to have four deputies and he can oversee their debates rather in the capacity of a neutral referee in a tournament between any two of them. There is no-one in whose ability to fulfil this role one could feel greater confidence than the present Director, Mr. John Methven, so what I have said is in no way an implied criticism of how he might conduct his function.

For the three reasons I have given I believe that the Amendment would help the Bill. But even if I am finally persuaded that it would not help the Bill, I am convinced that it would be helpful at this stage to have more information for the House, and those who will be affected by the provisions of the Bill, on how the Director will approach his duties. I beg to move.

4.8 p.m.

LORD SHEPHERD

I am very grateful to the noble Earl for the way in which he has moved this Amendment. As he has said, not only is this a complex Bill but it is a very complex industry that we are considering. The noble Earl referred to the large number of Amendments that were down in my name on behalf of Her Majesty's Government. I take it it is fair to say that most of those Amendments stem from continuing discussions that the Department is having with the many organisations involved in the credit industry, and I am quite sure that, even at this stage, it is right that we should continue to meet and discuss and, where we can, iron out any difficulties which those who are concerned in the industry foresee in the Bill.

I should very much like to accept the Amendment, but I am quite sure that the noble Earl does not expect me to do so. I should like to accept it because at the end of the day there is nothing between the noble Earl and the Government in this matter. We recognise that we are dealing with a very complex industry, and one that will need to have full confidence in the Director General or whatever organisation is set up. Equally, it must have the confidence of the general consumer. If the noble Earl will refer to the debates in another place, he will see that my honourable friend the Minister of State set out some of the reasons why we felt that the previous Administration were wrong in having a separate organisation for consumer credit. I think it is open to question whether the Crowther Committee might well have recommended something similar to what is in the present Bill if, when they were considering this matter, they had had knowledge of what the previous Administration intended to do in the setting up of the fair trading organisation.

I would say this to the noble Earl. I believe that this grouping of responsibilities under one Director General will be in the interests not only of the consumer but of the industry itself. First of all, they will be able to share many of the joint services. They will be able to use similar offices—and I am sure that that is a great advantage—rather than setting up separate offices in the regions. I also believe that this bigger organisation will allow flexibility among the staff; and that, in itself, will give promotional opportunities a greater scope. This is, of course, very important because unless there are promotional opportunities one is not likely to get the calibre of staff, not only which the consumer credit organisation here requires but which the other part under the fair trading office requires. So I think, without developing the point, that there are many advantages in going along the road suggested in the Bill. The question is: Should there be a deputy for consumer credit? I think there are dangers inherent in this. There is then a question—is there not?—as to who has ultimate responsibility: whether it is the Credit Commissioner, referred to in the Amendment, or whether it is the Director General. I should hope the Committee would take the view that there ought to be one man, and one man alone that is, the Director General—who car-carries the full responsibility of the organisation.

As my noble friend Lord Jacques said in the Second Reading debate, what is intended is that there shall be set up within the fair trading organisation one specific department for consumer credit; it will have a Director, and he—as I am sure the Committee will accept—will be a man of the greatest possible calibre. He will have the responsibility to report directly to the Director General. But I should have thought in such an organisation that the Director of that division would himself, as the Amendment suggests, have the full responsibility for the day-to-day conduct of the division, but of course be answerable to the Director General. I accept the noble Earl's point about identity, about the need to be able to identify the person, on the part of the consumer organisation, of consumers and also of those who practise within the industry; but I should have thought that the name of the Director would quickly be well-known. So I hope the noble Earl will feel that the Director General is fully aware of what he has said about the need for identity, particularly about the conflict of interest; and that what we have in mind, and what I know the Director General himself has in mind, will be met.

I do not wish to do what occasionally happens; that is, to criticise the Amendment in regard to what it would do. I would only repeat one point which I made earlier. I believe that if the Amendment were accepted and put into the Bill it would create considerable doubt within the industry as to who is responsible for the day-to-day conduct—whether it is the Director General or the Director of the division. I do not think there is anything between the noble Earl and the Government. I should expect, and hope, that all the noble Earl's intentions will be fully met within the context of the Bill as it is now before the Committee. I hope that these few words of mine will satisfy the noble Earl that there is nothing between us and that the Director General is fully aware of the needs of the consuming public and also of the industry; and I hope that the noble Earl will feel able to withdraw his Amendment.

THE EARL OF LIMERICK

: I am naturally grateful to the noble Lord, Lord Shepherd, for his explanation. He did me the compliment of addressing the first half of his remarks to an argument which I had not raised, which is the principle of whether the two offices should be separated. In fact, I went out of my way to say that I did not wish to raise that point. As to the answer to my would not be unfair to paraphrase what three strands of argument, I think it he is saying as that my Amendment is not so much wrong-headed as unnecessary.

LORD SHEPHERD

Yes.

THE EARL OF LIMERICK

: On the first and second points, I do not think he fully convinced me about the fact that if we are to attach importance to identity there is something to be said for having a man who is labelled, and thus identified, if he is to be a full-time deputy. The noble Lord turned my third point on me rather neatly by pointing out that there could be confusion about the ultimate responsibility, which could be a situation worse than the one we seek to avoid. I pay due regard to his arguments and, as I said earlier, I would not wish to press this Amendment. I should like to consider what he has said and perhaps reflect further on it and discuss it with one or two of my colleagues. So, without prejudice to the possibility that in some form we might return to this at a later stage, I now seek leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Clause 2 [Powers of Secretary of State]:

LORD WELLS-PESTELL moved Amendment No. 2: Page 2, line 36, leave out from ("subsection") to ("shall") in line 37 and insert ("(1) (a) shall be made by statutory instrument and").

The noble Lord said: As this is a drafting Amendment, perhaps your Lordships will feel that I can take it rather briefly. Subsection (6), as amended, will relate only to orders made under subsection (1)(a) conferring additional functions on the Director. Subsection 6, as amended, will read as follows: An order under subsection (1)(a) shall be made by statutory instrument and shall be of no effect unless a draft of the order has been laid before and approved by each House of Parliament.

It is unnecessary to cover in subsection (6) orders made under subsection (1)(b) regulating the carrying out by the Director of his functions under the Bill, because the making of such orders is already governed by Clause 178(1), which makes order-making powers under the Bill exercisable by Statutory Instrument subject to Negative Resolution. As I say, this is a drafting Amendment which I hope your Lordships will feel able to accept. I beg to move.

On Question, Amendment agreed to.

Clause 2, as amended, agree to.

Clauses 3 to 7 agreed to.

Clause 8 [Consumer credit agreements]:

4.19 p.m.

LORD JACQUES moved Amendment No. 3: Page 3, line 39, leave out from ("(1)") to end of line 42 and insert— A personal credit agreement is an agreement between an individual ("the debtor") and any other person ("the creditor") by which the creditor provides the debtor with credit of any amount. (1A) A consumer credit agreement is a personal credit agreement by which the creditor provides the debtor with credit not exceeding £5,000.

The noble Lord said: In general, the Bill applies to credit agreements where the debtor is an individual and the credit does not exceed £5,000. At present these two qualifications are lumped together in Clause 8. The Amendment, however, separates them. It calls a credit agreement where the debtor is an individual a "personal credit agreement", and then calls a personal credit agreement where the credit does not exceed £5,000 a "consumer credit agreement". This distinction is desirable because certain provisions of the Bill apply only to "consumer credit agreements" (as now defined), whereas others logically and properly apply to the wider category of "personal credit agreements", for example Clauses 10 and 11.

This Amendment does not alter the scope of the Bill. It simply seeks to achieve clarification throughout the Bill. I beg to move.

On Question, Amendment agreed to.

4.20 p.m.

On Question, Whether Clause 8, as amended, shall stand part of the Bill?

LORD ABERDARE

I wish to raise some small points for clarification in regard to this clause. They all relate to instances where one or other of the parties to the agreement might be domiciled outside this country. I should like to know what is the position in such cases. The Bill speaks especially of triangular arrangements, where there are creditor, debtor and supplier. It seems to me quite possible that in certain cases the creditor and the debtor might well be domiciled in this country but the supplier of the goods might be a foreign firm. Certainly as we on this side of the Committee would like to see, as the European Economic Community develops, the supplier may be a member of the European Economic Community. Therefore I wonder how the Bill applies in cases where one or other party to the regulated agreement is located overseas.

The second small point that I should like clarified concerns the position should one or other of the parties be located in the Channel Islands, in the Isle of Man or in Southern Ireland. It may be that with the responsibilities laid on a finance house by the Bill such an institution might find it possible to operate more freely without the control of the Bill if it were located in the Channel Islands or in the Isle of Man or Southern Ireland. I wonder what would be the application of the Bill in that case?

The third point on which I should be grateful for the help of the noble Lord is whether the Bill may have any effect on the financing of international trade where a trader from overseas who was not a body corporate seeks credit from a United Kingdom financial institution, in a form which would be regulated by the Act if the transaction were a domestic one.

I hope the noble Lord may be able to help me on these points. If they are too detailed I am quite ready to hear from him later.

LORD JACQUES

I thank the noble Lord for raising that interesting series of questions. They would have had to be raised at some time before the Bill leaves this House. The Department has given thought to the position of cross-border transactions in the light of an interesting memorandum it has received from the Finance Houses Association. It is necessary to take into account not only the necessity not to interfere with genuine cross-border agreements but also to make sure that it is not possible to evade the protection given by the Bill by such cross-border agreements. Furthermore, the position in the light of the movement of the E.E.C. has to be taken into account, including the position of the United Kingdom in the E.E.C. The Department may wish to discuss these matters with the interested parties within the next few days, and it is expected that appropriate Amendments will be introduced at the Report stage of this Bill.

LORD ABERDARE

I am extremely grateful to the noble Lord for that answer.

THE EARL OF LIMERICK

: I also have a point to raise. I apologise that I was not able to give notice of it since it arose at a very late stage, but I will put it in the most helpful way I can and I 'hope to get a quick and reassuring answer. It concerns the reference in Clause 8(1) to the credit not exceeding £5,000, which immediately introduces an ambiguity. I hope to hear that the ambiguity will be removed by forthcoming amendments to Clause 10 and subsequent clauses.

I have in mind two cases: the first is that of a credit with an agreed limit which exceeds the figure of £5,000—shall we say £10,000—on which the availment is only £3,000. How would this be affected? Does it fall within the scope of the Bill or outside it? The second case is that of a loan which is repayable by instalments, taking again the figure of £10,000 repayable by sums of £1,000 a year. Naturally, there comes a time when the availment on this credit falls below £5,000. How then would that be affected as regards the scope of the Bill?

I hope to be told that this will all be dealt with in our subsequent discussion on Clause 10.

LORD JACQUES

I can assure the noble Earl that these matters will be covered when we debate Clause 10.

Clause 8, as amended, agreed to.

Clause 9 [Meaning of credit.]:

On Question, Whether Clause 9 shall stand part of the Bill?

LORD ABERDARE

I should like to raise a point in regard to subsection (1), which reads: In this Act 'credit' includes a cash loan, and any other form of financial accommodation. The phrase "any other form of financial accommodation" seems to be very wide and imprecise. I think that where the Bill imposes considerable obligations on lenders who enter into regulated agreements they should know which agreements are and which are not covered by the Bill.

I have two specific points to put to the noble Lord with which, as he has seen the memorandum of the Finance Houses Association, he will be familiar. One concerns a line of credit. Is this, or is it not, a form of "financial accommodation"? Clearly the individual drawings against a line of credit are within the scope of the Bill, but the question I should like to put to the noble Lord is whether the line of credit itself is a form of "financial accommodation" even if it is never used. The other point in connection with a line of credit is that it is sometimes subject to the payment of a commitment fee, and if the line of credit is subject to the provisions of the Bill that will include the requirement to disclose the effective annual rate of interest; but the lender would then be asked to do the impossible by having to express the commitment fee as a percentage of drawings before it was known what drawings were going to be made against the line of credit. How can the lender state what is the effective annual rate of interest if there are no drawings?

I should also like to ask about the letter of intent: there are occasions when a customer places an order, knowing that delivery of the goods will not be for some time ahead, and before placing the order he wants to ensure that the credit will be available at the time of delivery. In that case, the credit granter issues a letter of intent indicating that the credit will be available at the delivery date. The precise terms may depend on conditions prevailing at the delivery date, and no agreement will be signed until that point arrives. Certainly, I would imagine the agreement itself would be a form of financial accommodation, but what I really want to ask is whether the letter of intent is also a form of financial accommodation under this Section 9?

LORD JACQUES

The term "financial accommodation" has been used quite deliberately to cover any form of credit that might be invented in the future, and which might otherwise not be within the scope of the Bill. In the earlier years of this century, hire purchase was invented as a way round other legislation. We wish to avoid this position happening again. We have looked at the points made and do not think any particular difficulty presents itself. However, we will consider whether some narrower term could be used which would not detract from the protection in the Bill.

The objections raised, we think, can be overcome by the flexible use of the regulations. I am grateful to the noble Lord for the interesting points he has raised on line of credit and letter of intent. In view of the complexities involved. I would prefer that any answer I gave should be accurate. Therefore, I would prefer to write to the noble Lord explaining just what the position would be.

Clause 9 agreed to.

Clause 10.—[Running account credit and fixed-sum credit.]:

LORD JACQUES

This Amendment is a parallel Amendment to Amendment No. 3. I beg to move.

Amendment moved— Page 4, line 17, leave out ("consumer") and insert ("personal")—(Lord Jacques.)

On Question, Amendment agreed to.

LORD JACQUES

My Lords, I beg to move Amendment No. 5.

Amendment moved— Page 4, line 25, leave out ("consumer") and insert ("personal")—(Lord Jacques.)

On Question, Amendment agreed to.

4.32 p.m.

LORD JACQUES moved Amendment No. 5A: Page 4, line 28, leave out subsection (2) and insert— (2) In relation to running-account credit, "credit limit" means, as respects any period, the maximum debit balance which under the credit agreement, is allowed to stand on the account during that period disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily.

The noble Lord said: The effect of this Amendment which has been drafted to deal with the criticisms of the bankers, is that "credit limit" shall mean the basic credit limit agreed, and shall not mean any higher credit limit which may be temporarily allowed by the agreement. Thus, if an overdraft agreement fixes £4,500 as the basic credit limit but allows the debtor to exceed the limit by £600 or £700 from time to time, the agreement will be a regulated one even though it does in fact allow the debtor to take credit in excess of £5,000. The same rule applies in relation to the £30 agreement for small agreements. I beg to move.

THE EARL OF LIMERICK

: I find myself in some difficulty here. My understanding was that Amendment 5A was intended to bring about the same result, or so it appeared, as Amendment No. 6 standing in the name of my noble friend, Lord Aberdare, and myself. If that is the case, I would find it hard to debate this Amendment without referring to Amendment No. 6 which follows. I think this is a course that might be convenient to the House, and we should proceed in that way. I therefore find it unnecessary to make the case in principle for this Amendment, because evidently it has been accepted by the Government in tabling Amendment 5A. However, I do note certain substantial differences between these two Amendments, and it is to these that I should like to address myself principally.

This is the first of a series of Amendments which deals with banks. It is, I think, a subject on which, judging by the Marshalled List, we are likely to spend more time than on any other. The intention of Amendment No. 6 was the avoidance of doubt. It seems to me that Amendment No. 6 does avoid doubt, but I am by no means clear that Amendment 5A is equally successful. I am no lawyer and have not studied Amendment 5A or had the benefit of the advice of anyone who has studied it through lawyer's spectacles, but my main concern about Amendment 5A is that the disregarding, the saving which it permits, relates to "any term of the agreement allowing that maximum to be exceeded merely temporarily". To me as a layman, this would imply that one could only disregard a temporary excess if the original agreement constituting the loan so provided. It would seem to me that the conversation with one's bank manager would have to go something like this: "All right, we are agreed that your overdraft limit shall be £2,000. By the way, I am going to have to agree that this £2,000 should be temporarily, for an unspecified time and by an unspecified amount, suffered to rise beyond that figure in order to take it out of Clause 10 and the other control of a regulated agreement" This is a different concept.

It may be I shall be told that the intention is that the agreement should apply to a new agreement constituted by a bank manager, suffering the amount to become overdrawn beyond the agreed limit. But if that is so, it does not seem to me in conformity with the way most people would read this Amendment. We are dealing with the very real problem of an overdraft which perhaps is knocking on its limit, a cheque is presented at five minutes to three, and the bank manager has the unenviable task of deciding immediately (and that means within banking hours in this context) whether to honour the cheque and thereby allow the overdraft limit to be exceeded, or to dishonour it, with all sorts of consequences. Decisions have to be made quickly and in conditions when generally it is not possible to get on the telephone to the borrower to find out that it was all a misunderstanding, or that there is a cheque in the post which has not been received, or something. If we are really saying this constitutes a new agreement each time, we are getting into the same sort of difficulty which we were seeking to avoid in Amendment No. 6, which would have been successful to that end, or so it seems to me. So I am in some difficulty because I am not fully clear, from what the noble Lord, Lord Jacques, said, that he was trying to meet this point with his Amendment. If that were so, the matter becomes a technical one. If I have raised a point which cannot be answered immediately, perhaps we should look at it again with technical advice between now and the next stage.

4.39 p.m.

LORD SEEBOHM

Now that we are in the jungle of banking amendments, I should like to say as an interested and professional banker, that we warmly welcome this Bill and hope it will be enacted. The Amendments we have put forward have not been such as to make more easy the life of bankers, but they will ensure the customers of the bank, who are consumers in the context of the Bill, can in fact maintain to a reasonable extent the easy and comprehensive manner in which they have been able to borrow money in the past. I should like to take the opportunity also of saying how grateful we are for the attention that has been given to this Bill by the noble Lord, Lord Shepherd. He has devoted a great deal of time and thought to it. We are grateful for his sympathetic approach and for the fact that he has agreed with a great number of suggestions we have made. I think I might finally say on this particular aspect that two of the Amendments down in the noble Lord's name are in fact much better than those we have put forward ourselves. So we are very grateful to the noble Lord, Lord Shepherd, for all the efforts he has put in on our behalf.

I believe that the noble Lord, Lord Shepherd, is moving towards us in attempting to meet our requirements on this particular Amendment, but, as the noble Earl, Lord Limerick, has said, it does not get us out of the difficulty. Before I join in pressing for our Amendment, I wonder whether we could have some firm assurance that this dialogue will be taken a little further so that we could, either by altering the words in Lord Shepherd's Amendment or by adopting part of ours, get some agreement which would make the Bill satisfactory in this respect.

VISCOUNT AMORY

I want only to emphasise the point my noble friend Lord Limerick made about this excess. It seems to me that this needs to be cleared up. In Lord Shepherd's Amendment the words used are: disregarding any term of the agreement allowing that maximum to be exceeded …". The Amendment of my noble friend Lord Aberdare says: … disregarding payments which are allowed by the creditor …". It seems to me that the temporary unintended excess that might come about as a result of a credit not being paid in when it was expected would be an excess that would be better covered by the wording in my noble friend's Amendment than the wording in the Amendment moved by Lord Shepherd, because that sort of excess can hardly be said to be a term of the agreement.

LORD JACQUES

I think it would be wise for us to look closely at the Amendment we are now considering. It says: (2) In relation to running-account credit, 'credit limit' means, as respects any period, the maximum debit balance which, under the credit agreement, is allowed to stand on the account during that period, disregarding any term of the agreement allowing that maximum to be exceeded merely temporarily. If there is no term, then that part of the Amendment clearly does not apply, and you can therefore finish at "period". Obviously, if there is no "term of the agreement" then there is none to be disregarded. I would also point out that the issue is also covered in my noble friend's Amendment to Clause 81, No. 73A which says: Where, in relation to running-account credit, the creditor at any time agrees to allow the credit limit to be exceeded, but intends the excess to be merely temporary, Part V (except section 56) shall not apply to that agreement (as modified by subsection (2)). If the noble Lord is not happy with the Amendment as it is, I think I can make two promises to him. First, we will write to him, if necessary to try to clear up any doubts he has; and, secondly, if the Amendment is deficient in the way he thinks it is, we will get together with him with a view to getting rid of that deficiency at the Report stage.

LORD SEEBOHM

May I make one comment on that? In the bank, when you are sitting there, as I have done, handing out credit, you get possibly anything up to one hundred cheques a day for which there is no agreement because you have not arranged an overdraft. These are excesses on the account, and you have to make up your mind whether or not to pay them. Then it may be that another cheque comes in the next day, and you have to make up your mind for a second time. This is the sort of situation, where you have queries every day, which I think is not covered by Lord Shepherd's Amendment.

LORD JACQUES

If I may have the leave of the Committee, may I reply to this point? Immediately the banker accepts the cheque which causes the overdraft there is in fact an agreement: by accepting the cheque he has entered into an agreement immediately. He has agreed to allow an overdraft; and for the excess of a further cheque he accepts a further limit, and so on. This is in fact an agreement in law.

THE EARL OF LIMERICK

: I was hoping to have my doubts removed in order for there to be clarity, but I confess that as the discussion has gone on I found myself moving the other way. If one accepted the last proposition put forward by the noble Lord, Lord Jacques, it would mean that if by accident a bank clerk accepted a cheque that he should not have accepted all sorts of legal consequences might ensue. There may or may not be an antecedently negotiated agreement; it may be something that nobody had in contemplation.

But, more fundamentally, I was puzzled by his explanation of this disregarding point. If, as he says, there is no term to be disregarded, it seems to me we are right back in the difficulty which the Amendment sought to avoid, because there is just nothing to consider here. But if there is an agreement in this specific term, perhaps with a figure on it surely this itself constitutes an agreement and we are not talking about a once-for-all temporary excess.

Furthermore—and here I think I am echoing the point made by Lord Seebohm—I cannot see what the position would be if a man who had conducted his account regularly and was always in credit, went, through some oversight (it might be a credit coming in late or some-body omitting to make a credit which he had been anticipating), for the first time in his life into overdraft. You would have a situation in which the banker would very properly realise that there was nothing intentional and would honour the cheque, thereby creating an agreement, with all these conditions attached to it, as a result of this temporary excess. Is this really what we intend? If, as I suspect, it is not, would the situation not be better served by words more nearly approximating to those in Amendment No. 6? We are in some difficulty here. I would not wish to press the matter beyond that. Approaching it in the spirit in which we are approaching this Bill, I should be very happy to rely on the assurance given from the Front Bench opposite: that it will be looked at to decide whether the suggested difficulty is a genuine one. No doubt the Government will come forward with a further Amendment at the next stage of the Bill.

VISCOUNT AMORY

Also, is there not the case where the excess may carry the overdraft over £5,000, which we have discussed before—marginally, temporarily over the £5,000? I should have thought that was another factor to be considered in this problem.

LORD JACQUES

That, of course, is the main issue so far as this Amendment is concerned—the temporary excess over £5,000. I would confirm the assurance given and say that we will endeavour to write to the noble Earl to give due time for consideration before we reach the Report stage, so that we can have consultations. We can tell noble Lords opposite what we are going to do at Report stage, and they will be free to take alternative action if need be.

THE EARL OF LIMERICK

: I am very happy to accept that assurance. Perhaps I might gently remind the noble Lord that it looks as if time may be a little short between this stage and the next, so it would be appreciated if such correspondence or consultation could take place very promptly.

LORD SHEPHERD

I will give an assurance on behalf of the Government that the noble Earl will have a letter posted to-morrow night.

On Question, Amendment agreed to.

4.50 p.m.

LORD ABERDARE moved Amendment No. 7: Page 5, line 4, leave out lines 3 to 7.

The noble Lord said: This Amendment would delete sub-paragraph (iii) of subsection (3)(b). At the moment it reads as follows: … running-account credit shall be taken not to exceed the amount specified in that subsection ('the specified amount') if— (iii) it is probable having regard to the terms of the agreement and any other relevant considerations, that the debit balance will not at any time rise above the specified amount.

I wonder how a person who is granting credit can possibly know what the probability is as to whether the debit balance will not at any time rise above the specified amount. I can understand that in certain cases it is quite reasonable that a judgment of probability could be made. Where a shopkeeper has a certain stock which does not exceed the £5,000 limit, then of course he will only be able to stock up to that amount, and therefore the probability is there to be seen, but there are other situations which are much more obscure.

The noble Lord, Lord Jacques, has already mentioned the memorandum from the Finance Houses Association in which they give two practical examples of where difficulties would arise, and I hope that I have no need to go into those in any great detail. To summarise the two cases, one is the case of a person who has a credit limit in excess of £5,000, subject to annual review. Being in excess of £5,000 he is not covered by the Bill. But at the end of the year when the review takes place it may well be that he has not drawn more than the £5,000, and therefore the credit granter might be expected to say that it is probable that his debit balance will not at any time rise above the £5,000. On the other hand he, the borrower, maintains that he needs to keep this larger sum available, and in those circumstances who is to judge what the probability is?

The second case that I quoted, also to do with a motor dealer, was where the borrower had two sources of credit open to him, both with limits in excess of £5,000 and therefore without the provisions of the Bill. The borrower will draw on those credits according to which of them offers him the better terms. At any one time a borrowing on one or other of the granters' credits may not exceed the £5,000 limit, and this will depend on the different terms offered by different credit granters. Again, how is the credit granter to judge, according to this subsection, whether or not it is probable that the debit balance will not at any time rise above the specified amount? It seems to me to lay a difficult burden on the credit granter.

Later, when we come to Clause 15, the case of the variable term leasing agreements, I understand that in that case it is the terms prevailing at the outset that determine whether or not a transaction is within the scope of the Bill. I would suggest to the Government that in this case, too, it would be much simpler to make the same rule, that it is the initial agreement that should determine whether or not a particular grant of credit falls within the scope of the Bill. The concept of this clause of probability seems to me to be quite inappropriate in a Bill which lays obligations and penalties on a person granting credit. I beg to move.

4.55 p.m.

LORD JACQUES

It would be much too dangerous to use the original agreement as the basis, and have the decision based upon that. One reason is the illustration which the noble Lord himself used, that of a trader seeking credit to keep his shop stocked. His stock is roughly £1,000, and is never likely to exceed it. In order to get outside the terms of the Bill, an agreement is made on the basis of £6,000, so that if you are going to have decisions based upon an agreement which may be seeking deliberately to avoid the Bill then you are going to open the door quite wide, and in what I think is an objectionable way.

The original Bill included all running-account agreements where the debtor could draw less than £5,000, even though the credit limit was above this. This meant that practically all running-account agreements were included. We have made strenuous attempts to meet all the points of criticism. The new definition lets out much that was included in the previous Bill. The price of the new definition is this small grey area which can be minimised by the creditor. To go any further would run an unacceptable risk of evasion. If creditors are in doubt they can always place themselves in the clear by playing safe and creating an agreement, as within the Bill. Creditors will have to learn to be more precise in the terms which they offer.

LORD ABERDARE

I am grateful to the noble Lord. I understand his point about the possibility of evasion. I think it is a good point, but I still think that he has not quite answered my questions as to how the creditor works out this probability. He speaks of the creditor being more precise, but the point of my examples was that the creditor was being precise; he was trying to meet the needs of the borrower. The borrower told him that he wanted £6,000 worth of credit and could show that he might well need £6,000 worth of credit. But in the first example that I gave, in fact after the the first year he had not used that amount of credit; he had only required £2,000 or £3,000 worth. The creditor has been perfectly precise, and so has the borrower, but it is a matter of probabilities. Is it fair to lay on the creditor the requirement that he has to make a judgment of this sort when, if he makes the wrong judgment, he is liable to all sorts of penalties under the Bill? I wonder whether the noble Lord would look at that again.

LORD JACQUES

The creditor does not need to make any judgment. All he has to do is to lend in accordance with the Bill.

LORD ABERDARE

It depends on whether or not the agreement to lend is a regulated agreement under the Bill as to whether the probability is that the amount he lends is under £5,000. That is the point.

LORD JACQUES

I would have no doubt; I would play safe. I think that every businessman in this House would play safe. If there is an agreement to loan up to £6,000. it does not end there. There are lots of discussions. The creditor can come to his own conclusions as to whether the amount is likely to exceed £5,000. In the end he has to use his judgment in such a way that he plays for safety. If it were a stocking agreement where there was some doubt as to whether the total credit would be taken even though it was £6,000, I should have no hesitation in playing safe and make the agreement in accordance with the terms of the Bill. Unless we did that we should be in great difficulties. It is not an offence if a credit agreement is wrongly created out-side the Bill if the creditor does his best to avoid this and bases his judgment upon information given to him. I believe that this is to be found in Clause 164.

LORD ABERDARE

If that is the case, I am happy to beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 10, as amended, agreed to.

Clause 11 (Restricted-use credit and unrestricted-use credit):

LORD JACQUES

Amendment No. 8 is parallel and arises out of Amendment No. 3. I beg to move.

Amendment moved— Page 5, line 8, leave out ("consumer") and insert ("personal").—(Lord Jacques.)

On Question, Amendment agreed to.

LORD JACQUES moved Amendment No. 9: Page 5, line 11, after ("them") insert ("whether forming part of that agreement or not").

The noble Lord said: This is a rather technical drafting Amendment. It removes any doubt whether a credit sale or conditional sale agreement where the loan and the purchase are combined in one agreement is a debtor-creditor-supplier agreement as is a separate loan agreement. Therefore it is purely for clarification. I beg to move.

On Question, Amendment agreed to.

5.1 p.m.

VISCOUNT AMORY moved Amendment No. 9A: Page 5, line 19, after ("chooses") insert ("(i)").

The noble Viscount said: I confess that I find everything in the Bill extremely complicated and a number of Amendments associated with my name are designed to obtain greater clarification on a number of points. The noble Lord, Lord Jacques, charmingly said that the Amendment he was moving was of a technical nature. I find every one of them of a profoundly technical nature.

I should like to associate myself very much with what my noble friend Lord Seebohm has said about the trouble that the noble Lord, Lord Shepherd, and the noble Lord, Lord Jacques, have taken to meet the concern expressed on Second Reading about some of the provisions and the effect they would be likely to have on the quality of service rendered by the banks. Indeed both noble Lords have taken great pains in this matter and it was very kind of them to assist those of us who have expressed some concern about these proposals in their willingness to meet our wishes. There is no question that the gap between the views expressed by some of us on Second Reading has been greatly narrowed by the provisions now included in some of these new Amendments. The object of some of our Amendments is to see whether we can be satisfied that the gap has been substantially eliminated, and where it has not we shall say that we are not happy yet.

Perhaps the Committee will agree that I should speak to Amendments Nos. 9A and 9B together because they cover the same ground. Again their object concerns the avoidance of doubt. It seems that it could be held that subsection (1)(b) and (c) of Clause 11 would bring all overdrafts into the category of restricted use of credit, whereas the nature of an ordinary overdraft is the very opposite of that definition.

I suppose all drawings on overdraft would be either to finance transactions between debtors and suppliers or to re-finance existing indebtedness. A cheque could be held to constitute restricted use of credit, if for example it were used to settle a monthly account supplier and the exemption given under Clause 11 subsection (2) does not seem to be sufficient. It is quite certain that the Ministers do not intend the effect that I have mentioned, but I should be grateful to know whether they would accept the Amendment I propose in order to provide greater clarification or suggest some other way in which the matter could be made more clear than it seems to be under the Bill as it stands. I beg to move.

LORD JACQUES

Agreements for loans, whether overdraft or in any other form, will only come within the definition of debtor-creditor-supplier agreements under Clause 13 if they are the subject of pre-existing arrangements between creditor and supplier. The only circumstance in which they could be so would be if a cheque guarantee card made a pre-existing relationship. We have put down Amendment 107B to Clause 182 to make it clear that they do not create a pre-existing relationship. Thus there is no reason for these Amendments.

VISCOUNT AMORY

I am glad to hear that the Amendments are not necessary, and I will certainly think over what the noble Lord, Lord Jacques, has said. I will look at Clause 182 on the assumption and in the hope that I shall feel happy when I have done so. I will not press the Amendment at this stage.

LORD JACQUES

May I mention again that what needs to be looked at is Amendment 107B?

Amendment, by leave, withdrawn.

LORD SHEPHERD moved Amendment No. 10: Page 5, line 24, leave out ("consumer") and insert ("personal").

The noble Lord said: I suspect that this is a consequential Amendment to Amendments Nos. 4 and 5 previously moved. I beg to move.

On Question, Amendment agreed to.

Clause 11, as amended, agreed to.

Clause 12 agreed to.

Clause 13 [Debtor-creditor-supplier agreements]:

5.9 p.m.

VISCOUNT AMORY moved Amendment No. 10A: Page 6, line S, at end insert ("provided that for the purposes of this Act tender to a supplier of a cheque shall not, if the debtor also produces evidence that the cheque will be paid on presentation, constituted a debtor-creditor-supplier agreement")

The noble Viscount said: Here again I hope that I am merely asking for greater clarification. This Amendment concerns the cheque guarantee card guaranteeing that a cheque up to £30 will be met on presentation. This type of card is in no way similar to the credit card and it is submitted that the cheque guarantee card does not in itself constitute a means of obtaining credit. In this case the means of obtaining credit is the cheque and not the card which is not the credit instrument.

The purpose of the Amendment is to make sure that the cheque card as against the credit card is excluded from the debtor-creditor-supplier agreement. This affects Clause 75(2) which imposes on the issuer a liability for the consequences of misrepresentation or breach of contract which is obviously inappropriate in this case. Therefore it seems that unless the Amendment I am speaking to, or one to Clause 75, is adopted, the banks would be compelled very reluctantly to withdraw the use of cheque cards which I think would be a pity and would be regretted by a large number of customers.

LORD SHEPHERD

I am happy to advise the noble Viscount that his Amendment is not necessary. It was never the intention that cheque cards should be subject to the Bill or that the issuer should have joint liability with the supplier under Clause 75. These cards do not do much more than provide a general guarantee that certain cheques will be paid. They are not the subject of specific arrangements between a creditor and any supplier. Originally, we did not consider cheque cards would be subject to the Bill as drafted; but it has subsequently become apparent from literature supplied by the banks that cheque cards might be held to be subject to the Bill. The Government have accordingly put down Amendment 107B to Clause 182 which makes it clear that cheque guarantee cards are excluded from the provisions of Clause 75. With that advice I hope the noble Viscount will agree that his Amendment is no longer necessary.

VISCOUNT AMORY

All this is very soothing. I am afraid the noble Lord will lull me into a false sense of security. But if, on the contrary, I find that I am not satisfied, then my indignation will break out on some other occasion. Subject to what the noble Lord has said, I beg leave to withdraw my Amendment.

LORD SHEPHERD

All that I can say to the noble Viscount is that if he has any wrath, it will be as nothing to the wrath I will bestow on the person who gave me the advice that I gave to the noble Viscount.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Clause 14 [Credit-token arrangements]:

LORD SEEBOHM

I am not sure whether this matter is covered by the previous discussion. But, as it stands, Clause 14 requires to be amended in the way indicated in the Amendment put forward by me and others. I beg to move Amendment 10B.

Amendment moved— Page 6, line 32, at end insert ("unless the object is usable only to enable a person to obtain cash from a cash dispensing machine.")—(Lord Seebohm.)

LORD JACQUES

We have sympathy with the purpose of this Amendment, but we should like a little more time to study the circumstances which have been raised. If the noble Lord will be good enough to withdraw this Amendment, we give the assurance that we will submit an appropriate Amendment at Report stage.

LORD SEEBOHM

I thank the noble Lord. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD SEEBOHM

Amendment 10C raises again the matter of the check card referred to in Clauses 13 and 75. If that has been settled, perhaps this Amendment, too, should be withdrawn.

THE DEPUTY CHAIRMAN OF COMMITTEES

Does the noble Lord wish to move this Amendment?

LORD SEEBOHM

Yes, I wish to move the Amendment.

Amendment moved— Page 6, line 32, at end insert— (5) For the purposes of this Act production to a supplier by a person of evidence that the cheque which he is tendering will be paid on presentation shall not constitute that evidence a credit token."—(Lord Seebohm.)

LORD JACQUES

We are sympathetic to this Amendment, but we should like a little more time for study and consultation. We hope to overcome the problem in one way or another, not necessarily by an Amendment to this clause.

LORD SEEBOHM

I thank the noble Lord and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Clause 15 [Consumer hire agreements]:

LORD JACQUES moved Amendment No. 11: Page 6, line 33, leave out from ("agreement") to ("which") in line 35 and insert "made by a person with an individual (the "hirer") for the bailment or (in Scotland) the hiring of goods to the hirer, being an agreement".

The noble Lord said: This also is a drafting Amendment. The people who hire out are not necessarily the owners. Very often they are, in effect, wholesale hirers; and after hiring in bulk a large number of articles they themselves then hire them out, one at a time. This Amendment is designed to prevent the term "owner" being used for the person who hires out. Consequently, it is a purely drafting Amendment and does not in any way increase the scope of the Bill. I beg to move.

On Question, Amendment agreed to.

5.18 p.m.

LORD ABERDARE moved Amendment No. 12: Page 6, line 42, at end insert— (3) This section shall not apply to a bailment or hiring where all the following conditions are satisfied, namely, that—

1. (a) the cash price of the goods exceeds £5,000;
2. (b) the goods are selected by the lessee;
3. (c) the lessor is not an associate of the supplier;
4. (d) the goods are to be used in the business of the lessee."

The noble Lord said: I beg to move Amendment No. 12. Clause 15 defines which hire agreements are to be regulated under the Bill but it sweeps together without distinction two different forms of hiring: leasing, which is a commercial form of hiring; and rental, which is the normal consumer rental agreement with which most of us are familiar. We all understand and support the Bill where it attempts to cover rental agreements and to give the protection of its provisions to consumer rental agreements. There is no quarrel about that object. But we consider that leasing is quite a different matter, that the Bill should discriminate here and that leasing should not in most cases come under the provisions of the Bill. It is used by industry and commerce and it is not a facility used by consumers in general.

To my knowledge there have been no complaints about leasing in the industrial and commercial field, nor have there been any abuses which require remedying; but, unfortunately, because the Bill defines a consumer as being anybody who is not a corporate body it also covers the cases of sole traders and partnerships. Therefore, commercial leases taken out with sole traders and partnerships will be subject to the Bill. In our view, this may well discriminate against them so that what is intended to be a consumer protection measure will, in fact, interfere with the commercial life of the country in the case of these leases. The requirements imposed by the Bill (which are, I repeat, wholly appropriate in consumer rental cases) will mean that sole traders and partnerships obtain leasing facilities less readily than do their corporate competitors. So what we have tried to do in this Amendment is to distinguish between the two things: to leave the normal consumer rental agreement within the Bill, and to exclude the commercial leasing agreement.

There are several differences between the two, but we have tried to distinguish them by applying the following test. The essential element in leasing is customer choice. The intending lessee first chooses the goods and then chooses the supplier of the goods. It is only after that choice is made that he approaches the lessor, and the lessor does not buy the goods until invited to do so. The lessor is not an associate of the supplier, and holds himself out as providing a financial service for leasing goods generally, whereas in renting the goods are selected by the customer from the stock already owned by the rental company, which holds itself out as renting the particular class of goods in which it specialises and which it offers on a standard tariff. There is a clear distinction here between the consumer rental agreement and the commercial leasing agreement. It is in the belief that this distinction should be made and that the commercial leasing agreement which is a very valuable form of agreement and which at the moment reacts to the disfavour of the sole trader and the partnership vis-à-vis the corporate body, should be excluded, that this Amendment has been drafted. I am not at all sure about the actual wording of the Amendment, but I hope that its object is clear. I beg to move.

5.22 p.m.

LORD JACQUES

I find this one of the least attractive Amendments in the Marshalled List. Nothing like it was in the original Bill, and nothing like it was suggested at any time when the original Bill was under consideration in another place. I am quite sure that had anything like this Amendment been suggested at that time it would have been resisted by the previous Administration for exactly the same reasons as it is resisted by this Administration. I think it is time we looked at some of the general philosophy underlying the Bill. Everybody, of course, says, "This Bill is necessary; changes are needed. But those changes are needed for somebody else; not for us. Our circumstances are just a little different, and either we should be exempt from the Bill or the Bill should be amended in a little way so that it does not affect us in all respects." Everybody wants change, but only for somebody else. What causes a Bill to be complicated perhaps more than anything else are the endeavours that are made to meet these people who want change only for some-body else and not for themselves. Every time you try to meet the point of view put forward by a sectional interest then you add complication to the Bill. But, of course, there are many cases where it is worth while adding the complication because the representations which have been received are entirely justified, and the alteration which is being made is worthwhile. I am going to submit that this Amendment highly complicates, that it is not justified and that is not worth while.

First, that it highly complicates there can be no doubt. As the Bill stands at the moment, the hirer knows exactly where he stands. If he has to pay not more than £5,000 in total hire charges then the agreement comes within the Bill: there is no doubt about that; whereas if the charges are in excess of £5,000 it is outside the Bill. That is simple, and he will have no difficulty in understanding it But this Amendment would greatly complicate it. It would not be a question only of whether the total was more or less than £5,000: he would also have to consider whether the cash price of the goods exceeded £5,000 and whether the goods were selected by the lessee; and he would have to ensure that the lessor was not an associate of the supplier and that the goods were to be used in the business of the lessee. How far can you complicate a Bill with one Amendment? This Amendment really would complicate the Bill, and without justification and without making a great deal of difference.

It makes very little difference because as the Bill stands the test is whether the total amount of hire money that is paid is £5,000 or not. Here we have it introduced whether the cash price exceeds £5,000. Clearly there is not going to be a great deal of difference between the cash price exceeding £5,000 and the hire charges exceeding £5,000 I submit that this is relatively small. Secondly, it is not worth while for several reasons. Let us take the question of documentation. It is the common practice in commercial leasing for there to be formal agreements, so the Bill is not introducing anything really new in the documentation which it requires. All it means is that, in so far as the smaller hirers are concerned, the lessor will have to be a little more careful in framing the agreement.

In considering the representations made by the commercial lessors, it seemed to us to be abundantly clear that there was only one province in the Bill where they could be greatly inconvenienced, and that was by Clause 101. Clause 101 gives the hirer the right to terminate the agreement. We have met the representations of the commercial lessors in this respect. As a result of their representations, provision has been made for all commercial leases where the hirer has a free choice of goods to be excluded from the clause. I submit that we have gone a very long way to meet the representations of the commercial lessors, and that we should not complicate the Bill by accepting this Amendment to give them a little more.

LORD ABERDARE

I must say that I do not find that answer at all satisfactory. I began not finding myself in agreement with the noble Lord when he said that he did not like this Amendment because, first of all, it was not in the original Bill and, secondly, because it was not considered in the Commons Committee. That seems to me to be totally irrelevant, if I may say so. This is the House of Lords considering this Bill in Committee, and what has gone on before is entirely irrelevant. But I think there is a real difficulty here which the noble Lord has perhaps not quite grasped. These commercial leases are something quite different. The Bill exists to defend the consumer; it is the Consumer Credit Bill. As I said when introducing the Amendment, we naturally want to do all we can to see that consumer rental agreements are covered. All we have tried to do is to meet this other point, where the transaction is a purely commercial one, against which there has been no complaint and where the Bill has dragged this in by its coat-tails, although properly speaking I do not think there is any need for this particular leasing agreement to be covered by the Bill. We were seeking to make a sensible exclusion of a practice which is a commercial practice and a useful one but which, if put in the Bill, would discriminate between the corporate body and the partnership and the sole trader and make commercial life in that respect more difficult, and unnecessarily so.

The noble Lord says that my Amendment complicates the matter, and it may well be not the right way to deal with this point. It may indeed be a too complicated way to do it. He said at one point, talking about complication, that there was very little difference between the cash price and the £5,000 of total payments in the Bill. I do not think he is right. There can be a very considerable difference between the cash price of the goods and the total payments amounting to £5,000. Perhaps we have not made the correct distinction, but I would ask the noble Lord to look with a little more sympathy on the case that has been put by me—I hope adequately—for these commercial leasing agreements. I know that the Government have helped in one way in a later clause. I respect that and I am very grateful. But I hope that the noble Lord will look a little more carefully at this matter, and if he does so I shall readily withdraw the Amendment at this stage.

LORD JACQUES

With the leave of the Committee I should like to speak again. I should like us all to be quite clear as to the position here. It was the last Administration that made up their mind that not only consumers but also small traders should be protected by this Bill, and it was the last Administration that brought within the province of this Bill the question of commercial leasing up to a total hiring cost of £5,000. The present Administration have accepted what the previous Administration put in the Bill, except that they have given a concession to the commercial lessors. In other words, we have gone further to meet the position of commercial lessors than did the previous Administration. We are not prepared to go any further.

LORD ABERDARE

I do not find that at all helpful and I will reserve my right to return to this point at a later date. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, whether Clause 15, as amended, shall stand part of the Bill?

LORD HAWKE

I do not pretend to know a great deal about this very complicated Bill, but at first sight this clause impinges upon an interest which I declare, which is in a linen hire business. I should like to know whether a linen hire agreement, millions of which are in existence, by which protective clothing is provided on a hire basis for the majority of working men in this country, is covered by this Bill, and whether it will become a consumer hire agreement. If so, there will be complications because, in many cases, an agreement is between the hirer and the individual workman. In other cases, an agreement is between the hirer and the firm which employs the workman. That can be a large contract whereas the other contract is for a matter of a few shillings a week. I make this point on the Question, whether Clause 15 shall stand part of the Bill?, in the hope that the noble Lord can tell me whether that type of linen hire agreement is covered by the Bill and will become a regulated hire agreement.

LORD SHEPHERD

Perhaps the noble Lord will refer to Clause 15(1)(b) —though I am not quite sure whether that is the right reference. I am assured, however, that the leasing arrangements to which the noble Lord referred are excluded from the provisions of this Bill. I will advise the noble Lord by letter where this aspect is to be found in the Bill.

LORD HAWKE

I thank the noble Lord very much. I have searched the Bill but cannot find it.

LORD SHEPHERD

I am advised that the correct reference is Clause 15(1)(b). Clause 15(1) reads: A consumer hire agreement is an agreement for the bailment or (in Scotland) the hiring of goods made between an individual ("the hirer") and their owner … which— under paragraph (b)— is capable of subsisting for more than three months". Therefore, the leasing arrangements to which the noble Lord referred has clearly excluded by that provision.

LORD BARNBY

Much of the resistance of the noble Lord, Lord Jacques, to the Amendment proposed by my noble friend is based on the amount of £5,000. Is this an appropriate moment to ask whether he has any observations to make on the fact that, since inflation is increasing at the rate of 10 per cent. per annum—I am not making any specific reference to this or any previous Administration—it would appear that at the end of five years £5,000 would be worth £2,500 and, therefore, the basis of the Government's resistance would be stultified? Does the I noble Lord find this an appropriate moment to consider the effect of this legislation on the amounts that will be statutorily imposed?

LORD SHEPHERD

If the noble Lord refers to one of the earlier clauses regarding the power of the Secretary of State, he will see that the powers for change, if change became necessary, are within the Bill. I hope that we shall not have to consider any change of this sort in the near future. The noble Lord will be aware that under the original provisions the figure was £2,000, and it has been decided to raise the sum to £5,000 because that is more attuned to the present time.

LORD ABERDARE

Before we leave this clause, may I put one more point to the noble Lord opposite? Some leasing agreements have variable terms. For example, rentals sometimes vary according to changes in interest rates, or, in the case of leased cars, according to the mileage covered. The point that concerns me about a variable term agreement is that an agreement which was originally within the £5,000 limit may go outside it as the terms change; or, vice versa, an agreement which was outside the Bill may come within its terms. I believe it is correct to say that the test of whether or not an agreement comes within the terms of the Bill is based on the terms prevailing at the outset. If that is so the position is satisfactory, but it is not clear from the present wording of the clause. I do not know if the noble Lord can confirm whether that is the position under the clause, or whether it will be made clear by regulation or in some other way.

LORD JACQUES

I think the test is that if an agreement has hire charges of less than £5,000, it comes within the Bill. I see the worry on the noble Lord's face, but it is probably a mirror of my own. I will certainly undertake to look at this matter, and if the noble Lord would like me to do so I will consult him or exchange letters to see whether we can deal with his concern.

Clause 15, as amended, agreed to.

Clause 16 [Exempt agreements]:

On Question, whether Clause 16 shall stand part of the Bill?

LORD ABERDARE

May I make one small point? Subsection (4) provides that the Secretary of State may by order exempt agreements where the number of instalments does not exceed the number specified in the order. The content of an order is of importance, in view of the wide definition of "credit" in Clause 9(1). Will there be a different number specified for different types of agreement—hire purchase agreements, credit sale agreements, instalment loans and so on—or will they all be covered by the one number of instalments? I ask this question in the interests of certainty, because until an order is made the granters of credit will not know which agreements are to be regulated.

LORD JACQUES

No decision has yet been taken on the contents of the orders and regulations, but there will be the fullest consultation about these with the interested parties. The order-making power in relation to Clause 16 (4) is wide enough to allow a different number of instalments to be specified for different kinds of transactions but, subject to consultation, it is the intention that transactions serving the same purpose—for example, hire-purchase, conditional sale and credit sale—will certainly be included in one category.

Clause 16 agreed to.

Clause 17 agreed to.

Clause 18 [Multiple agreements]:

LORD SEEBOHM moved Amendment No. 12A:

Page 9, line 35, at end insert— (6) For the purposes of this Act it shall not constitute a multiple agreement if a creditor allows payment (i) in excess of the credit limit on running account or (ii) where there is no credit limit.

The noble Lord said: I beg to move this Amendment, which again concerns excesses and the multiple agreements caused by them. I think that it will be appreciated that without this Amendment each cheque paid in excess of the limit will constitute a new regulated agreement. This is a possible application in the banking system, where payments in and out are continuously made into a trading bank account. For instance, it may well be that 12 cheques are drawn, coming in one after another, taking the account into excess. Each cheque will make a separate agreement, paid, and when amounts are paid in later on to which cheque, if any, are those credits to be allocated? It seems to me this is a situation which needs to be altered.

LORD JACQUES

I am pleased to be able to advise the noble Lord that his Amendment is no longer necessary. We have met the point by two Amendments. One of them (Amendment 5A) has been dealt with and there is a later Amendment, which is Amendment 73A. These two Amendments together cover the point; but if there is any doubt in the mind of the noble Lord we shall be very happy to discuss the position with him after he has had the opportunity of considering the two Amendments referred to.

LORD SEEBOHM

I am grateful to the noble Lord and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 18 to 21 agreed to.

Clause 22 [Personal and group licences]:

LORD WELLS-PESTELL moved Amendment No. 13: Page 11, line 12, leave out ("personal") and insert ("standard").

The noble Lord said: The purpose of this Amendment is to remove possible confusion and misunderstanding. Noble Lords will see that the word "personal" appears on a number of occasions—18, to be precise—spread over a number of clauses. With your Lordships' permission, I should like to give the reason for the change from the word "personal" to the word "standard". If the Amendment is accepted, perhaps your Lordships will allow me at later stages merely to move Amendments formally without going over the ground again.

The word "personal" carries the connotation that the agreement is with a debtor who is an individual and not a corporate body. However, "personal" (when used in the term "personal licence" in this and other clauses) means a licence which is personal to the licensee to whom it is issued. As the licensee may well be a corporate body, the term "personal licence" seems rather in-appropriate in view of the terminology of the Bill. The Amendment provides for the term "standard licence" to replace the term "personal licence" and, if I may be permitted to say so, I think this is a very considerable improvement. The meaning of the term "personal licence" has not been clear to everybody, and the term "standard licence" points more clearly the distinction between the licences issued to ordinary traders and the group licences which the Director will have power to issue when it appears to him to be in the public interest to do so. I beg to move.

On Question, Amendment agreed to.

5.46 p.m.

LORD AIREDALE moved Amendment No. 14: Page 11, line 13, after ("person") insert ("including a body corporate").

The noble Lord said: I regret that a, little of the force of my argument here has been swept away by the last Amendment. Nevertheless, I think it is still worth while. Lawyers of course, know that the word "personal" includes a body corporate and indeed many laymen also know this; but there must be a good many who do not. In this particular context I think there is room for confusion because we have two paragraphs together, contrasting what is now to be called the "standard licence" with the "group licence". On reading the Bill for the first time, it would surely appear to be all too easy to suppose that the group licence is a licence which applies to a body corporate—a body corporate being a group of persons. That is not the case. A body corporate can hold a standard licence under the earlier paragraph, and in order to make this clear at first sight I would have thought it is worth while adding the words "including a body corporate" in that paragraph relating to the standard licence after the word "personal". I think this may do away with initial confusion in the minds of some people when reading these words for the first time. I beg to move.

LORD JACQUES

The noble Lord is fully aware that the Interpretation Act of 1889 provides that in that Act and in every subsequent Act the expression "person", unless the contrary intention appears, includes any body corporate or unincorporate. No contrary intention has been shown in the Bill, and therefore the Amendment is not necessary. I would say to the noble Lord that it is not only lawyers who know that "person" includes a corporate body but businessmen are also very fully aware of this. If we had to word the Bill so that all consumers would understand it, I think it would put an impossible burden upon the draftsmen. I think this Amendment would be somewhat unusual because of the Interpertation Act and would, I think, by those referring to it at some later stage, be looked upon as a mistake by the draftsman.

LORD AIREDALE

I was aware of that part of the Interpretation Act of which the Minister has just reminded us. I am also aware that ever since the noble Lord and learned Lord, Lord Gardiner, became Lord Chancellor we have striven to make the statutes more easily understandable not only by lawyers but by ordinary people; and I venture to think that most ordinary people are not as familiar with the Interpretation Act as the Minister is and as even I am. However, I accept that, strictly speaking, the Amendment is unnecessary and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.50 p.m.

LORD ABERDARE moved Amendment No. 15: Page 11, line 15, after ("period") insert ("not being less than 5 years,").

The noble Lord said: This Amendment returns to the point raised on Second Reading by my noble friend Lord Limerick about the length of time for which a licence, once issued, should run before it must be renewed. The Bill says that a personal licence will be issued by the Director for a prescribed period and, in reply to my noble friend on Second Reading, the noble Lord, Lord Jacques, mentioned a possible period of three years, but said that it had not been firmly fixed.

The only point of this Amendment is to suggest that five years may be appropriate. It seems to me that there is no sense in causing a lot of paperwork and extra clerical work by too frequent a renewal of licences, and that there are advantages in letting a licence run for as long as possible, or at least a reasonable length of time, before it has to be renewed. I say this only because it is quite clear from the Bill that the Director General of Fair Trading already has adequate powers to vary licences under Clause 31, or to revoke them, under Clause 32. So all the powers are there in the event of a licence-holder doing something of which the Director General does not approve, for him to alter or revoke the licence. In fact, one could almost say that the licences might run for ever, subject to those powers of alteration or revocation. However, there is normally a period of time for such a licence, and the only point of the Amendment is to suggest that it should be five years rather than three.

LORD JACQUES

I think I should remind the House that certain credit traders at the moment already require licences. Pawnbrokers have licences for one year; moneylenders have licences for one year. The Crowther Committee, who recommended that licences should be required by all who give credit, proposed a period of three years, and I have no doubt that that is where the period of three years mentioned on Second Reading came from. My point, arising out of the Amendment, is that it would be unwise to specify a minimum period in the Bill. There are considerations on both sides: many changes could take place within five years—for instance new forms of credit might develop and quick action might be needed—and it might be that some licences might not be renewed. Consequently, there is a case against five years, but there is also a case in its favour. A five-year period would reduce the administrative work, and if I were the Director General I should be in favour of five years. I think there is a case on both sides, but I feel that we should be ill-advised to tie down the Secretary of State, whose right it is to decide. He decides, not the Director General.

Another reason why there should not be a minimum is that circumstances might arise in which it was necessary in some cases to issue licences for very short periods—for instance, because a business was to be reconstructed. We hope therefore that it may be left to the good sense of the Secretary of State to weigh up the pros and cons at the time when they should be weighed up. For instance, we might start with what would be a standard period of, say, three years but, after experience, go to five years. As the Bill stands, that kind of change could be made. We could not have that flexibility if we set out a minimum period in the Bill. It might also be that there would be different licence periods for different kinds of credit and that, while it might be justified because kinds of credit are different could also be justified in that it might simplify the administrative work by staggering it. I think there is a very strong case for not fixing a minimum period, and certainly not one of five years. Flexibility should be left so that the Secretary of State can determine whether there should be one or more fixed terms and whether, if we started with three years, we should not at a later stage have five years.

LORD ABERDARE

I am grateful to the noble Lord, who has helped us a lot by going into more detail on this clause. I accept that it would not be wise to put the period into the Bill, but I think that it is helpful to know that the Secretary of State has in mind the use of these powers in a flexible way at the time when they need to be exercised. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD WELLS-PESTELL

I beg to move Amendment No. 16.

Amendment moved— Page 11, line 25, leave out ("personal") and insert ("standard").—(Lord Wells Pestell.)

On Question, Amendment agreed to.

5.58 p.m.

LORD AIREDALE moved Amendment No. 17: Page 11, line 29, leave out ("if, and").

The noble Lord said: I was told by the Minister just now how important it was not to have unnecessary words. I suggest therefore that, "if, and only if" means, "only if". There is no end to adding emphasis if one wants to: one could say "if, and only if and in no other circumstances whatsoever", but it all boils down to, "only if". I beg to move.

LORD JACQUES

The existing text is intended to emphasise that the Director General may issue a group licence "if, and only if", doing so is in the public interest. That is to say, we want to strengthen the Director General's hand if he wishes to refuse a group licence. If we do not strengthen it literally, we hope that we do psychologically. However, the deletion of "if and" would not weaken the requirement unduly and if the Committee would prefer a more prosaic wording the Government are willing to accept the Amendment, though they would prefer that the Bill should remain as it is.

LORD AIREDALE

We are in Committee and I shall not divide the House. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD JACQUES

I beg to move Amendment No. 18.

Amendment moved— Page 11, line 32, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

LORD JACQUES

I beg to move Amendment No. 19 for which the same explanation applies.

Amendment moved— Page 11, line 37, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 22, as amended, agreed to.

Clause 23 [Authorisation of specific activities]:

6.0 p.m.

LORD JACQUES moved Amendment No. 20: Page 12, line 7, leave out from ("licence") to ("covers") in line 9.

The noble Lord said: This clause refers not only to credit and hire business but also, by the application of Clause 144, to ancillary credit businesses. These Amendments improve the drafting in relation to the application of this clause to ancillary credit businesses. For example, by deleting held by a person carrying on in a consumer credit business or consumer hire business in subsection (3), the Amendment removes any doubt as to whether the provision applies, as it does, to licences issued to credit-brokers. I beg to move.

On Question, Amendment agreed to.

LORD AIREDALE moved Amendment No. 21: Page 12, line 8, leave out ("covers") and insert ("permits").

The noble Lord said: It seems to me the word "permits" is more appropriate in this context than "covers". It is more accurate to say that a licence permits something than to say it covers something. I beg to move.

LORD JACQUES

The choice of the words appropriate in a particular context is a matter over which there may be differing views. There are two essentials. First, the word should not be ambiguous; secondly, it should be consistent. We consider the word "covers" expresses the intention clearly and therefore is not ambiguous. Furthermore, we point out that it is also consistent because "covers" is used in subsections (1) and (2), and if this Amendment were accepted only one of the conditions that I have laid down would be satisfied. While it would not be ambiguous it would fail to be consistent. The Committee would wish us to be not merely unambiguous but also consistent.

LORD AIREDALE

I agree that this is a two-sided argument, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD JACQUES

Amendment No. 22 is similar to Amendment No. 20. I beg leave to move the Amendment.

Amendment moved— Page 12, line 13, leave out from beginning to ("which") in line 14.—(Lord Jacques.)

On Question, Amendment agreed to.

LORD AIREDALE moved Amendment No. 22A: Page 12, line 14, leave out from ("of") to ("require") in line 15 and insert ("a licensee").

The noble Lord said: Although on the Marshalled List this Amendment is down to be moved by the noble Lord, Lord Aberdare, it is in fact my Amendment. There has been a misprint, probably because my signature was not decipherable. I am still trying to cut unnecessary words out of the Bill. We have the expression "a person carrying on the business", which so far as I can see is identical with a licensee. If one can use two words instead of six, that is a saving. I beg to move.

LORD JACQUES

Any regulations which might be made would apply not only to those already having a licence, but to those who might at some future date wish to carry on business and engage in the activities in question, and would therefore need to get a licence. The present wording expresses the intention more clearly by leaving no doubt on this score.

LORD AIREDALE

I must think about that. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD JACQUES

Amendment No. 23 is exactly the same as No. 22. I beg to move.

Amendment moved— Page 12, line 15, leave out ("the") and insert ("a")—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 23, as amended, agreed to.

Clause 24 [Control of name of business]:

6.6 p.m.

LORD JACQUES

This is a matter of drafting. I beg to move Amendment No. 24.

Amendment moved— Page 12, line 17, leave out ("personnel") and insert ("standard")—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 24, as amended, agreed to.

Clause 25 [Licensee to be a fit person]:

LORD JACQUES

I beg to move Amendment No. 25 which is entirely drafting.

Amendment moved— Page 12, line 20, leave out ("personal") and insert ("standard")—(Lord Jacques.)

On Question, Amendment agreed to.

LORD AIREDALE moved Amendment No. 26: Page 12, line 20, leave out ("not").

The noble Lord said: Perhaps we may discuss Amendments Nos. 26 and 27 together because it is only when they are taken together that they make sense. This will amount to a very small amendment in terms of words, but an important principle is involved. Subsection (1) of Clause 25 is only enabling, and is not mandatory upon the Director. Yet all that the Director is considering under this clause is the credentials of the person who applies for the licence.

The question I want to ask is this: If the Director is not required to issue a licence to a person whose credentials have satisfied him, what criterion is he to adopt, and on what grounds is he to refuse a licence to a person even when he is satisfied with that person's credentials? The only circumstance I can think of is the kind that arises in the minds of the licensing justices, who have to consider not only whether this person is suitable to become a publican, or to run a betting shop, but whether there are enough pubs or betting shops in the locality already, and is it necessary to have another one. I hope it is not the intention to face the Director with that kind of jurisdiction, because the Director will lack the important qualification which the licensing justices have of having real knowledge of the circumstances. I do not think you can expect the Director to have the degree of local knowledge which licensing justices have. I should have thought that in those circumstances it was only right to make it mandatory upon the Director to issue the licence provided he is satisfied with the applicant's credentials. As I say, I can think of no criterion which would seem to me to justify the Director in refusing a licence to a person when he is satisfied with the credentials. I seek therefore to make this clause mandatory and not merely enabling on the Director. I beg to move.

VISCOUNT AMORY

I thought in listening to the noble Lord, Lord Airedale, that his was a very sensible suggestion. I hope the noble Lord will consider it carefully or tell us specifically why he does not find it acceptable. The positive way of putting the matter appeals to me personally.

LORD JACQUES

It is intended that any applicant who satisfies the Director that he is a fit person to engage in the activities in question and that the name under which he applies to be licensed is not misleading or otherwise undesirable, will receive a licence. However, given that one of the main purposes of the Bill is to ensure that only "fit persons" should receive licences it was thought appropriate to emphasise that the Director should not grant a licence unless he was satisfied. Having said that, it seems unlikely that there is any practical difference in effect between the present and the amended text. If the Committee supports the Amendment the Government are quite willing to accept it.

LORD AIREDALE

I am very pleased to hear those last words. I cannot begin to agree that there is no practical difference between something mandatory and something merely permissive or enabling. I think that this is a very important principle and I very much hope that the Amendment will be agreed to.

On Question, Amendment agreed to.

LORD AIREDALE

I beg to move Amendment No. 27.

Amendment moved— Page 12, line 21, leave out ("unless") and insert ("if").—(Lord Airedale.)

On Question, Amendment agreed to.

LORD JACQUES

Amendment No. 28 is a drafting Amendment.

Amendment moved— Page 12, line 27, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 25, as amended, agreed to.

Clauses 26 to 28 agreed to.

Clause 29 [Renewal]:

LORD JACQUES

I beg to move Amendment No. 29. This is a drafting Amendment.

Amendment moved— Page 13, line 38, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 29, as amended, agreed to.

Clause 30 [Variation by request]:

6.15 p.m.

LORD JACQUES

I beg to move Amendment No. 30. This is a drafting Amendment.

Amendment moved— Page 14, line 22, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 30, as amended, agreed to.

Clause 31 [Compulsory variation]:

LORD AIREDALE moved Amendment No. 31: Page 15, line 4, leave out from ("that") to ("the") in line 8.

The noble Lord said: Perhaps we may discuss Amendment No. 33 with this one because the point is exactly the same. I am still trying to cut out unnecessary words from the Bill. The message of this subsection is that if the Director is of opinion that the licence should be varied "he shall proceed, as follows". There are four lines which go into the hypothetical question of what the Director would have been minded to do if the licence had expired at that time. That seems to me to be quite unnecessary. It does not make the slightest difference to the situation. Under the clause the fact will remain in either case that if the Director is of the opinion that the licence should be varied "he shall proceed, as follows". I beg therefore in this Amendment to leave out those four and a half lines of totally unnecessary words about a hypothetical situation.

LORD JACOUES

The intention is that the Director should, in exercising his powers to vary, revoke or suspend licences, have regard to exactly the same criteria as those which govern his determination on application for the grant or renewal of licences. This is achieved by the words in the brackets and we would not like them to be taken away.

LORD AIREDALE

All I can say is that the words proposed to be left out do not do any harm if they are left in, but I still think that they are quite unnecessary. However, having had some success a short time ago, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD JACQUES

I beg to move Amendment No. 32. This is a drafting Amendment.

Amendment moved— Page 15, line 10, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 31, as amended, agreed to.

Clause 32 [Suspension and revocation]:

LORD JACQUES

I beg to move Amendment No. 34. This is another drafting Amendment.

Amendment moved— Page 16, line 3, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 32, as amended, agreed to.

Clauses 33 and 34 agreed to.

Clause 35 [The register]:

LORD AIREDALE moved Amendment No. 35: Page 18, line 15, at end insert— ( ) The Director shall provide free of charge a copy, certified by him to be correct, of any relevant entry in the register, accompanied by a copy of section 36(1) and section 39(3) of this Act, to any person capable of committing an offence under the said section 39(3)".

The noble Lord said: If we may look forward for a moment to the next clause, Clause 36, we find that the duty of keeping the Director's register up to date is largely passed on to the shoulders of the licensee. If we may glimpse shortly at Clause 39(3), we find that if the licensee fails in that duty he commits a criminal offence. Under this clause we have to consider how the licensee knows what the Director's register contains in respect of him, and what he has to keep up to date on pain of committing a criminal offence. We observe that if he wishes to find what is the entry in the register that applies to him he has to pay a fee. I should have thought it was wrong in principle that anybody should have to pay a fee in order to be in a position to avoid committing a criminal offence. I have therefore thought it right to put down this Amendment, which absolves the licensee—not other people, of course, but the licensee himself—from having to pay a fee to obtain a certified copy of his own entry in the Director's register.

I thought it only right that at the same time he should be supplied by the Director with not only a certified copy of the entry but also a copy of Section 36 of the Act (as it will be), which reminds him that it is his duty to ensure that the register is kept up to date in respect of his own entry. More important still, a copy should at the same time be supplied to him of Clause 39(3), which reminds him that if he fails to ensure that the register is kept accurate in respect of his entry he commits a criminal offence. I want him to be free from having to pay a fee to save himself from committing a criminal offence. I beg to move.

LORD JACQUES

We consider that the present position in the Bill is wholly satisfactory, in that the information in the register is obtained from the licensees. It is up to the licensees as reasonable businessmen to keep a file of their correspondence and all the information which they supply Ito the Director General. If they fail they still have a way out, but they have to pay. It is quite right that if they fail to keep proper records, proper filing, and have to rely upon the public service for information which they should have in their own files, they should pay for it. That is the present position in the Bill and we hope it will remain like that.

However, in any case we could not accept this Amendment, for several reasons. First, it is not clear on the face of it whether the Director General has to supply all these copies automatically or only when a request is made. If it were automatic, it would throw upon the Director General quite impossible requirements, because he would have to send documents to people and would have no knowledge that they existed at all; changes would have taken place of which he would have no knowledge. Furthermore, this Amendment refers to sending copies of Clause 36(1). Subsections (2) and (4) of Clause 36 equally apply. We think the Amendment is therefore unwise, but even if it were wise we could not accept it in its present form.

LORD AIREDALE

I can see the force in some of the points that have been advanced in opposition to this Amendment. But will the Minister consider it if we return to this matter at the next stage with an Amendment in the following form: that every time a licence is issued it shall be accompanied by one free copy of the entry in the register, a copy of the provision which reminds the licensee that he must ensure that the matter is up to date, and a copy of the provision which says that if he fails to do that he then commits a criminal offence or is liable to commit a criminal offence? That will involve the Director only in sending out these supplementary papers with each licence, and that will not be a Herculean task for the Director. My main point is of course that these papers must be sent free of charge in the case of the licensee. If I put down an amended Amendment on those lines at the next stage, will the Minister consider it sympathetically?

THE EARL OF LIMERICK

: Before the noble Lord replies, might I say that it is so unusual to find the noble Lord seeking to put words into a Bill instead of taking them out. I think that this suggestion is worthy of serious consideration, the object being, as it must be, to prevent non-compliance with the law. It seems that it would be no great or arduous task to have printed forms which could be sent out with the licence, containing the information to which the noble Lord, Lord Airedale, has referred. I very much hope that the noble Lord will be able to tell us that he is able to think about a proposal on these lines.

LORD JACQUES

I do not think I can decline to say that we will consider it.

LORD AIREDALE

With that undertaking, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 35 agreed to.

Clause 36 [Duty to notify changes]:

6.28 p.m.

LORD JACQUES

Amendment No. 36 is a drafting Amendment, which I beg to move.

Amendment moved— Page 18, line 17, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

LORD JACQUES

Amendment No. 37 is another drafting Amendment, which I beg leave to move.

Amendment moved— Page 18, line 24, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

LORD ABERDARE moved Amendment No. 38: Page 18, line 38, leave out ("14") and insert ("21").

The noble Lord said: I beg to move Amendment No. 38 and to speak also to Amendment No. 40 which covers the same point. It struck me that under subsections (1) and (2) of this clause the licensee has to inform the Director within 21 days of any change in officers, of any change in its control if it is a body corporate, and of any change in the membership of a partnership. But subsections (3) and (4) allow only a 14-day period within which a body corporate which controls a licensed body corporate has to notify that there has been a change in its officers, or that a person becomes or ceases to be in control of a licensed body corporate. I merely wanted to inquire of the noble Lord why there was this differentiation—why certain people had 21 days to make a notification while others had only 14 days. I beg to move.

LORD JACQUES

As the Bill stands the licensee has 21 days in which to notify the Director General of changes. When the licensee is controlled by, say, a parent company and there is change the controller, the parent company, has 14 days in which to inform the licensee, leaving the licensee the balance of 7 days to inform the Director General. Therefore, if we accepted this Amendment it would leave no time for the licensee to get his information off to the Director General. We think that the total period of 21 days which is allowed in the present text of the Bill should be ample for the purpose.

LORD ABERDARE

I accept that explanation and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD JACQUES

Amendment No. 39 is a drafting Amendment. I beg to move.

Amendment moved— Page 18, line 40, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

6.31 p.m.

LORD AIREDALE moved Amendment No. 41: Page 18, line 42, leave out subsection (4).

The noble Lord said: I tabled this Amendment because I cannot see how there can be any need for this subsection, which appears to say that after a person becomes or ceases to be the controller of a body corporate he must give the body corporate notice of the fact. I should have thought the body corporate in all cases would know. Perhaps I shall be told that this is to cover cases of mysterious take-overs, or something of that kind, but as it stands I simply cannot think of any reason for subsection (4), which I therefore beg leave to remove from the Bill. I beg to move.

LORD JACQUES

Clause 36(2)(b) requires a body corporate, which is a licensee under a personal licence and which becomes aware that a person has become or ceased to be its controller or the controller of another body corporate which is its controller, to give the Director notice of the change. It is essential that the Director should have this information because it must not be possible for a person who could not obtain a licence to evade the licensing requirement by exercising control over a licensee. Sometimes, however, companies do not learn until after a lengthy delay about a change in control. To ensure that licensees are told when such changes occur the Bill makes controllers responsible for doing so. The original Bill required the controller to notify the Commissioner direct. We now think it preferable that the controller should inform the licensee so that the latter can notify changes in control as well as other changes to the Director.

LORD AIREDALE

This will not be the first time that something that looks rather odd is, nevertheless, apparently necessary. Therefore I beg to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD JACQUES

I beg to move Amendment No. 42, which is a drafting Amendment.

Amendment moved— Page 19, line 1, leave out ("personal") and insert ("standard").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 36, as amended, agreed to.

LORD JACQUES

I beg to move that the House do now resume.

Moved accordingly and, on Question, Motion agreed to.

House resumed.