CONSUMER CREDIT BILL [H.L.]

HL Deb 06 May 1974 vol 351 cc289-311

2.35 p.m.

THE LORD PRIVY SEAL (LORD SHEPHERD)

My Lords, I beg to move that the House do again resolve itself into Committee on the Bill. With permission, may I indicate to your Lordships that at an appropriate moment I shall propose for the convenience of the Committee that we postpone consideration of Part IX of the Bill—that is, Clauses 127 to 141 inclusive—until the end of the Committee stage to-morrow. This is a highly complex and legal Part of the Bill, and I understand that there are a number of points which it is wished should be considered. Because of this complexity, perhaps we might have discussions some time to-day. It might then meet the convenience of your Lordships to take Part IX to-morrow, after we have been able to identify quite clearly the various difficulties that may arise. I beg to move.

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

VISCOUNT COLVILLE OF CULROSS

My Lords, that is a course which wholly commends itself to me. I should think it would appeal to everybody else, too, because they would not then have to listen to me. If that is the course which the noble Lord would suggest, it has my blessing.

LORD HAILSHAM OF SAINT MARYLEBONE

My Lords, may I ask the noble Lord this question? As the noble Lord has said that Part IX is the legal Part of the Bill, and as I understood from what the noble and learned Lord the Lord Chancellor said last week that he has leave of absence, does that mean that in this House, in Committee, the legal Part of the Bill will have to be passed in toto without the presence of the Lord Chancellor?

LORD SHEPHERD

My Lords, the House did give permission to be absent to my noble and learned friend who sits on the Woolsack. Although certain parts of the Bill are legal, it is not the first occasion, I suspect, on which we have dealt with such Parts of a Bill without the Lord Chancellor being available. One of the reasons why I have suggested this course of action is in order that there should be discussion between the noble Viscount, Lord Colville, and the legal advisers within the Department, and then I would seek to speak on behalf of the Government on these matters to-morrow. Clearly, if the noble Viscount himself is not satisfied—or, for that matter, any other noble Lord—I will certainly see that my noble and learned friend is available when we take the Bill on Report. I do not think that we ought to hold up the progress of the Bill, but we should seek to identify the difficulties that may arise and then consider the course of action we should take.

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 84 [Duty on issue of new credit-tokens]:

LORD JACQUES

Amendment No. 74 is a drafting Amendment. It is needed to cover those cases where no executed agreement is required in the first place, and therefore no copy can be supplied. I beg to move.

Amendment moved— Page 43, line 35, after ("agreement") insert ("(if any)").—(Lord Jacques.)

On Question, Amendment agreed to.

On Question, Whether Clause 84, as amended, shall stand part of the Bill?

LORD ABERDARE

May I raise a point on Clause 84? I apologise to the noble Lord, Lord Jacques, that I did not have much time to give him notice, but if he has had my note of about five minutes ago he may have realised that I wished to say something on this clause; but, of course, if he cannot answer me straightaway and would rather write to me on the matter I shall be quite content.

Subsection (1) of the clause reads: Whenever, in connection with a credit-token agreement, a credit-token (other than the first) is given by the creditor to the debtor, the creditor shall give the debtor a copy of the executed agreement and of any other document referred to in it".

This would mean that a credit card firm would have to include a further copy of the executed agreement every year when it sent out a renewal card. A firm such as Barclaycard has 2½ million cardholders, and it really would be impossible for them to prepare annually a photostat copy of each agreement to enclose with the renewal card. Naturally, in their case, and I am sure in other credit card cases, the whole process is fully automated, and to add an individual agreement on each occasion a renewal card is sent out would really be quite impossible. I am only asking what the Government's intentions are, and whether this is really what is required in the case of credit cards.

LORD JACQUES

This point has been the subject of discussions between the Department and the credit card companies. Once the Bill is law it will be the duty of credit card companies to have an agreement in writing; if not, their loans will be unenforceable against the debtor. The Department has had discussions with the credit card companies about the difficulties of documentation, and Clause 176 has in part been inserted in the Bill to allow a sufficient flexibility, so that no undue burden is put on the credit card companies. We consider that, subject to further consultations, we have gone as far as we can go.

LORD ABERDARE

I am grateful for that reply, and if indeed Clause 176 is interpreted in the right way it would be a matter of making regulations. If these regulations are to be made to assist the credit card companies, then I am content with the reply. I am very grateful.

Clause 84, as amended, agreed to.

Clause 85 [Death of debtor or hirer]:

2.44 p.m.

THE EARL OF LIMERICK moved Amendment No. 75: Page 44, line 2, after ("entitled") insert ("other than by operation of law")

The noble Earl said: This is a minor but not unimportant point arising from Section 75 of the Bills of Exchange Act 1882, which propounds that the duty and authority of a banker to pay a cheque drawn on him by his customer shall be determined either by countermand of payment or by notice of a customer's death. While I think I am right in saying that this point has never been taken right through the process of law to ensure certainty, nevertheless, by normal banking practice the bank/customer relationship would determine upon receipt of a notice of the customer's death, and if the account at that time is overdrawn the bank would look to the estate of the deceased for repayment in full.

The suggested Amendment to line 2 would do no more than enable the bank to continue existing practice. I am not 100 per cent. clear that the drafting is correct, but my purpose in moving this Amendment is to seek assurance by some means that the Bill is not intended to bring about any change in this practical and equitable arrangement. It is possible that this matter may be covered by subsection (5), so this Amendment is in the nature of a probing Amendment. I beg to move.

LORD JACQUES

It is necessary to distinguish between banking practice and the law; and much of what has been submitted to us has been banking practice rather than the law. We know of no law that should be excluded, but in general I would say that, provided one can be named, we shall be very pleased to consider it. I shall ensure that the point made by the noble Earl is taken into consideration and we will either write to him or, alternatively, look into the possibility of putting down an Amendment at the Report stage.

THE EARL OF LIMERICK

I am grateful to the noble Lord, Lord Jacques, for what he has said. This obviously meets the point I have in mind and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

THE EARL OF LIMERICK moved Amendment No. 76: Page 44, line 22, leave out from ("life") to end of line 23.

The noble Earl said: This Amendment gives some concern to clearing bankers because it covers circumstances in which a borrower has taken out a policy specifically to cover a loan, but this apparently does not cover the more frequent circumstance where a customer wishes to avail himself of an existing policy to furnish security. I cannot see any reason for this distinction. Surely the same rules should apply whether a policy was in existence at the time the loan was sought or whether it was a case of the bank manager saying, "If you will take out a special policy for this purpose we shall be able to deal with your application." It is undesirable that customers should be under pressure in any way to take out new policies if they have existing ones which would serve equally well. Likewise, the bankers may find themselves prevented or in some way inhibited in accepting existing policies for the purposes of security. I think it would be in the interests both of the bank and the customer that it should be equally available to the customer to offer and to the bank to accept the security of an existing policy. I beg to move.

LORD JACQUES

The Bill, as at present before us, covers a policy to secure an agreement. The Amendment seeks to allow an existing policy to be used as a security. Personally, I have very great sympathy with the Amendment and have pleasure in saying that if it is withdrawn I will see that the proposal put forward is very fully examined.

THE EARL OF LIMERICK

I am most grateful to the noble Lord. Naturally, in the circumstances I have more than usual pleasure in seeking leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 85 agreed to.

Clause 86 agreed to.

Clause 87 [Contents and effect of default notice]:

2.50 p.m.

LORD ABERDARE moved Amendment No. 77: Page 45, line 24, after ("credit") insert ("or credit balance").

The noble Lord said: It may be convenient, if the noble Lord, Lord Mais, agrees, to discuss Amendments Nos. 77 and 77A together. In any event, perhaps I could put my point, which is a small one, regarding Clause 87, which deals with the consequences of issuing of default notices. In particular, where there is a breach of agreement by the debtor or hirer and a default notice has been issued, the debtor or hirer must be given an opportunity to remedy the breach before the creditor or owner enforces the agreement. This is a very sensible provision, but a point arises in relation to current accounts. It often happens that for convenience a customer has more than one current account at the same financial institution, and it is established banking law that if the need should arise the financial institution has the right to off-set the credit balances of one account against the debit balances of another.

The effect of Clause 87 is that if there is a breach of the terms of one current account there must be a pause after the issue of a default notice before the lender can take action. During that pause a borrower might withdraw the credit balances in other current accounts in order to frustrate the right of off-set. Clause 87(3) attempts to deal with this matter, and it allows the creditor to freeze other credit facilities. But it seems that there may be a loophole in the wording of this subsection, because although it plainly allows the creditor to prevent the customer drawing on other credit facilities, it is not clear that the creditor may prevent the customer withdrawing actual credit balances. That is the point of the Amendment. I beg to move.

LORD SHEPHERD

I thought my noble friend Lord Mais might respond to the invitation of the noble Lord, Lord Aberdare. However, I agree with the noble Lord, Lord Aberdare, that although these two Amendments are not absolutely identical their intention is the same.

Clause 87(3) allows a creditor, immediately after the service of a default notice, to restrict the debtor's right to draw on credit, instead of waiting seven days as is necessary in the case of any other action against the debtor. This Amendment, which has been inspired by the banks, attempts to deal with a technicality which does not exist. The debtor may have several accounts, some in deficit and some in credit. In these circumstances, the banks wish to be able to prevent the debtor, whose position on one or more accounts is in deficit, and on one of which there has been a default, drawing further on accounts that are in credit. The Amendment would accordingly allow the creditor to prevent the debtor drawing on a credit balance in any of his accounts.

In our view, the Amendment is unnecessary. We are advised that the existing wording of the clause would allow a creditor to aggregate the debit and credit balances of a debtor who had more than one account and, if he was overall in deficit, to prevent him drawing any further credit. Moreover the Amendment goes too far. It would allow a creditor to prevent a debtor drawing further on his credit balances even though he was in overall credit; in effect, to freeze his assets. This would be wrong. The present wording meets the banks' point and allows them to cover themselves to the extent mentioned by the noble Lord, Lord Aberdare. If there are any further matters of drafting which the noble Lord wishes to draw to our attention, I shall be happy to consider them. It is the intention of the clause to meet the problem that the noble Lord has explained.

LORD ABERDARE

I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD MAIS moved Amendment No. 77A: Page 45, line 25, at end insert ("nor does it prevent the creditor from exercising his right to amalgamate two or more accounts in the same right.")

The noble Lord said: I apologise if the noble Lord, Lord Shepherd, was waiting for me to take part earlier. I was waiting, full of hope that he might accept Amendment, No. 77, of the noble Lord, Lord Aberdare, in which case I should have been happy not to move Amendment No. 77A. The noble Lord, Lord Shepherd, overlooked one point, quite apart from the bank's position in the event of default by a debtor, or the bank's wishing to exercise its right of repayment on demand or the receipt by the bank of notice of an act of bankruptcy by the debtor. In the case of bankruptcy it is legally required that those accounts should be amalgamated. If that is so, there appears to be no logic in making an Amendment which does not place the banks in a different position from their position in the event of receiving notice of bankruptcy in connection with the customer concerned. This point must be tidied up and perhaps the noble Lord will assure us that it will be looked at in more detail. It is one law for the rich and another law for the poor at the moment. I beg to move.

LORD SHEPHERD

I shall not argue with the noble Lord, Lord Mais, about the law for the rich and the law for the poor. The point which the noble Lord has made is a new one to me. I will carefully look at it, but I still think that, at the end of the day, the consequences of the Amendment would be similar to that moved by the noble Lord, Lord Aberdare, and we would be reluctant to make any changes. In the light of what the noble Lord said, we will look at the point between now and the next stage.

LORD MAIS

I should like to thank the noble Lord very much for agreeing to look at this again. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

2.56 p.m.

LORD SHEPHERD moved Amendment No. 77B: Page 45, line 28, at end insert ("but if the breach of that other provision is not duly remedied or compensation demanded under subsection (1) is not duly paid, or (where no requirement is made under subsection (1)) if the seven days mentioned in subsection (2) have elapsed, the creditor may treat the failure as a breach and section 86(1) shall not apply to it.")

The noble Lord said: I beg to move Amendment No. 77B. If I may I should also like to speak to Amendment No. 77C as these two Amendments go together. They make it clear that two default notices are not necessary in certain cases, but that one is sufficient. For example, an agreement may provide that if a debtor fails to pay an instalment then the whole amount shall become due and owing at once. It would not be right to require a creditor to have to serve one notice in respect of a failure to pay an instalment and then another notice in respect of failure to pay the whole amount due. These Amendments make it clear that one default notice is all that is needed in such a case, to warn the debtor that if he does not pay the instalment within seven days the whole amount will become due and that if this is not paid then, for example, security may be enforced against him. I beg to move.

On Question, Amendment agreed to.

LORD SHEPHERD

I beg to move Amendment No. 77C.

Amendment moved— Page 45, line 32, leave out from ("(6)") to ("at") in line 33, and insert ("A default notice making a requirement under subsection (1) may include a provision for the taking of action such as is mentioned in section 86(1)").—(Lord Shepherd.)

On Question, Amendment agreed to.

Clause 87, as amended, agreed to.

Clauses 88 to 91 agreed to.

Clause 92 [Recovery of possession of goods or land]:

LORD SHEPHERD moved Amendment No. 77D: Page 47, line 24, leave out ("agreement for the sale of") and insert ("conditional sale agreement relating to").

The noble Lord said: This Amendment is a drafting Amendment. The Bill applies to the conditional sale of land (popularly known as the hire-purchase of land) and Clause 92(2) provides that when a debtor is in breach of such an agreement the creditor cannot recover possession except on an order of the court. We consider that it is not entirely clear in this clause that "a regulated agreement for the sale of land" relates to a "conditional sale", and this Amendment clarifies the position.

On Question, Amendment agreed to.

Clause 92, as amended, agreed to.

Clauses 93 to 97 agreed to.

Clause 98 [Duty to give information]:

3.0 p.m.

LORD SEEBOHM moved Amendment No. 77E: Page 49, line 8, after ("debtor") insert ("and payment of a fee of one new penny").

The noble Lord said: This is not a very important point, but it is a statutory statement that is being issued and this prescribed fee, however small, will call the attention of those issuing it to the fact that it is a statutory statement and not just a note or informal document. I beg to move.

LORD LEATHERLAND

I should like to ask briefly whether it is really necessary for the adjective "new" to be placed in front of the word "penny". The penny, under the present system of coinage, is a penny. It is neither a new penny nor an old penny. I remember that in your Lordships' House about eighteen months ago I drew attention to the fact that there was some confusion on the part of the public about the nomenclature of the penny itself, and that when people saw something marked "five pence" they thought in terms of five old pence whereas they should be thinking in terms of one shilling. I also drew attention to what I thought was the rather silly custom of using the letter "p" to denote a penny. A penny is a penny. Do we really want the word "new"?

LORD SHEPHERD

I am most grateful to my noble friend for a touch of light relief. I confirm—I apologise to the noble Lord, Lord Airedale, who presumably wishes to speak.

LORD AIREDALE

I sympathise with what the noble Lord, Lord Leatherland, said about using the odious expression "p" when one means a penny. But I do not think he was accurate in the first part of what he said. I have in my hand one new penny, and it is not inscribed "1 penny"; it is inscribed "1 new penny".

LORD HAWKE

I hope that this Amendment will not go through, because the idea of having to go to a post office and buy a one penny stamp, which is of not much use for anything else, in order to send it along to the bank or someone else, ruining the gum in the process, is difficult to understand. What the bank is going to do with it when it gets it the other end, I do not know. This is pure bureaucratic nonsense.

LORD SHEPHERD

I tried to intervene on two occasions. Again I congratulate my noble friend Lord Leatherland on his light relief. I agree with him that is quite wrong to use the phrase, "one new penny". There is only one penny now in our currency. The noble Lord, Lord Seebohm, raised a question of doubt as to the position of the banks in the issuing of a statement that is binding. I wonder whether he would be agreeable to withdrawing his Amendment and considering at a later stage Government Amendment No. 101, which has been introduced in anticipation of the doubts that were expressed? The later Amendment will give an opportunity for the points again to be made. If we were to let this Amendment go by, and then deal with the issue on Amendment No. 101, I think the noble Lord would find the fears he has expressed will have been met.

LORD SEEBOHM

I am happy with that explanation and beg leave to withdraw the Amendment.

LORD ABERDARE

Before the noble Lord withdraws, may I draw attention to one small point? I know there are some quite fundamental disagreements in this Government, but does the noble Lord, Lord Shepherd, realise that the answer he has given about a new penny is exactly the opposite to an answer I was given by the noble Lord, Lord Jacques, last Thursday when I made this same suggestion, that we should no longer speak about a "new penny"? I was told, yes, it was absolutely vital that we should go on speaking about a "new penny".

LORD SHEPHERD

Whether that is so or not, I was replying on the basis of my general understanding that there was only one form of currency in this country. But, if I am wrong, I have no doubt that my noble friend Lord Jacques will take me very severely to task later this evening.

LORD DERWENT

I believe that the noble Lord the Leader of the House is wrong. I believe I am right in saying there is now no such thing as a penny; there is only a new penny. That is why it is written on the coinage.

LORD SHEPHERD

If this is the case, I am clearly in the wrong and I shall make my most abject apologies to the noble Lord on a more suitable occasion, in a more appropriate place.

Amendment, by leave, withdrawn.

LORD SHEPHERD

I beg to move Amendment No. 78. Clause 98(1) requires the creditor under a regulated consumer credit agreement to give the debtor on request a statement of his indebtedness. This Amendment limits the burden of providing these statements to what is practical. It takes account of the possibility that information may be held up in distant branches of the same firm, for example, when the creditor is preparing the statement.

Amendment moved— Page 49, line 9, after ("indicating") insert ("according to the information to which it is practicable for him to refer").—(Lord Shepherd.)

On Question, Amendment agreed to.

Clause 98, as amended, agreed to.

Clauses 99 and 100 agreed to.

Clause 101 [Right to terminate hire agreement]:

3.6 p.m.

LORD SHEPHERD moved Amendment No. 79: Page 51, leave out lines 39 to 41.

The noble Lord said: I beg to move Amendment No. 79. The Bill as originally published by the previous Administration did not include this provision. Some of the Government Back-Benchers of the day, particularly Mrs. Oppenheim, at we believe the instigation of the Finance Houses Association, argued that an 18-months termination right provided in this clause would cause large hiring transactions to be within the Bill that would not be there otherwise. Their argument is a very involved one and I can save the Committee's time by not going through it. But we have now considered this point. We think that it is not necessary, because if an agreement is outside the scope of the Bill the 18-months termination right will not apply to it and therefore cannot bring the agreement within the scope of the Bill. If, on the other hand, there is a term in the agreement providing for early termination under which the total payments do not exceed £5,000, it is that term in the agreement, and not the statutory 18-months termination right, which will then apply to the agreement. That brings the agreement within the scope of the Bill. I beg to move.

LORD ABERDARE

I have looked at this point and should like to study what the noble Lord has said. There were some worries about leaving out this subsection, but from what I understood him to say I think the problem is overcome and I shall not oppose the Amendment.

LORD SHEPHERD

I can certainly help the noble Lord and give him on paper some of the examples. From the examples the noble Lord will understand the difficulty and how this clause has sought to meet it.

On Question, Amendment agreed to.

Clause 101, as amended, agreed to.

Clause 102 agreed to.

Clause 103 [Termination statements]:

LORD JACQUES

I beg to move Amendment No. 80. This is a drafting Amendment to obtain uniformity throughout the clause.

Amendment moved— Page 52, line 42, leave out ("creditor or owner") and insert ("trader").—(Lord Jacques.

On Question, Amendment agreed to.

Clause 103, as amended, agreed to.

Clause 104 agreed to.

[Clause 105 [Form and content of securities]:

LORD SEEBOHM moved Amendment No. 80A: Page 53, line 15, leave out ("provided") and insert ("available to a creditor").

The noble Lord said: I beg to move Amendment No. 80A. The Amendment is to preserve the present practice of a continuing security. Where a customer borrows and pledges a security, and then repays the borrowing, if he borrows again he can continue the same security and need not provide a new and fresh security or fresh charge forms. This is purely a matter of convenience to the customer.

LORD SHEPHERD

The noble Lord has moved Amendment No. 80A, but, provided he agrees, we might speak also to Nos. 81A, 81B, 81C, 90B, 90C, 90D, 90E, 90F, 90G and 91B. If we were to take these Amendments together it would save the time of the Committee. These Amendments appear to be inspired by the doubts of the clearing banks who are concerned to preserve their present informal arrangement for the deposit of securities. I am advised that the Amendments which the noble Lord has moved do not appear to make any difference to the effect of these clauses since, if a security is "available" to a creditor, it must have been "provided". The Amendment does not alter the essential provision in Clause 105(1) that a security instrument must be in writing. If anything, this is a provision which would hamper the informal provision of security. However, we have taken note of some of the concern that has been expressed and, at a later stage, we intend to move Amendments to Clause 105 to meet this point.

LORD SEEBOHM

I am very grateful and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

3.11 p.m.

LORD ABERDARE moved Amendment No. 81: Page 53, line 34, leave out ("it is") and: insert ("the principal agreement has been").

The noble Lord said: I beg to move Amendment No. 81 and propose to speak also to Amendment No. 82. Clause 105 provides that any surety shall receive both a copy of the principal agreement and a copy of the security instrument. We have no objection to this at all but are only concerned about the timing. Subsections (4)(b) and (4)(c) require a copy of the security instrument and a copy of the principal agreement to be given to the surety within seven days after the instrument has been executed. However, the instrument and the agreement are not necessarily executed at the same time and these subsections may require the impossible.

Subsection (7) plainly envisages that the execution of the two documents may not be simultaneous. The Amendment suggests that it would be more practical if subsection (4)(b) required a copy of the security instrument to be sent to the surety within seven days after the principal agreement has been executed. Amendment No. 82 suggests that subsection (7), which already contains a reference to subsection (4)(c), could be improved by containing also a reference to subsection (4)(b). I beg to move.

LORD SHEPHERD

I have a fairly long brief that I could use to answer the noble Lord. It is a brief which is based upon various examples and qualifications of clauses. I think that there is a possibility of doubt here, and I would only use the word "possibility"; I do not think that it is very much more than that. We have looked at this matter with great care, and we believe that the fears that have been expressed are, in fact, unfounded. I wonder whether the noble Lord would agree, in withdrawing his Amendment, that we should ask the industry whether they would wish to write and set out quite clearly on paper their real fears. We will then see whether we can meet them. I do this for the convenience of the House. I have no doubt at all that I can persuade the noble Lord of the merits of my brief and that he should withdraw the Amendment. However, at the end of the day it is necessary to satisfy the industry. I think, if the noble Lord will agree, that we will ask the industry to write to us and we will examine their points and will seek to meet them. But, as I say, I think that their fears are unfounded.

LORD ABERDARE

I shall be very grateful if that can be done. I shall be more than thankful not to have to argue this particular Amendment. I beg leave to withdraw.

Amendment, by leave, withdrawn.

Clause 105 agreed to.

Clause 106 [Default notices]:

LORD JACQUES moved to leave out the clause. The noble Lord said: With the permission of the Committee, I speak to Clauses 106 and 107, and Amendment No. 90A. This is a matter of drafting. We seek to delete Clauses 106 and 107 and to replace them with a new clause which repeats precisely the same wording. Our object is to improve the order and to reduce the number of clauses. I beg to move.

LORD ABERDARE

I should like to say something about the new clause. Should I say it at this point, or when the new clause is moved into the Bill? Perhaps I should say now what I have to say, and then the noble Lord can consider it. I should like to comment on the new clause, Amendment No. 90A. It seems to me reasonable that failure to serve a copy of a default notice on a surety should affect the security that has been given by that surety, but surely it is not reasonable that it should affect any security given by the debtor himself. It seems that that might happen. I should be grateful if the noble Lord could have a look at that point in relation to the new clause. It arises under the new clause just as under the old one.

On Question, Amendment agreed to.

Clause 107 [Failure to serve default notice]:

LORD JACQUES moved to leave out the clause.

On Question, Amendment agreed to.

Clause 108 [Duty to give information to surety under fixed-sum credit agreement]:

LORD SHEPHERD moved Amendment No. 82A: page 54, line 33, leave out ("or hirer").

The noble Lord said: This Amendment corrects a drafting error. Clause 108 refers to credit agreements and the reference to a "hirer" is therefore inappropriate and unnecessary. I beg to move.

On Question, Amendment agreed to.

LORD SHEPHERD moved Amendment No. 83: Page 54, line 38, leave out second ("of") and insert ("showing, according to the information to which it is practicable for him to refer").

The noble Lord said: With this Amendment No. 83 I shall speak to Amendments Nos. 85 and 88. Clauses 108, 109 and 110 impose on the creditor under a fixed-sum credit agreement, the creditor under a running-account credit agreement, and the owner, under a consumer hire agreement, the duty to give information on a surety where applicable, including a statement of the state of the account in the case of credit agreements or of the sums payable in the case of hire agreements. These Amendments limit the burden of providing these statements to what is applicable, and take account of the possibility that information may be held up—such as in distant branches of the same firm—when the creditor or owner is preparing a statement. The Amendment to Clause 109 replaces the existing words used to cover this potential difficulty by the wording now being used throughout the Bill. I beg to move.

LORD JACQUES

Amendment No. 83A is consequential on Amendment No. 64A. I beg to move.

Amendment moved— Page 55, line 5, at end insert— (1A) If the creditor possesses insufficient information to enable him to ascertain the amounts and dates mentioned in subsection (1)(c)(iii), he shall be taken to comply with that subparagraph if his statement under subsection (1)(c) gives the basis on which, under the regulated agreement, they would fall to be ascertained."—(Lord Jacques.)

On Question, Amendment agreed to.

LORD JACQUES moved Amendment No. 84: Page 55, line 13, leave out ("this section") and insert ("subsection (1)").

The noble Lord said: This is purely a drafting Amendment. It is desirable because the relevant requirement for the creditor to supply the surety with information under this clause is contained in subsection (1). I beg to move.

LORD HAWKE

I cannot quite see the raison d'etre of the fee of I5p for the furnishing of very considerable documentation. I can see the argument for furnishing it for nothing and I can see the argument for furnishing it at something like cost price. But why 15p, which is neither one nor the other?

LORD SHEPHERD

That, coming from the noble Lord, Lord Hawke, with his long connection with cricket is not only a fast one but also has a slightly googly aspect. I will look into it and will be in touch with the noble Lord.

clause 108, as amended, agreed to.

Clause 109 [Duty to give information to surety under running-account credit agreement]:

3.20 p.m.

LORD JACQUES

I beg to move Amendment No. 84A. This Amendment corrects a drafting error. Clause 109 refers to credit agreements; the reference to "hirers" is therefore inappropriate and unnecessary.

Amendment moved— Page 55, line 25, leave out ("hirer")— (Lord Jacques.)

On Question, Amendment agreed to.

LORD SHEPHERD

I beg to move Amendment No. 85 which I spoke to when moving Amendment No. 83.

Amendment moved— Page 55, line 30, leave out from ("according") to end of line 31 and insert ("to the information to which it is practicable for him to refer")—(Lord Shepherd.)

On Question, Amendment agreed to.

LORD JACQUES

I beg to move Amendment No. 86 which is drafting. It is desirable because the relevant requirement (for the credit to supply the surety with information) under this clause is, in fact, contained in subsection (1).

Amendment moved— Page 56, line 5, leave out ("this section") and insert ("sub-section (1)")—(Lord Jacques.)

On Question, Amendment agreed to.

LORD SEEBOHM had given Notice of his intention to move Amendment No. 86A: Page 56, line 11, at end insert— (6) Where the creditor carries on business at mole than one place the statement referred to in subsection (1) shall contain only the latest information which is recorded by the creditor at the place where the debtor's account is maintained.

The noble Lord said: Amendment No. 85 moved by the noble Lord, Lord Shepherd, covers the subject which we had in mind for this Amendment. Therefore, I do not desire to move it.

Clause 109, as amended, agreed to.

Clause 110 [Duty to give information to surety under consumer hire agreement]:

LORD JACQUES

I beg to move Amendment No. 86B. This Amendment corrects a drafting error. Clause 110 refers to "hire agreements"; the reference to "debtors" is therefore inappropriate and unnecessary.

Amendment moved— Page 56, line 16, leave out ("debtor or")—(Lord Jacques.)

On Question, Amendment agreed to.

LORD JACQUES moved Amendment No. 87: Page 56, line 18, leave out ("(if any)").

The noble Lord said: This Amendment corrects a small drafting error. This clause requires the owner under a regulated consumer hire agreement to give the surety information on request, including a copy of the executed agreement, if any. The words, "if any" are not required in this context because under the Bill there are no exceptions to the rule that a regulated consumer hire agreement must always be in writing. Therefore, there will always be an executed agreement to copy. I beg to move.

On Question, Amendment agreed to.

LORD SHEPHERD

I spoke to this Amendment when moving Amendment No. 83. I beg to move Amendment No. 88.

Amendment moved— Page 56, line 21, leave out second ("of") and insert ("showing, according to the information to which it is practicable for him to refer").—(Lord Shepherd.)

On Question, Amendment agreed to.

LORD JACQUES

Amendment No. 89 is a purely drafting Amendment. It is desirable because the relevant requirement (for the owner to give the surety information) under this clause is in fact contained in subsection (1). I beg to move.

Amendment moved— Page 56, line 33, leave out ("this section") and insert ("subsection (1)").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 110, as amended, agreed to.

Clause 111 [Duty to give information to debtor or hirer]:

LORD JACQUES

This again is purely a drafting Amendment. It is desirable because the relevant requirement (for the creditor-owner to give the debtor or hirer information) under this clause is in fact contained in subsection (1). I beg to move.

Amendment moved— Page 57, line 15, leave out ("this section") and insert ("subsection (1)").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 111, as amended, agreed to.

LORD JACQUES

Amendment No. 90A is consequential. I beg to move.

Amendment moved— After Clause 111 insert the following new clause:

Default notices

.—(1) When a default notice is served on a debtor or hirer, a copy of the notice shall be served by the creditor or owner on any surety (if a different person from the debtor or hirer).

(2) If the creditor or owner fails to comply with subsection (1), the security is enforceable on an order of the court only.

(3) In determining whether or not to make an order under subsection (2) the court shall consider, in addition to any other relevant factors,—

1. (a) how far, if at all, the surety has been prejudiced by the failure to comply with subsection (1); and
2. (b) the degree of culpability for the default.—(Lord Jacques.)

LORD ABERDARE

This Amendment is consequential on the leaving out of the other two clauses on which I raised a point. I hope that that paint has been taken and perhaps somebody will kindly look into it and let me know the answer.

LORD SHEPHERD

Certainly.

On Question, Amendment agreed to.

Clause 112 agreed to.

Clause 113 [Act not to be evaded by use of security]:

LORD SHEPHERD moved Amendment No. 91: Page 58, line 31, leave out ("age and")

The noble Lord said: I beg to move Amendment No. 91 and I should like at the same time to speak to Amendment No. 91A standing M the name of the noble Lords, Lord Seebohm and Lord Helsby. Clause 113(6) enables creditors to lend to minors and unincorporated bodies (such as sports and social clubs) on the indemnity of a third party without risking infringing the prohibition in Clause 113(1), against benefiting from the enforcement of a security to a greater extent than if the security had not been provided. Minors and unincorporated bodies that are prohibited by their constitutions from borrowing would not otherwise be able to borrow. But the present words, "of full age and capacity" in line 31 are misleading because they suggest that the subsection applies only to individual men and women and not also to unincorporated bodies. The Amendment removes this suggestion. "Full age" is not in fact required because it is included in "full capacity". I beg to move.

On Question, Amendment agreed to.

Clause 113, as amended, agreed to.

Clause 114 [Pawn-receipts]:

3.28 p.m.

LORD MAIS moved Amendment No. 91C: Page 59, line 5, leave out from ("title") to end of line 6 and insert— (b) a pledge of goods to secure a debtor-creditor agreement conferring on the debtor the right to overdraw on a current account, or (c) a non-commercial agreement.

The noble Lord said: Clauses 114 to 122 of the Bill deal with pledges but Clause 114(3)(a) provides that these clauses do not apply to a pledge of documents of title. In Scotland, however, it is customary for a bank to take security directly over goods rather than documents of title and it is considered that the exemption does not go far enough as no allowance is made for the situation where, for example—and I am sure I shall have sympathetic consideration here—whisky in the custody of a neutral warehouse keeper is pledged as security simply by transferring it into the name of the bank. The suggested Amendment is intended to exempt also such securities from the provision of Clauses 114 to 122.

I would draw your Lordships' attention to the definition of "goods" in Clause 184, which is that it has the meaning given to it by Section 62(1) of the Sale of Goods Act 1893; namely, that goods include, in Scotland, all corporeal movables except money. I beg to move.

LORD SHEPHERD

As the noble Lord, Lord Mais, has said, Clause 114(3) exempts pledges of documents of title (for example, a bill of lading or other documents representing goods), and noncommercial agreements from the requirements under this clause and others relating to the taking of pledges as security for credit. By inserting new paragraph (b) the Amendment seeks to extend this exemption to pledges of goods securing overdrafts on current account. The argument for exempting pledges of goods to secure an overdraft appears to be that where an overdraft is exempted from the documentation provisions of the Bill (under Clause 74(3)) it is also exempted from the security documentation provisions (under Clause 105(5)), and it therefore seems anomalous to require the provisions governing pawn receipts to apply to pledges of goods to secure such an overdraft.

We have tried to meet the proper demands of the banks, but there is a limit to which we can go without destroying the basic philosophy of the Bill that there should be no exemptions on an institutional basis. Furthermore, each exemption must be considered in the light of the complications it will cause in the structure of the Bill. We do not think we can accept this Amendment. It is not a point which the banks have mentioned to the Department as causing difficulty and we can see no reason why, if a bank is to take pledges, it cannot observe the minimum rules laid down in the Bill for dealing with the pledge. Surely the banks do not mind observing what I think are relatively simple rules. The giving of a receipt for the pledge of goods and the observance of rules about its return and sale on default should not be onerous and could hardly be said to damage to any significant degree the informal nature of exempted overdraft arrangements.

The noble Lord, Lord Mais, has placed a new interpretation on the clause. I will certainly look at his Amendment but I thought I would explain to him in some detail the reason why we would find the Amendment itself unacceptable. I shall certainly look at this and will be in touch with him.

LORD MAIS

I thank the noble Lord for his answer. It is not so much a question of asking to ease the banks' position but rather to ease the traders' position because it is established custom. I am grateful to the noble Lord for his assurance, in the light of which I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 114 shall stand part of the Bill?

LORD HAWKE

I am not quite happy about the drafting of this clause, though I may be barking up the wrong tree. First of all, subsection (2) reads— A person who takes any article in pawn from an individual whom he knows to be, or who appears to be and is, a minor commits an offence. I should have thought that either those words, "or who appears to be" should be deleted, or else the sentence should read "or" instead of "and". Perhaps the noble Lord will look at that.

Another point about which I am not quite clear is whether subsection (3) provides an escape for a minor pledging an article if it is a pledge of documents of title or a non-commercial agreement. I cannot quite visualise what form of agreement or document to title a minor might pledge, but I suppose that father's pawn ticket for something else might be pledge-able by little Willie at another pawn shop. Perhaps the noble Lord would look into that, too.

LORD SHEPHERD

In the light of my experience about new pennies and old pennies I will not respond to the noble Lord's first question but will look into it and communicate with him. In regard to his comment on subsection (3) I understand it has been placed there because we do not wish to inhibit the taking of pledges in transactions between friends. I think the object of that subsection is to give that degree of flexibility.

Clause 114 agreed to.

Clauses 115 to 122 agreed to.

LORD SHEPHERD

I beg to move that the House do now resume.

Moved accordingly and, on Question, Motion agreed to.

House resumed.