HL Deb 06 May 1974 vol 351 cc317-59

3.52 p.m.

Committee stage resumed.

Clause 123 [Restrictions on taking and negotiating instruments]:

On Question, Whether Clause 123 shall stand part of the Bill?


May I raise one point on Clause 123, which prohibits the use of negotiable instruments in connection with regulated agreements. It reverts really to some remarks I made way back on Clause 8, about the effects on matters where one or other party was from overseas. What I am worried about here is the possible effect on bills of exchange. The noble Lord very kindly undertook to look at these matters in Clause 8, and it may be that this point will also be covered under the same review of matters affecting overseas business. But just to mention the point, it is customary and convenient for international trade to be financed by bills of exchange, and we feel that unless this clause is amended there could possibly be an adverse effect on exports. It is quite frequent, and certainly to my knowledge there have been no complaints or evidence of abuse, for overseas buyers of British equipment to obtain credit by accepting bills of exchange, either one bill or a series of bills. This clause would appear to prevent a United Kingdom finance house drawing a bill or bills where the acceptor outside the United Kingdom was not a body corporate. This is our worry. It may well be, as I say, that the matter is already being reviewed by Her Majesty's Government in connection with the points we raised on Clause 8, but I thought it worth mentioning at this point.


So far as the Government are concerned, we do not wish this Bill to hinder in any way the export trade. The Department is now looking very closely at the points raised by the Finance Houses Association and also by noble Lords opposite at an earlier stage. If, after consultation, it appears that there is any difficulty in this area, an appropriate Amendment will be introduced at a later stage.

Clause 123 agreed to.

Clauses 124 and 125 agreed to.

Clause 126 [Enforcement of land mortgages]:

3.54 p.m.

LORD ABERDARE moved Amendment No. 92: Page 63, line 25, after ("(1)") insert ("the court may direct that")

The noble Lord said: Clause 126 provides that if an application for the enforcement of security, where that security is a mortgage on land, is dismissed by the court then the creditor shall lose his security. This, we feel is draconian. If one looks at Clause 113, which is brought into play when an application is dismissed under Clause 126, we see that Clause 113 is intended to apply in cases where there has been some impropriety in the making of the agreement, or where the agreement has been cancelled, or where the creditor has acted improperly. Certainly it is right in such cases that the creditor should surrender any security. But in Clause 126 there is no suggestion of impropriety. An application might be dismissed on purely technical grounds without prejudice to a future application. In other cases covered by Clause 113 the agreement is at an end, but under Clause 126 the agreement continues to exist and the creditor is still owed money, only he has lost his security. He may well not have made the advance if he had known that he might lose his security at the very moment when he needs it. I beg to move.


The Amendment seeks to give the court discretion as to what should happen when it has dismissed an application for an order to enforce a land mortgage securing a regulated agreement, for example, a second mortgage. At present Clause 126(2) provides that when such an application is dismissed the provisions of Clause 113(3) shall apply; that is, the creditor shall lose his security. I understand that the Finance Houses Association have inspired this Amendment, considering the present provision to be excessively harsh in cases where an application is dismissed on purely technical grounds without prejudice to a future application. The Amendment accordingly makes the provision permissive and not mandatory.

We are advised that the effect of the clause as drafted would not be as the Finance Houses Association fear, and that the creditor would only lose his security under this clause where the court determined that the agreement had been improperly executed or was extortionate under the provisions of Clauses 136 to 139. In these cases we consider it right that the security should be lost. However, we are considering the whole subject of judicial control with a view to making extensive amendments to Part IX of the Bill, and we would be prepared to consider any further case which may be put up concerning any unintended effect that Clause 126(2) might have.


I am very gratful for what the noble Lord has said, and I will draw his remarks to the attention of my noble friend Lord Colville of Culross. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 126 agreed to.



In accordance with my Statement earlier to-day, I beg to move that consideration of Part IX of the Bill be postponed until after Clause 188.

Moved, That consideration of Part IX be postponed until after Clause 188.—(Lord Shepherd.)

On Question, Motion agreed to.

Clause 142 [Definition of terms used in Part X]:


Amendments Nos. 93, 94, 95 and 96 are Amendments which simply correct misprints. I beg to move.

Amendments moved— Page 73, line 4, leave out ("143(3)") and insert ("143(4)") Page 73, Line 12, leave out ("143(4)") and insert ("143(5)") Page 73,Line 22, leave out ("143(4)") and insert ("143(5)") Page 73,Line 26, leave out ("143(4)") and insert ("143(5) ")—(Lord Jacques.)

On Question, Amendments agreed to.

On Question, Whether Clause 142, as amended, shall stand part of the Bill?


There is one small point that I should like to raise at this stage on the clause. It has been represented to us that the effect of subsection (5) will be to include the activity of block discounting, and therefore to classify that activity as an ancillary credit business. The Finance Houses who conduct this activity are rather concerned to know whether this is intentional and also to be reassured, if this is the case, that it will not be necessary for them to enter into two licensing systems, one for their main activity and one for the subsidiary. I should be grateful if the noble Lord could enlighten me on this subject.


If block discounting were not to be classified by the Bill as an ancillary credit business, it would be possible for any financier who was prepared to deal only with block discounting to escape entirely the licensing provisions of the Bill. Such a financier could have a great deal of power in the consumer credit industry by virtue of being able to extend credit to retailers, but could not be disciplined in any way if he used this power against the consumer's interest. To stop this evasion the definition of debt collecting has been drawn so as to include block discounting. No decision has yet been taken as to the actual physical form licences will take, or whether a creditor's licence will enable the holder to include debt collecting. The point that is made will, however, be borne in mind when decisions are taken. It is accepted that if block discounting is only a small part of a creditor's business it might be burdensome for him to have to obtain two separate licences.


I am grateful to the noble Lord for looking at this sympathetically, and I shall study his reply further this evening.

Clause 142, as amended, agreed to.

Clauses 143 to 147 agreed to.

Clause 148 [Advertisements]:

On Question, Whether Clause 148 shall stand part of the Bill?


This is a microscopic point and I may well be mistaken, but it appears to me that in line 37 it is not possible to attribute a meaning to the word "whether". I wonder whether the word ought to be "where", or whether later in the sentence the words "or not" should appear. It is a small point, but it affects the meaning of the clause.


Now that the noble Lord is following the noble Lord, Lord Aberdare, in being able to pick up these abstruse matters, I begin to tremble for any future Committee stage. I shall certainly look at what the noble Lord has said to see whether there is a drafting or printing error. If there is we shall certainly put it right on Report.

Clause 148 agreed to.

Clauses 149 to 152 agreed to.

Clause 153 [Entry into agreement]:

4.4 p.m.

LORD SHEPHERD moved Amendment No. 97: Page 78, line 24, after ("65") insert ("129").

The noble Lord said: This is a drafting Amendment. Clause 153 empowers the Secretary of State to make regulations making provision in relation to credit brokerage, debt-adjusting, or debt-counselling agreements, corresponding to certain provisions relating to consumer credit or hire agreements. If these provisions in relation to consumer credit or hire agreements are not met, the agreement is enforceable against the debtor or hirer only on an order of the court. The extension by Clause 153 of these provisions to ancillary credit agreements should obviously mean that such agreements should also be enforceable on an Order of the Court only when the provisions are not complied with. This is not so at present, and the Amendment rectifies this by adding to Clause 129, which sets out the powers of the Court in relation to improperly executed agreements and security instruments. I beg to move.

On Question, Amendment agreed to.

Clause 153, as amended, agreed to.

Clause 154 agreed to.

Clause 155 [Duty of agency to disclose filed information]:

On Question, Whether Clause 155 shall stand part of the Bill?


I should be most grate ful if the Government would look closely at the effects of Clause 155 as it now stands. There is no objection to the effect, which is clearly intentional, of forcing credit reference agencies to reveal all that they hold on file about private individuals when those private individuals request it. However, I have received representations about the effect, which is not so clearly intentional, for giving to private trading partnerships and unincorporated businesses the same right to force information about them to be revealed. This effect arises from the definition of the word "individual" as it is used in line 3 on page 75 and as it is defined in Clause 184. Noble Lords will remember an exchange earlier this week when the noble Lord, Lord Jacques, clarified this point with the noble Lord, Lord Airedale. Therefore, there is no doubt that the word "individual", for the purposes of this Bill, includes not only individuals as we use the term in every day speech but also individuals in the legal sense, which includes unicorporated businesses and partnerships. In this sense incorporated businesses are specifically excluded and unincorporated business are specifically included.

The agencies involved do not object to revealing statements of fact, but what concerns them is the disclosure of their sources of information, and more particularly their sources of opinion. The Crowther Report also had reservations on exactly the same point, and expressed them in Paragraph 9(1)(25). The agencies fear that the existence of the machinery of compulsory disclosure will make many of their sources dry up. They expect, not unreasonably, that the result of this will cause a higher incidence of successful fraud, and that, in turn, this will result in a greater reluctance of companies to give credit to unincorporated businesses. As this, in fact, is the form in which many of our greatest and most flourishing commercial enterprises started their life, the effect of limiting credit by this means would be quite disdisproportionate to the sums involved. I should be grateful if the Government could look into some means of avoiding this difficulty, perhaps by a redefinition of the word "individual".


The noble Lord has raised a point which I must admit I discussed very fully with my advisers. On the matter of disclosure, I think that it is right that there should be a statement as to who has disclosed information. Unless you know who has made a statement it is very difficult to be able to elucidate, to track, and to change. Whether there is another definition for the word "individual" I do not know. I shall certainly look at it. The word "individual" is deliberately used on a number of occasions in order to incorporate a wide-ranging group of individuals as a group, and individuals by themselves. I cannot offer the noble Lord a great deal of hope, but I will undertake to have a look at it. However, I do not think that there is a way out in meeting the point that he has made by seeking to have a new definition for what is a group or an individual.


I accept that that was an unhappy suggestion. It would be much better to substitute a different word, such as "applicant", bearing in mind that we are dealing with larger sums than when we deal with individuals as private persons, and, therefore, the inquiries would be of a different nature from those that would be made by a private individual. I am grateful to the noble Lord for his undertaking to look at this matter again, and I hope that he will do so sympathetically.

Clause 155 agreed to.

Clauses 156 and 157 agreed to.

Clause 158 [Powers of entry and inspection]:

4.10 p.m.

LORD SHEPHERD moved Amendment No. 98: Page 83, line 4, leave out ("an enforcement authority other than the Director") and insert ("a local weights and measures authority").

The noble Lord said: Clause 158(5) empowers the Secretary of State to make regulations providing, in effect, that in cases described by the regulations, an officer of an enforcement authority will require special authority from the Director to exercise powers of entry and inspection. This new provision was inserted in the clause to meet, inter alia, the clearing banks' misgivings about the consequences of the powers of entry and inspection in the confidentiality of the banker or customer relationship.

The purpose of the Amendment is to exclude from the requirement to obtain the Director's authority officers of the Department of Commerce for Northern Ireland, which is the enforcement authority in Northern Ireland. The Amendment is necessary because it is inappropriate that officers of the Department of Commerce should require the Director's authority, given that the head of a Northern Ireland Department has Ministerial status. The Northern Ireland authorities will ensure that in cases where regulations under Clause 158(5) limit the investigatory powers to officers of the local weights and measures authorities in Great Britain, corresponding controls will apply to their officers. I beg to move.

On Question, Amendment agreed to.

On Question, Whether Clause 158, as amended, shall be agreed to?


This clause, and the clauses associated with it, will impose extra duties and responsibilities upon the weights and measures inspectors and the weights and measures authority. I think it is generally known that there is at present a shortage of properly qualified weights and measures inspectors. Is any step being taken by the Government Department concerned to try to stimulate the recruitment of additional weights and measures inspectors?


Obviously the imposition of very considerable new duties as a consequence of the Bill will require the Weights and Measures Inspectorate, in terms of its size and efficiency, to be carefully considered by the authorities. However I am not in a position to say anything more about that at the moment. I think I shall have to seek to deal with it when we come to Third Reading. That, I think, will be an appropriate stage to deal with the matter.

Clause 158, as amended, agreed to.

Clauses 159 to 162 agreed to.

Clause 163 [Penalties]:


I beg to move Amendment No. 99, which is to deal with a misprint.

Amendment moved— Page 84, line 31, leave out ("as").—(Lord Jacques.)

On Question, Amendment agreed to.

Clause 163, as amended, agreed to.

Schedule 1 [Prosecution and punishment of offences]:


I beg to move Amendment No. 100, which again is to deal with a misprint.

Amendment moved— Page 106, line 8, leave out ("158(5)") and insert ("158(6)").—(Lord Jacques.)

On Question, Amendment agreed to.

Schedule 1, as amended, agreed to.

Clauses 164 and 165 agreed to.

Clause 166 [No further sanctions for breach of Act]:

Loan SHEPHERD moved Amendment No. 100A: Page 85, line 26, leave out from ("requirement") to ("except") in line 27 and insert ("made (otherwise than by any court) by or under this Act shall incur no civil or criminal sanction as being such a breach,").

The noble Lord said: Amendment No. 100A has two effects. First, it adds to the provision already in the clause that the breach of a requirement contained in the Bill itself shall incur no sanction except one expressly provided by or under the Bill. A further provision is that the same shall apply to a requirement made under the Bill. In other words, the same rule also applies to breaches of regulations made by the Secretary of State and to breaches of conditions made by the Director under Clause 74. But the Amendment makes it clear that this does not apply to court orders. If a court order is disobeyed the court may impose the usual sanctions for contempt of court. Secondly, the words "being such a breach" have the effect of allowing steps to be taken under the Fair Trading Act 1973 in relation to persons who break the requirements made by, or under, the Bill. If an order is made under that Act forbidding such breaches, Clause 166 would not prevent steps being taken under that Act to deal with a contravention of such an order. I beg to move.

On Question, Amendment agreed to.

Clause 166, as amended, agreed to.

Clause 167 agreed to.

Clause 168 [Statements by creditor or owner to be binding]:

4.16 p.m.

LORD SHEPHERD moved Amendment No. 101: Page 86, line 31, at end insert— (3) Where in proceedings before any court—

  1. (a) it is sought to rely on a statement or notice given as mentioned in subsection (1) or (2), and
  2. (b) the statement or notice is shown to be incorrect,
the court, if satisfied that on a prosecution for failure to give a correct statement or notice the person charged could have established a defence under section 164(1), may, either wholly or to such extent as it considers just, treat the statement or notice as not binding on the person by whom it was given.

The noble Lord said: I beg to move Amendment No. 101 and perhaps draw the attention of the Committee to the next Amendment, which is to leave out the clause. This, I understand, is for the purpose of dealing with much that is in the Government Amendment. I think the noble Lord, Lord Seebohm, was willing to withdraw an earlier Amendment in anticipation of what I can now say in regard to this matter. The Amendment enables creditors and owners to escape being bound by Clause 168 in respect of statements and notices given by them. If they can establish that (a) the giving of a statement or notice which they now say is incorrect was due to a mistake or to reliance on information supplied to them, or to an act or omission by another person, or to an accident or some other course beyond their control and that they took all reasonable precautions to avoid this situation: that is the defence in Clause 164(1) against offences under the Bill; and (b) it is fair to treat the statement or notice as not binding on the creditor or owner. That is not spelled out in the Amendment itself but it is achieved by reference to the defence given by Clause 164 to a person prosecuted for giving an incorrect statement or notice.

The Amendment is designed to meet the fear of the clearing banks that if they make a mistake in favour of their customer in statements under Clause 168 they will be unable to recover their money. The effect of the Amendment will be that in such circumstances a creditor might succeed in an action to recover his money if he could prove both that the money was rightfully his and that the mistake in his statement was outside his control. If these points can be proved the banks will be in the same position as they are at present. I beg to move.


I agree with the noble Lord, Lord Shepherd, that we should consider the following Amendment now; indeed, it would be semantically rather difficult to consider the Amendments separately. I believe that one should never look gift horses in the mouth, particularly when they come from Governments, and naturally this Amendment is welcome so far as it goes. I am not sure that it goes as far as one might wish. I shall try to express my reservations, which are a little tentative, because this is a highly technical area. I will certainly not be dogmatic about the effect of the Amendment. As the noble Lord said, it links back to what was said during our deliberations on Clause 98, and just picking up the point which was left there, the proposed fee of one new penny, or one-hundredth of a pound, was to draw attention to the fact that the matters specified under Clause 98(1) were the only ones of that nature which would be binding in the case of a certificate given by a creditor for which there was no fee prescribed; and therefore the intention was merely to ensure that the mind of the institution issuing the certificate was concentrated on the fact that it had a statutory effect.

My reservation is merely this. I wonder whether the onus of proof set out in Clause 164(1)(a) and (b) is still rather heavy? First—and this probably makes no great difference in practice from what happens now—it will be necessary for proceedings to be brought before a court before a banker can defend himself against an action taken by a customer who is possibly relying on a mistake in his account to show that his position had been changed by reliance on that information.

Secondly, what would happen if a banker correctly provided a certified copy of an account which reflected an error by a third party; for example, if a credit was wrongly directed to an account of one of his customers, or perhaps repeated in a way that the banker could not discern and, indeed, had no duty to inquire into? If a banker were then to debit his customer's account to rectify this error, could he rely on the defence in Clause 164? It is not entirely clear to me whether he could. But even if the answer is, "Yes", it is hard to see why the banker should be required to defend himself in court in respect of the errors of a third party. I repeat that this Amendment is welcome and naturally, having had a peg on which to hang these questions, I shall not seek to move the following one. But I should be grateful if those points could be considered.


I am bound to say that I think that the proposed new subsection throws a very considerable burden on an unfortunate court of law. I say that because what it really amounts to is that the court has to say to itself, "If there had been a prosecution, would the defendant have won the case? If we think that the defendant would have won the case, we are to take certain action in consequence of that." There is only one way of knowing what will be the result of a criminal prosecution, and that is to have a criminal prosecution and see who wins the case. I should have thought that that was asking a great deal of a court which was not conducting a criminal prosecution.

To my mind, the gravamen of this matter is that the words that the person charged "could have established a defence" are too strong. If the words had been that the person charged had grounds for putting forward a certain defence, I could have understood them. Perhaps it would not be asking too much of a court to say, "Would the defendant have had reasonable grounds for putting this defence forward?". But if the unfortunate court had to go beyond that and ask, "What would have been the result of the case? Would the defendant have won?", that would be imposing too great a burden. I do not suppose the noble Lord has had time to think about all these points, but could he consider before the next stage of the Bill substituting the words, "could have had grounds for putting forward a defence", for the words, "could have established a defence"?


I fully understand that the noble Lord, Lord Shepherd, has gone a long way to meet our requirements, but I am still unhappy about this Amendment. It appears to me that the approach to the problem is wrong, and I suggest that the honesty of the debtor should be the criterion in any decision as to whether he should or should not benefit from a mistake on the part of the creditor. This is just another additional burden of proof on the creditor. If the approach had been the other way around, we might have got wording which would have been rather more acceptable.


In reply to the noble Lord, Lord Seebohm, may I say that we have established all along that the balance should fall in the area of the consumer or the debtor. The drafting suggestions made by the noble Lord, Lord Airedale, were, as usual, helpful. But I am sure the noble Lord will appreciate that at this hour—I shall not say "late hour", but we have been in Committee to-day for some two-and-a-half hours—I shall not react by saying that what he suggested is an improvement on the drafting. What I shall do is look very carefully at what he has said and see whether an Amendment is necessary.

In regard to the point made by the noble Earl, Lord Limerick, about the position of a bank if it sent out a stat- ment in good faith but was in error because of false information provided by some other person, I would say this. My understanding is that under subsection (a) to which I referred and which I explained at some length, a bank would be able to rely on the fact that the information had been supplied by some other person. Therefore, the point made by the noble Earl, Lord Limerick, is met by the drafting of the Amendment.


Before consenting to this Amendment passing into the Bill, may I amplify what I said? I am grateful for that assurance, which is what I hoped to receive. I should have framed my question: After this Bill becomes law, will the doctrine relating to a mistake remain as it is now, in relation to the furnishing of statements by banks to their customers?


As I said at the conclusion of my earlier remarks, if a bank can prove the points which I mentioned we believe that it will be in the same position as it is in now. I think that meets the point that the noble Earl has in mind.


I have listened with great interest to the discussion that has gone on, and to the remarks of the Minister. Am I right in saying that in the matter of the relations between a creditor and a debtor, where there is a question of doubt or a question of giving some advantage, the modern view is that that advantage should be given to the debtor rather than to the creditor? If that is the case, it certainly is a great change around from the traditional attitudes about the relationship between creditor and debtor in this country.


I sought to say that if one was putting the balance it was in one way as opposed to the other. I should not have thought it was new, and I plead for the noble Earl, Lord Limerick, to come to my aid, because I believe that this was the general balance in the hire purchase legislation of 1965 and 1966. One seeks to have the right, the just balance between the two sides in a negotiated deal. But if one has to fall in one way, then one falls more on the side of the consumer in hirepurchase agreements and in the money-lending field, whereas under very old legislation one fell more on the side of the debtor. As the noble Lord will see, there is no new philosophy or principle in this Bill, but perhaps there is a little more emphasis than in the past.

On Question, Amendment agreed to.

Clause 168, as amended, agreed to.

Clause 169 [Contracting-out forbidden]:

4.30 p.m.

LORD HELSBY moved Amendment No. 101A: Page 87, leave out line 5.

The noble Lord said: Subsection (3) of this clause deals with things being done at any time with the consent of the person affected given at that time. The words "given at that time" seem hardly necessary in this context. In some cases which arise, they import the idea that it is quite impracticable. If what was to be done was the sale of property or land, that could not be carried out instantaneously, as it were, if it were to be done fairly. It would take some considerable time, and as a matter of practical necessity the consent would surely have to be given before the wheels were set in train for the arrangements to sell. I beg to move.


The Bill states that certain things in the Bill, for example enforcement of an improperly executed agreement or the enforcement of a land mortgage, may only be done on the order of the court. Similarly, an agreement by an unlicensed trader may be enforced only on the order of the Director. This rule, however—and I think it is harsh—means that the debtor or the hirer may be willing to consent to the enforcement; for example, the debtor may have an unenforceable agreement on his hands but it is made unenforceable by such a small technicality that any court would enforce it. If, therefore, the debtor got into arrears, it might be in his best interest to consent to enforcement to save time and cost.

However, such a voluntary agreement is obviously also open to abuse, and to counter this the Bill provides that such consent must be given at that time; that is, at the time when enforcement is envisaged. If the debtor were allowed to give his consent in advance, he could write off his protection. For example, he could be asked to sign such advance permission as a condition of getting the loan before even he knew that it was an unenforceable agreement, signing away his rights. I understand that the clearing banks have some concern in this matter and argue that for consent to be given at that time is too restrictive.

One of the important protections of the Bill is the power of the court to enforce certain agreements and this must not be whittled away. A debtor must not give his permission in advance or otherwise he might sign away his rights before he realises that one day he might need them. We cannot see that such timing is restrictive. If a creditor wishes to enforce his agreement, he could surely approach the debtor and discuss the matter first. If the debtor had moved, or was not traceable, it is right that the court should be able to look at the matter in the debtor's absence. But if there is any real problem, we should like to have full details and would look at them, but we should be most unwilling to water down this important protection. If the noble Lord would care to give us full details, these clearly would be considered.


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

Amendment, by leave, withdrawn.

LORD SHEPHERD moved Amendment No. 102: Page 87, line 5, at end insert ("but the refusal of such consent shall not give rise to any liability").

The noble Lord said: This Amendment makes it clear that a consumer's refusal to give his consent to goods or land being repossessed without a court order will not, of itself, make him liable for proceedings such as "conversion" (dealing with someone's goods in a way inconsistent with that person's rights) and an action for the return of goods wrongfully detained from their owner. It would be wrong if a consumer who relied on his rights under the Bill and held on to goods or land could be sued for the civil wrong of wrongfully keeping someone else's property.

Section 52 of the Hire Purchase Act 1965, which the Bill repeals, makes refusal to surrender goods not conversion in certain cases. Therefore, in so far as hirepurchase goods are concerned this is not a new provision. I beg to move.

On Question, Amendment agreed to.

Clause 169, as amended, agreed to.

Clause 170 [Restrictions on disclosure of information]:

LORD JACQUES moved Amendment No. 103: Page 87, line 19, after ("Part") insert ("II or")

The noble Lord said: Section 14 of the Fair Trading Act 1973 makes provision for references to the Advisory Committee of matters which may adversely affect the economic interests of consumers, and the Director is required to give the Committee information in his possession. The subject of such a reference could be a consumer credit trade practice, and the purpose of this Amendment is to enable the Director to pass on information in his possession to the Advisory Committee. I beg to move.

On Question, Amendment agreed to.

Clause 170, as amended, agreed to.

Clauses 171 to 176 agreed to.

Clause 177 [Power to alter monetary limits etc.]:

LORD JACQUES moved Amendment No. 103A: Page 90, leave out line 24 and insert ("and 155(1)")

The noble Lord said: This is an Amendment to pave the way for Amendment No. 107C to Clause 183 which empowers the Secretary of State to amend Schedule 2 by adding further examples, or in any other way. With power to amend Schedule 2 in Clause 183 it will no longer be necessary for Clause 177 to contain a specific power to amend the monetary limits mentioned in Schedule 2. We therefore wish to remove that reference in Clause 177, and that is what the Amendment does. I beg to move.


I take it that any order made by the Secretary of State amending Schedule 2, by adding further examples, would be subject to Parliamentary procedure under the negative resolution procedure.


That is my understanding.

On Question, Amendment agreed to.

Clause 177, as amended, agreed to.

Clause 178 agreed to.

Clause 179 [Associates]:

4.39 p.m.

LORD ABERDARE moved Amendment No. 105: Page 91, line 27, after ("descendant") insert ("Uncle Tom Cobbleigh and all,")

The noble Lord said: I apologise for the somewhat unparliamentary nature of this Amendment, but it highlights what is a rather extraordinary situation. If one refers back to Clause 25(2) one sees that in examining whether an applicant for a personal licence is a fit person to engage in any activities, the Director may have regard to any circumstances appearing to him to be relevant, and in particular any evidence tending to show that the applicant or any of the applicant's employees, agents or associates—and that is the point I shall be taking up in a minute—whether past or present, and so on, has committed any offence involving fraud or other dishonsty or violence, contravened any provision, and so on, or practised discrimination on grounds of sex, colour, race, and so forth.

One comes then to find out what the word "associate" means, and we see that in subsection (1) of the clause that we are now considering it says: A person is an associate of an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife. Then, naturally, one wants to know what a relative is, and so one turns to subsection (5) and sees: In this section 'relative' means brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant, and references to a husband or wife include a former husband or wife and a reputed husband or wife; and for the purposes of this subsection a relationship shall be established as if any illegitimate child, step-child or adopted child of a person had been a child born to him in wedlock.

It seems to me very extraordinary that the Director General of Fair Trading, before he grants a licence, is to be able to take into account certain misdeeds committed by a very wide range of people indeed described under the titles of "associate" and "relative". I really wonder whether this is right. It seems to me that in determining whether a person is a fit person to hold a licence the Director General can take into account the behaviour of, for example, the applicant's great-great-grandfather, his niece's husband, his wife's uncle or any other combination of relationships. I wonder whether this is not only visiting the sins of the fathers upon the children unto the third and fourth generation but is going further and visiting the sins of the fathers-in-law as well. I find it rather curious and rather difficult to understand, and if the noble Lord can reassure me I shall be very grateful. I beg to move.


In considering this Amendment when it was first put down, we were at some pains to discover what was really behind it. Who was this "Uncle Tom Cobley"? It cannot be a reference to the famous person who, in company with Tom Pearce, Bill Brewer and other gentlemen, went to Widdecombe Fair, first of all because that gentleman's name was spelt "Cobbleigh" and, secondly, because we could hardly think that noble Lords opposite would be so frivolous as to put down an Amendment referring to him. We came to the conclusion that, for some reason, one of the noble Lords in whose name the Amendment stands thought that his relative should be specially protected under the Bill, and that the name of his relative was Tom Cobley. I am sure noble Lords will appreciate that it would be very difficult if we were to mention one of their relatives. We would then have many applications from Members of both this House and another place for their relatives to be mentioned and to be specially protected under the Bill. Apart from the increased size of the Bill which would result, I hope noble Lords will agree that it would create an undesirable precedent to name in Acts of Parliament people who required special protection. But I can assure noble Lords that relatives of Peers of the Realm are not debarred from the protection provided by this Bill, and that their Uncle Tom Cobley and any other relatives will get the protection given to everybody else. With this assurance, I hope noble Lords will be able to welcome this clause as much as I know they do the rest of the Bill.

I am reminded that the name of one of the noble Lords who has moved this Amendment is defined in one dictionary as a "metrical frivolity". Perhaps your Lordships would therefore grant me indulgence if I quote a verse of that type, the last lines of which I hope might also be appropriate to this Bill: All hail to the town of Limerick, Which provides a cognomen, generic, For a species of verse Which for better or worse Is supported by layman and cleric. I think I had better now answer the argument, having replied to the Amendment. The purpose of this wide definition is to prevent evasion of the protection given to the consumer under the Bill. One way of evading the "linked transaction" provisions would be for the creditor to get different members of a family to sign agreements for transactions "linked" to the main agreement and then claim that these were separate agreements, and not linked. For example, the father of the family might sign the credit contract for, for example, the purchase of a deep freezer on credit; the mother might be asked to sign a "linked" agreement for the purchase of the food on credit; and the son might be asked to sign a maintenance contract for the freezer. Indeed, any relative who happened to be in the household could be asked. This might sound far-fetched, but the Departments have had complaints where this has happened. The wide definition of "relative" is intended to include all likely members of the consumer's household so that he and his family are fully protected. A common definition of "relative" would reduce that protection. We do not think that this wide definition leads to any undesirable consequences, but if it is thought that there are we are willing to consider them. I believe from what the noble Lord said that he believes there are consequences which are undesirable, and I should like to give the assurance that what he said will be considered.


I am very grateful to the noble Lord. I did in fact correct the spelling of "Uncle Tom Cobley", if the noble Lord will look at the present Marshalled List of Amendments. I know I put down the wrong spelling to start with, but it is in fact the same gentleman who was associated with Tom Pearce and all those other characters. But I see the point that the noble Lord makes for the need to have a wide definition. My only point concerned linking it with Clause 25, where the Director General can take into account the behaviour of associates and relatives before granting a licence; that was my only worry. But I should be grateful if the noble Lord would, as he says, look to see whether there are any undesirable consequences as a result of that.


There are two points I should like to make, if I may, before we go on. First of all, I apologise for not having noticed in the Marshalled List we had to-day that the spelling had been corrected. I was working on this Bill over the weekend, and was working on an old Marshalled List. Secondly, I give a firm assurance that what has been said will be considered.


Before the Committee decides what to do about this Amendment, I have been busily scribbling at the same time as listening to the noble Lord's most interesting argument, and I should like to add one comment of my own: The clause is in principle clear, No references to "Uncle" appear, But the class is so wide that all joking aside We think he should think again here.

Amendment, by leave, withdrawn.

Clause 179 agreed to.

Clause 180 [Agreement with more than one debtor or hirer]:

LORD JACQUES moved Amendment No. 106: Page 91, line 39, leave out ("one of them shall be binding on the others") and insert ("or on behalf of one of them shall have effect as if done by or on behalf of all of them")

The noble Lord said: This Amendment is a drafting Amendment to make it clear that, when there is an agreement involving two or more debtors or hirers, anything done on behalf of one debtor or hirer shall be binding on the other debtors or hirers; for example, a notice of cancellation given by one debtor is binding on the other, and so is a notice of cancellation given on behalf of one debtor. The whole purpose of this Amendment is simply to clarify. I beg to move.

On Question, Amendment agreed to.

LORD JAQUES moved Amendment No. 107: Page 92, line 12, at end insert— (2A) Subsection (1)(b) does not apply for the purposes of section 61(1)(a) or 129(2),

The noble Lord said: This Amendment is consequential upon Amendment No. 106. It makes clear that, to be properly executed, an agreement must be signed by every debtor or hirer who is a party to it. I beg to move.

On Question, Amendment agreed to.

4.50 p.m.

LORD HELSBY moved Amendment No. 107A: Page 92, like 25, at end insert—

("(5) For the purposes of this section anything required by or done under this Act shall only refer to matters required by or done under the following sections

The noble Lord said: This is by way of being a probing Amendment. The clause deals with agreements with more than one debtor or hirer and the question of joint hirers and debtors. In the context of "information" as defined for the purposes of the Bill, subsection (2) deals with dispensing notices and so on. It is not quite clear to me where the clause takes us at the end of the day. I should like to ask how wide of the Act subsection (1)(a) is inteded to go. This Amendment is an endeavour to limit the clause to the formal seeking of information by enumerating previous clauses which provide for a statutory statement of information at the request of the debtor or hirer. I beg to move.


This Amendment would limit the effect of Clause 190 to actions under clauses in the Bill dealing with the provision of information to debtors, hirers and sureties. Each of the clauses enumerated in the Amendment is simply concerned with giving information. The Amendment overlooks the key provisions in the Bill under which this clause is expected to operate. Under Clause 61(1)(a), all individual debtors must sign the agreement so that no one joint debtor can commit the rest; but under Clauses 57, 67, 99 and 101 no such stipulation is made, so that one joint debtor, when withdrawing, cancelling or terminating, will cancel the agreement for all. By excluding these two key provisions from the operation of the clause, the Amendment is in effect a wrecking Amendment because the safeguards would then be disregarded and all would depend on what was laid down in the agreement. Whilst this may be of little consequence in the case of a joint stock bank account where the bank has a mandate governing the rights of joint holders, it would remove an important safeguard in the case of other types of credit agreement. For instance, a wife might commit a husband in his absence, or another person might commit a friend.

The clause, as amended by Government Amendment No. 106, would not complicate the working of a normal bank joint account. The signing of mandates is not done under the Act and so cheques could still be signed by whoever is authorised to sign, whether it be an individual, a joint debtor or the nominee of an unincorporated body such as a sports club. Trustees would still all be required to sign by the law relating to trustees, and this would not be affected. The only difficulty in relation to joint stock bank accounts concerns the provision of regular statements under Clause 77(4). In order to avoid these always having to be sent to all joint account holders, with consequent wasteful duplication in many cases, a provision has been added in Clause 180(2) allowing joint debtors to dispense with this requirement so long as at least one statement is provided. With this point covered, we do not consider that, in the case of joint stock bank accounts, any practical difficulties would be caused by the remaining provisions in this clause. The Amendment is therefore harmful, and in our view unnecessary.


The Amendment was not designed to be a wrecking Amendment but rather a probing one. I am very grateful to the noble Lord for the information he has given, and in view of this, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 180, as amended, agreed to.

Clause 181 agreed to.

Clause 182 [Arrangements between creditor and supplier]:

LORD JACQUES moved Amendment No. 107B:

Page 92, line 42, at end insert— (2A) Arrangements shall be disregarded for the purposes of subsection (1) or (2) if—

  1. (a) they are arrangements for the making, in specified circumstances, of payments to the supplier by the creditor, and
  2. (b) the creditor holds himself out as willing to make, in such circumstances, payments of the kind to suppliers generally."

The noble Lord said: The purpose of this Amendment is to exclude from the connected lender liability imposed by Clause 75 cheque guarantee cards, as distinct from credit cards. I beg to move.

On Question, Amendment agreed to.

Clause 182, as amended, agreed to.

Clause 183 [Examples of use of new terminology]:

4.55 p.m.

LORD JACQUES moved Amendment No. 107C: Page 93, line 13, at end insert— (4) The Secretary of State may by order amend Schedule 2 by adding further example or in any other way.

The noble Lord said: It was the original intention that the power to amend Schedule 2 should be only in respect of the financial limits mentioned in the examples. Further consideration has led us to the belief that it might be useful to have a wider power. For example, while some terms such as "cheque cards", "credit cards" et cetera, are recognisable concepts at the moment, they may not be so in a few years' time—in which case the examples might need to be deleted or amended. This Amendment accordingly widens the power to amend the Schedule so that the examples can be altered or added to if need be. Since the examples merely illustrate the law contained in the body of the Bill, there is no question of altering substantive legislative provisions in this way. I beg to move.

On Question, Amendment agreed to.

Clause 183, as amended, agreed to.

Schedule 2 [Examples of use of new terminology]:

LORD JACQUES moved Amendment No. 107D: Page 107, leave out Schedule 2 and insert the following new Schedule—


  1. PART I LIST OF TERMS 294 words
    1. c341
    2. EXAMPLE 1 53 words
    3. cc341-2
    4. EXAMPLE 2 104 words
    5. c342
    6. EXAMPLE 3 80 words
    7. c342
    8. EXAMPLE 4 223 words
    9. cc342-3
    10. EXAMPLE 5 96 words
    11. c343
    12. EXAMPLE 6 55 words
    13. c343
    14. EXAMPLE 7 92 words
    15. c343
    16. EXAMPLE 8 144 words
    17. c343
    18. EXAMPLE 9 50 words
    19. cc343-4
    20. EXAMPLE 10 167 words
    21. c344
    22. EXAMPLE 11 206 words
    23. c344
    24. EXAMPLE 12 97 words
    25. cc344-5
    26. EXAMPLE 13 100 words
    27. c345
    28. EXAMPLE 14 91 words
    29. c345
    30. EXAMPLE 15 126 words
    31. cc345-6
    32. EXAMPLE 16 232 words
    33. c346
    34. EXAMPLE 17 136 words
    35. c346
    36. EXAMPLE 18 172 words
    37. cc346-7
    38. EXAMPLE 19 215 words
    39. c347
    40. EXAMPLE 20 210 words
    41. cc347-8
    42. EXAMPLE 21 313 words
    43. cc348-59
    44. EXAMPLE 22 3,768 words