Lord Bruce of DoningtonMy Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in the light of experience, they consider that the Consumer Credit Act 1974 affords, to those who have recourse to money-lenders, the same degree of protection as that available under the provisions of the Moneylenders Act 1927 prior to its repeal.
§ Lord Lucas of ChilworthMy Lords, when it is fully in operation in May of next year, the Consumer Credit Act 1974 will provide more comprehensive and effective protection than existing legislation in the whole field of consumer credit. We cannot yet speak from experience of the operation of the Act as a whole, but we are satisfied that those provisions which have been in force for some time do provide more extensive protection than their counterparts in the Moneylenders Act 1927.
Lord Bruce of DoningtonMy Lords, has the attention of the noble Lord the Minister been drawn to the remarks made by Sir Gordon Borrie, as reported in The Times of 13th July last, in which he complained that more and more people are getting caught in a debt trap from which they may never escape? Is the noble Lord aware that one of the abuses that are practised by moneylenders on the renewal of a loan, very often at the invitation of the moneylender himself or herself, is to claim that far more is owing on the debt that is being renewed than is in fact the case? Is the noble Lord aware that, under Section 6 of the Moneylenders Act 1927 where that was proved, the debt immediately became void and any security that was taken in respect of it lapsed, and that in fact Section 6 of the Act proved to be a very effective means of combating that abuse?
§ Lord Lucas of ChilworthMy Lords, indeed I am aware of the comments which the Director General of Fair Trading has made in this connection. However, the problem is not one of inadequate legislative protection, but rather that the victims of unscrupulous moneylenders have either been unaware of the protection available in law or unwilling to come forward and seek help. The noble Lord will probably be aware that the provisions that will come into force in May of next year include those on the form and content of documentation, which provide for a number of matters to be included in the contract. When that is done there will certainly be provision for a wrongful debt or interest charge to be set aside by the court.
Lord Bruce of DoningtonMy Lords, I am grateful to the noble Lord for that reply. Is he aware that he himself has therefore admitted that ever since the Consumer Credit Act 1974 there has been no real protection of the borrower in this respect? I am deeply grateful to him to learn that 10 or 11 years afterwards this situation is about to be remedied.
§ Lord Lucas of ChilworthMy Lords, there is no gap in the provision because until the other provisions of the Consumer Credit Act come into force in May of next year those parts of the Moneylenders Act 1927 remain on the statute book. But certainly we are quite sure that there will be greater protection when those remaining provisions come into force.
§ Lord MolloyMy Lords, is the noble Lord the Minister aware that very many distressing cases have arisen from the practices which have been described by my noble friend Lord Bruce of Donington? Would it not perhaps help if, by means of a statement or an advertisement, the Government could tell people that if they were to refer to the Office of Fair Trading the problem that confuses, upsets and distresses them, they would receive guidance and help which might relieve their grief and distress?
§ Lord Lucas of ChilworthMy Lords, I am very well aware of what underlies the question of the noble Lord, Lord Molloy. The Director General of Fair Trading has in recent weeks given a good deal of publicity to this matter. The greatest difficulty is really one of human nature. The option open to a borrower not to pay the debt, so that he is taken to court, can plead his case, and may have an unfair contract set aside, is one which has very few attractions for most borrowers. Certainly I take the point that the noble Lord makes with regard to publicity.