HL Deb 18 January 1993 vol 541 cc716-7

2.40 p.m.

Lord Ashley of Stoke asked Her Majesty's Government:

Whether they will discuss with the National Association of Citizens Advice Bureaux the practices of the credit industry following the publication of its report on the problems of 1,782,000 of their clients who sought advice on consumer and debt matters in the year ending April 1992.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)

My Lords, I shall be pleased to discuss this matter with the National Association of Citizens Advice Bureaux if it wishes to do so.

Lord Ashley of Stoke

My Lords, although I welcome the Minister's Answer, is she aware that this report reveals the extent to which very poor people are cruelly exploited by extortionate rates of interest while trying to cope with very low and inadequate incomes? In one case mentioned in the report the rate of interest was 972 per cent. As a result, people slide from poverty into penury. When the Minister has these discussions, will she suggest that action is taken against the sort of pressure that is exerted by some of the banks and against some of the very unfair practices that exist?

Baroness Denton of Wakefield

My Lords, I agree with the noble Lord that it is the people at the bottom of the income scale who suffer most from this problem. The Consumer Credit Act contains provisions to allow the courts to reopen extortionate credit bargains. In producing his report, the Director General of Fair Trading emphasised that it was important that we publicise that fact as much as possible.

Lord Ennals

My Lords, does the Minister accept that an increasing number of people are using credit as a sort of sticking plaster for quite inadequate benefits? Is she satisfied that the Consumer Credit Act really does give the sort of protection that is needed for some of these people who seem to me not to be protected? Will she raise this issue when she meets the National Association of Citizens Advice Bureaux?

Baroness Denton of Wakefield

My Lords, I am pleased to reassure the noble Lord that I shall, of course, cover those subjects. I quote from the report of the Director General of Fair Trading. He said: Most credit for most consumers most of the time causes no problems". It is multiple debt that causes problems. Perhaps I should add that the 1.8 million cases referred to in the NACAB report are inquiries. The Policy Studies Institute has shown that half a million households have three or more debts. Those are the ones that we should be looking at.

Lord Bruce of Donington

My Lords, will the Government give some consideration to the possible re-enactment of the main provisions of the Moneylenders Act 1927, the repeal of which by the Consumer Credit Act left some very considerable gaps? Is the Minister aware that in the pre-war years the provisions of, in particular, Section 6 of the Moneylenders Act 1927, which are not currently in force today, proved a considerable check against illicit credit, undue pressure and all the evils that come from unrestricted money lending?

Baroness Denton of Wakefield

My Lords, I repeat that most credit does not cause problems; 85 per cent. of credit relates to mortgages. However, I agree with the noble Lord that there is work to do on the Consumer Credit Act. As soon legislative time is available we will do it.

Lord Mishcon

My Lords, when the Minister sees representatives of the National Association of Citizens Advice Bureaux will she take the opportunity to express the admiration of the House for the work that they do? Will she also say how generous the Government will be in their grants to the organisation?

Baroness Denton of Wakefield

My Lords, I welcome any opportunity to praise the work of the citizens advice bureaux. They provide help which would be sadly missed if they did not exist. Obviously I cannot prophesy future income, but in the past we have managed to ensure real-term growth in their income.

Lord Peston

My Lords, I thank the Minister for saying that she is willing to see representatives of the CAB. But does she agree that, although the problems involve a minority of borrowers, that is the characteristic of problems generally in our society? It is always the minority about which we are worried; but that does not make the situation less important. If anything, it makes it more important. The Consumer Credit Act goes back to 1974. It was drafted well ahead of the great boom in borrowing that took place in the 1980s. Do I understand her to say that she and her department are at least open to considering possible reform of or amendment to that Act when legislative time can be found?

Baroness Denton of Wakefield

My Lords, yes.