Consumer Credit Licensing (Hansard, 26 October 1988)

§ Mr. Maude

My Department has been reviewing the operation of consumer credit licensing and I have concluded that there should be greater powers for the authorities to take swift action against business practices which are a threat to the consumer.

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My Department is therefore issuing today a consultation document containing proposals to make changes to the current licensing system and to give the Director General of Fair Trading more flexible and appropriate powers of enforcement. These will include the power to prohibit a business from trading with immediate effect where necessary, to seek information from businesses, and to attach conditions to a licence. I am also considering the removal of the current exemption from licensing of businesses not lending more than £30, which has been argued to be a barrier to effective enforcement of the Act against illegal moneylenders.

In the light of these changes I propose also that in future only lenders and hirers will automatically need to be licensed by OFT, and that in the exercise of his powers the DGFT will be able to take into account the activities of ancillary credit businesses, such as debt collectors, employed by lenders and hirers. Ancillary credit businesses will have to apply for a licence if the DGFT has reason to believe that they represent a threat to consumers; for instance, if their controllers have previously been refused a licence or have certain convictions or if their trading practices give rise to concern. At present, licences need to be renewed only after 15 years. I propose that in future licences should run for no more than three years.

I believe that these changes will focus regulatory resources where they are most needed, on those who pose a threat to consumers, while relieving a significant administrative burden on a wide range of law-abiding businesses.

My Department is seeking comments on these proposals before 2 December.