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Charles Hendry: I am grateful to the Minister for such a detailed exposition of the clause, which is a very important aspect of the Bill. I would be grateful, though, if we could return to the types of business. Mr. Taylor, you were sadly absent from the Room this morning when we had a lively and interesting—I would not go as far as saying ''riveting''—discussion about the types of business, and it just seems unfair that because you were out of the Room you should not be given a chance to be part of it.
Paragraphs (a) to (i) of proposed new section 226A(3) list a range of types of business. The concern that we discussed this morning, on which we did not quite reach a conclusion, is that although that is an exhaustive list of types of business as we currently know them, we cannot be certain that they will still be the types of business that exist 30 years ahead. New types of business may or may not have been started.
The Minister asked me what types of business I had in mind that could be started up in the years to come. If I had that degree of vision and knew what multi-billion pound businesses there would be in 30 years' time that no one had yet thought of, I would not be sitting here in Committee but would be out there starting one, or, at the very least, I would be down at William Hill's putting a few pounds on the 2.40 pm at Lingfield park tomorrow afternoon.
Expecting us to know what types of business will exist is perhaps unreasonable, but it is not unreasonable to say that we cannot all have the foresight to say what new types of business might arise, and that we should perhaps be covered by the ombudsman's services.
I therefore ask the Minister to go away and reconsider the matter. I do not want to be rude by telling him to go away today, but I do ask him to think further about it after this sitting and before Report to ascertain whether it would not be unreasonable to
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amend the Bill so that the list could be reviewed every five years.
After each five-year period, we will know the types of business that might be emerging and whether they are services that should be considered. My simple concern is that the Bill should give us the scope to protect consumers, which we are all trying to do, against the types of business that are not currently major players but that will come along in years to come offering credit services.
If we tie up the legislation as it stands, we deny ourselves the chance to keep it up to date and to give consumers the length and breadth of protection that we seek to offer them. I simply ask the Minister to say that he will reconsider the possibility of the Secretary of State reviewing the list every five years, and that if new types of business have opened up, the Secretary of State should have the power to include them in the list.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): I welcome the measure, but will the Minister clarify further how the scheme would apply, bearing in mind the remarks made on Second Reading by my right hon. Friend the Member for Leeds, West (John Battle), which I endorsed, about the need for a complaints procedure that would enjoy the confidence of potential victims of unfair credit practices, and be mindful of the fact that many of the people who fall foul of credit companies have low levels of education, a great fear of any court or judicial processes and a great fear of the organisation that is lending them money?
According to the provisions, people have to exhaust the internal procedures of the credit company before they can use the financial ombudsman's service. I understand the reason for that, which is the need to avoid the ombudsman's service being swamped by sometimes trivial or inconsequential cases. On the other hand, we must ensure that the person who perceives that they have been unfairly treated does not feel intimidated in undergoing a process that would enable them to redress their grievance.
Will the Minister reassure us that everyone who enters into a credit agreement must be informed in the simplest and clearest way of the avenues that are open to them if they feel unfairly treated, and that there should be severe penalties for any company that uses any form of intimidation that stops anyone using the provisions that are available to them?
James Brokenshire (Hornchurch) (Con): I shall build on the point about ease of access to the ombudsman's scheme and on the several comments made about the need to ensure that the scheme efficiently and effectively gives access to justice, which is a phrase that we have used many times in this debate, so that people can resolve issues.
I understand that the subtle little amendment in new section 226A(2)(f), which states that
''the complaint cannot be dealt with under the compulsory jurisdiction'',
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is intended to cover situations in which a firm is regulated under the Financial Services and Markets Act 2000. I want an assurance that there is an interconnection between the two regimes and some link between the Financial Services Authority and the Office of Fair Trading. If someone has a complaint, they want it to be dealt with efficiently and effectively. They do not want to be passed round the houses, with the ombudsman saying that the problem has nothing to do with that service and that they will have to launch a separate complaint to the FSA under the regime set out in the Financial Services and Markets Act 2000. That is the last thing that we would want to happen.
If someone has a legitimate concern, they are likely to be under a great deal of pressure and wanting to get things resolved quickly. They will feel at the end of their tether, so I want some assurance that there will be a joined-up approach. I know that the Minister kindly has circulated papers on the joint working memorandums that have been agreed between the OFT and the FSA. However, there must be something in the system to ensure that if people have legitimate complaints, they are dealt with efficiently and effectively.
Mr. Sutcliffe: Again, I welcome the contributions from all hon. Members in trying to ensure that we get the provisions right, as they are a significant step forward from what is in the 1974 Act. It is right and fair for individuals to go through a company's internal complaint procedures, and I agree with my hon. Friend the Member for West Bromwich, West (Mr. Bailey) that that should not be about intimidation. There is also an eight-week time limit for that procedure.
Consultation showed that, for most people involved, the FOS was the preferred option because of its experience in equities. To answer the question of the hon. Member for Hornchurch (James Brokenshire), the consumer credit jurisdiction under the FOS will not fall within the regulatory scope of the FSA, so there will be no duplication or confusion. The consumer credit jurisdiction will cover only cases that are not currently dealt with under the compulsory jurisdiction. There are three jurisdictions, and it will be clear what falls within each.
James Brokenshire: I am sorry to press the Minister on this point. If that is the case, information should be made available to borrowers so that they know that, if the ombudsman scheme is not available to them, what their rights of redress are. A problem is likely to occur when some form of remedy should have been followed, and I would like an assurance that some information will be provided so that people can make a proper complaint.
Mr. Sutcliffe: Information needs to be provided to the borrower or the borrower's representative through citizens advices bureaux or whoever else takes up the individual cases, which relates to the point made by my hon. Friend the Member for West Bromwich, West about people's inability in times of hardship and concern to understand fully the redress mechanisms that are available. That is where the advice services can come into play. We would also want the information
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to be included on the OFT information sheets that we mentioned earlier in relation to dispute resolution.
It is important that the system works. Most of the FOS work is done through correspondence, so the process should be speedy and less threatening to the individuals participating. I would hope that the ADR will be what we intend: a quick, common-sense system that meets all requirements.
That brings me on to the hon. Member for Wealden. He seems to like five-year cycles, as they keep recurring in his amendments. Much as I have sympathy with his line of thought, his proposal is not needed. The scope of the ADR is to cover all consumer credit licence businesses, except holders of group licences, for all disputes arising under the Consumer Credit Act. We do not envisage any unforeseen circumstances in terms of the ADR's coverage, and it is not dissimilar to what we were discussing this morning.
With those explanations, I commend the clause to the Committee.
Question put and agreed to.
Clause 59, as amended, ordered to stand part of the Bill.
Schedule 2
Part 3A of Schedule 17 to the 2000 Act
5.30 pm
Mr. Sutcliffe: I beg to move amendment No. 29, in schedule 2, page 60, line 41, at end insert—
'( ) Consumer credit rules under sub-paragraph (3) may authorise the scheme operator to dispense with or modify the application of such rules in particular cases where the scheme operator—
(a) considers it appropriate to do so; and
(b) is satisfied that the specified conditions (if any) are met.'.
Before complaints are dealt with by the FOS, firms are allowed time to resolve them directly; most complaints are resolved in that way. It is, however, necessary that firms deal with complaints expeditiously, and the FOS will have powers to set rules for that purpose.
There will be occasions when it is appropriate for a firm to have longer to resolve a complaint or a particular type of complaint, and the amendment will give the FOS the power to waive the rules when appropriate. An example of such a situation would be when the FOS is dealing with a case that has wider implications. Firms will be allowed longer to respond to similar complaints so that the FOS can make a decision on the case with wider implications first, and firms will then be able to respond to complaints in line with the FOS decision. I hope that the Committee will accept that explanation and support the amendment.
Amendment agreed to.
Question proposed, That this schedule, as amended, be the Second schedule to the Bill.
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