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Mr. Sutcliffe: The hon. Member for Wealden is less vociferous in his opposition to the OFT than was the hon. Member for Hornchurch, who spoke from the Front Benches on the last occasion on which we discussed the matter. His hon. Friend was concerned because anything to do with the OFT excited his well-known interest in horse racing and the OFT's deliberations to that effect, to the point at which his opposition to the OFT became almost obsessive.
As I reminded the hon. Member for Hornchurch this morning, hon. Members would do well to look at the Enterprise Act 2002 and the Competition Act 1998 with regard to the need to separate Ministers from interfering in markets that are performing well. It is right that we set the framework, and I do not believe that the OFT is completely unfettered, as the hon. Member for Wealden suggests. The way the OFT should act with regard to its consumer credit functions is set out in sections 1 to 5 of the 1974 Act. That includes keeping under review both the Act and the relevant social and commercial developments; enforcement and working of the Act; production of information; advice; and annual reporting obligations on the operation of the Act.
The provisions of the Bill should be read in conjunction with the provisions of the Enterprise Act 2002 relating to corporate governance and the OFT board requirement for annual reports. The OFT's general functions are set out in sections 1 to 8 of that Act. The ground rules for the operation of the OFT were laid down when Parliament debated the 2002 Act. The OFT is subject to the usual range of accountability measures, such as scrutiny and appearance before Committees of the House. In addition, as a signatory to the Cabinet Office enforcement concordat, it is under an obligation to act proportionately. It is committed to minimising the cost of compliance for business by ensuring that any action that it requires is proportionate to the risk, and
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by taking into account the circumstances and the attitude of the operator.
The OFT is, therefore, already required to do what is required by the new clause. I hope that, having heard that explanation, the hon. Gentleman will withdraw the new clause—unless he, too, has an obsession about the powers of the OFT going too far.
Charles Hendry: The Minister should be well aware that the modern Tory party has nothing to do with obsession. We have moved on. Many of us here are so modern that if it were not for our respect for the Chair, we would not be wearing ties, and the suggestion that we have obsessions is simply out of date. I understand where the Minister is coming from—he is heading in the right direction. However, at this stage we are clearly not going to get the degree of clarity that we seek. There is a case for the new clause; I shall not push the matter to a vote, but perhaps the issue could be reviewed further in light of their lordships' experience when the Bill goes to another place. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
6 pm
New clause 2
OFT GUIDANCE
'After section 183 of the 1974 Act insert—
(1) No guidance is to be published under the 1974 Act without the approval of the Secretary of State.
(2) In preparing or revising guidance under that Act the OFT shall consult such persons as it thinks fit.''.'.—[Charles Hendry.]
Brought up, and read the First time.
Charles Hendry: I beg to move, That the clause be read a Second time.
The Minister and I could almost swap places, as we know each other's phrases so well. I am sure he will know where I am coming from on new clause 2. He has stressed time and again that improving transparency is one of the fundamental aspects of the Bill. We all support that aim, but certain aspects of the Bill will not achieve it; indeed, some will serve only to blur the legal situation.
Far too many significant policy areas have been left to secondary legislation and guidance from the Office of Fair Trading. That not only creates uncertainty for consumers, businesses and enforcers but means that Parliament does not have the opportunity to consider vital detail that is relevant to the Bill. That issue was raised many times on Second Reading and has been raised many times in Committee.
As drafted, the detail of key features of the Bill has been left to be developed by the OFT, which is an agency over which the Government have no ministerial control and which operates as the regulator in its area. The result is that the OFT could become both judge and jury. That is bad legislation and not how we should move forward in trying to protect consumers. Instead, we should try to ensure the transparency that the Minister said that he wants.
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The new clause will achieve just that, by requiring approval from the Secretary of State before OFT guidance is published and requiring the OFT to consult relevant stakeholders on the content of that guidance. That builds in essential safeguards, by enabling the Secretary of State to ensure that the OFT acts in accordance with Parliament's wishes, while not interfering with the detail of that work, and ensures that those affected have the chance to influence the OFT's direction before it is set in stone.
Mr. Sutcliffe: The new clause undermines the independence that Parliament gave to the OFT under the Enterprise Act 2002. When that Act was passed, Parliament concluded that the OFT should be independent of the Government and exercise its functions independently of Ministers. To that end, it was constituted as a non-ministerial department, under the control of a chairman and a board.
The new clause goes against that approach and would require the OFT to submit its guidance on issues under the legislation to Ministers for their approval. That would mean that the OFT would no longer be independent and that, before it could publish documents, it would have to obtain ministerial clearance indicating how it could enforce consumer credit legislation and which issues it could take into account when doing so. The OFT would no longer be a regulator independent of the Government.
The only aspect of the legislation that requires the OFT to obtain ministerial clearance concerns the statement of policy in relation to civil penalties. That is a special case, which allows the OFT to impose fines for breaches under the licensing regime. That goes beyond the OFT's normal role as a market regulator. The other guidance provided for by the legislation is not the same, and nor is the requirement made in respect of the guidance provided for in the Enterprise Act 2002.
Proposed new section 183A(2) in new clause 2 permits the OFT to consult such persons as it thinks fit when preparing guidance. The proposal is unnecessary, because the relevant provisions of the Bill and the Enterprise Act concerning unfair relationships already require the OFT to consult on the guidance. In light of that information, I hope that the hon. Gentleman will withdraw the motion.
Charles Hendry: I am grateful to the Minister that it is clear where his thought processes are going. He is not prepared to shift, but we have made the point. In the light of that I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
New clause 3
CREDIT TOKENS
'(1) It shall be an offence to give a person an application form for a credit-token unless he has specifically requested it.
(2) To comply with subsection (1), a request must be made by the applicant by way of—
(a) a document signed by that person;
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(b) a recorded telephone call by that person to the person or company offering the credit-token; or
(c) an electronic form of communication, the origin of which can be authenticated.
(3) Any approach to a person offering a credit-token application must include a full statement of the legal liabilities and responsibilities associated with such a token.'. —[Charles Hendry.]
Brought up, and read the First time.
Charles Hendry: I beg to move, That the clause be read a Second time.
Although the new clause refers to credit card tokens, it concerns the issue of credit card cheques, which was raised several times on Second Reading in this Parliament and in the previous Parliament. The new clause is a simple, probing new clause. It is designed to outline our dissatisfaction with how credit card cheques work and to see whether something can be done to tighten the process up in the interests of the consumer.
The new clause is intended to stop the sending of unsolicited credit card cheques. I accept that some have some benefit. For example, in buying something, there is no transaction fee. If one uses a credit card to buy something, one sometimes pays a transaction fee to use the card; with a cheque that does not apply. It is also useful when someone needs money desperately: perhaps the plumber has come to do some emergency repairs, but will not take a credit card. A credit card cheque makes it possible to settle that bill without taking the money directly from one's account.
However, there is a great temptation to overspend. The credit card cheques are not time limited and can sit in a drawer for year after year, until, when times get a bit tough, they can be used. People might be inclined to use them at times when they are not thinking of the consequences. I recognise, however, that people cannot spend beyond their existing credit limit. [Interruption.] I am sorry that the hon. Member for Eccles (Ian Stewart) is finding this a bit tiresome, but it is important. I noticed that he was yawning while the Minister was speaking, too, so it is not just me.
The Chairman: Order. Could we return to new clause 3?
Charles Hendry: We want to make lenders more responsible. The banking code rules have been tightened to cover some of the relevant issues. Can the Minister confirm that the cheques can no longer be issued to people who are nearing their credit limit or struggling to pay? Those are the sort of assurances that we want. Will he also consider the idea that customers should have to opt into receiving credit card cheques, rather than opting out of them? At the moment, when they enter a new credit card agreement, they must say, ''I do not want to receive these.'' That means that they can be sent without ever being requested.
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