Clause
104
Debt
management
schemes
Mr.
Newmark:
I beg to move amendment No. 173, in
clause 104, page 89, line 31, after
‘persons’, insert
‘approved by the relevant
supervisory
authority’.
The
introduction of approved debt management schemes is welcome, but only
in so far as the supervisory and approval regime is sufficiently
rigorous. Subsection (5) establishes that the scheme must be
operated
“by a body of
persons”.
I presume that the intention is to prevent
individuals from offering schemes. Our amendment goes further and would
require the supervisory authority to approve not only the scheme, but
the body offering it. That matters because the schemes will in time be
marketed as approved. They will receive the seal of approval from the
Government and presumably use their new status to drum up business.
There will be no surprise if existing individual voluntary arrangement
providers offered their own debt management schemes for that very
reason.
Encouraging
providers to seek approval for their schemes may well be a pragmatic
alternative to regulating the entire IVA sector, although there are
legitimate concerns that the Government have missed an opportunity by
not choosing to regulate. Whatever the intentions behind the clause,
the purpose of the amendment is to ensure that debt management schemes
cannot be operated by individuals who are entirely unvetted by the
supervisory authority. That would create a risk of unscrupulous
providers operating one approved scheme, which they can market as such,
among many others and thus leave the public to draw the inference that
all their services have been given a Government kitemark. It is
ultimately a matter of
perception.
During the
course of its investigation, prior to the approval of a scheme, the
supervisory authority might look closely at the body offering it. In
that case, nothing would be lost by the Bill stating explicitly that
the provider, as well as the scheme itself, is approved. I therefore
seek the Minister’s assurance on that
point.
Simon
Hughes:
We support the amendment. I can understand that,
in a free market economy, it could be left to anyone to run such a
scheme, but there is benefit in having official trade-marked, branded
kitemark schemes. Given our long debates about regulation bailiffs and
the Security Industry Authority in respect of bouncers and security
outside pubs and clubs, it would be sensible to think of such matters
now and not wake up only after the Bill is enacted. I hope that the
Minister will be sympathetic to my
argument.
3
pm
Vera
Baird:
Amendment No. 173 would require those who operate
debt management schemes to
be
“approved by the
relevant supervisory authority’.
The Bill contains what is in a sense a
double-decker scheme. A scheme that wants to benefit from the powers
set out in clauses 109 to 116 will have to be approved by the
supervisory authority dealt with in clause 106. However, seeking such
approval is optional; scheme operators will have to decide whether they
want to offer an enhanced scheme. When schemes do not have the approval
of the supervisory authority, they will still be able to offer debt
management schemes, but they will not have the powers available to
those who do have such approval. The schemes that do not have the new
powers will operate as they do now and will be totally dependent on the
voluntary participation of the
creditor.
I hope that
the hon. Gentleman accepts that there is a scheme for approval and that
those who choose not to seek approval will have only a limited range of
powers available to them, although they will be able to offer a service
based on the voluntary acceptanceof debtors. No doubt such
acceptances will be forthcoming. I hope that that flexibility is
sufficient for the hon. Member for Braintree, because it commends
itself to the Government.
Mr.
Newmark:
Again, the Minister has not really persuaded me.
My concern is that if there is some sense or perception on the part a
scheme that it has, even in law, the approval or Government backing for
what it is doing, it may be out there marketing itself as a
professional operation that has the stamp approval of a regulated body.
That might open the system to some level of abuse. I appreciate that
such abuses might happen only at the margin, but the whole point of
having a regulatory body and of regulatory approval is to protect the
innocent and the vulnerable from those that might prey on them. Will
the Minister once again clarify, perhaps more formally than she has,
what the schemes are and under what restrictions they will
operate?
Vera
Baird:
The operators of approved schemes have to be
companies or partnerships, not individuals. It is likely that the CAB
might itself go into such territory. The hon. Gentleman will know about
the Consumer Credit Counselling Service, which deals with debt
management concerning credit cards and personal loans, and
Payplan.
Regulations
will control and limit advertising,which might provide further
reassurance to the hon. Gentleman, who suggested that people might
misrepresent the supervision under which they operate when offering a
scheme. For a company to misrepresent itself by saying that it has the
authority of a court to offer a scheme when it does not, or by saying
that it has powers that it does not have, would certainly be an abuse
of the scheme and would likely be a criminal offence, probably under
the terms of the theft Acts. I hope that that reassures him on the
issue of false advertising. There is scope in the Bill to limit or
control advertising.
I hope that I have reassured
the hon. Gentleman, albeit not exactly how he envisaged—a depth
of worry about the matter is unnecessary. Some schemes will probably be
run by wholly virtuous bodies such as the CAB, which do not have
powers. The input of the supervisory authority will be necessary before
such bodies can have more powers.
Mr.
Newmark:
The Minister’s words may be reassuring,
and I take on good faith what she says, but I am still not overly
convinced that there will not be some abuse out in the big wide world.
However, I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Question
proposed, That the clause stand part of the
Bill.
Simon
Hughes:
Subsection (2) states:
“The scheme must be open
to some or all non-business
debtors.”
My
understanding is that a scheme could be set upthat dealt with
all groups of people. I do not see from
the notes on clauses what sort of groups have been thought particularly
relevant. I understand that the arrangement is a permissive one, so
anyone could come up with a proposition, which would then be approved
under the system, but will the Minister suggest possible sub-groups of
non-business debtors? Might it be the category of women’s debt
or debts of certain ethnic or other communities? I am trying to get
behind the words to see what the thinking is, because it is not clear
from the Bill.
Vera
Baird:
I do not think that it has been thought through any
further than it says—that schemes must be open to some or all
non-business debtors. I have not contemplated that people would set
themselves up particularly for black or minority ethnic debtors or
women debtors, but I suppose that that is not impossible. Perhaps
membership organisations might want to offer that kind of service to
some of their members rather than to others. I think that the
opportunity that is offered by the provision—although
opportunity is rather too positive a word for what we are talking
about, which is debt management—means that there will be
organisations that are happy tostep into the breach and take
on non-business debtors of various kinds. There is maximum flexibility
in chapter 4, and particularly in clause 104, to allow for all that. I
suppose that the kind of organisations that the hon. Gentleman has
mentioned might become involved; there might be some who wanted to
focus on women, disabled people or mentally ill people, and so on. I do
not know, but the scope is there if they wanted to do
that.
Simon
Hughes:
That is helpful. In relation to what is an
embryonic concept, I hope that when those who avail themselves of the
opportunity, as the Minister put it, refer to the debates, they will
reflect on the probable wisdom of setting up schemes to be offered to
all debtors rather than to some groups. It becomes invidious, often, if
people knock on a door and are told, “I am sorry, but you do not
qualify for the service if you are not in the relevant
community.” We should try to encourage arrangements that are as
inclusive as possible, not as exclusive as possible.
Question put and agreed
to.
Clause 104
ordered to stand part of the
Bill.
Clause
105 ordered to stand part of the Bill.
Clause
106
Approval
by supervising
authority
Mr.
Newmark:
I beg to move amendment No. 174, in
clause 106, page 90, line 11, leave
out ‘may’ and insert
‘shall’.
The
Chairman:
With this it will be convenient to discuss the
following amendments:
No. 175, in
clause 106, page 90, line 21, leave
out ‘may’ and insert ‘shall’.
No. 177, in
clause 110, page 91, line 30, leave
out ‘may’ and insert
‘shall’.
No.
176, in
clause 115, page 93, line 24, leave
out ‘may’ and insert
‘shall’.
Mr.
Newmark:
Amendments Nos. 174 to 177, which on the face of
it would replace the word “may” with
“shall”, are probing amendments to establish how rigorous
the approval of the supervisory authority will be, in effect. I am
concerned that the word “may” appears many times in this
chapter of part 5. The amendments in this group do not include all of
them and an awful lot is to be left to regulations.
Approved debt management
schemes and the registration of plans are positive in principle, but
the detail of the approval mechanism and the rigour to be exercised by
the scrutinising authority are a bit vague. That is compounded by the
fact that the proposed supervising authority is the Lord Chancellor or
his delegates rather than the Office of Fair Trading or the Financial
Services Authority. The authority may approve schemes, but it does not
have to do so. Regulations, on the other hand,
“may make provision
about...conditions that must be
met”
before approval.
There is a conflict there: may they or must
they?
That theme
applies also to the registration of plans under clause 115, which
states that regulations “may make provision” about either
or both of the situations listed. If the need for regulation is
anticipated, it should be declared openly. That is the purpose
underlying the amendment—to replace some of the
“mays” with “shalls”. I apologise to the
Committee that I have not managed to identify them all, but I hope that
I have managed to make my intentions clear to the Minister. Will she
clarify what will and will not be done by the supervising authority,
and what will or will not be prescribed in the forthcoming
regulations?
Vera
Baird:
I am not sure whether it is entirely clear what the
hon. Gentleman
wants.
Mr.
Bellingham:
He wants some
“shalls”.
Vera
Baird:
He wants some “shalls”, I know that.
He wants a lot of “shalls.” I wonder what the collective
noun for “shalls” is—a shower of shalls? However
by substituting “may” with “shall” in
clause 106(1), for instance, which is what amendment No. 174
woulddo, we would end up with the requirement that the
supervising authority shall approve one or more debt management
schemes, irrespective of whether they are utterly hopeless and
inappropriate. That would require the authority to approve one or more
schemes but, in truth, it would probably require it to approve all debt
management schemes put before it. I am sure that that is not what the
hon. Member for Braintree
wants.
Under our
proposals, seeking approval to operate a scheme with the proposed
enhanced powers would be optional. The hon. Gentleman knows that. There
is no intention to force operators to offer enhanced schemes; they will
have to decide whether they want to do so. There is no certainty about
the number of applications for approval that will be received or how
many will be
judged suitable and how many not. The intention is that the supervising
authority will have the power to set conditions that must be met by all
scheme operators, so a bedrock of conditions will be laid down. Those
conditions will have to be satisfied before a scheme is
approved. Naturally,
we intend to consult on the terms of the proposals, including the role
of the supervising authority. There is no doubt that there will be a
grounding of rules, and all scheme operators will be required to meet
them. I expect the rules to be rigorous. Our intention is that schemes
will be proper, helpful, well thought through and well worked out, and
that they will work for the people who are taken on by
them.
I believe that
the hon. Gentleman moved on to amendment No.
177.
Mr.
Newmark:
Did I do that by
accident?
Vera
Baird:
No, I thought that the amendments had been
regrouped so that the hon. Gentleman could talk to amendment No. 177,
but I am not sure whether he did. He might want to say more about it. I
have done my best to address amendments Nos. 174 and
175.
Mr.
Newmark:
I appreciate the Minister’s response. At
this stage I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Clause 106 ordered to stand
part of the
Bill.
3.15
pm
Simon
Hughes:
On a point of order, Mr Bercow. It might help the
Committee if I indicate that my hon. Friend the Member for Cardiff,
Central and I will be very happy if you wish to group some of the
clauses that follow, except that we would like to say a word on clauses
113 and 124.
The
Chairman: I am very grateful to the hon. Gentleman; that is
helpful. At this stage, I intend to proceed by taking the next four or
five clauses individually.
Clauses 107 and 108 ordered
to stand part of the
Bill.
Schedule
21 agreed to.
Clauses 109 to 112 ordered
to stand part of the Bill.
| 
