Government Bill Lacks Clarity

The Government's Consumer Credit Bill reaches the report stage in the House of Lords on 18th January. At its heart is the introduction of an 'unfair credit test' which will replace the extortionate credit provisions of the current Act. However, the Government has failed to set out clearly the types of issues that would allow a court to make a finding that an agreement is 'unfair'.

The Zaccahaeus 2000 trust, one of Debt on our Doorstep's member organisations has obtained legal opinion that the current wording in the bill is likely to cause confusion and could be narrowly interpreted by the courts to the disadvantage of the millions of low income households using high cost credit.

Lord Beaumont of Whitley will introduce an amendment in the debate seeking clarification of the unfair credit test and asking the Government to spell out the types of problems that it considers are unfair.

The amendment being sought is to ensure that:

'all relevant matters' to be considered by the court shall include the personal and financial circumstances, the health and the literacy of the borrower and the extent to which these matters were taken into account by the lender".

Damon Gibbons, Chair of Debt on our Doorstep commented:

"The Bill as it stands offers little hope for consumers to get a fair deal without considerable time and effort being invested in court cases to clarify the law. We would prefer it if the Government clearly stated the types of issues that should be considered by the courts so as to prevent a narrow interpretation being taken."

Debt on our Doorstep also calls for: