Business and Planning Bill — House of Lords, 2020-07-20
Topic: Domestic Commerce
Robert Stevenson (Labour, Centre-left): My Lords, my name is on this amendment, and I am in general support of the points powerfully made by the noble Baroness, Lady Bowles, in Committee and today, and by others who have spoken. They have made the main arguments, which I will not repeat The Government argue that the key driver for this initiative is to get the bounce-bank loans out to as many small businesses as want them and can use them, and to reduce barriers to that effect. I sympathise—it is very hard to be against that aim—but there are clearly risks here, as we have heard. While my concerns are not identical to those of the noble Baroness, Lady Bowles, they are very similar, and I would like to make three points on the issue First, there is general agreement that the Consumer Credit Act 1974 urgently needs bringing up to date, to be fit for purpose regarding the changed regulatory landscape of different lending practices and the tighter financial circumstances of the 2020s, now and post Covid-19. The current lender/borrower relationship envisaged under the Act does not work but, as others have said, it is very risky to remove all the court protections, and I sympathise with that Secondly, the Government have put on record the very tight constraints that they are putting on lenders who wish to engage with bounce-back loans, including banning fees, banning punitive interest and forbidding reach-through sanctions to personal assets such as houses and vehicles, but is that enough? There is a powerful tool in the Government’s armoury Thirdly, the 100% guarantee that we have been talking about is on the lender, not the borrower, but that gives the Government considerable powers which they say they will use to drive good behaviour. For me, the key question is whether, in removing access to the courts under the unfair trading clauses of the 1974 Act, the Government have put the bounce-back loan borrowers in a worse position than if they had left it all in place, or—as suggested in the amendment—just the affordability issue. It is a close call I would be very grateful if the Minister, when responding, could deal fully with the following points. First, will she confirm that the Government will undertake to overhaul the Consumer Credit Act 1974 in the near future, taking full account of the issues raised in this debate? Secondly, can she list concisely the limits on lenders’ ability under the bounce-back loan to penalise borrowers who are in default or otherwise transgress, irrespective of the amount of money borrowed, and the statutory and non-statutory opportunities for borrowers to protect themselves and their possessions if lenders attempt to penalise them absent the core protection of the 1974 Act Thirdly, can the Minister set out what she called "the steely determination" of the Government to use their power to reduce or cancel the 100% underwriting of loans made under the BBL scheme, if lenders transgress? This could be a very powerful weapon. It would be useful to know who will have the power to trigger certain sanctions, and how borrowers will be informed about the process. The noble Lord, Lord Carlile, suggested that an arbitration structure was needed, and he may well be right. If the Minister can confirm that these points are in play and give assurances on them, then I suggest that the noble Baroness, Lady Bowles, does not press her amendment to a vote this evening, as we will not support her.