Consumer Rights Bill

Lord Deben Excerpts

Wednesday 5th November 2014 Grand Committee

[The Lord Bishop of Truro]

My Lords, Amendment 105C is in my name and those of the noble Lord, Lord Mitchell, and the noble Baroness, Lady Bakewell. I declare an interest: I am chair of the trustees of the Children’s Society, which has co-ordinated this amendment as part of its campaign—of which I am very proud—on the impact of debt on children and families. We produced a report entitled The Debt Trap earlier this year.

In September this year, the Children’s Society launched another report, entitled Playday not Payday, which looked at the effects of the advertising of payday loans on children, and in particular at the telemarketing of payday loans. The report identified a gap in the regulations which allows payday loan companies to use unsolicited marketing calls to offer people payday loans through phone calls and texts. For mortgage products, this type of unsolicited marketing is completely banned by the Mortgage Conduct of Business rules. The Financial Conduct Authority, which regulates payday lenders, said:

“Cold calling can expose consumers to high pressure sales tactics which mean they can end up with an inappropriate or over-expensive product or service. Our investment and mortgage financial promotion rules therefore ban cold calling … unless certain conditions are met”.

Why, therefore, does the Minister feel that this ban should apply only to mortgages and not to other forms of credit such as payday loans? According to a poll by the charity StepChange, a third of its clients have received an unsolicited marketing call offering them a payday loan. The average client said that they received an average of 10 calls per week. Calls at that frequency, if aimed at certain vulnerable parents and families, can have a detrimental effect on a person’s mental health and well-being.

The Children’s Society found that of those parents who had never taken out a loan, only 7% said that they were receiving calls from payday loan companies more than once a day. That increased to 42% for parents who had previously taken out a payday loan. Given that we know that young parents are more likely to take out a payday loan, I share the society’s concern that this suggests that young parents who are already in financial difficulty are receiving the brunt of those calls. Anecdotally, we hear stories of payday loan companies sending “I miss you” texts to parents who have not taken out a loan after a period of time. I am sure that the Minister agrees with me that that kind of behaviour is unacceptable.

I understand that the Department for Culture, Media and Sport has recently launched its long-awaited consultation on nuisance calls, which will also cover unsolicited telemarketing calls. The proposal to make it easier to prosecute and fine firms that break the nuisance calls rules is of course welcome and will in the long term help reduce the number of unsolicited payday loan marketing calls. However, I am concerned that this does not go far enough to protect consumers. An outright ban, similar to that applied to mortgage products, would almost guarantee protection for vulnerable families from harassing and persistent calls from payday loan firms. Will the Minister commit to looking at this issue ahead of Report to consider using the Bill to further protect vulnerable families?

[Lord Deben (Con)]

My Lords, I support this amendment. It is true that we have already complained about this constant nuisance. However, it is particularly true that many parents of vulnerable children are not at work, and therefore are present when the phone rings on a constant basis to offer people money in this way. It is intolerable, and an insult to family life. I do not understand why we have taken so long to deal with the overall nuisance, which most of us recognise in our own homes and our own places.

On those occasions on which we happen to be at home during the week, there is no doubt that the telephone rings on a regular basis to offer us all kinds of services, none of which we may want. There is no way of stopping them—in particular that annoying habit of a machine talking to you, so you do not even have the chance to be unfairly rude to the person who has rung you up. I try to be polite to the real people at the other end, because it is not their fault—that is the job they were given. However, it is extremely difficult, because this is an intrusion which modern life has not applied itself to. Why should we have the disadvantages of the telephone without doing something to compensate for them?

In general, this is a scandal, and in general it is fair to say that Governments of both parties have been very slow to deal with it. However, in particular what the right reverend Prelate has brought forward is a crucially important problem. Once a family has taken out a payday loan and has paid it off, they are very vulnerable to a repeat performance. These people go on and on at them, and the children are very much affected by that. It is one of those habits that people have to get out of. If they are trying to get out of it, the telephone call is intended to bring them back within the thraldom of the payday loan.

We should be much tougher about payday loans, right across the board. We should be doing a lot more to encourage the provision of the much more respectable and sensible means of people taking small loans and being able to pay them back in proper ways. Credit unions, and the extension of those credit unions, are very important. That is the positive side, but the negative side is that we have to take this seriously. I have tried very hard but I cannot for the life of me think of any logical reason for opposing these amendments.

I hope that my noble friend will not put forward the argument that we are consulting on something else. I have been in politics and in Parliament for 40 years, and I do not believe that argument. It is always used by civil servants who do not want their Minister to listen to the argument; they want them to put it off. Therefore, I hope that my noble friend will not raise that point. If she is able to find another point, I shall be thrilled, because I have not been able to find one myself. If she is either unable to find another point or unwilling to raise the usual answer, perhaps she will be kind enough to say yes to the right reverend Prelate.

[Baroness Wilcox (Con)]

My Lords, there are far too many of us in this Room who have been through this issue. I look across and see “credit unions” written right across the noble Lord’s forehead. It is a more difficult situation than we are making it sound. First and foremost, we know that we must be very careful not to push people into illegal borrowing or illegal credit. If we do that and they get into trouble, there is no way that we can get at them to save them. The issue of when to lend money to people has always been difficult. You can see that some of them will get into trouble, but at least you can see them and they can come to you for help. Credit unions are a wonderful idea. They are a gathering of people who come together to save money and, when they have done so, they can then take out the small loans that they need—because it is their money; they put it in there.

This is not about payday lending, which is for borrowing quickly when your child needs a pair of football boots, which every other boy has and without which he cannot play in the football match. This issue is not as simple as it sounds. I tried to tackle it, as did the Minister who followed me, and I am sure that this Minister will try again now. I remind us all that, in the best of all possible worlds, we would not want these telephone calls to happen. However, I urge us to be careful in seeing what the Minister can or cannot do because, if it is that easy, the Labour Government—a socialist organisation—would have done a lot more about it when they were in power—and they could not do it, either. I wish the Minister the best of luck today with this one.