Lord Paddick
To ask Her Majesty’s Government what action they propose to take in respect of the Student Loans Company and the reports that it has employed misleading practices to ensure that graduates keep up with their debt repayments.
Lord Ahmad of Wimbledon (Con)
My Lords, it is important that the Government recover taxpayers’ money, but they must do so in a way which is fair. They must not use misleading tactics to get people to do the right thing. The Student Loans Company has now stopped issuing letters under the Smith Lawson brand and we are speaking to it to ensure that lessons are learnt and that its procedures and correspondence are brought into line with industry best practice.
Lord Paddick (LD)
I thank my noble friend for that response. The practice of companies sending threatening letters falsely representing themselves as debt collection agencies is something that we might expect of payday loan companies, but not of a government agency. Will the Minister please reassure the House that in every case where one of these misleading letters has been sent, the Student Loans Company will now write to the individuals concerned to put the record straight?
Lord Ahmad of Wimbledon
First, I assure my noble friend and, indeed, the House that this practice has ceased. It was brought to our attention on 27 June. I believe that since then only two further letters have been issued manually, in error. I take on board the point that my noble friend makes. This afternoon, the chairman of the SLC will talk to my right honourable friends the Secretary of State for Business and the Minister for Universities and Science. They will look at what other remedial action is necessary. However I assure the House, once again, that this activity has now ceased.
Lord Stevenson of Balmacara (Lab)
My Lords, when similar practices were undertaken by Wonga we learnt that it was going to make redress to those affected by letters of this type, in significant amounts of money. Can the Minister confirm that all students who have been similarly affected in this way will also receive redress?
Lord Ahmad of Wimbledon
As the noble Lord may well know, this practice started in 2005, and since then a great number of letters have been issued. As to the differences between Wonga and Smith Lawson and Company: first, no charges were made for the letters that the latter issued; and secondly, the name Smith Lawson was set up as a trading name and, in accordance with procedures, was registered with the Intellectual Property Office. However, as I have already said, the Secretary of State and the Minister responsible for this area are looking at the situation, and I shall of course let the House know of any further action that needs to be taken.
Lord Elton (Con)
My Lords, my noble friend has just told the House the astonishing fact that this practice started nine years ago. What responsibility do departments hold for the oversight of agencies responsible for work in their area?
Lord Ahmad of Wimbledon
Ultimately, responsibility lies with the relevant Minister. The decision in 2005 was made by the board of the Student Loans Company, BIS and the Minister responsible for the area at that time. It is right that Ministers should ultimately be responsible for all government agencies in the departments in which they lie.
Lord Phillips of Sudbury (LD)
My Lords, does my noble friend not see that to have talks with the Student Loans Company is simply not enough? This is straightforward deceit. If any student were engaged in deceit of this nature he or she would be thrown out of their university or denied a job prospect. Surely we must start to set an example. At least the chair of the Student Loans Company should resign from his or her position. Without some exemplary conduct, the standards in this country, which are already declining, will, frankly, decline more and more.
Lord Ahmad of Wimbledon
I agree totally with my noble friend’s sentiments. It is right that those who are held accountable for this should take responsibility as well. The highest standards should be set, and Governments and government agencies should be setting those standards. As I said, this was brought to the attention of BIS, of the Minister, on 27 June. Subsequently, all further letters have ceased going out. We are looking at what other action needs to be taken. As I said, we shall look at what comes out of the Secretary of State’s meeting; I do not want to pre-empt anything in that regard. One thing is very clear, however: this practice was wrong. The Government agree with that sentiment and the practice has now stopped.
Lord Low of Dalston (CB)
My Lords, when the practices that Wonga was engaging in came to light, the question of possible criminal liability was canvassed. Will that be investigated in the case of the Student Loans Company as well?
Lord Ahmad of Wimbledon
On the issue of criminal liability, the loans are, first and foremost, in two formats: mortgage-based or mortgage-style loans, which are no longer available; and those which are currently issued, which do not fall within the remit of the Consumer Credit Act. That said, we are currently taking appropriate advice to see whether there are any matters that need to be looked at in this way. Again, I assure the House that if such matters need to be brought to light in the House, appropriate action will be taken either through a Statement or, I am sure, through future Questions tabled in this regard.
Lord Elystan-Morgan (CB)
Is there not one feature that Wonga and the Student Loans Company hold in common—that they hold licences under statutory regulation? The House was told a few days ago that, in respect of Wonga, there will be a careful examination of its capacity to hold properly such a licence. Will the same be done in relation to student loans? In asking this question, I declare an interest as a former president of a Welsh university.
Lord Ahmad of Wimbledon
My understanding is that, in the decision taken at the time under the previous Administration, appropriate advice was followed and decisions were taken in the light of the industry practice. I hear what the noble Lord said. As I said, however, the key difference between Wonga and the Student Loans Company is that Smith Lawson was registered as a trading name with the IPO. It is a key distinction. In the case of Wonga and some of the companies being used, as I understand it, that was not the case.