Consumer Rights Bill

Debate between Jenny Willott and Justin Tomlinson

Tuesday 13th May 2014 Commons Chamber

[Jenny Willott]

I welcome you, Mr Deputy Speaker, to our exciting debate this afternoon. The hon. Member for Walthamstow (Stella Creasy) opened the debate by saying that we had an opportunity to take action on these issues. I completely agree, so I am sure she is absolutely delighted to see how much the Government have done to protect consumers and take action in these areas.

We have debated a number of issues, and I shall run through them in turn. First, on the issue of high-cost or payday lenders, hon. Members will know—certainly the hon. Lady knows this, as we have discussed it before—that the Government have taken robust action to curb the harm these lenders can cause. On 1 April, responsibility for regulating payday lenders, along with all other consumer credit firms, transferred from the Office of Fair Trading to the Financial Conduct Authority, as mentioned by a number of Members. The Government strongly welcome the FCA’s new, tough rules for regulating payday lending. The FCA requires robust affordability checks, limits the number of times that a payday loan can be rolled over to two, and places tough restrictions on lenders’ use of continuous payment authorities. As highlighted by a number of Members, the Government have also legislated to require the FCA to introduce a cap on the cost of payday loans to protect consumers from unfair costs. The FCA will consult on its proposals for the cap in the summer, and it will be in force no later than 2 January 2015.

In addition, the FCA will thoroughly assess every payday lender’s fitness to trade as part of the authorisation process. Given the risks to consumers, the FCA has said that those firms will be in the first phase of firms and will be required to be fully authorised from October this year. The Government believe that the tough and decisive action the FCA is taking, including the cap on the cost of payday loans, will ensure that consumers are far better protected than they have been.

[Justin Tomlinson]

The welcome news is that the measures are already making a difference, because a number of lenders have already withdrawn from the market, which is a bonus for the vulnerable consumer.

[Jenny Willott]

The hon. Gentleman is absolutely correct. We only have anecdotal evidence at the moment, but it is clear that a significant number of lenders have already withdrawn from the market because they know they will not be able to comply with the rules, which are extremely tough. As he said, that is absolutely as it should be. People who cannot comply with the rules are withdrawing, and consumers are being protected as a result.

Free debt advice is currently funded by a levy on lenders channelled via the Money Advice Service. As payday lenders are now regulated by the FCA, they too will contribute to the levy. The new clause tabled by the hon. Member for Walthamstow would duplicate the existing funding arrangements for debt advice. It is important that we put on the record the fact that payday lenders will be contributing to money advice services via the levy.

It is also important to note that the FCA is taking steps to ensure that vulnerable consumers are aware of the free debt advice available to them. It requires all high-cost, short-term lenders to signpost their customers to free debt advice at the point at which a loan is rolled over, and all payday lending adverts must include a risk warning and information about where to get free debt advice.

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[Jenny Willott]

The hon. Lady makes an extremely important point. There are some really good schemes in schools across the country, but provision can be a bit patchy. I have worked in schools in my constituency that are doing exactly that. Such matters can be extremely complex for people to understand, and learning about them as part of the school curriculum before they get into debt can be extremely helpful.

[Justin Tomlinson]

I reassure the Minister that, as of September, that will be in the national curriculum, so all is under control.

[Jenny Willott]

I am very grateful to the hon. Gentleman for highlighting that.

Holiday Pricing

Debate between Jenny Willott and Justin Tomlinson

Monday 24th February 2014 Westminster Hall

[Jenny Willott]

The staggering of school holiday periods may well lengthen the period of peak demand and help to lower prices. I completely understand the suggestion that the Government should arrange for holiday periods to be spread, but currently local authorities, not the Government, set the term and holiday dates for community and voluntary-controlled schools. Academies, free schools and voluntary-aided schools—including some church schools—set their own dates. The Deregulation Bill, which is currently before the House, will extend the power to set term dates to all schools by 2015. The Government believe that term dates should be dealt with locally, through negotiation and co-operation across an area, to take into account the educational needs of students and the practicalities of varying the school year. I cannot remember which hon. Member raised the fact that someone with a child in a primary school and a child in a secondary school wants their holiday dates to line up.

[Justin Tomlinson]

I raised that point. I accept that schools can lead locally, but the reason why the system works so successfully in Germany is because the dates are set by regions, which ensures that children in primary school are not off at a different time from those in a nearby secondary school. Although I accept that the decision should be made locally, I think that the Government might guide regions to pick the dates.

[Jenny Willott]

It is clear that such a decision will have to be made across a local authority area, or more broadly. When the Deregulation Bill becomes law, we will look at how that can be done most effectively, and with the minimum disruption, to help schools and families.