Creditworthiness Assessment Bill [HL]

Lord Desai Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Baroness Grender (LD)]

My Lords, we on these Benches fully support the Bill as originally drafted and therefore oppose the amendments in group 1 for all the reasons set out so far by other Members. Renters are such a large part of the population now. They have every right to be full participants as consumers. I will give a very specific example: if you are a renter in social housing—78% of renters in social housing pay their rent in full and on time—and you go to buy a washing machine, currently, because you are described as high risk, you will pay between £300 and £1,000 more. Could somebody please explain to me how it is possible that someone can steer clear of arrears when they are in a scenario where, if they are not an owner-occupier, they pay between £300 and £1,000 more for a washing machine? We need to stand firm on the current wording in the Bill and not allow this probing amendment to be aired. A small change in the renting threshold would mean that an additional 4.8 million consumers would be more attracted to mainstream and lower-cost renting.

On arrears, while I understand that this is a point of concern, the whole point of this is to bring people who are renters into the sunlight with information about them. The FCA has also said that it would be good to know who these people are. The alternative is unscrupulous lenders. That is where we drive people to if they are not in the full sunlight of creditworthiness and there is data about them. For those very brief reasons, we urge noble Lords to reject these amendments and to understand that renters are increasing in number. Just today the BBC announced that the proportion of 35 to 54 year-olds who live as private tenants has nearly doubled in 10 years since 2006. The real problem is that the number of people who are renting is doubling but government policy is not keeping pace with this scenario. This very fine Bill tries to do so.

[Lord Desai (Lab)]

My Lords, I did not speak in the Second Reading debate but I add my support to the Bill sponsored by the noble Lord, Lord Bird, and speak against the amendment. The Second Reading debate showed that several things were being put together and confused. The Bill’s purpose is simple. Obviously the problem is that the poor do not get access to credit, or they do at very high interest rates. That is not the problem that would be solved here. There is also the problem that lots of people are in arrears. If they are they will have a low credit rating. That is often as true for owners. That is not a problem.

The virtue of the Bill is to say that if people are behaving like regular, honest payers of their debt on time they ought to get some sort of compensation or reward for that. If people are paying rent regularly they should be treated on par with those who pay their mortgage regularly. It is such a simple idea that I do not know why people are upset about it. For one thing, the cost of recording payments is much lower than it used to be because they are completely automatic. If we can tell the FCA to persuade people to get into a blockchain system that would be a very efficient way of recording payments, both on the part of the landlord who receives it and the tenant who pays it. It would be very easy to build up a databank of regular payments. From there we could easily get on to some sort of financial app that will give them the credit they deserve.

If we keep the Bill to this particularly narrow but very useful aim we should be very happy to support it. It is required that we do not treat two groups of virtuous people unequally. Those who pay their mortgage on time and those who pay their rent on time should be treated equally because they are both behaving honestly.

[Baroness Gardner of Parkes (Con)]

My Lords, I listened very carefully to what my noble friend said in introducing the amendment, but I really think it is a very bad amendment. It throws out the whole value of the Bill completely. It would just reinstate the current position. That is not what we are aiming to do. We are aiming to make this possible for people who really have no knowledge or awareness of finance or how to do things. These people would be the very ones to be overlooked with a “may”, because they do not push themselves forward in the same way, yet they need the information and the help, certainly if they have been good payers of rent. I remember when I was looking to get a mortgage for the first house I ever bought—I did not succeed in getting one at the time. The whole house cost £7,500, which in those days was a lot of money. A dental chair-side assistant was paid two pounds 10 shillings a week; a highly skilled receptionist was paid £7. We are talking about a long time ago. Although those were times when I knew nothing whatever about mortgages, these are times when you need help and you want to have your case considered. The more modest you are or willing to be squashed the more you were squashed. It is not a good amendment and I am sorry to say that I cannot support my noble friend on it. I want to retain the status quo in the original wording of the Bill, which would be very much more helpful to those who need help.