Rent-to-own Sector

Stella Creasy Excerpts

Tuesday 14th July 2015 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone, and it is a genuine pleasure to take part in this debate. The Treasury Minister might be surprised to see a shadow Minister from the Business, Innovation and Skills team but, as he knows, I have form in this area. I am secretly delighted that he is now in the Treasury, especially on the issue of debt. I hope he will be the cuckoo in the nest of the Treasury when it comes to getting right the issue of how we help people in debt.

First, I acknowledge the work that the all-party group, the hon. Member for Blackpool North and Cleveleys (Paul Maynard), and my hon. Friend the Member for Makerfield (Yvonne Fovargue) have been doing in this area. I want to talk a little about some of the work that was done on this issue for the Consumer Rights Act 2015, and I also want to say something about the broader context in which the firms operate. Finally, as I always like to be helpful, I would like to suggest some proposals for making progress on this issue to the Minister, and test whether he is willing to support them.

I congratulate the hon. Member for Blackpool North and Cleveleys on securing this debate. He said he is concerned that shadow Front Benchers may not be aware of these companies and may make the same mistake that others have made in thinking that the rent-to-own sector is about housing. Let me reassure him that the Opposition call a spade a spade. Legal loan sharking takes many forms. My hon. Friend the Member for Makerfield and I are as concerned about the rent-to-own sector and debt management companies as we are about payday lenders. That is why we have been campaigning for a number of years for reform of the sector.

Hon. Members will recognise concern in my part of town about what we call the “BrightHouse knock”—when we are knocking doors during campaigns, we have to be careful not to knock like the bailiffs, because people think we are BrightHouse coming to repossess their goods. I may have expressed some surprise when my hon. Friend cited BrightHouse’s statement that it does not repossess goods—it seems, then, that that is happening only in my part of town.

Rent-to-own companies are legal loan sharks. They operate in exactly the same way as the payday lending industry and a number of other consumer credit industries. They lend in a way that is designed to encourage a persistent relationship. The problem is that they lend in a way that does not ensure that people have access to fair credit, but ensures that they continue to pay something back weekly. They make sure they always get money out of people. In what other industry is there such a high default rate, yet such high profits to be made? That should surely tell us that it is not a competitive industry, and that there are problems that need to be addressed. We have all seen at first hand people in our communities who are exploited by that predatory model of lending.

[Jim Shannon (Strangford) (DUP)]

I apologise for not being on time, Mr Hollobone. I flew in this morning. We stayed for 12 July, which, as hon. Members will know, is a special day in Northern Ireland.

I, too, have great interest in this issue. My constituents regularly come to me when they have entered into hire-purchase arrangements, and sometimes arrangements with loan sharks as well. What I see is their desperation. They have made a decision based on what is right at that moment in time, rather than what is good for them in future. Does the hon. Lady have any idea about how the Consumer Rights Act can be better utilised, or how someone can control it, to ensure that when people make such desperate decisions, we can help them at the right time?

[Stella Creasy]

I do not want to keep the hon. Gentleman on tenterhooks. I have some ideas, growing on the work that the all-party group and my hon. Friend the Member for Makerfield have done on the industry. The hon. Gentleman is absolutely right that we can do things to change the situation. We need to recognise that it is predatory lending. The hon. Member for Blackpool North and Cleveleys talked about vulnerable people being exploited, and that practice is much more widespread than people realise.

The hon. Member for Strangford is right; people make what is probably the right decision for them at the time about where they could get a freezer, cooker or other basic consumer goods that their family need to live. The hon. Member for Blackpool North and Cleveleys was tempted into a discussion about consumerism and modern life, but the reason we began campaigning on legal loan-sharking in my community was that we could see that people were trying to make ends meet and needed to be able to wash their kids’ clothes so that they had school uniform. Those companies were their only option, and the method of lending increasingly prevented them from going to other companies. It affected their credit histories so they could not borrow from other parts of the industry.

Frankly, it is very expensive to be poor in this country, and the problems are compounded by the companies in question and by predatory lending. Consumers lack choice, and that distorts the market price that they pay. Some hon. Members have already talked about the method of selling, “pay weekly”. For the shadow Front Bench the issue is the mindset—lending to people in a way that means they cannot get away. We have all seen examples of what has been mentioned, when people pay double the cost of a washing machine, cooker or TV, and then some, only to have the goods repossessed like that—I do not know whether Hansard can record my clicking my fingers, but it is that quick. As soon as someone falls behind for a week the company comes round. There is no breathing space or recognition that something about the lending may have got people into difficulty so that they cannot make their repayments. There is no such responsibility.

The Opposition have tabled several proposals to deal with the companies in question, and other legal loan sharks, for some years. The Minister is aware of that and I know that he shares my concern about the companies. We may differ on how best to deal with them and with predatory lending, but he too is concerned about it. During the passage of the Consumer Rights Act we tried to address the issue of warranties and insurance sold with products, and how that breached people’s consumer rights. They would be sold a product with a requirement that created a lack of clarity and transparency about what they were buying. I recognise that some companies now say that those things are not compulsory, but we all know about the hard sell. I remember the Minister talking about his experience of being on the BrightHouse mailing list. I am interested to know whether he has finally managed to disentangle himself from that. He will know how hard the companies push the products, as part of the original deal that was agreed to. Even if they are not now compulsory, the arrangements are still difficult for consumers to get out of.

The Minister may take the opportunity, now he is no longer in coalition, to suggest that he was held back by his former partners in his attempts to deal with the problems, and say that he is now free to get to grips with legal loan sharks. He is among friends as far as wanting that freedom to be exercised. During the passage of the Consumer Rights Act, Jenny Willott, the then Under-Secretary, said:

“If a warranty provides no more than the statutory rights and there is a charge associated with it, whoever is selling the warranty may well be in breach of consumer protection regulations. When shops sell goods and the warranty is purchased at the same time, the full cost must be disclosed and consumers must be informed of their statutory rights. Consumers also have the right to cancel the extended warranty within a set period, and those rights must be made known to the consumers when they purchase the warranty.”—[Official Report, 13 May 2014; Vol. 580, c. 623.]

The Under-Secretary was adamant that our proposals for prohibiting such agreements were covered under the consumer rights measures that were being introduced, so one of my questions to the Minister today is what he knows about the implementation of such rights since then. After all, the Act has been passed, and the Government set up a consumer rights implementation group. Is the issue of rent-to-own companies being investigated by that group? How are we making sure that consumers can exercise the rights they now have under the Act? That would also extend to marketing methods—the Minister will know about marketing lists—and how companies tell people their rights and make sure they know that they do not have to take out insurance or an extended warranty. Often such warranties are not worth the paper they are written on and offer consumers no additional protection or benefits. Is that being made plain to people?

Why does all that matter? Why must we get to grips with those companies? It is because we know the issue is fundamentally about debt. Consumer and personal debt in this country are rising into what might be called uncharted territory. Since March, unsecured personal debt has gone up £48 billion. Personal debt is rising three times as fast as wages. The Minister and I disagree about the Budget and whether it will make things worse or better, but we know people are finding that there is too much month at the end of their money. Therefore the companies we are talking about—and their credit agreements and their predatory lending behaviour—are here to stay, unless we show the political will to tackle them and unless we recognise how they make people’s already difficult situation worse. I may disagree with the hon. Member for Blackpool North and Cleveleys about the Government’s decision to abolish the term “child poverty”, but we can all agree that making it difficult for people to make ends meet by leaving them stuck with companies that exploit them and squeeze out every last penny will do no one any favours.

The hon. Member for Blackpool North and Cleveleys talked about mortgage debt, and many people with mortgages go to the companies because they have no alternative. If interest rates go up just 2% families will have to find £1,000 extra a year in interest alone, to keep a roof over their head. If they are also trying to pay off an expensive cooker or freezer, we can see what is coming down the road for them. Some of us who fought to retain the social fund will know about the lack of alternatives. Many credit unions do wonderful work trying to come up with alternatives, but the lack of options is compelling people towards the companies in question. In the context where personal debt is rising—and that will cause a massive economic problem for us and put our recovery at risk—there is a compelling case to be much more proactive about predatory lending in the consumer credit market.

With that idea in mind perhaps I may give the Minister some suggestions for things to do, and things to raise with the Financial Conduct Authority. He will know that I have a slight sense that the Financial Conduct Authority is playing catch-up. If the banks were tyrannosaurus rex, legal loan sharks are the velociraptors of the consumer credit market. They are fast, nimble and ever-evolving, and that is evident when we compare the rent-to-own sector with the way lending is done by the lumbering beasts of banks. That is why voluntary action is not enough to deal with the companies. Will the Minister make a commitment to work with the Financial Conduct Authority and to get it to expand its remit, to look at the industries in question and how they can change? In particular, could there be a requirement on lenders to provide pre-contractual information on both the cash price of goods and the total cost of the credit agreement: the difference between the price at the start and what it could be by the end of the agreement? If consumers could have that up-front they would know exactly what the cost would be, including any additional fees and charges.

Companies could be banned from requiring consumers to take out additional products alongside the initial credit agreement—separating out the insurance and warranty to make it clear that, aside from its not being compulsory to buy them, it would be illegal to try to sell such additional products at the same time. The companies could be required to undertake affordability checks based on the possible total cost of the agreement rather than the initial up-front price of the good, so that companies would have to reflect, when doing the affordability check, on what debt people could possibly get into by borrowing in that way, and whether they could pay the money back. We clearly need to change the way affordability checks are done. [Interruption.] The Minister says from a sedentary position that they already do this, but clearly they do not, given the levels of debt that people are getting into. We need to recognise that it is possible for affordability checks to deal with the potential cost of the goods—the doubling of prices—rather than the minimum that someone could pay. They should deal with the maximum that someone could pay.

My hon. Friend the Member for Makerfield made a powerful point about breathing space. The companies do not give people breathing space when they get into financial difficulty. We want the Government to make a commitment to end fees for debt management. The fact that people have to pay to get out of debt compounds the issue, and I would like a time scale for that change. We recognise that the debt advice industry needs to grow. We would like the Government to use the levy—in fact, to double the levy on the companies—to pay for that. The Minister may want to take up that idea; I do not know. However, we all know that having to pay to get out of debt extends the debt. It makes it harder for people to get into a debt-management agreement. With the companies we are talking about, it would be good to stop the clock once people start the process of getting a debt-management agreement, so that no more interest would be accrued, and there would be no more pressure, visits or BrightHouse knocks on the door.

I encourage the Minister to go further and talk to his colleagues in the Department for Work and Pensions about a reinstitution of the social fund—funding for alternative ways in which people could get white goods in particular. I am sure that the Minister will know from his constituency that people cannot go without a washing machine or cooker. We may disagree about iPads but we can certainly agree that there is a case for basic white goods to be provided.

It would be helpful to hear from the Minister about the commitment that the Government made last year to reviewing personal debt. We have not seen any further information, so will he update us on that review and the work that is being done? There is also the issue of how credit histories are affected by this form of predatory lending, because, even if customers get out of payments required for an individual credit agreement, if that affects their future ability to borrow and to go to alternative or mainstream providers, there is a problem.

[Jim Shannon]

I apologise again for not being here for the whole debate. I am conscious of how many good groups there are—I have them in my area—such as the citizens advice bureaux, Christians Against Poverty, the Churches and many others. They offer good advice and can often come to an agreement with the hire purchase companies or mortgage groups to reduce the fees to a payment system that is manageable. Does the hon. Lady think that it is important to recognise what such groups do to help people in poverty and debt?

[Stella Creasy]

The hon. Gentleman pre-empts my final point, which is that what we really want is an alternative, but for an alternative to exist, it has to be funded, because this is not a fair fight. What I have noticed, as we have exerted pressure on the Government to tackle the payday lending industry, is that it is retreating from our high streets but that it is being replaced by the rent-to-own industry. This industry and legal loan sharking have evolved because there is no reform. We need an industry that works, because we need people to be able to borrow in this way to make ends meet—because they are not earning enough—and we need to end legal loan sharking by reforming the way in which these companies operate. That requires alternatives. However, our credit unions, housing providers and alternative forms of financing are struggling in an environment in which these companies are making a great deal of money from exploiting people. That is why it is right that the Government not only step in and are much tougher about regulating—learning the lesson of capping the cost of credit by capping what these companies can charge—but look at how we support the alternatives to grow and how we can level the playing field.

My final point is about the particular case for mainstream credit providers. Will the Minister commit to talking to mainstream credit providers, particularly to our banks, to ask them to review how many of their customers have entered into these agreements? I think he would be surprised—just as we found with payday lending companies—that half a million customers from one bank alone, who could have gone to it for a personal loan, were going to payday lenders. We need to make the case that these forms of lending and problems with debt are now so mainstream in Britain and so much part of modern life that there is a case not to see this as separate, small industry but part and parcel of how we help people to make ends meet. The mainstream credit providers have a vested interest in working with credit unions and providers—the Hoot credit union, for example—who do alternative forms of white goods provision to help their customers, because the consequences for the mainstream providers will become apparent when people default on their mortgages and personal loans.

This is not an either/or any more. We have to end legal loan sharking in Britain in its many forms. I hope that the Minister will take in good faith those examples of things that he could do now and accept what the priorities are. I look forward to a positive response from him and hope he will join the Opposition, as the cuckoo in the nest, in saying: let us end predatory lending in Britain once and for all.

[Mr Philip Hollobone (in the Chair)]

Although the Minister can finish before 10.57 am, if he would be kind enough to finish no later than that, that will allow Mr Maynard two and a half minutes to wind up the debate.

[The Exchequer Secretary to the Treasury (Damian Hinds)]

It is a great pleasure to see you in the Chair, Mr Hollobone; I think it is the first time I have served under your chairmanship in this way.

I start by congratulating my actual and honourable Friend the Member for Blackpool North and Cleveleys (Paul Maynard) on bringing this important subject to Westminster Hall. I also thank Mr Speaker for granting time for the debate. It has been good to hear from all the other contributors to the debate. There was the hon. Member for Ross, Skye and Lochaber (Ian Blackford), representing the SNP, and the hon. Member for Strangford (Jim Shannon)—the renaissance man of the 2010 generation in respect of the breadth of subjects on which he contributes in this place; he should be much congratulated on that.

It is always a joy to hear from the shadow Front Bencher, the hon. Member for Walthamstow (Stella Creasy), and I pay particular tribute to the hon. Member for Makerfield (Yvonne Fovargue), who brings a great deal of personal experience to these subjects from her time with Citizens Advice. She has been a great campaigner on fee charging, debt management companies and other aspects of the broader sector.

My hon. Friend the Member for Blackpool North and Cleveleys spoke powerfully and persuasively about the market—not only through personal stories, anecdotes and his experiences with his constituents, but far more broadly. He raised a number of very important points on disclosure, affordability, comparability, repossession, debt advice and financial management. Others have also touched on those subjects; I hope to cover most of them during my remarks and come to some others at the end.

On my hon. Friend’s point about meetings, the Government are always open to hearing from him and other colleagues who have special knowledge and interest in this area, because we have a shared objective to minimise consumer detriment and generally make the market work better.

The Government are committed to supporting hard-working people to be financially independent and resilient, and to save for unexpected events and for the future. Financial matters, as we all know, can be daunting, and making a poorly informed or sometimes just bad financial decision can have far-reaching consequences over a long period. The Government have taken a number of significant steps to improve the consumer credit market and ensure better outcomes for consumers. As well as fundamental reform of the regulatory framework, there is now, as we have heard, a cap on the cost of payday loans to help protect consumers from harm.

Crucially, the Government are also committed to ensuring that consumers are given the education that they need to make better informed financial decisions. Financial education is now on the national curriculum—something that I know a number of hon. Members campaigned for over an extended period. Pupils now learn about the importance of budgeting, sound management of money, credit and debt, as well as how to understand different financial services and products. It is really important in financial education to understand the principles behind these things and not just the products that might currently be on the market. If we had learned about the financial services products on the market when we were all at school, that would have been of absolutely zero relevance to the world we find ourselves in today: we have to learn about the principles of sound personal financial management and budgeting.

The Government are committed to providing sustainable financial services that give customers greater choice in accessing credit. With greater choice comes greater competition, and from greater competition should come—and generally comes—better outcomes for consumers. For example, the Government have already introduced several initiatives to support the credit union sector, including the credit union expansion project—up to £38 million—and the raising of the maximum interest rate from April 2014, which makes it that bit more possible for the credit union sector to compete in higher-cost, higher-customer-risk markets. That will help to allow consumers access to more alternative forms of consumer credit. For example, a consumer may now use a credit union for a loan to buy a household product, rather than go directly to a rent-to-own store.

That said, as my hon. Friend and, I think, the hon. Member for Walthamstow acknowledged, the rent-to-own sector is an important and legitimate part of the consumer credit landscape, allowing people to purchase essential items that they would otherwise have difficulty in finding the lump sum to buy. However, it is important that consumers who use rent-to-own agreements are protected appropriately from harm and adverse outcomes. There are times when unexpected, one-off expenses mean that consumers require access to credit—that happens throughout the income scale in different ways—either to fund shortfalls in income or to replace essential goods. Rent-to-own agreements allow payments to be spread over a long period, which is valuable for some customers on low incomes who do not have access to more mainstream forms of credit such as credit cards or overdrafts, and who lack the savings to be able to purchase household goods up front.

To help deliver the Government’s vision for a well functioning and sustainable consumer credit market that is able to meet consumers’ needs, the Government have fundamentally reformed regulation of the consumer credit market. That has created a new, more robust regulatory system and transferred regulatory responsibility from the Office of Fair Trading to the Financial Conduct Authority on 1 April last year. The new regime has been designed to strike the right balance between proportionality and consumer protection. The Government have ensured that the FCA has the robust powers that it needs to protect consumers. It will thoroughly assess every firm’s fitness to trade as part of the authorisation process and has put in place binding standards on firms. It proactively monitors the market, focusing on the areas most likely to cause consumer harm, and it has a broad enforcement toolkit to punish breaches of its rules. There is no limit on the fines that it can levy and, crucially, it can force firms to provide redress to consumers.

In the evidence session for the all-party debt and personal finance group’s inquiry into the rent-to-own sector, the FCA expressed concern about firms in the market. It stated—this quote was used earlier—that practices in the sector “rang alarm bells”. For that reason, it has brought forward the authorisation period for these firms to this summer. Rent-to-own firms that wish to obtain authorisation needed to apply by 30 June. That will ensure that any firms that do not reach the rigorous standards required are not able to continue in business and that poor standards start to be driven out of the market.

With regard to the price of credit, the Government believe that consumers should be protected from unfair costs and charges in the market. The Government showed their commitment by legislating to require the FCA to introduce a cap on the cost of payday loans, which came into force on 2 January 2015. The Government were clear that an interest rate cap or a cap that covered only some of the fees and charges that payday lenders may impose would be ineffective; I remember discussing some of the finer points of that sentence at some length with the hon. Member for Walthamstow. The FCA therefore designed a cap to include all fees and charges that may be incurred in relation to a payday loan, including arrangement fees and default penalties.

The Government legislated to give the FCA the power to cap the cost of all forms of credit. They have placed a duty on the FCA to use that power to impose a cap on the cost of payday loans because of the clear evidence of consumer detriment in that sector. The objective was to target payday lenders. However, the FCA retains the power to cap the cost of all forms of credit if it thinks that that is necessary to protect consumers, and it has said that it will keep the issue of capping the cost of credit in other markets under review.

[Stella Creasy]

Can the Minister set out for us, then, what evidence he would look for in order to introduce a cap on the charges that the rent-to-own sector may impose? I wonder whether he has a note that will help him to explain what levels of detriment, of costs, would have to apply. Some of us may argue that the cap on the payday lending industry is a little high at the moment, but it could be brought down. The Minister makes the point about a test. What tests would he set?

[Damian Hinds]

The test would be to appoint a regulator that we believe in and give it the tools to be able to make the decisions—give it the enforcement powers and the analytical capability—rather than, as a Government, meddling in the individual decisions on the details of the regulation. Appointing a regulator is historically how we have done things in this country, not just in this market but in others. It does not always please everyone all the time. Sometimes, people may feel that things should move more quickly or more slowly or be somewhat different, but in general it is a good way to protect consumers.

If at some point we think that the regulatory system in toto is not working, we change the regulatory system, but I do not think that it is right for Government necessarily to have a prescriptive answer to every subsection of the market; as the hon. Member for Walthamstow rightly said, this market, in its broader form, has a remarkable ability to shape-shift. If we go very specifically after one part of it and try to change one specific practice, we will find that something else changes somewhere else that we did not know about. That is why it is important to have this broad regulatory framework that includes high-level principles of fairness to the consumer, with the regulator stepping in to license and delicense operators when it feels that that is necessary.

[Stella Creasy]

Obviously, the Minister will be conscious that doing nothing has consequences, too; we have seen that in relation to all the people we have been talking about today, who have been ripped off by these companies. The Minister will also be aware that, on payday lending, the Government did not accept the argument that he is putting forward—that the Government should not intervene and set a cap—and did recognise the need to set a series of tests. Opposition Members would be incredibly sympathetic if he wanted to break his vow of libertarian conservatism and say, “Actually, there is a need to intervene because we see this predatory behaviour in this industry.” I want to press him. Is he saying that he would be opposed to learning the lessons from payday lending and to the Government’s stepping in and introducing proposals for a cap on the rent-to-own sector, despite the consequences of doing nothing, which we are seeing now?

[Damian Hinds]

The hon. Lady, although passionate, is not right when she says, “The Government did specifically this.” The Government put a duty on the FCA with regard to that part of the market. They also, at the same time, gave a power to the FCA to do something in parallel, in other parts of the broader consumer credit market, if it deemed that necessary.

Ultimately, individual organisations make their own commercial decisions on prices, interest rates and default fees for their products. However, the Government believe that it is in the interest of lenders to consider the impact on their customers and, of course, to treat them fairly.

On the affordability of credit, rent-to-own firms must fulfil a number of requirements. When the responsibility for regulating consumer credit transferred from the OFT to the FCA, the FCA turned key elements of the OFT’s irresponsible lending guidance into binding rules. Those are enforceable with the full range of FCA enforcement powers. They set out that a firm should assess the customer’s creditworthiness, having particular regard to the potential for the commitments to impact adversely on the consumer’s financial situation and taking into account information that the firm is or ought reasonably to be aware of at the time and the consumer’s ability to make repayments as they fall due. The FCA’s rules are aimed at strengthening consumer protection and are based on the simple principle that money should be lent only to a person who can afford to repay it. Firms are also provided with greater clarity on what is expected of them and the sanctions if they lend irresponsibly.

Rent-to-own firms, like all consumer credit businesses, are required to make affordability checks for consumers taking out an agreement. The FCA makes it clear that a firm should lend responsibly and should take reasonable steps to assess the customer’s ability to make repayments in a sustainable manner, without undue difficulties and without having to borrow further. Ultimately, credit should be extended to a consumer only if they can afford it. The extent and scope of affordability checks are determined by a number of factors, which include, as well as the financial position of the customer, their vulnerability and in particular whether the firm understands that the customer has some form of mental capacity limitation or reasonably suspects that to be so. Some of the casework examples given by my hon. Friend the Member for Blackpool North and Cleveleys throw that requirement into sharp relief. In addition to that, on 23 February 2015 the FCA published a paper on consumer vulnerability and a practitioners’ pack to assist firms in addressing the needs of customers in vulnerable circumstances.

Some concern has been expressed that rent-to-own agreements are not always adequately explained to consumers before they enter into them. That point was made from the Opposition Benches. The FCA requires firms to provide adequate pre-contractual explanations to enable consumers to assess whether the proposed credit agreement suits their needs and financial situation. Consumers can compare the cash price quoted in the pre-contractual information with the price of equivalent goods elsewhere to decide on the best deal. That ensures that consumers have the ability to make the financial decision that best suits their needs.

The Government are aware that consumers are sometimes required to take out insurance and service deals when entering into a rent-to-own agreement and that that could cause consumer detriment. Although there is concern that those deals raise the total cost of an agreement, the Government have ensured that where insurance is required as a condition of credit, the cost of the insurance must be factored into the APR, so that consumers can make a comparison on the basis of total costs and make informed decisions about the agreement that they are entering into. Furthermore, when firms sell insurance products, they must do so in line with the FCA’s requirements about assessing consumers’ eligibility to claim on a product.

The reforms made to consumer regulation by the Government and the FCA have given consumers new protections, and the regulatory framework means that consumers will continue to be protected in the future. It is important that avenues of credit remain open to those who need them, while consumers are protected from harmful practices.

[Stella Creasy]

I have asked the Minister about the Consumer Rights Act 2015 and the commitments given to hon. Members by BIS Ministers that these practices—the selling of warranties and insurance products—would be covered by consumer rights legislation. The things that he is saying do not quite match what those Ministers said. Can he clarify whether he has spoken to the Ministers in BIS about the Consumer Rights Act and its role in tackling the bundling up and selling of insurance products and warranties, and will he commit to raising that issue with the consumer rights implementation group? If nothing else, he could get that group to look at whether being required to buy an additional product when someone simply wants to buy the original product breaches basic consumer rights.

[Damian Hinds]

I will have to write to the hon. Lady about the details of the regulation on bundling. In general, price bundling in markets is not illegal, but on the specifics of this market I will have to get back to her.

The Government have set up the Money Advice Service, which provides a single point of debt advice for consumers and allows those who face problems with debt to obtain free and impartial money advice. This year, MAS will spend £47 million on debt advice, delivering through its third sector partners an increase of almost £9 million on the previous year.

It is important to take a joined-up approach to the provision of free debt advice. Following the independent review of MAS, the Government welcomed the creation of a debt advice steering group, which will help to improve the effectiveness and efficiency of free debt advice provision by bringing together senior representatives of the debt advice charities, high street banks, water and energy bodies and devolved organisations.

[Damian Hinds]

The steering group will be an open forum to involve all relevant and interested parties, and I take on board the point that the hon. Lady makes. I wanted to come back to a point that she raised earlier, which my hon. Friend the Member for Blackpool North and Cleveleys also mentioned: where the consumer stands in relation to part-paid goods. The Consumer Credit Act 1974 states that in a hire purchase agreement, a court order is required to repossess goods if a third of the total cost has been repaid. Furthermore, where 50% of the total price has been repaid, a consumer can return a product without penalty and the agreement will finish.

[Stella Creasy]

One thing that we see with such companies is that they move the goalposts with consumers. First, they do not tell consumers that a court order is required to repossess goods. Secondly, the amount that constitutes 50% moves, because of some of the charges applied. Will the Minister commit to reviewing that area? As he says, consumer protection exists, but because companies change how they lend to people, consumer rights are not being upheld.

[Damian Hinds]

The hon. Lady raises an important point. It is one thing to have rights, but another to know what they are. That is not restricted to the rent-to-own sector or to consumer credit, and organisations such as Citizens Advice have an important role to play in making that plain. It is an important part of disclosure for firms to make that known. The regulatory regime and enforcement are designed to provide confidence that that is happening in reality.

That brings me to my more general concluding point. We are in a new era, with a new framework. I pay tribute to Martin Wheatley and the FCA for the speed at which they have introduced a more positive framework. Many of us have taken an interest in consumer credit issues and detriments in the market over several years, and the FCA framework now contains a lot of what people have asked for. In addition, I pay tribute to hon. Members from all parts of the House who have taken a constant interest in the subject and kept it at the forefront of public policy debate.

None of the issues that we have talked about today is new. The leading home credit provider first came into being in Victorian times, catalogue lending has been with us for as long as anybody here can remember and rent-to-own shops existed long before 2010. Moreover, the market can and does change; we talked earlier about its ability to shape-shift. The Government have adopted a proportionate approach to the market. The hon. Lady suggested that I might have felt constrained by being in coalition between 2010 and 2015. I wonder what constrained her, or her colleagues in the Labour party, for the 13 years before 2010, when they did not do all the things that she is now demanding from the Government of today.

More broadly, I think that the approach has to be a judicious combination of financial education, sensible regulation and ensuring that alternatives are available. In all three of those areas during the past five years there has been a significant shift, with the inclusion of financial education on the national curriculum, the new FCA framework, Government support for the credit union sector and the accompanying regulatory change.

Rent-to-own is an important part of the consumer credit market. My hon. Friend the Member for Blackpool North and Cleveleys is absolutely right to keep our focus on it, and we will continue the dialogue.