Lord Blackwell (Con)

My Lords, I declare my interests as a significant shareholder in Lloyd’s Banking Group, of which I was formerly chairman. Although I recognise the concerns raised by my noble friends, it is important that we tackle the confusion caused by the dual roles of the courts and the regulator in the regulation of consumer credit. The regulation of consumer credit is not a black and white issue. A balance has to be made all the time between the level of protection offered to consumers and the costs of compliance borne by the institutions, and the risk that, if the courts are unpredictable in the way they interpret the Consumer Credit Act, suppliers will either withhold products or build an insurance premium into the costs. We have had too many incidents over the past few years where what financial institutions thought was a settled issue, as determined by the regulator, has been altered retrospectively by decisions in the courts. We can have a choice one way or the other, but it is important that we tackle the confusion caused by the dual responsibility. As I see it, the Consumer Credit Act is an outdated piece of legislation, as the Government have set out. It was based on conditions that have changed radically. We have since set up the financial services regulator, with devolved responsibilities for regulation. We may or may not think that the regulator is doing well or want to increase supervision of it, but the Government should try to make it clear through these amendments to the Consumer Credit Act whether the result will be, as I hope, to make it clear that there is a single definitive source of regulation for the Consumer Credit Act, which is the balance struck by the Financial Conduct Authority, and that the courts, so far as possible, no longer have a role.