§ 4.34 p.m.
§ Order of the Day for the Second Reading read.
§ LORD JESSEL
My Lords, I beg to move that this Bill be now read a second time. The fact that I am sponsoring this Bill in no way signifies that I am opposed to the practice of hire-purchase or credit sales. On the contrary, I think that hire-purchase is an admirable institution and has done much to raise the standard of living in this country and to ensure a wider distribution of goods. But it has obvious weaknesses. Because payments by instalment are easy, the ultimate amount to be paid is often lost sight of. Advertisements setting out the easiest and most attractive parts of the terms are 800 liable to make people enter into hire-purchase agreements before making sure what the agreements actually involve. Sometimes people do not even bother to read the agreements, or they send them in blank and leave the details to be filled in later by a salesman, and then they mistakenly think that they have entered into a contract on the lines of the advertisement which they had read which gives only part of the terms—and, naturally, the most attractive part.
As the Bill talks about hire-purchase and credit sale agreements, I think I should explain the basic difference between the two. In the case of hire-purchase, the ownership of the goods remains with the seller and no title passes until the last instalment has been paid. In the case of the latter, ownership passes to the buyer immediately the first instalment has been paid. Both types of agreement are covered by the Hire-Purchase Acts of 1938 and 1954, but it is the 1938 Act which is the main Act and which governs the requirements to-day.
Briefly, these two Acts set out, first, that before any hire-purchase or credit sale agreement is entered into, the seller must state in writing to the buyer the cash price of the goods unless a label on the goods or a catalogue price list or an advertisement of the selected goods has indicated this information. Then a note or memorandum of the agreement must be delivered to the purchaser within seven days of the making of the agreement, and this memorandum must contain, first, a statement of the hire-purchase price of the goods, also the cash price, the amount of each instalment, and the date, or method of determining the date, on which each instalment is to be paid. Incidentally, failure to comply with these requirements is not a criminal offence. If they are not complied with, the seller cannot enforce his contract, nor can he recover the goods except after a decision of the court. It may be argued that the 1938 Act gives all protection to the purchaser which can reasonably be expected. Unfortunately, it has not worked out that way. I understand that many representations have in fact been made to the Board of Trade to this effect, and the purpose of this Bill is to try to make sure that advertisements of this type shall give a fair and complete picture of the terms offered.
801 To turn to the Bill itself, Clause 1 sets out the types of advertisement to which the Bill applies. They are advertisements of goods offered for sale by hire-purchase or credit sale if the advertisement includes certain elements, which are set out in subsection (2). May I give your Lordships an example of the proposed working of the Bill? Suppose an advertisement reads "Yours for £1 down." This is misleading and, in order to comply with the clause, it should read "Yours for £1 down and £2 a month for a year." To take another example, suppose an advertisement reads "Yours for 5s. a week." The true picture is "Yours for £10 down and 5s. a week for two years." Those are quite simple examples of misleading advertisements and how the Bill, if passed, will work to make them give the true picture. This clause does not apply to advertisements which merely state that hire-purchase terms in general are available or which advertise credit sales of an article under the value of £5.
Clause 2 sets out the information which is to be included in the advertisements to which the Bill applies, and prohibits the display of advertisements if they do not include that information. Subsection (1) specifies that each part: of the information shall be displayed with equal prominence, not the least attractive parts in small print. Subsection (2), at first sight, looks rather formidable, but in fact the information required can be given quite briefly. Here again, may I trouble your Lordships with an example?" Cash price, £40; hire purchase terms, £20 deposit and 24 monthly instalments of £1 "—that gives everything which the purchaser should want to know. Paragraph (e) is rather important, as there are sometimes hire-purchase agreements under which a certain number of instalments have to be paid before the goods are delivered, so that, in fact, this is a disguised form of deposit. Subsection (3) deals with advertisements which do not contain details of payments—that is, generalised advertisements such as those which offer "No deposit" terms. In such a case, the number of weekly instalments must be plainly given. Subsection (5) deals with advertisements which refer both to hire-purchase and credit sales. These often mislead the reader because they are I muddled together and the terms become obscure.
802 Clause 3 deals with penalties. These are quite moderate—£50 for a first offence and £100 for subsequent offences. Then the defences open to the defendant are set out. These are mostly for the benefit of newspapers, printers, and so on, and the result is that the people who issue the advertisements are not to be held responsible for the contents. Clause 4 gives a definition of "advertisement". This is widely drawn. Subsection (3) makes it clear that the terms in an advertisement need not necessarily correspond with the terms on which the goods are actually disposed of. The hire-purchase advertisement, like any other, is only an invitation to treat and is not an offer.
My Lords, I submit that this Bill does not require the giving of more detailed information than is already given by many reputable firms. It will serve a useful purpose by forcing traders to set out their terms fairly and will help the public to find out what the goods being offered will, in fact, cost them. It was ably sponsored in another place by the honourable Member for Rochdale. One or two Amendments were made on the Committee stage, but at the end the Bill had the approval of both sides of the House and the blessing of Her Majesty's Government. I hope that to-day your Lordships will give this Bill a Second Reading. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Lord Jessel.)
§ 4.43 p.m.
§ LORD SILKIN
My Lords, we on this side of the House welcome this Bill. We feel that in many cases the general public are in need of the kind of protection which the Bill gives, and we are very glad that it has been introduced. I particularly welcome Clause 2 (1). It is so easy, when there is a requirement that certain information is to be published, for a person publishing that information to do it in an inconspicuous way so that it is liable to be missed by the person affected. I think that Clause 2 (1) ensures that where the information is published it must be published in a manner which affords no excuse for anyone reading it to miss it. I am very glad indeed that in Clause 2 the noble Lord has made this quite clear. As I say, we welcome this Bill.
803 We hope that it will receive a speedy passage, and that these malpractices, which are evidently fairly common in the case of hire-purchase agreements, will come to an end. I am not entirely optimistic. I dare say that other means will be discovered by people engaged in these practices of disguising from the purchaser the nature of the transaction, but we will go on doing our best to protect the general public, filling in the cracks as they become manifest. This is a very good step in that direction.
§ 4.45 p.m.
§ THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT)
My Lords, I think your Lordships will probably wish to give a Second Reading to this Bill which my noble friend Lord Jessel has set before us in such a clear and attractive way. I say "probably" because there has been some little doubt in the past about this type of legislation—there have been two schools of thought about this over-protective legislation which comes forward in profusion nowadays. People remind us of the old-fashioned adage of caveat emptor—that the purchaser should look after himself, decide for himself and inquire before he enters into his bargain. It is not the duty of Parliament to clutter up the Statute Book with Bills to protect the fool from his folly, and it is not the job of Parliament to put burdens upon various traders who have no intention of swindling their customers at all. We had a little bother about this during the passage of the Merchandise Marks Act. I think we spent half an afternoon deciding whether or not the slogan "Guinness is good for you" fell within the scope of the Bill.
There are, I suppose, those who say that there are innocent "tricks of the trade". There is, of course, the payment of 19s. 11¾ d. for goods which we all know perfectly well really cost £1 and therefore we should not go so far as to be fussy about that; there, people should take care of themselves. That is one school of thought The noble Lord has put the other point of issue quite clearly. Whether we like it or not, hire-purchase is here to stay. It covers a large portion of the daily retail trade of this country. A large number of people use it to improve their standard of life, 804 and every purchaser should be in a position to understand the meaning of the more subtly phrased advertisements which are put before him. I use the word "subtly" advisedly, because the subtlety often escapes some people.
Although this Bill fills a noticeable gap, I do not believe that it will put any burden on the legitimate trader. I hope that it will stop knaves, and that the people who normally practise this kind of thing will not find some way round it in five minutes. If we are to draw a balance between those people who are foolish—those who do not take the trouble to read these advertisements and understand what they really mean—and the knaves, I think quite clearly that we must give the fools the benefit of the doubt and approve this Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.