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I thank Mr Fitt and Mr McIntosh for coming in and offering such helpful contributions so far. I am mindful of your overall position regarding consumers being removed from the proposed bill.

Concerns have been raised in written correspondence in relation to the enforcement implications in particular. Those concerns are around the fact that people could agree not to be subject to a court order to recover goods with the security attached, and around what arguments people would be able to offer in defence in court against a move against them by a creditor. Being mindful of those issues, are the processes in the bill sufficient to protect consumers? Do the enforcement issues present concerns?

I am interested in the position of the Faculty of Advocates. The advocates are against the idea of waiver-of-defence clauses because they believe that that would very quickly become established practice across all financial institutions, that transactions would become pro forma on that basis, and that that would diminish the rights of third parties. They say that that is weighing the protection of small businesses against the marketability of claims. Do you recognise that as a major risk? Might that become normal behaviour, thereby diminishing the ability of businesses to protect themselves against faulty products that they might have sought security against?

That is an important point. It also carries over to the point about sole traders. If you remove the means by which they can earn money to service the debt, you are compounding the problem, not solving it. There is no public interest in that happening.

That is very helpful.

The potential for licensing to provide a product to the Scottish market is interesting.

I am conscious that we are up against it time-wise, so I will be quick. I have some questions about enforcement issues, which are a major concern.

Mr Dailly has raised concerns about section 63, which entitles a creditor to serve a pledge enforcement notice on a debtor if payment has not been made; section 65, which enables an authorised person such as a sheriff officer to enter someone’s home to remove moveable goods subject to a statutory pledge; and section 66, which gives a creditor rights to sell someone’s moveable goods at public auction. The main concern is for consumers, but there is potentially concern for small businesses too, as the removal of a critical piece of machinery might shut them down. The bill does not necessarily contain the range of protections that are needed. Something as simple as one missed payment could trigger enforcement action.

Looking at how the bill balances protections against unjust enforcement with the need for the statutory pledge to remain attractive to business lenders, do you think that it strikes the right balance?

I want to build on the point that Mr Dailly made. On section 64, even if an individual consumer could agree with the creditor that a court order was not necessary, thereby bypassing the protections of a court, another respondent to the consultation has noted that,

“while a court order may be required before enforcement against a consumer, there were no obvious powers for a sheriff to rely on to provide protection.”

They add that

“Section 62(2)b) would allow enforcement against a pledged item if there has been a ‘failure to perform the secured obligation’”,

which is obviously wildly open to interpretation.

On the point about the Consumer Credit Act 1974, it does not seem clear that it contains protections in relation to specific enforcements.

Based on those points, where a consumer has breached the terms of a secured loan, it is not clear what argument they could use in court—if they even got to court—to persuade a sheriff to stop enforcement action. Do you have any views on how we can enhance that provision in the bill and what we could rely on in consumer protection legislation more generally that could be referenced in the bill as a safeguard?

I will rest on that.

An interesting point was raised about legislative competence. As the conversation has developed this morning, I have been thinking about interest rates. Mike Dailly mentioned the Roman cap on interest rates at 8 per cent. I do not know whether it would be legislatively competent to put a provision in the bill whereby we could cap a maximum APR that could be charged in relation to any form of security.

If I want to buy a telly from John Lewis, I can do so with zero per cent interest over 24 months. That is an obvious incentive for me to make the transaction, and the shop gets the sale. That is a patient way of financing the purchase because the good will last a long time. On the face of it, it would not seem to be a problem for me to stick £1,000 against my telly, go off on holiday and pay it off over the 24 months. I would have free money, basically, to finance something that I wanted to do on a whim.

However, if we have that interest rate liability, it is clearly going to be targeted towards people who are financially distressed and are much more desperately in need of the money, which will be charged at an onerous rate of interest. It seems that it will inevitably be targeted to people who have no other avenue to access cheap finance.