 Rwy'r ffawr youn econom i'r Prifysgwm Hwy, cwestiynau cyflaethat Èu cyflaen mwy iawn i y trafod i gynhyrchu i gydig i ddaw'r ffoil cwmau Cymru. Y bwyf ar gweithio i amlallyniad Y 6, 7, 8, 9 i 10 yn Ffraith Cymru y mae'r cyfliad ein chynhyrchu i'r ffraith Cymru. Fy llaw ni'n gweithio i gynhyrchu i Gymru nr 19, yn ddfrydy i gydig i gyfer mae'r ffrindiau sydd wedi ddim yn ddysgol gwn i gydig i gydig i gydig i gydig i gyflaen For a first panel, I welcome Mike Daley, Solicitor Advocate and Principal Solicitor at the Government Law Centre. Dr Jonathan Hardman, convener of the Banking Company and the Solicitor Law Subcommittee at the Law Society of Scotland, and Dr Hamish Patrick, partner and head of the financial sector at Shippard and Wetherburn. Welcome, men and gents. Can I remind all attendees please not to worry about turning on your microphones during the session, as he's a controlled by broadcasting? If you'd like to come in on any question, can you please just indicate to me by raising your hand? That would be helpful. With that, we will get started on to the questions. First of all, I have just a couple of general questions from me before I go on to colleagues. Apart from the issues that you have raised in your submissions, which we welcome on to, I imagine some detail. Apart from those issues, are you content with the general thrust of the bill? I'll start myself first of all, Mr Daley. I don't think so, convener. I think the concern that the Government Law Centre has, and we're very grateful to be invited to give evidence before your committee, is that we're in an unprecedented cost-of-living crisis. I would ask, is this bill needed? If so, who does it help? The difficulty is that, in our experience as a law centre, the bill would be a bonanza for predatory lenders looking to exploit vulnerable consumers, streamlining benefits. I heard the evidence from the Scottish Law Commission last week, which I thought was very helpful. I can see some of the benefits from a B2B business-to-business perspective, although, in saying that, I'm not aware of any empirical evidence that is established in any real business case for businesses yet to see that. Although I'm giving my evidence on behalf of the Law Centre, I spent six years representing consumers at the financial conduct authority on their consumer panel, and five years as a member of the expert panel of the European banking authority. I come at this as a consumer rep, but also with a knowledge of the financial markets in the UK. I think that the answer is yes. As I indicate in my submission to this, we have a post, and we need broadband. That is a technical reform. It is a matter of legal infrastructure. The legal infrastructure that we have at the moment is 19th century. It is completely useless for practical commerce. I understand the point that Mike Smith makes in relation to consumers, and we will come on to that in more detail, I'm sure, but there is absolutely no doubt that this is of immense benefit to businesses. I spend most of my working life apologising to people in England and the States about how rubbish our law is here. We might be able to do this, but it will be very complicated and increase your risk and cost more money, or you can't do it at all. So, yes, it is needed. There may be a question for consumers. The major benefit of it is undoubtedly for business. There may be benefits for consumers as well, and there are obviously risks in relation to consumers, as with anything else new that appears, which I want to, just because you can now do something on the internet that you otherwise had to do manually. Yes, you have to look out for the issues that arise around that, but it undoubtedly makes business life better and will be able to do things that we can't. The position of the Law Society of Scotland is that reform in this area is needed drastically and as soon as possible, so we support the reforms. We've got some specific comments on aspects of the bill that are included in our submission, but we're very supportive of the reforms in general. On one other element, which I know one of my colleagues will go into in a bit more detail later, it's on the threshold of £1,000. The initial report by the SOC was published a number of years ago. I imagine that that £1,000 was probably fit for that time. Would you want that threshold to be increased? My concern—again, I'm recollecting the evidence from the Scottish Law Commission, and there was an empathy there about having to upgrade that figure. With the greatest respect, I don't think that consumers should be in this bill at all. I think that this bill would be an absolute disaster for consumers in Scotland. So, from the point of view of Government Law Centre, we would like to see consumers removed from this bill in totality. I have no doubt that we can explore that further. From the position of the Law Society, we are concerned about consumers being included in the bill. I think that there are a few different mechanisms to reduce them. One option would be to remove consumers from the bill altogether. The second would be to remove assets that we traditionally associate as being consumer assets, such as washing machines and televisions, etc. Or the third would be to increase the amount so that it effectively takes out most consumer amounts, which would cause less damage to the operation of the bill at the moment, but is, as Mike has said, a rougher metric. I have nothing to add to what Dr Hartman said. Yes, there is no reason not to increase it. I think that the folks of the legislation are really elsewhere, and the benefit is really elsewhere. Another few questions. First of all, Dr Patrick, can you explain how the current law in Scotland affects businesses' ability to access finance? To set back a bit further, the bill is not about finance. It is about how you do things legally. There are lots of things that you will be able to do that are nothing to do with finance. The pledges section is about finance because that is a security interest. The assignations section is not. It will be useful when you try to restructure a business, for example, within a group, so it is not all about finance. It is about many other things as well. In relation to finance, there are a whole series of different types of finance that are affected by that. I think that consumer finance is very much a small element of it, which we may come on to. The immediate impact that people see in it is in relation to invoice discounting. Invoice discounting is basically buying debts. It is a method of financing using your working capital. Many of the invoice discounters regard their product as a better version of an overdraft, as it were, because it is safer for them. As it is safer for them, it has a better capital treatment. It is potentially cheaper and so forth. Within voice discounting at the moment, you cannot basically do it because, as you would under the bill, because the 19th century structure requires you to give notice, oe, oe, oe, style to all your customers in order to transfer a debt. It does not work, so you have lots of work-arounds that are inefficient questions about how they operate. It affects all sectors of the market. It affects very large multinational companies for whom Scotland is ineligible jurisdiction, i.e. you are financing on the basis of your commercial debts throughout Europe or globally. Scotland does not count, so you get no benefit from your renewable energy receivables due from companies or something like that. There is a whole series of things that you would not get benefit from, so Scotland does not count. It would help at that level. At the bottom level, in size, and this will be an issue to be discussed in the context of consumers, because there is a gap between the two. At the moment in Scotland, most of the invoice discounters will not fund sole traders. They will do it in England, but they do not do it in Scotland, and they do not do it in Scotland because Scotland's law is inadequate because individuals cannot grant floating charges, which is the backup mechanism. In England, they do not do that because their law works. It is ugly, but it works because it would enable sole traders to have access to discounting, which currently in Scotland some will do it, but it is a risky business and the price is higher. I agree with what Hamish said. It is important to add the benefits for raising finance on corporeal movable items or things that you can touch. At the moment, if you have a manufacturer with a valuable piece of plant or a shoemaker who has a shoemaking machine that is the most valuable thing in the business, you cannot use that to generate finance. You cannot secure that against your finance without physically delivering it to the creditor and therefore entirely removing it from the operation of the business. The pledge aspect increases access to finance as well, so there are three areas that have been raised in the law society banking company and insolvency law policy sub-committee of areas in which this will help businesses. Firstly, those who currently cannot obtain finance will be able to obtain finance in the same way as there are empirical studies linking the ability to grant fixed security to access to finance. In the same way, you can imagine that RBS would not lend me money for my flat without the ability to have a standard security against it. The same logic applies. Some businesses who cannot currently obtain finance will be able to do so, both over their corporeal things that you can touch and in corporeal things that you cannot touch, such as claims and intellectual property. Secondly, for those who currently have finance, it will make it cheaper because part of what lenders charge against or the way they set their rates in theory is the profit that they want to make, the risk to them of lending the money. In theory, what this does is it reduces the risk element because, if the borrower does not pay, it gives them further assets that they can go against. It should make existing finance cheaper. Thirdly, there is a concern that the current law is driving people away from using Scots law. People are encouraging the use of contracts being written under English law to make them easier to assign. They are encouraging the use of bank accounts based in England to make them easier to take fixed security over. They are encouraging the incorporation of English subsidiary companies instead of Scottish subsidiary companies to be able to take security over their shares more easily. Those are three areas in which Scots law and Scotland more widely are losing out when it does not need to. Just on that point, before I bring in yourself, Mr Daly, on the use of the Scots law and English law, do you have any type of financial sum that Scotland is losing out on an annual basis? As a consequence of the current law? No, it arises anecdotally, I'm afraid. It's difficult to gauge. As I say, I spend a lot of my practicing life saying, put that bank account in England. It's anecdotal, but it is absolutely an everyday occurrence certainly at the mid and larger end of the market where that's possible, or practical, the extent to which it's structured at the smaller end of the market so that you will find retail contracts with them under English law because it's easier. So that bill would actually stop you from having to say that to clients? Yes. In fact, I'll be saying to them, write your stuff under Scots law instead of English law, because we're better than you now. Whether they'll do it's another matter, obviously. I fully accept the points that Hamish and Jonathan have made in terms of the business benefits. I conceded that at the very start, that it's quite clear that there is a streamlining benefit to businesses, but again, I don't see the arguments in terms of the consumer position. Okay. We are going to come on to a range of questions, so we'll come into that also. Just one final question, just on from myself, just regarding the business-to-business opportunities with this proposed bill. Do you see any particular sector of the business community that would primarily be a beneficiary of this bill what to pass? I think all sectors benefit now. It depends which, like I say, it's a very broad technical structural reform, so all sectors benefit. As I say, the obvious one is invoice discounting, so that's trading businesses with book debts. The real estate sector, for example, sorry, I'm getting a bit English here, property people, you will now be able to fund student accommodation development more easily because you'll be able to sign the rents, if anyone has had to advise. Will I give all of these students notice of this assignation of rents, and then they'll not know where to pay it will be? When another student comes in, I'll have to do another set of documents through it, so it'll affect the property market for shopping centres and things like that as well, other types of development. It will affect energy, both renewables and oil and gas, in terms of how they operate their businesses. Things like fishing potentially, depending on whether or not your fishing boat is a ship or not, if your fishing boat is not a ship but a boat, will be able to be pledged, which will make life a lot easier in that regard. Technology, once the intellectual property ones are through, we'll be able to do proper security over intellectual property. At the moment we say, oh sorry, you can't do very good security over that, or maybe you should move to England or the US or something like that to do this. So there's a whole series of sectors. Every sector will be benefiting due course some early on others, so I think it will be a gradual realisation of the opportunities that the reforms present to the sectors in order for that to be developed. I agree with everything Hamish has said. I think intellectual property for technology, start-up companies especially, is going to be very important. I think a big area as well are those that rely on having large, valuable assets, such as whisky, for example. You'll be able to pledge your whisky barrels to a funder and therefore a whisky distilleries will be able to obtain finance on their whisky whilst keeping it in their warehouse, which is something that is not currently possible to do, which strikes me as a potentially big opportunity. I want to ask a couple of questions about asignation and principally whether you see there have been any challenges if asignation is able to occur both by intimation and registration. I guess whether you have a view on whether both types of claim might continue. I have no problem with it at all. There are several reasons for this. One of which goes back to the breadth of the legislation and its potential applications. There are some situations in which the current system works absolutely fine or elements of the current system work absolutely fine. Things like notice. In a lot of circumstances, the requirement to give notice is something that stops things happening. On large-scale invoice discounting, you've got hundreds and hundreds of customers with debts that are due for 30 days. Giving them notice every 30 days for hundreds and hundreds of people just isn't going to work. You're doing a large project financing, building up a harbour or a hospital or something like that. You assign lots of high-value limited contracts. Now everyone's there, everyone's in the room, everyone can sign it. Notice is very easy, and in fact it's probably easier than registration. Sometimes there will be commercial sensitivity, so there will be need throughout the variety of uses of this infrastructure that mean that one is more advantageous than the other. I think that the disadvantages of that are outweighed. There are arguments around the register that the register won't be complete. The register was never going to be complete. The register was never going to be the answer to absolutely everything. The land register works because the land is registered. The assets you assign are not registered, so you don't know who wants them to start off with. The register is a completely different thing. The register just tells you that something has happened and puts you in a position to find out what that might be. Yes, there may be someone who's given notice that that risk is there, but that's reduced. In certain fields, I think that the practice will develop of everyone registering, and it may be that there comes a point where you say that the bill provides for those particular types of claim. Registration is going to be the only way, and that will obviously improve the usefulness in those particular ways of the register, but that's not what the register is for. It's not a land register. Do you think that the register will become the default over time? For a lot of things, yes. For some things, people will do both. If I'm buying a business and I'm buying the debts of the business, when I close the deal to protect myself from the insolvency of the seller, I will immediately register in the register so that I'm protected from their insolvency. Now, the customers may carry on paying the wrong person over a period of time. I will probably give notice to them because it's going to work better that way. Equally, there are situations where you wouldn't give notice because it just confuses, you know, if you're transferring retail debt, you usually carry on paying to the same bank account you paid before because it just confuses people to give them notice. I mean, I guess it's a wider point, but do you think that it's important for people to know, even for smaller businesses, that it's important for people to know who they owe money to? Well, if they pay to the wrong person, they're protected. That's what the notice provisions are around. Do you think that it's important for them to know who ultimately they owe money to, or do you think that that's just how business is done and it doesn't matter? If they could have been notified. Anyway, there are certain types of contract where the transfer won't be possible anyway because the identity of the person to whom you are performing the contract is important, and that's preserved by the bill. Do you think that there are situations where it's not important or not? In many circumstances, I don't think it is important. It's not the case at the moment. You would give notice and, yes, you would find out that you have to pay someone else, but you can't do anything about it. If you're not going to notice, you'll carry on paying the person that you were paying before and what they'd do with the money once they've got it, because it will probably go to a secured account that will then be passed on to someone else. If I could just add to that two things. Firstly, on the dual approach, I don't think that there's an alternative, because an alternative would be to say that the only way to transfer a claim would be to register it in the register of assignations. So that would mean that if Hema showed me £5 and I transferred that to Mike, there wouldn't be any valid transfer unless it was done through the register of assignations. And so you're kind of forcing everybody through a very narrow legal technical approach, which isn't going to be the way in which claims are transferred at the lower end of the scale. So I don't think there's an alternative really to that. And in respect of the, is it important who you owe money to? I think law traditionally thinks it's more value who it's more important to know who owes you obligations rather than who you owe obligations to on the grounds that if I owe £50, then I owe £50. If the debt can change in terms, and that's obviously a different matter, but to follow up with what Hamish says, I think there's probably two differences of approach. One where you're still paying the debt to the same place, so RBS creates loads of loans and assigns them. He's still going to be paying RBS, whoever it ultimately the loan sits with. There it's probably less important than if you physically want the money to transfer, then there's no way around it other than to tell somebody don't pay into that bank account, pay into that bank account. I just want to push him back on that a little bit. It's strange, slightly out of my greed area, a question about for consumers or for individuals. If you owe money to the person, you have an idea of how they might treat that debt and how they're going to act. I guess for smaller businesses as well, if you think you owe money to a friendly supplier who you've done business with over a number of years and then the person you owe money to changes without knowing, suddenly you could find the debt being handled differently. Is that a consumer protection issue that arises or is that something that we shouldn't worry about? It's important to note that at the moment, debts can be transferred by notice, so you might find out about it. You would know and you'd instantly be able to change your behaviour or approach to how you manage that debt within your business. It was changed. Yes, there are already practices in relation to consumer debt promoted by the regulators and the trade bodies dealing with that. Michael, I have a view on whether or not these are good and effective. There's a bigger issue of whether or not things ought to be transferable at all. If they are transferable, I'm not sure that this makes a lot of difference. It makes it easier for them to be transferred and it makes it easier for them to be transferred without you knowing. At the moment, you do it using the work around, using the other trust-based methodologies. No, at the moment, in invoice discounting, you don't know. It happens economically in business terms because there will be a trust and a floating charge between the seller and the funder. The funder will have certain controls and be able to step in and enforce. That would carry on. I think that people just wouldn't adopt the system you've got. Unless, of course, the transfer itself were restricted, which is a different issue altogether. In that direction, legislation as yet to be implemented in Scotland—not for policy reasons, in relation to restrictions on transfer of commercial debts—is going in the other direction to say that you cannot impose a restriction on transfer of commercial debt. Mr Daly, can I ask just one point of clarification? You mentioned that regarding the work around, also after Oliver's question. With the bill, would that then put in place a consistent approach to that transfer, as compared to work arounds that might be different, depending on the particular transaction? Would that be connected? Yes. It would be great if it followed you. Things would be easier. There might be situations where people would still use the work around, but it's unlikely. It would have to be if, for example, they were operating in several jurisdictions and used the same work around somewhere else, for example. The incentive of things being cheaper and easier will move people towards using the register. So it's not just about cheaper and easier, it's cheaper and easier, but also consistent? Oh, yes, yes. Right, yes. Okay, thank you. Thank you, convener. I think that Mr Mundell raises a really important question. Oddly enough, I'm actually very sympathetic to what Hamish has just said. I can think of Government Law Centre, where we have businesses that provide us with supplies. I've seen the invoice financing from that end, so I take on board what Jonathan and Hamish say, from the B2B position, and the point that you yourself, convener, have made, that there's a logic in the bill in making that more effective and streamlined, and it's better for Scots law. However, in terms of the consumer position, I think that it's quite to guidel what the bill does, because you need to remember it operates within existing UK law, so under the Financial Services and Markets Act 2000, the financial conduct authority is empowered to make rules, and they've made the consumer credit rule book, which requires any consumer credit agreement to be intimated on assignation to the consumer. So if the bill was passed as drafted, you would then have the kind of quite absurd position that consumers are protected in certain circumstances, but not on others, and that can't be logical. The final point that I'd make is that it's interesting, in terms of Mr Mundell's point, that the FCA considers SMEs to be consumers in certain circumstances. I took from your question a concern about smaller businesses that perhaps don't have the resources of a larger company to handle some of those issues, so I thought that that was a really interesting point. Can you provide some examples, then, please, Mr Daley? You said there that consumers are protected in some aspects, but not all. Can you provide an example of each as to where a consumer would be protected, but also one where it wouldn't be? I'm thinking that Hamish had mentioned, I think, talked about students' rents, I think that you had referenced. In that regard, that's not regulated by the Consumer Credit Act 1974. Clearly, there could be some agreement—for example, an agreement that has no interest is not regulated by consumer credit law. There's a lot of detail in that, convener, but the point that I'm making is that I just think that that creates a very odd position in terms of having UK consumer protection law here and then having the bill coming along. I think that Hamish said earlier that the bill is not about finance, it's about possession and securities law in Scots law and upgrading the spec. I accept that, but what I would say against that is that the law doesn't operate in a vacuum, so the real world is that we have the way that businesses operate. We have the experience of England in that regard, which is why, from a consumer perspective, we've not had bills of sale in Scotland unlike in England. I think that that goes back to Roman law, because our Scots law system is based on Roman law, which has then replaced our common law, so that's why we never had a non-possessory pledge. If anybody was to say, well, what have the Romans ever done for us? Actually, they kept interest at 8 per cent 2000 years ago, so actually there's a lot to be said for going back to Roman law. Thank you for that. Oliver. Thank you. I'll just leave that point there. The bill would provide for a waiver of defence clause where it deeter agrees with the assigner not to raise defences to payment against the assignee. Are you aware of the waiver of defence clauses being used at present and do you think there's potential for them to be misused? Waiver of defences, you mean? This is in relation to section 13, is that right? Yes, section 13. Section 13 is a section in which I think needs completely recast, but that's for technical reasons, because I think it probably has got it. What it's trying to do is restate the current position of the law. Waiver of defences is an interesting question. What you're really talking about here is a provision where someone says, I will pay you this money, and if you owe me money, I will still pay you it, or if you haven't performed this other contract, I will still pay you this money. There are two contracts that are unrelated, one of which involves payment going one direction and the other involves performance of services going the other direction. The services aren't performed very well. That gives rise to a claim for defective performance of services. At the moment, the person who is due to pay the money cannot say, I'm not going to pay you the money because you didn't fix my car properly, because until he has actually crystallised that counterclaim for bad fixing of car, he cannot set that off against the payment. He must carry on paying. When it reaches the stage where it is turned into what they call a liquid claim, i.e., they've gone to the court, sort of, and they've gone to the stage where that claim is valid or is accepted as valid and quantified, they can say, well, I'm not paying your debt to the extent of x quid because that's what you owe me the other direction. This is really a law set off, which is what section 13 is about. You can, in theory, waive set off so that you can say once you have not, when I could otherwise set this liquid claim against this other liquid claim, I agree not to. That's quite common in some circumstances. Not, I should say, in retail contracts, but it's quite common in certain types of financing agreement. Again, there's a whole spread of types of financing agreement in financial markets agreements, in particular when doing exactly what you say, when you say you're going to do it, is quite important. There's a spread where this happens, but I don't think what the bill is trying to do is trying to change the current position on this, which has been developed over many years. The basic legislation, this is from 1592. Why does the bill feel the need to restate it? The bill feels the need to restate it because the cut-off time for a set off when you do a transfer. You owe me a fiver. I assign it to Jonathan. Hold on. You owe me a fiver. I owe you to quid. You assign the fiver to Jonathan. The two quid can be set off against it at that point. At the time at which notice is given, and if the two quid came into existence after notice, it couldn't be set off normally. There's nuances around that, but it normally cannot be. What the bill seeks to do is to do something funny with notice of assignation. At the moment, notice of assignation has an effect in relation to set off and how defences and counterclaims and so forth operate. We need to do something about that. What the bill has done is, to my mind, not very well, insert a provision that tries to take account of the changes to the way notice operates of assignation under the bill. That is all that it tries to do. It is trying to restate the existing law to take account of a change within the bill. I don't think that this is altered. There may be a general policy point as to whether or not the law of set off should be the way it currently is, which is why I suggest in my longer response that this should probably be at the law commission that the law of set off should be the law of commission, not a restatement of a bit of it in the context of a bill that is partly affected by it. It's a bigger question, but it's not something that the bill is trying to change. What would you recommend in relation to section 13 that it comes out altogether? I've suggested in my longer amendment suggestion that it should say something along the lines that the law of the different types of set off will continue as is provided that the effect of notice within the current law will be blah blah with reference to the notice provisions in the bill. I've tried to set that out in a bit more detail. I think that's one of the important changes that I suggested because if that sort of thing has got wrong, it creates potentially serious problems. In financial markets, for example, if you're closing out derivatives contracts, set off is critically important when you're dealing with a derivative contract when prices change by the minute. Yes, we've done a swap on sterling 10 days ago and we want to close it out on Friday instead of on Monday. The timing of set off is quite important in that point. Is there notice? It would be the current question. I was interested in the Faculty of Advocates' position against the idea of the waiver of defence clauses because they believed that it would become very quickly established practice across all financial institutions and transactions would become proform on that basis that would diminish the rights of their parties. It's weighing against the protection of small businesses against the marketability of claims. Would you recognise that as a major risk that, behaviourally, that could become the norm and thus diminish the ability of businesses to protect themselves against faulty products that they might have sought security against? I was so busy seeing section 13 as being miscast. I didn't look at that one. I don't have other views on that. I think that these are pretty common clauses anyway in practice, especially in the business to business context. I've often referred to as part of your boilerplate clauses. I think that there are legitimate questions where you have bargaining disparities as to whether the freedom that people should have contractually to contract out of the default rules for set-off. I think that some of the protections that we've looked at outside the business to business context will help at least alleviate that. Mr Daly, do you want anything to add? No, convener. You finished all of it? Yeah, I'm finished. Bill Kidd? Yeah, thank you very much. And thank you, guests, for the enlightening discussion so far. Can I ask a wee bit positive aspect of the bill? How do you think the bill's provisions on pledges would actually help businesses to access finance? Johnathan referred to whisky already. Obviously, there are varying different types of whisky producer. At the moment, you have to jump through various hoops in order to create the equivalent of one of those pledges over whisky barrels or whatever it happens to be. That's one. There are some situations in which it's quite difficult at the moment to do it at all, and sheep as well. I recall as a trainee doing a hard purchase agreement in relation to sheep. This is not a common method of financing sheep, but it would be useful. I'm not joking apart. Fish farming is a big industry. How do you go about doing it at the moment? Commodities, the ways that you deal with grain or hydrocarbons when you're seeking to create security over them at the moment, are a little bit conflicted and difficult. Yeah, it's going to be very useful for a lot of people. Yes. Just to play devil's advocate, if I may, Mr Kidd, to what Hamish has said, I accept everything that he said in terms of whisky sheep fish. I was just questioning how many of those businesses are sole traders, which is why I think the discussion that the committee had with the Law Commission last week, I can't remember who asked the question, it might have been Mr Wall for, about floating charges. Why didn't the Law Commission think about extending floating charges? I don't disagree from the business perspective with what Hamish and Jonathan have said. It seems to me that we need to sort all of that out, but I just throw a caveat in terms of, yes, that's a cogent argument, but it's more in terms of businesses that are more likely to be able to use float with charges, for example. I just wanted to throw that into the mix. Floating charges for sole traders are very difficult because of the method by which you enforce them. Floating charges for partnerships I might have been in favour of. It was seen as a distraction because of the way floating charges fit in with Scott's law, but for sole traders, that is very useful for a small agricultural business, for example, raising working capital on livestock or crops or whatever. It's a positive benefit. It will have something that they can provide to a funder. Add in manufacturing again, if you have an SME with a valuable piece of kit that makes whatever they sell, be it gears or shoes or whatever, a bank, a financial institution, may only be willing to lend to that SME on the basis that, if it goes wrong, they can sell that valuable piece of equipment, so they want some preferred right in it. This provides that without having to deliver it to the creditor in order to create it, so that's another tangible benefit on it. Thank you very much indeed for that. That's extremely helpful, actually. That's something that might not be quite so helpful, but I'll ask it anyway. There are concerns that the statutory pledge provisions in the bill could open up a high-cost lending market in Scotland and that could target vulnerable consumers. Any idea about whether that is a probability or a likelihood? That is the concern that certainly Government Law Centre is coming from. If you think about it, we've got the benefit of the experience in the rest of the UK. Of course, the English law commission had looked at the bill of sale provision, which is what the bill would have introduced in Scotland with statutory pledge. It's interesting that the England and Wales law commission had done a piece of work looking to reform the position in England. I'm just quoting from the reports. The bills of sale are fraught with problems both legally and practically, and that included allowing goods to be repossessed on a single default with basically no protection for borrowers. That's what we would introduce if the bill as drafted was passed by this Parliament. It's interesting that logbook loans are taken off in the rest of the UK. That's effectively a non-possessory pledge, your bill of sale on a motor vehicle. I think that that's what would happen. We already have logbook loans in Scotland, but you don't have to go over your loan book to the lender. You effectively get a higher purchase agreement, which has got lots of protection for consumers. If I could just give a quick example, if I can, on this very point, because I think it's important. You borrow £1,000 over three years. I went online and looked at this edit. I never hit the button to actually do it. £1,000 over three years, the APR that I was quoted online—I'm in Glasgow, honest of it—is 204.2 per cent. It's about £100 a month to pay it over that three-year period. I would repay £3,660. Let's say that I do that on the back of a £1,000-old banger of a car. I pay my first payment and miss the next. I get into all sorts of difficulties for all sorts of reasons that happen to people in real life. What would happen in the real world is that that car of mine would be sold at an auction under the bill. Let's say that you get £600 plus quid for it at the auction, because you always get less. The Law Commission talks about auctions getting the best value in the real world. People go to these auctions and they know what's going on, and people get a discounted deal. Let's say that the car gets sold for £600. I'm still due the £3,060 on my loan, plus there will be the cost of recovery and so on and so forth. I just simply say that why is that benefiting consumers in Scotland? From the position of the Law Society, we very much are concerned about consumers, as reflected in our response, and I think that there are some ways that we need to protect on that aspect. I do think that it's important, though, to clarify that the law of debt and the law of security are inextricably linked but separate, and that the lending market should be regulated and, indeed, is regulated. Loans made and respect to this would fall under that regime. Now, there's an argument for changing that and tightening up the protections there, but I suppose at the moment what we have is roadblocks in the access to finance through our security laws, which is like regulating something else by saying, by regulating debt, by putting in legal restrictions to people wanting to lend to you. That's perhaps not necessarily the best way to regulate the market, however we are very concerned about consumers, as noted. Can I be devil's advocate to Mike, then? Come back to my modernisation thesis, I suppose. Opportunities are provided for innovation and provision of financial services here. In itself, that is a neutral thing. It is how you use the technology that is the bad thing. There are good new entrants to the funding market and there are bad new entrants to the funding market. There are people providing good products and bad products. Therefore, there is the argument that consumers are deprived of an opportunity for innovation because they will not be able to do things, for example, online. Now, there are clearly risks attached to that. If you look, for example, at the moment, at the point of sale finance, the clarnars of this world—some point of sale finance is regulated anyway because it is a consumer loan—you have the deferred purchase price structures, which are not currently regulated, but the SCA is about to regulate them. Should we have banned clarnar in the first place and made it impossible to have that type of deferred structure? Once that innovation is there, should we regulate it to make sure that it operates properly? Similarly, I think of another example, online payment systems and push payment fraud. Obviously, if we did not have online payment systems available to individuals, you cannot have online push payment fraud. What is the balance between innovation and protection, and where do you set it? Come back to Hamish on that, because I am very sympathetic to Hamish in terms of his philosophical, what if the world was only wonderful and beautiful? I accept his thought. Though it was, I would say to Hamish—a very interesting point that you raise—here is the thing. Who are the people who use pawn-broken in Scotland at the moment? I see them because, often, they have lost their ticket if they want to reclaim the goods from the pawn shop, so Governor-Law Centre does it for free—you need a note republic—and we have to produce a document so that people can get their stuff back. We have been doing that for decades. Who is it, though, that uses pawn-broken in Scotland? It is people who cannot get credit any other way. They have a really bad credit rating. They are desperate. I could go, touch wood, get a 0 per cent credit card interest today. I could ask my bank for an overdraft and get a personal loan at a low rate. For people who are in financial distress and are really vulnerable, they cannot do that. What do they do? Traditionally, they have used money lenders, which is illegal. Coming back to Hamish's point, what are they going to do? Well, they are going to use, if the bill is passed, virtual pawn-broken, which is what the bill would do. All I say to that is, who is going to be interested in that? Well, predatory lenders are going to be interested in that because the only way that you make any money out of that is to charge several hundred per cent. I think that the Scottish Parliament—I know that the Scottish Parliament is here to protect the interests of the people of Scotland, and I simply say that this is very dangerous in terms of ordinary members of the public. Let's see. There was Jeremy Foster in all of the supplementaries. Good morning, Gior. I mean, just following up that point with you, Mr Daley, if we accept your argument, what way would you see then taking this out? Would you simply take all individuals out of this bill, or would you go down the other route of saying that you can't go against any household goods and define that with the mobile plus other areas you might have to go? Or, thirdly, would you go for a higher amount? We've obviously got a £1,000 balance. Would you raise that to, say, £5,000, £6,000, £7,000? I'm just wondering which of the three options—or the fourth option—that you've come up with, if we accept your argument? That's a really interesting question, Mr Walford, because, again, one could get into the semantics of some of those arguments about increasing thresholds to high figures, just so that you don't prejudice Mr Smith that's got a strativarius who wants to borrow on the strativarius. Sometimes the arguments you get wheeled out here. I think that the easiest and the cleanest and the best solution is just simply taking consumers out. Consumers are defined in law in different places. We've got the Civil Jurisdiction and Judgment Act in terms of jurisdiction in Scotland, which defines consumers. We've got other bits of legislation. It's effectively an individual not operating as a trader or in a business function. I fully accept—I think that I've probably been more convinced from listening with respect to Jonathan and Hamish—that, yes, I can see, particularly in the examples about agricultural soil, I'm convinced that I can see the benefit. You don't want to exclude individual traders, but if we use the definition of consumer, we could protect the kind of people that ordinary members of the public that I'm talking about as against not restricting businesses. Can I then ask Mr Hardiman and Dr Patrick if that was the course of action of Parliament too long term that we didn't take out individual soil traders, but we took out consumers, what would your response be to that type of change with Emma Bill? Can I go first? From the Law Society of Scotland perspective, that would protect consumers. I think that whichever one of those three metrics you go, you end up slightly overprotecting in some places and risking underprotecting in others. So, if you carve out consumers, you overprotect the wealthy consumer who might want to use their assets. If you go down household items, you don't protect every consumer, but you protect—you might overprotect in certain areas in respect of businesses that use things that we think of typically as household items in the course of business, such as a laundromat for a washing machine or something. If you carve out washing machines, they can't use what is effectively there, the way they make money. Or if you increase the threshold, you overprotect in some areas and underprotect in others, whichever way you do it, because they're all kind of rough heuristics. I think that the Law Society of Scotland perspective any would work to protect consumers. Do the Law Society of Scotland have a preference to any of those three options? I would need to speak to our consumer sub-committee about that. We could provide follow-up evidence in writing if helpful. If you could, that would be helpful, thank you. I'm pretty much with Jonathan on this one, I think. As I said earlier, the principal benefits of the reforms are commercial, but there are big benefits for sole traders, so it's important to get that boundary right and not preclude availability of something that would be useful for them. I come back to my argument a minute ago that it does prevent potential innovation in retail situations, but clearly there's a policy decision to be come to as to whether or not the best approach to that is to say that you can't do it, rather than here is how it is regulated and here is how it is otherwise restricted. Theoretically, I think that the Professor Gretton and Stephen said last week that most jurisdictions do not exclude consumers. That's my inclination. I can see that the practical arguments may run the other way, and that's not the most important thing, as I see it from the bill. I was going to ask—obviously, I'm concerned about POM broken 2. I see in my constituency work the situations that arise out of it, but the argument that we've heard from others is not necessarily their views, but it's the argument that's put forward that maybe that, and I think you touched on that yourself, that it's maybe preferential to some of the other finance agreements or things that are available to people, and I just guess from the Parliament's point of view, it's how we find that balance. At the moment for POM broken, you have to hand over the item, and we'd heard that one of the potential benefits is that people wouldn't have to hand over the possession. Your car example, I guess, is that you can continue to drive the car, or you could continue to use high-value items. You wouldn't have to give them to someone else. Do you think that that is a benefit, or do you think—I guess my own view is quite hard to ask people to lend against something that they couldn't live without, or to borrow against something that they couldn't live without? It's a really important point, and I think that what it comes back—I mean, the image that you talked about is a policy decision, and I think that that's right. But if you think about it, why do we have consumer protection law in the first place? Why do we have consumer protection law, which is completely different to say businesses, which is much more laissez-faire? You negotiate freely with your choice, and it's because you don't have choice, I think, that people are potentially very vulnerable. I would go so far to say that, if the bill has passed, including consumers in the way that it did, I think that not only in terms of all the legal problems, but I actually think that there's a morality question to be asked, because we know from the experience on the rest of the UK that the only companies that get into this area will be charging several hundred per cent APR. For me, there's a moral question, an ethical question, which is that, do we really want our most vulnerable disadvantaged fellow citizens in this country to be exposed to that? What I would say to Mr Wendell, which was very interesting, was that I remember just a matter of weeks or a couple of months ago, the Scottish Government said publicly in defending the consumers that are being in this bill, and I quote, consumers would benefit from these proposals because securing the debt against previously untapped movable assets would generally result in lower interest rates. What I'm saying is, all of the evidence says that's not true. I know that the question would be, is it a lower interest rate than they might get from an unregulated lender if people are really desperate? You're cutting off any access to finance at all, and I'm not saying I think that's right, but I'm just wondering, that's the pushback you get, is you'd be taking away the chance to borrow at all in a regulated market. Does that raise a question? If you're desperate for money, and you have items you can borrow against at a lower rate than you could get somewhere else, I mean, could people find, I guess, my question would be, I mean, people are finding their own work, I guess, in the way businesses are finding these complex workarounds with trusts and accessing other jurisdictions. Some of the most vulnerable people in our society who don't have access to regulated lending at the moment are finding their own workarounds as well. It's just that they're not necessarily as, I mean, you've no idea what they're paying in order to borrow that money, and I guess, is it better to move that practice into the light than leave it unregulated altogether, I guess, in terms of the morality question? No, I fully accept, you do raise a really important point, because, for example, companies like, say, Provident and other companies that would come round your door and lend money and have a relationship have disappeared, but, at the same time, we do know, and I was involved in some work when I was at the FCA in this, illegal money lending is an absolute evil in this country. So you're right to say that 300 per cent APR with a virtual pawnbroker under this bill is better than an illegal money lender that's going to, you know, come round and, you know, threaten if you don't pay. But we've made that a crime. I mean, all I'm saying is... We're not very good at identifying it and stopping it, I guess, the question. So is it better to bring that practice sort of into, you know, cast some sunlight on it so that we know what's actually happening? I mean, I don't have a sort of... I mean, what I would say, and I'll try and be sure, if you know what I would say, is we need to do something about it. You're absolutely right, don't disagree on that. But there's things that we could do. You know, so to me, there's two options. One is we pass the bill as is and allow this predatory lending to take off in Scotland. And so we become like a page, you know, from a Charles Dickens novel, right? Or we have the Scottish Parliament and the Scottish Government taking a lead, and they have done great work in terms of, for example, credit unions. We do more. I mean, if you think about it, the Parliament has just published today the Scottish Government's cost of living bill in terms of rent freezes and the winter eviction ban. That's the kind of thing that we need in terms of innovative solutions, you know, that can make people's lives better. So I accept your premise, but I think there's a better solution is the short answer. I'm sorry, convener, that was very short. Okay, thank you. I'll take you and Mr Hardman and then back to Bill Kidd, because I'm just conscious of the time that we have thus far. Excellent, I'll be as brief as I can. I think we all agree that predatory lending is something that needs to be fought against wherever possible. I think the question is how do you fight it? Do you fight it by regulating the lending market? Or do you fight it as we currently have by having such out-of-date security laws that nobody wants to lend in that situation, which might reduce opportunity for consumers as well? I suppose, going back to the point that regulating, while security is linked to access to debt, the best way to regulate lending is by regulating lending, not by putting roadblocks in the way for lending in respect of our securities laws. That's what I'm going to do. Okay, thank you. Bill. Thank you very much, indeed, for the depth of the response there. There's a general agreement—in fact, it's a total agreement—that the £1,000 asset protection threshold for consumer statutory pledges is too low these days, and that's expected that that would be replaced anyway. Alternatives for achieving protection for essential household goods, including specifically excluding what are turned ordinary household goods, are creating an index-linked accelerator to ensure that the threshold is updated, which I think most people are looking forward to the idea of. Do you have any views on the strength or weaknesses of these approaches? I think, Mr Kidd, I've made the position of a Governmental centre quite clear, so I'm not going to labour the point, but I think I can see that, if the Parliament wasn't minded to take out consumers from the bill, then I'm a pragmatist, I would rather have something than nothing, so I would accept that that would be better, to increase the levels, the higher the better, if that was all that was on offer. It was important to ask that question, so that you get an answer. Thank you. From the Law Society of Scotland's perspective, our main drive in this is the business-to-business world. Our consumer committee said that it could live with an increased amount, so I'll go back to them, as I promised to Mr Belfer, and provide written evidence as to which of the three options the consumer committee of the Law Society of Scotland would prefer. I think that Mike is in a better position to comment than I am, but I think that there are various protective levels and mechanisms in other legislation, there are diligence levels and so forth as well, so there might be value. I think that there were some attempts to match them, so I think that there's some value in consistency, so that to know that your telly and your sofa aren't going to be taken for this well, is that not more easily comprehensible to people? I've not got the expertise to be much more comment. If I can just take us back to the law of recording and the registers in general, I think that we dealt with some of this in the opening questions, but just to get a wee bit more on that, it has been said by some respondents in the evidence that we took that the registers can never be comprehensive. Can you just maybe explain, and hopefully in Lehmans language, what are the limitations? They can never be comprehensive. You can only have a comprehensive register if the asset that you're dealing with is registered, so the land register in Scotland is comprehensive because all land is registered, or it will be at some point in the next god knows how long, registered on the land register with reference to OS maps. You know what the land is, you know who owns it and all dealings with it must be registered and unless that is registered there's no dealing. That is the only situation in which you can have a register that is comprehensive. Here we do not know, it's very hard to work out who owns, for example, cars are a different thing, but who owns this table, who owns a piece of intellectual property, an invention, unless you've registered it in a register, but we're not such a good example. Who owns these sheep, back to my sheep again? You cannot tell from a register who owns them, so you're starting off from a point of view that the foundations are away. Then you lay on top of that the practicalities of operating the register in order to provide a comprehensive nature. First of all, you've got to make everyone use it and we've discussed that already as to some of the disadvantages of that being the only way to do things. There's lots of history there which we would have to get on the register at some point, so the historical position for long-lasting assets of one sort or another and there are a lot out there of this nature would always create uncertainty. Then when you pile on lots of information that you have to provide with your registration so that people can work out what's going on from the register, that creates administration and expense and risk of inaccuracy and invalidity for everybody. I think that we've got to be conscious that we don't want to make the best of the enemy of the good as far as this register is concerned. If you've got what is basically needed, i.e. the identity of the assignee or the identity of the security holder on the register and mechanisms in the bill and in the documents uploaded through which you can find other things out, you know something's there, so therefore you know there's something probably there so you can do something about it. It's a lot better than we've got at the moment where you haven't the faintest idea. I don't know if this table has been hard purchased to the parliamentary body or something like that and I have no way of finding that out. I wonder if I can just put the question to Mr Daly in a similar way. Could more from a practical level of when you have clients coming into you and they say, well, do you think you're able to search the register enough to get the information, you know, so I may be somebody who doesn't remember I've got this or have that debt, will you be able to find my information by searching the register or is it something that would just not be something you'll be interested in when coming to advise clients? If it came to pass, it may be something that you would want to check as a money advisor, you know, somebody providing advice in terms of debt. But what I would say, Mr Balfour, it is quite remarkable how people who don't have very much actually managed their what very little they have so well. I mean, so you've, you know, because it's quite important to people, you know, when you're up against the wall financially. So I suppose in some respects, you know, clients that certainly I've acted for in difficult financial circumstances have the keep their papers, you know, but I take your point. It certainly could be something that would certainly be useful. Certainly from the business to business point of view, I can see the absolute logic in it from a lending perspective. Yeah, maybe I can just put this question to you as well, Dr Arman. Is, I mean, do you think we'll be sufficient information to identify individual claims or pledges? So, yes and no, is the answer to that. The no's are inherent in the nature of the registers, I think. They'll never prove that a claim existed in the first place, one that was assigned. I could register an assignation of the million pounds Hamish owes me to Mike. It never existed. So searching that, seeing that, will never show you the claim existed. Similarly, I could register my cold fusion, a pledge of my cold fusion machine, which again doesn't exist. So the assets don't necessarily exist. Even if they do exist, there's nothing to say they still exist later on. And there's nothing to say that they vested in the party that claimed to grant it at the time that they did. And there's some further legal limitations on it as well, which is that by, as a matter of law, they can in a business to business context, capture future assets so I can pledge all of my future machines falling within a certain category in a business context. So when one of those machines comes in, it's automatically covered by law by the pledge, but won't be on the register. And similarly, we can capture generic types of assets, all of which is important for flexibility, but will undermine the search ability of the register. Now, what comparable jurisdictions do, so there's a version of this in the US and New Zealand, in Australia and in Canada, they make the point that this is really a diligence exercise. You can search against a person and see if there is something there. That there is doesn't mean that you can take it on its face value. It means you've got to ask the person, okay, well, you've got this register says this. Can you tell us about it? Oh, that transaction completed. I've repaid the debt, et cetera, et cetera. Really a due diligence exercise to help you trigger and ask the questions. Questions that have to be asked anyway at the moment when you're lending, anyone's lending to anybody else, but are asked without that framework to check one aspect against. Yeah, I think that's helpful because obviously people may do it and then discharge the debt, but then forget to go back and take off. So that would be a due diligence that would have to be carried out. Yes, and it operates in slightly different ways. So your register of pledges in theory can be discharged. You can say, oh, the pledge has gone, but you don't have to. But the register of assignations and a lot of assignations take place in security. They'll just be events. So there's no way to register against an assignation that has been returned or retrocessed in technical legal language. You have to do another assignation register to say it's gone back. So that's a valid point for both registers and they operate in slightly different ways. But I would say that doesn't undermine the utility of it as a creation exercise. It will have effects on searching. You'll never be able to search against an asset and prove that it's in the right place or with the right people or the people it claims to be. I don't think that's a limitation. Well, I think it's a limitation, one that's inherent and acceptable, and one that perhaps needs a bit of publicity when the registers are launched. That's helpful. I mean, and so I suppose in regard to it, you know, we're looking at this bill that the Parliament will come to view in different areas of the bill. Are there improvements you think could be made in regard to the registers and how they will work? And do you think there's clarity or do you think everyone's gone away thinking I've got what I want and it won't be until it actually works in practice we find out who the winners and losers are? And do you think we need more clarity in regard to actually how it will work in practice at this stage? I think so. I think there's a risk at the moment that the search criteria are so all-encompassing that people think they can see things or be able to search things they can't. Like perhaps car financiers are looking at it thinking you'll be able to search against a chassis number and see if it's covered by the register, which they never will be able to do. In part, I think that can be helped by streamlining that provision of the bill to actually state what you'll be able to search against and clarify that against that backdrop. In part, I think it could be resolved by having clear registers guidance when the registers come up and running. But I think at the moment there is that risk, as you say, that people expect different things that might not be achievable. The registers are obviously developing the system at the moment and in some ways they are slightly in the dark, because the bill is very broad and the devil is in the SI, which will say what should be on it because at the moment the bill permits all sorts of things. I've suggested that the SI shouldn't be too detailed and prescriptive and I've said likewise to registers of Scotland. I think that both Jonathan and I have seen an early version of the register that they're developing and registers are engaging with the stakeholders, which is great, with a view to ensuring that what emerges at the end is going to be what works for people, which I think is important because it's possible to create a monster here, which doesn't help anybody, but they've been very positive in doing that. But as I say, in some ways they're slightly in the dark because they need a steer for some of the detail, because the SI could specify just about anything to go into the register. I just very quickly, because I appreciate the time that is going. Do you think that it should be done by such instrument or do you think that it should be on the face of the bill? Are you happy with an SI that will follow this bill if it's passed, or would you rather just see it on the face of a bill? We'd be happy with either, from the Law Society's perspective. Clearly the advantage of an SI is that it provides ability to change if what emerges isn't quite right, which wouldn't be the first time that something had been produced that didn't quite work. Perhaps narrowing down the bill a bit so that you would know what they were doing would readily help. I wonder if I could go on to one area at the moment, a man, which might be affecting Dr Hardiman in particular. One area that I just wanted to pursue before we come back to our areas is in regard to what's not in the bill. Obviously the Law Commission drafted the original bill, which had instructions there. The Scottish Government has come to a view that that's not got legal competency in working with the UK Government to see if it can do it through a different means. I just was wondering, from a law society perspective and maybe from a practitioner's perspective, do you think that it is legally competent to have this in this bill, and would you prefer it to be done through this bill rather than through an appropriate backdoor method? We think that it's very, very important that shares are included. They must be included. There's been a couple of legal developments that affect companies generally that basically make it less likely to make it less attractive to take a traditional share pledge over shares in a Scottish company. I've written on that elsewhere and can provide written further submissions if helpful on that. In respect of the method by which that's achieved, I think we're agnostic so long as it's implemented at the same time as the bill comes in. If the quickest way is to achieve a section 104 order, I think, then the Law Society of Scotland would be as happy with that as it would be with it appearing in the bill. We didn't look into this in great detail, but when the Scottish Law Commission first produced its draft, we didn't comment that we thought it was outside the competence of the Scottish Parliament. Do you think that it is within competence? That would be something that I would need to look into further details on. If you would mind coming back to us at some point, I would be helpful. I'm a practitioner and not a representative of the Law Society. I am also not an expert on legislative competence, although I will confess that I was surprised when the Scottish Government took the view that it wasn't within the competence of the Parliament to do that. Clearly, there are various things that overlay shares and other securities that are Westminster competence. The commission's bill contained lots of stuff on financial collateral and so forth, designed to fit in with the UK financial collateral regime. Absolutely, there would be an interest of the UK Government then to look at that to ensure that what was happening here wasn't causing problems for financial markets, both for the financial collateral regime and the crest regime for dematerialised share trading. Yes, there are bits where there is dual competence, although I think that you'll be more familiar with this than I am, where the competence passes each other and overlays the other. It's like consumer competence. There's CCA competence at Westminster and you can't do it because it's bad for you as a consumer. I think that there's overlap with it there now. I can't really take a view because it's for the Scottish Government and the parliamentary authorities to take a view on what is competent or not. I'm conscious that we're up against it in terms of times. I'll try and be quick on enforcement issues, but they are a major concern. Mr Daly, you have raised about section 63 in titling accredited to serve a pledge enforcement notice on a debtor if payment has not been made. Section 65 enabling an authorised person, a sheriff officer, to enter someone's home to remove movable goods, subject to a statutory pledge in section 66, giving accredited to the right to sell someone's movable goods at public auction. Of course, the main concern being consumers, but also potentially a small business that's a critical piece of machinery and might shut the business down or something like that. There isn't necessarily that the range of protections needed that could be something as simple as one mispayment could trigger an enforcement action. So really just looking at how the bill needs to balance protections against unjust enforcement with the needs for the statutory pledge to remain attractive to business lenders, do you think it strikes this balance? Mr Daly, if you'd like to start. A really, really important question, Mr Sweeney, because the short answer is, I don't think it does. Again, that comes back to the submissions that are made in relation to the reasons why I don't think consumers should be in there. I think that you had mentioned last week Mr Sweeney to the Scottish Law Commission on the reference to the diligence aspects of the bill in sections 63, 65 and 66 being reminiscent of the diligence aspects of warrant sales. I did say that and I stand by that. I'll explain why, with the greatest of respect to the Scottish Law Commission, who, as I recall, were not in favour of abolition of the pinnings and warrant sales back in the day. I had drafted that bill for cross-party members back in 1999, yes, I've been around. I remember the Scottish Law Commission had actually drafted the SSI to increase the exemptions of goods, so that was their initial position. The reason I mentioned the pinnings and warrant sales is that what was interesting about that was that you never really got that many warrant sales in Scotland. In 1999, there was about 500, but you had 23,000 pinnings and it was the threat of that form of diligence that really put the fear of gods into people. It was why this Parliament voted to abolish and improve consumer protections. I just don't think that, in the 21st century, being able to apply to the court to recover goods within somebody's house is something that we should find acceptable. Partially, if we resolve the consumer issue in respect of the grant of security, that resolves a large chunk of it. Enforcement follows the grant of security, so if we make sure that those who want to protect are adequately protected at the start, that reduces the need to protect them at the end. Secondly, it's worth bearing in mind that once the debt is there, there are existing enforcement mechanisms that you can use. If I owe £1,000 in respect of a television, there are methods in which I can proceed towards your insolvency. I don't know much about personal insolvency, but once debt is owed, it needs to be repaid or can be recovered in certain mechanisms anyway, so that just add those two points to mind. If you have granted a security, you have to have a method by which you realise the asset that is secured. If you are allowed to grant a security over something in your house, then it's not a very good security if you can't enforce it. Sure, protections around enforcement are important, particularly for consumers, so it needs to be addressed. Whether that is actually the return of funding at once, there is another matter in which various people rent all over the place on that as to whether or not it is. The auction is only for the purposes of the creditor buying it themselves. I'm not sure that that analogy holds, but clearly going into someone's house to get something, even if it's a specific thing that has been secured for the purposes of a debt, is an issue. At the moment, of course, you can HP your telly and they can repossess your telly. I'm not sure that it's radically different from that. Clearly, there are recovery issues around that. It is radically different with respect to Hamish because under the Consumer Credit Act 1974, if a client comes into me and says that my car is getting repossessed or that my big expensive telly is getting repossessed on HP, I have the ability to apply to the court for a section 129 time order under the 74 act, and I can vary the ability to get a warrant from the court. Basically, I can force the creditor to accept a repayment plan, and I can retain possession of the goods, and that includes motor vehicles. It's interesting that you raised that, because we've covered so many different issues, but it does occur to me that, if consumers are left in, the obvious route will be motor vehicles. All I say to the committee is that we've already got higher purchase in Scotland, which works really well and protects consumers with motor vehicles. Even if they get into financial difficulty, they can keep their car using section 129. Indeed, one of my colleagues at Government Law Centre in Govanhill Law Centre, part of the GLC, applied to the court to do that. It was very interesting in case because the member of the public had applied for what he thought. He didn't know about time orders, but he applied for a time-to-pay direction, which is under the Dair Scotland Act 1987, which doesn't give you the protection to retain the car, but it just gives you time to pay off when you have to give back the car. He didn't fully appreciate the power that exists in terms of the 74 act, so we managed to save his car. We will talk about that. One could amend the enforcement provisions. Again, the comment that I made was that there may well be CCA amendments that would be sensible to consequentially make it. Although I should say on enforcement more generally that there is a huge spread of situations where there will be enforcement, and there are situations where quite complicated protections are sensible, and there are situations in which speed is critical. Once we get shares back in, for example, when you want to enforce when the market is falling, you need to enforce now. You need to enforce now and you need to enforce now without having to jump through lots and lots of hoops before you do it. You may be able to fight about it afterwards because you can enforce the wrong value or something, but there is a spread. That is addressed in the bill, and it is important to remember that, and not focus only on consumers, because I think that the benefit of this is principally for businesses. Just to build on the point that Mr Daly made, looking at section 64, even if an individual consumer could agree with the creditor that a court order was not necessary and that could bypass the protections even of a court, even then looking at the issue that has been noted by other respondents to the consultation that where a court order may be required before enforcement against a consumer, there are no obvious powers for a sheriff to rely on providing protection. Section 62 would allow enforcement against a pledge that has never been a failure to perform the secured obligation, which is obviously wildly open to interpretation. To the point about the 74 Consumer Credit Act, it does not seem clear that there are protections within that which would provide protection in relation to specific enforcement. Based on those points made, where a consumer has breached the terms of secured loan, it is not clear what arguments they could use in court if they even got to court to persuade a sheriff to stop enforcement action. Do you have any particular views on how we enhance that provision in the bill and what we could rely on in terms of consumer protection legislation more generally that could be referenced in the bill as I get a safeguard? Again, the risk of repetition. I think that I have set out the case, which is the easiest thing to do is to remove consumers altogether. I do think that there is a very powerful case for the reasons that I have set out, but if the Parliament was not minded to do that, then obviously, yes, you would want to increase those protections. I am conscious that it is quite interesting, because when you pay a certain amount under the Consumer Credit Act 1974, it then becomes necessary under that act for the creditor to apply to the sheriff in order to be able to come and recover your car, but you have to pay a certain amount. Interestingly, there is some Scottish common law that says that you could never recover a common law if you just go round and get somebody's car. What is interesting about this bill is that, for sole traders—let's say that we have a taxi driver who wants to raise money in terms of a statutory pledge in terms of their motor vehicle—my understanding of the way that it is drafted is that, if they get into a default situation, somebody can just come round and just take the car, and obviously they would need the keys. However, they do not need a court order, I think that I am right in saying, under the bill as drafted as a sole trader. That is right. I think that we talked earlier—I think that Mr Mundell had raised the issue about SMEs. Even from a point of view of sole traders, do we need a bit more protection? I would argue yes. There are some protections already in there for individuals. They are weak and they need strengthens on the lines that we have talked about, but there are differences for individuals than sole trader—well, for the consumer aspect. You have to specifically list your assets, so you lose the flexibility to have categories of assets, which can be more in the corporate lens. These will be securities under the Consumer Credit Act, and so, whilst you have issues as to whether the Consumer Credit Act protects enough, nevertheless you fall within that regime and the court order of course being required to do that. A final thing worth noting is that under section 624, creditors enforcing must conform to reasonable standards of commercial practice, and therefore anything that is deemed by a court to be unreasonable in commercial practice in respect of wakening your goods is going to be something that a lender is going to breach your duty in respect of. So there are protections in there, but I think that overall the message that the three of us seem to be united on is that if we resolve who can grant the securities and what they can grant the statutory pledge over, other things fall into line. It was our interesting point that was raised about legislative competence. I was just thinking internally, as this conversation has developed over this morning, about interest rates. You mentioned the Roman cap on 8 per cent. I don't know if it's legislative competent to put a provision in the bill where you could cap a maximum APR that could be charged in relation to any form of security. I think that that would be reserved because it would be getting into, in terms of finance and consumer credit, it's clearly Scotland at 1998 schedule 5. Much of that, I would like to argue. At one point, when we were trying to do something before the FCA acted for payday loans, I would have been working with the late Margo MacDonald on this, because Margo had sort of said, what are we going to do with these payday lenders, and we couldn't do what you've talked about, but we did think about potentially licensing, so we were hatching a plan on that basis, but then the FCA came in and sorted things out in terms of payday lending. It's an interesting potential around the idea of licensing, though, in order to provide this service product to the Scottish market, though. That was a question, I think, as to whether or not that's competent as well in the financial sector or its FASME stuff, so I think probably not is the answer to that. There are protections on extortion at credit transactions that you can challenge transactions if somebody becomes insolvent or to wait until insolvency, but you can challenge them. Again, I think that restrictions on debt are best restricting debt rather than necessarily being inherently linked to the security rights associated with them would be my personal view on that. I think just to make a brief point, it's just the point, for example, if you wanted to buy a telly from John Lewis, you would get 0 per cent over 24 months. It's an obvious incentive for you to make the transaction and they get the sale, and it's a patient way of financing it for yourself, because it's a good deal that will last a long period of time. It seems absurd. In the face of it, it wouldn't seem a problem if I wanted to go on holiday, I can stick £1,000 against my telly and go off on holiday and pay it off over 24 months, and I've got free money, basically, to finance something that I want to do in a whim. Obviously, if you've got this interest rate liability, then that's clearly going to be targeted towards people who are financially distressed and are much more desperate in the need of money to charge at such an onerous rate of interest. It just seems like it will be inevitably targeted at people who have no other avenue to access cheap finance. That's easier. It strikes me that a lot of the mainstream lenders will use it as well. Why wouldn't they if it was more convenient? Actually, you may find that your licensed pawn brokers, to the extent that they can do it in the bill, will do it, and they'll be able to find their pawn receipt because it will be online somewhere. I think you're absolutely right. If you think about it in terms of mainstream financial services, we've got a very robust market in the UK. Consumers and businesses can access all sorts of different products unless they've got a really bad credit rating. That's where it disappears off the cliff edge. I think that that's the point that you're raising, Mr Swinney, which is that, in a consumer perspective world, where is the incentive for any lender to make money out of this from consumers? The only way is done. It's not just me doing this as a hypothetical, because this is what's happened in England and Wales and Northern Ireland, whereas the predatory lenders will come in and the only way they can make money out of this is by charging hundreds of percent APRs, and that's how they make money. So that's not a benefit to anybody, apart from predatory lenders. Before we close the session, do you have any final questions? I appreciate it, and I don't want to open a tin of worms, but, as we heard last week from the commission, this type of legislation comes around once in a generation, however you want to define a generation. It doesn't come around very often. I suppose that, if anything, you think you thought could have been in a bill that isn't there, that it would be worth looking at, and, again, without opening a whole tin of worms, yes or no, we do. You did mention flows in charges. Would that be an area for partnerships to look at? Is that something that would be worth looking at, or are we better just to leave as is? I was just going to say, so obviously it's clearly an area of law that's very complex, so one always cautions against trying to introduce something very complicated, because this has taken years. The law commission had been working on this for a long, long time. I certainly think that some of the suggestions that my colleagues have made in relation to technical aspects, hopefully, can be taken on board by this committee. I can see absolutely the value in that. I can see the value in the bill itself with respect to business to business, but not consumers. In terms of the floating charge, there's an argument that this will make the floating charge potentially less popular. It probably won't, but there's an argument that it might do, which, as somebody who's just edited a book on the floating charge, is rather frustrating. Nevertheless, I think that it's possibly worthwhile thinking that this is the functional replacement for floating charges in a business to business context. What that will mean is that a floating charge should become less fundamentally important to Scottish corporate finances at the moment and more a sweep-up like they have in England as part of the insolvency processes. I would say as well, noting Mr Daly's point, that this has taken a long time. It's now five years since the Scottish Law Commission Bill was published, five years before that, since the initial discussion paper. I think that there is a risk that the perfect is the enemy of the good. We obviously have major issues here to protect against consumers being the primary one to protect them adequately. However, in terms of more practical operations, I think that there's an argument to have a slightly iterative process where we get it on the books and then work out how to smooth it out once it's launched. Just the shares, I think, which we'll discuss. Thank you. Before we close, are there any final comments that you would like to highlight? I start with 7. Mr Daly. That's very comprehensive. Thank you. Dr Hardman. Just the Law Society of Scotland appreciates the opportunity to provide evidence, and thank you very much for hearing for us. Thank you. As indeed do I, nothing to add in my work. Okay, thank you. With that, I thank Mike Daly, Dr Hardman and Dr Patrick for their help this morning. The committee may fall up by letter. I know there's one or two points this far, but we might want to do another letter with any additional questions stemming from today's meeting. With that, I once again thank you very much, and I will now suspend the meeting briefly to allow the change of panel under five-minute comfort break. For our second panel, I welcome Miles Fitt, who is the strategic lead for financial health at Citizens Advice Scotland, and Alan McIntosh, who is an approved money adviser at Advice Talks Limited. I again remind our witnesses not to worry about switching on your microphones because that will be done by broadcasting. Also, if you would like to come in on any question, please raise your hand. I'll start off with some questions before we go into colleagues. First of all, on the submission from Citizens Advice, I notice that there's quite a lot of reference to the cost of living crisis, which clearly we are living in at the moment. However, the bill, as proposed in the financial memorandum, indicates that, if the bill is passed, it wouldn't be introduced until 2024. Certainly, with some of the commentary from Citizens Advice, that clearly appears to be focused upon in the present day, as compared to what we would all hope by 2024 that we're not in the current cost-loving situation. Would you accept that, Miles? I think that the cost of living crisis could carry on for quite some time. I don't think anyone's got a crystal ball as to when that's going to end, so we think that this bill, even in happier economic times, isn't necessarily the right thing for consumers because of the of what it brings and the risks it brings to the consumers. However, in economic difficult times, this has made even worse having a bill like this that brings consumers into the equation. I'd like to set the scene, if I can, on where we are with this. I'm going to read something out because I want it to get crystal clear to the committee, and it might help as we proceed with the rest of the discussion. I want to outline the view of Citizens Advice Scotland, but I know that it's supported by many in the debt advice sector. Essentially, we do support this bill in terms of it being for businesses, but not for consumers. We see the need for business to have this legislation, but we don't see the need for consumers. We do not understand what the policy gap is that the bill is trying to fill for consumers, and at best we think that this bill is unnecessary for consumers, and at worst we think that it's harmful. We believe that the bill runs a great risk of creating an unintended consumer harm for several reasons. First, it opens up a new route by which consumers can borrow what assets they need and may lose and which may lead to debt should they be unable to repay that loan. Secondly, it allows consumers to borrow assets that they would like to purchase but may not need or have the ability to repay. Thirdly, and most importantly for us, and it's been mentioned earlier on in this session, it will attract high-cost lenders to target vulnerable consumers who are unable to access mainstream lending, or people who are simply seduced by the effective marketing of such lenders. Do not underestimate how effective the marketing is from those high-cost lenders, and they will be much better at it than the marketing from any mainstream lower-cost lender. Fourthly, and this is absolutely critical, and it was touched on earlier on, those high-cost lenders will create a product that is beyond the reach of the FCA regulation, and that is a critical point. That will lead to years of vulnerable groups getting into financial difficulty until the FCA catches up with it, so buy now, pay later is a good example of it. There are no protections in this bill for that scenario where there's an unregulated product by high-cost lenders that target vulnerable people, and we think that's a critical weakness within this bill. Finally, the definition of vulnerable consumer has widened. It's not a narrow segment. If you're looking at the cross-the-loving crisis, there are more people who are falling into financial difficulty. Traditionally, what we're having is people who are in debt, getting more into debt. You've got people who are just about managing who are now getting into much more financial difficulty. You're also getting an additional group who are, you could say, comfortably off, who are starting to get into some financial difficulty. That idea of vulnerable people is quite a wider group than it might be traditionally has been, which is going to be a problem for high-cost lenders targeting such a group. As a consumer organisation, we don't believe that consumers have any place in this bill, and it should be removed from it. We think that consumer need and behaviour is very different from business need and behaviour, and our position here is very wide and very strong support from the money advice sector, including step change, money advice Scotland, Christians against poverty, money advice trust and from the great many money advisers that we've spoken to over the past several months. We think that removing consumers from the bill would alleviate all the concerns of the unintended consumer debt net while achieving the bill's main aim of making the law more modern and less restrictive for businesses. I'm pleased to be able to say that to you, and I hope that that helps to frame discussions. The concerns that you've raised there, but also in the written submission, were raised directly with the SLC when they were going through the process and when they produced their draft bill a number of years ago, since advice contacted the SLC to raise concerns. I think that you raised an interesting point about engagement in this entire process and this entire subject from going back 10 years from the start. I did a bit of homework on this. There were 67 opportunities for organisations to engage or 67 examples or moments where there was engagement by stakeholders. Only one was for our consumer organisation and that happened to be Citizens of I Scotland a couple of years ago, and that was in relation to the economy committee inquiry. The rest were all academics, lawyers, legal firms or financial industry representatives. We have an issue around the fact that organisations that represent the consumer or the money advice sector haven't barely been involved. Now that issue has come as a bill that has been presented, you are seeing a lot more interest. As we explained why, it has grown into a bit of an issue now, and it has done with us. We did get engaged a couple of years ago, and we put forward the view that consumers shouldn't be in the bill. In terms of your organisations, you have argued that the statutory pledge provisions could open up a high-cost credit market and you just touched upon that miles, targeting vulnerable customers. Why do you think that this is likely and what would be the potential impact on the people who become your clients? We can look at comparative studies with different legal systems, we can look at New Zealand, we can look at America, we can look at Canada, but we don't really need to look that far. We are already part of a single financial market, which includes the whole of the UK. At the moment, I would say that there are a lot of those types of companies that would give these kinds of loans already, swimming about sharks. I was maybe using an expression that there are a lot of these kind of sharks swimming about in that market already. The reason they don't come north very much is because the waters up here are quite interpretative to them. They are a bit colder towards their business model. If we were to create a statutory pledge, which is proposed, which is equivalent, roughly of the English bills of sale, then I think it won't take long for some of those sharks, those credit companies to start swimming north into the Scottish market. They won't need to get any further regulatory permissions because they're already authorised with the FCA. The only thing that's really stopping them moving out of the Scottish market at the moment is because we don't have the bills of sales or something similar to a statutory pledge. I think that's the danger. The danger is that if we create the environment that is optimum for these companies to start moving out of the Scottish market, they will. We don't need to really look far as well to understand what the effect of this is because citizens advice, obviously citizens advice Scotland's partner organisation in England has already done a lot of work into bills of sales in these companies and what the effects they have on people. When they talk about these sort of, in a lot of times in England, when they talk about these types of securities, they don't call them bills of sales, they call them logbook loans because that's effective, what they are. It's a logbook loan security and you speak to English advisors, they'll talk about logbook loan security and that's really a bill of sales, so that's why what we're saying is we believe we understand how these bills are going to, these securities are going to be used in Scotland once this law has changed because we already know how they've been used in England and you know, as soon as we create that environment, it's possible for these companies to operate a bit more easily in Scotland than they believe that they'll come in. So a lot of the other sort of things that have been found with these companies is that there are these types of securities, it's a bit of a mis-selling, it's a bit of a consumer detriment and that's the experience in the English law commission when they actually did their investigation into bills of sales. That was their findings basically. It's a product that's used against people who are vulnerable, it's a product in the consumer context, it's a product that's used against people who are vulnerable, it's used against people who can't access credit in any other way that would probably be better going to the local citizens advice bureau or the local council because there's probably other types of assistance available to them such as the Scottish welfare fund or there might be debt solutions available at the debt arrangement scheme in bankruptcy and that's another thing that these types of securities need to be in mind. A lot of the times the people that actually take these securities out, this is a right, so this is after they've had the credit cards and the loans and everything else and they can't get the credit rate that's been damaged and they can't get credit anywhere else then they would maybe go and take it a statutory pledge security because that's the only credit they're going to get and I've seen this to Mike Daleham when I was coming here to the train and I said oh I'm actually one of these people in Scotland that's probably still owning their car because the vast majority of people can't finance these days but I said I could raise finance for my car tomorrow but why would I do that? I mean I would need to be basically totally capable of getting credit any other way before I would ever go and raise security on my car because I'm going to pay that 300-400% interest because that's what that market is so I think and the problem with that is is when these people take these securities out after then you'll go to the local citizens advice bureau or money advice centre to try and get help then this creates a problem because at the moment we could maybe put one of those debts in the debt arrangements scheme or we could put them in a bankruptcy but the problem is once out there are securities put on one of these you know if somebody takes that security for one of these debts if you put that debt in that bankruptcy they'll reposition the car if you put that debt in the debt arrangements scheme they'll reposition the car so the reality is it actually creates problems for money advice services if we see more people taking these types of debts out even when they come in money advice centres to try and get help we'll struggle to help them because these types of securities they give the credit as a preference so I would really urge in the supportment miles said of support the miles Mike Daly said in order that the consumers are taking out the salt together because I don't see any benefit just like that so you're asking why would high-cost lenders come into this because it's what they do this is going to allow people to use an asset to raise money which they can't do at the moment so what you've got is their predators they prey on people's instinct so people's instinct to say actually I've got something in the house that I can actually you know I know there's going to be thresholds but the point is that the high-cost lenders prey on that whole consumer motivation about saying whether people who actually might want to be seduced or tempted into getting some money on the best on an asset it could be the asset that they need it could be that they're doing it because they've got no other means of of raising that money they could be there for desperate measures so they're preying on that right so that's the first thing we see time and again they do this all the time and thankfully what we've got a situation where is the this industry high-cost winding industry is actually in the coin because it's getting regulated and or some of the companies are going out of the bus which is good this bill will be a shot in the arm to the high-cost credit industry because they're always waiting for the next opportunity so we've seen it with likes a one guard we've seen it with you know it's that similar loans we've done it with on doorstep lending from provident and so on like they pop up right and they will see this and they will pop up again and that is why it is it is dangerous and I say as well what they'll find is they'll find a product which is beyond the reach of the fca right and once they do that this parliament has no control over that and can't regulate that and we'll have to be asking the fca to do so and the fca we take a few years to catch up with this and by that time what's more vulnerable people have been sucked into a really poor form of borrowing. Can I just say, my view is absolutely correct what we find in this sector is that the markets and the finance companies move a lot faster than the legislator and the regulators do so what we end up doing is there was never a law created to create payday loans that they took advantage of the opportunity there was never a law created to create the sort of guarantor consumer guarantor loans they just took advantage of it there was never a law to create the pcp market that exists in high purchase law that had been there for 40-50 years there was never a law to create the buy new pay letters they just took advantage of it and all that's happened to the last 10 years as miles will tell you as the fca has been chasing them and if we make this law because we know how we know what the consequences are we don't need to look far we can look south of the border and we can see what the consequences were if we introduce consumers into this for statutory pledges we know what's going to happen and miles is absolutely right the regulators are going to be chasing them and I just think there's no why why we do that there's because there's no real evidences I think my mouth made the point there's no real evidence that we need this there's no evidence that we need this for consumers for business absolutely I'm prepared to support the you know I'm going to get involved in the business side that maybe other than the sole creators but and they'll have no interest in the business side but in terms of consumers there's no evidence that we need this this is like a this is like an academic sort of you know it's aesthetically pleasing that there's a gap in law in Scotland so we need to fill that gap that's what this is there is no empirical evidence or research done to show that we need this kind of security in Scotland for consumers we don't see the part the the need for it is great like we did in our view about the risks and the harm that could come for it if you were to say actually if it was like you know like this this is a really strong need for it and we're saying okay there's a strong need but there's a strong problem that might arise from it then you're into a different debate about it but we should don't see that there's an overwhelming need that would outweigh the risks that that we are foreseen from this. So it's here suggesting that the other stakeholders have suggested that the existing protections in the consumer credit act and also via the FCA are there and it's certainly from what we're both saying today that those regulations and the FCA that they're not strong enough. I think the issue here is the type of product this is a security right so there's different types of products so obviously under the consumer credit regulations you've got higher purchase which is also a type of conditional sale which is also PCP which we use to buy a car and that's called a quasi security and that's widely used in Scotland over 90% of all cars that are bought in Scotland are bought using higher purchase or PCP very few use actual owner cars now and that's the reality but you know and it's bought using what's called a quasi security and the reason it's a quasi security is because you act whenever on it until you pay it off but it's a real security as you own it but you can't really sell it because that's a full security so what does statue pledge is a real security it's a fixed security but what's actually we don't have that in Scotland over movable property and that's also at the point of the billers but what we do have is quasi security and quasi security are widely used and in quasi security there's lots of protections for people so you would need to use I can't I mean a fear that it's possible you would use a quasi security and a fixed security but there's no real reason so to do a statue pledge which you're going to use is a fixed someone right under the consumer credit act that's what you're going to you're going to give somebody a fixed someone and then you're going to take a statue pledge over it the big difference is and does higher purchase PCP quasi security is that kind of stuff that's regulated by the consumer credit act there's a lot more protections and Mike has just might give you an example of the person that sells a car buys it basically takes finance out in the car for three and a half thousand gets out of trouble making the payments the car gets taken off him and it gets sold for five hundred pound and he's based maybe still left on three thousand that was the example might give that's a fixed someone right that's that's how I fix some that's how I fix someone would work with a fixed security the person would be left to put a car maybe they get to sell the car for five hundred pounds so they go so the based on it the car's worth three and a half the finance is worth three and a half thousand the car gets repossessed it gets sold for five hundred you're left with three thousand pound of debt you don't have a car and you got three thousand pound of debt that's how I fix someone works the way are we are higher purchase would work as you've got a three foot three and a half thousand pound one half of that is one thousand seven hundred sort of one thousand seven hundred fifty under higher purchase you have a right to volunteer surrender so you know you're getting into trouble you say I want to give this up because I know I can't pay it you give them the car back but maybe you've maybe paid five hundred there is your law but 1250 because under higher purchase under the volunteer surrender rights you can actually hand the car back at any point and no reliable for more than half the full amount that's owed under the agreement less what you've already paid to it you can't do that with a fixed someone so the type of products that this will be used with and I saw that that's quite technical but the point is the type of products this will be used with I know there's no they don't have as much protections as the type of products that are currently used in Scotland which is higher purchase and quasi security they have a lot more consumer protection built in it so you're going to create a situation where people can use types of and I think it says it in the law commission's report they actually say in the report that higher purchase car finance companies might prefer this type of finance of course they would you'd be so it's in their interest do you know what I mean because it's actually higher purchase then current types of products that are used offer far more protections towards consumers it does nothing for consumers and I would say that adding that point and I'm going to be like a stuck record on this is a product will be designed that's out with the fca regulation right so you can talk about all the protections you like that are in the bill they want to apply to that and that's the risk and that's the danger so the fca has announced its intention to induce a new consumer duty which will make it easier to take action against harmful products does this allay any of your concerns no I don't think so because I think that the problem is is actually um I mean that there's nothing wrong with a fixed sum loan I mean the fixed sum war take off I go to a bank and I take a loan out it's a fixed sum loan there's nothing wrong with that you know there's nothing wrong if I go to a finance company and I take a loan out it's a fixed sum loan that's what that's what the fc have it's a it's a bank loan you know it's a it's a finance company loan the problem is is we're going to give them the power to secure that and it's this pattern that's going to keep that power to let them these people secure that over people's moveable property and there's no need for that there is no need for that if I want to buy a car if I want to get a logbook loan just now I can take out my phone base you know I can go on my phone now I will have the money paid into my phone by the end of the day if I want to take some finance in my car that's possible just now what's going to happen though is that finance company's going to they do it online you know what I mean in the target scottish customers and they'll tell you you'll get paid in the same day but the way it's going to work is what's going to happen is I'm going to sell them my car and then they're going to give my higher purchase agreement back with the protections that come with higher purchase agreement and the money's going to go into my bank account so in england it's a bill of sale so it's one transaction in scotland it's two transactions so you know it's a so it's a sale and then a higher purchase back I asked i'll keep the car I've got the money in my bank account by the end of the day now I know the law commission says this makes it unnecessary with complex and it's more cost involved but that's not true because if I can get the money by the end of the day how complex is it the difference is and I accept that this bill started its life along quite a bit over 10 years ago but the difference is as well no after Covid I turned down electronic signature on my phone that's just costless and you know and it's one signature and it goes on both transactions so there is companies at the moment that will say to me if I want to raise finance in my car I can do that and I can get it at the minute and they'll get paid today and as I say I do it today they say they'll pay me today but the point is it's it's two transactions so it's basically I sell the car to them and they basically I keep the car I keep possession but I sell them in the car they become the owners and they give me a higher purchase agreement now halfway through this finance agreement I realise I can't afford that I've got the right to volunteer surrender and I can give them their car back and I don't need to pay any more than half the total amount that's so less what I've already paid if I take it affect some loan where in the situation Mike Dale was talking about where they can come and take the car they can sell the car offset that against how much I'm owed but I've still got to pay the rest of the debt that's no man's trust I would rather have a higher purchase agreement please yeah consumer duty it is a good thing um I the only point I'm going to add to what Alan said is is well it um we don't think it'll cover the example I'm continually giving you about um products that are beyond the reach of the fca being created so good thing but we don't think it will cover that okay um thanks Oliver thank you uh convener I just going to push it back a bit on the same sort of line of question asked in previous panel um and I'll say the same thing to start it off I mean I see uh you know people accessing your bad you know bad lending you know all the time you know in my constituency work I'm not kind of you know it's not I think these products are good but when people are often in you know desperate straits you've said that yourself they're at the end you know of the of the kind of you know safer products that they can access and I just wonder you know it's trying to balance that moral kind of question round you know why do we think it's it's okay to let people access existing products you know but not this and again the other bit is why you know do we we know there's a problem with with unregulated debt a black market and debt you know people borrowing money um you know from illegally um do you think that there's any advantage to to people in that very vulnerable situation to bring some of this into the into the open um and I guess on your higher purchase example for the car there are people you know there are people who can't access higher purchase because of their credit record are they not allowed to borrow at all I mean that's yeah I mean I just it's not my own view but I just feel in scrutinising the bill it's to to push back a wee bit on that and just see what you see I think it's a very good point and I don't mean to make my first move I mean if you look at for example um to give an example uh I don't know um bright house right bright house for the the the the entire purchase known the household goods and bright house went out of business as we know them in administration and they went into administration because there's so many miss seven claims against them and the financial ombudsman were upholding something 80 or percent of their claims and they went right by house like provenant like longer like you know they ended up with administration basically going out of business so that was because they were giving high purchase loan agreements to people that couldn't afford it now actually so the first point is whether you know that there is action to be taken against these companies because we've got the wonders out of business we've got the provenance that our business looks similar to business amigo a hanging on I think they're trying to get a scheme of arrangement for the courts in England where they'll pay a reduced dividend to their reduced amount of compensation to the people that claims against them but you know there's so many other companies on bright house not different ones that went out of business and they went out of business because they were lending people that based on the financial conduct authority says they shouldn't have been or the financial ombudsman services they shouldn't have been lending to because they had bad credit reasons they had default notices who knew they weren't going to be able to afford and if you'd done enough basic affordability check you'd have looked to these people and says you shouldn't be lending to them right so the point is that's who these creditors are that's in a lot in the market in business and I think my point is making as we can be creating an opportunity for these to give them a shot in the arm and create a new product when the financial contract to 40 spent 10 years trying to basically get them out of the market. The next issue though about you know do we push people into the arms of their illegal lenders as well but I remember speaking to I think Glasgow the Scottish loan sharks organisation you know the camp I can't remember the name anyway but they specialize in tackling loan sharks in Scotland and their point was that when Brighthouse they went out of business to support they might see a big upsort and sort of or when the payday lenders went out of business to support they might see a big upsort and people using payday loans but they did this year but the thought they might see had been Brighthouse but so the point they're making though as people take paid illegal loans out tend to be a certain type of people that are in contact with illegal lenders do you know what I mean so you see that just because all the payday lenders went out of business didn't necessarily see a right, didn't it result in necessarily arising illegal loneshark and increase in loan sharks but you know there's certain types of people that might use actively access that credit because you need to sort of know how to access that credit I mean most of us probably would know how to access loan sharks so I think there is a danger but I think the danger that there is also a danger that if we use that argument to actually no protect people and end up using these legal lenders but equally you know they're causing a lot of consumer detriment I think the real key here is that there's actually a lot of help for people if they can go to a money advice centre we can make people bankrupt you know minimum asset bankruptcies we've got the debt arrangement scheme we can bring people's payments down if somebody's saying I can't afford to pay enough because you know I'm all paying £600 a month to my monthly debts £600 a month to my debts so therefore I'm going to have to go and borrow more money this month to own my car to pay my rent the point is if they work the citizens advice bureau they can maybe get a debt arrangement scheme and maybe they're only paying £200 a month to their debts their interest and charges are frozen if they're you know maybe going to a minimum asset bankruptcy you know their debts are going to be written off after six months because they're on benefits do you know I mean so there is I think the key thing is if people are not suitable for borrowing they need to get them to the help also there's things like the scotch welfare fund there's crisis grants there's you know there's fuel banks and stuff there's other things that we can do to help people and I think the danger is is miles it's all about marketing these people these companies these high-cost predatory renders will target vulnerable people whose interests we could probably be better helping better if we could get them to advice agencies or get them to the local authority with community access with grants and stuff like that. Can I add in? Is that okay? Can I add in? I suppose that the question of us is that who's going to use this option we're not convinced who's going to use this option of using an asset to secure lending on because we see how I did more an interruption but I mean obviously that already happens with with POM broken it's just that people have to give the asset away and they're not able to use it but you think that that's better and that's the key difference because the key difference here is that the person gets to keep something that they're arguably needing when you put something in a POM you probably don't need use of it and you don't still have it so the temptation from a consumer perspective is that you're going to get to keep the thing that you're securing a loan on and get that money that you're looking for but you still have the ability to use it and that opens up a consumer behaviour of going this isn't you know this is tempting this is tempting a point I was just going to make was if you're someone who can go down this route the chances are you can go down the route of borrowing unsecured as well so why would you choose if you can borrow unsecured why would you attach it to something that you need who's this for I'm not convinced we're not convinced and we don't have to maybe have to see it in practice but someone borrowing from a mainstream bank yes there might be a lower cost of of the lending but why would you do that when you've got other options so the question for us is who's this for what's going to turn into in reality and it'd be for people who cannot access mainstream lending and that takes us back into that high cost yeah I would just add mainstream lenders aren't going to touch this they don't touch it in England and no touching it in Scotland so any suggestion that mainstream lenders might get into this and the reason why is because if you need this kind of security removable property you probably aren't going to pass an affordability test and you probably shouldn't be getting a loan in first in the first place and mainstream lenders respectable lenders are not going to touch this for that reason because they're not going to lend to these people because they're not going to rent to them because it's not affordable it's not because they want the security then that's going to change it the people that are going to use these are the people that are based on making miscellaneous loans to people that can't afford it no thank you i is helpful to have that on the record the one thing i'm not asking you to come back on it but i mean people people do pawn things that they do need because they're desperate so i think it just you know people you know i just i just think it is that there's a question just round you know what's best but you've been very clear that you think this is the wrong the sort of wrong approach so it was just to ask on some other questions on on assignation quickly it's sort of come up in the first session and it goes come back in some of the responses we've had but i've wondered how you felt in relation to intimation you know and whether how the bill's currently set out causes you concern in terms of notification in particular yeah like we believe that the debtor should be notified it's as simple as that and we want them to continue to be notified and we don't have any national issues with anything else we don't want anything else necessarily changed in that front in terms of registers and so on although previous session we're suggesting there's some weaknesses in it but look we believe that debtor should be notified it's i think it's morally the right thing to do i think it's practically the right thing to do as well so you think they should be notified before it goes on the register yeah yeah they should be notified they should be notified and that lack of notification does make it difficult for when clients are coming to see re-service in the case it's all about much of it is about identifying who people owe debts to if it's getting passed on just simple notification that's that's all we're asking for you know we should keep that that's again very clear and it doesn't offer you i mean again obviously addresses some of the concerns but you don't think it goes far enough that consumers would be protected if they paid their own person that do you think that that's enough or do you think that provision needs to go further um well there is a there is a um mitigation and if someone pays their own person that you know in good faith um i just find it i find it interesting that there are three um mitigations workarounds um that are being put forward on off the back of like removing the intimation and it's like okay well why do you need these three workarounds when just just don't remove intimation like intimate right back that'll go some way to find other ways in which you have to clear up the confusion or problems that come from that so it doesn't make sense to me and what about the point we heard i mean i'll just add you heard the previous panel's evidence is that you've heard the first session a bit of it just this thing round the confusion it causes people to you know if in terms of paying if they find the person's change we think we heard in relation to student rent and and things like that is it do you think do you think that's a valid argument that actually finding out can confuse people about who they've to pay and how they've to pay and um it is a recipe for confusion if you don't tell the if you're not telling the data and and you don't have a um a register register which is you know fully comprehensive so like the two things work together like you know a system of the registration which is as good as it can be but also intimate as well and that way you cover yeah almost the point that i mean i'm worry about kind of mischaracterising what was said but what i heard from the previous point was actually you know if you're like in a student block of flats and you're paying money i mean actually it's it's easier for you not to know that the that the person you know money to has changed you know as long as you can as long as you have their account details to pay into it doesn't i mean it's actually easier for you not to get a notification every time you know the the future debt sort of changes hands is that do you think that's right or are you saying very firmly that's wrong i think it's in the best interest of the debtor to be notified every every single time in that way they have um they have that responsibility they know um and when they are being helped by citizens advice bureau then they have a at least it's fair on those who've done the notifying to say we've notified um and then they may have an idea about who they've who has now got the debt and that allows the problem to be easier fixed um from a from an advisor perspective so i mean one of the problems we've got is money advice is like for example the debt arrangements scheme we've got to notify the creditors you know and give them offers and confirm the balances that are owed to them so obviously if we don't know who the creditors are then how do we make them an offer so money advisors need to know who the creditor is because i need to be able to say this is the offer which and you've got three weeks to respond to that and if you don't respond to that within three weeks you're deemed to consent to that offer so that citizens advice bureau money advisor who does the debt arrangement scheme needs to know who they're making the offer to because otherwise how can the i mean otherwise we might be sending the offer to somebody who no longer owns the debt and how can they respond to say whether they accept the repayment plan no thank you that that's a good solid example for us to pursue further so thank you that's been computer thank you um bill kid thanks very much for your information so far panel um i can go off you've answered quite a few things that i was going to ask anyway um so i'm going off at just a wee bit of a tangent from what we've been on so far can ask you it's more about businesses in the communities um and do you think the proposals in the bill as presented should apply equally to all businesses or should there be additional protections for small traders and small businesses i mean i don't have a lot obviously in terms of limited companies and partnerships i probably don't have um i think that's got that cut offline you know obviously but i don't have a lot of opinions but in terms of sole traders i do have concerns and i accept the point you know that the previous witnesses know that we made a point about maybe the farmer who has got maybe valuable stock for example and he wants to put a fixed secure area over it and obviously he may still be trading as a sole trader so i accept that point and i think my daily made that point that that is possible but on the other side it is you've got the delivery driver and stuff like that um so i suppose what is a sole trader uh i think one of the things and i think i want to just touch on the point my daily made is obviously the problem one of the issues with this bill though is is that uh the sole trader in this this bill doesn't have the same protections as his consumer does so they don't therefore no court order is required to actually go and seize the goods basically to you know to put them up for sale uh and i think that is although i want to see consumers take note this bill if sole traders are left in i think that has to be a mandatory that they still have to get a court order and i think touch on one other point that might make and that was in reference to the common law position in scotland there is a common law position in scotland you know that i think it was one of the institutional writers of erskine or i can't bail or something like that you know and this is the basically says that you know that the scotch courts don't like self-help remedies they do not like credit using self-help remedies and if somebody tries to use a self-help remedy like come just take your good no take possession of something for a court order then you know you're actually allowed to defend it use their defense and that's why under mike pointed out under the high under consumer credit act it actually says unless the goods one third of the goods have been paid it's an unprotected good and the lender can come and take it before a court order that's what the consumer credit act says but if you look at every single consumer credit agreement in terms of higher purchase we'll say in brackets after that point except in scotland where we always need a court order if you speak to any consumer credit lawyer in scotland they'll tell you you always need a court order in scotland because and the reason for it is because if you look back at the obviously the common law in institutional writers the scotch courts do not like self-help remedies so they know if somebody tries to come and take possession of your goods without a court order you're entitled to use a self-defense to protect the goods the point being is this act allows them to come and take your goods before a court order and so i think it is actually a serious point here that mike touched on and there's the only one i'm sitting there i was thinking about it and i think that's true because at the moment they've been in a court order that would be the common law position if we create another piece of legislation it says they can come and get the goods before a court order then i think we're diminishing the rights of sole traders okay thank you yeah we don't have too much to say on that you know we're looking at small consumer perspective and the consumer element in the bill um so clearly we've said that we think that what's being applied for business is good but yeah there is an issue maybe around sole traders and and whether but we don't have too much to add to that sorry no that's not that's fair enough and thank you very much for that and thanks mr mackintosh for the outline as well thank you okay thank you and Jeremy thank you and good morning i understand you know absolutely your position is consumer should be taken out and i'm at that's very clear but just in regard to our scrutiny and just in case the parliament doesn't go with you in regard to that just a couple full-up questions in regard to if you know if consumers are left in and particularly around the register um do you have concerns as money advisors about who can access a register and what information is there enough information in the register to then you for you to be able to help your clients okay i suppose fair there is ways of doing this i mean for example if you look at the register of statutory moratoriums which have registered a public register operating with a accounting bank and obviously you can as a public register you can search it and the thing about a public register is it has to be searchable who obviously otherwise what's the point of having it but it is searchable the register of statutory moratoriums but you can only search it if you know somebody's first name their second name and their date of birth or i think it's a postcode actually and you need their postcode so if you unless you know like you know if I was looking for pulse phoenix i'd need to know i couldn't just type pulse phoenix and need pulse phoenix data postcode as well and that way I can actually find them so there is probably ways that you can probably add in extra protections to make it harder to set you know for somebody just to troll through you know and go go go go troll through it and basically just search for all their labels basically well maybe they could if they had the postcode but you know that idea there is probably ways and the reason for that is is because you know there was issues about people trolling the statutory register of statutory moratoriums in Scotland and so the AIB put these additional protections in but I think the point about a public register is that it has to be searchable you have to be able to find people on it and so but I think there are maybe lessons that could be learned by looking at that and the experiences that are counting in bank drops is to try and protect people. When you also tend to find this is literally as well for the register of solvences it's not really people that there's no people don't tend to go and search these things unless they've got a reason to. I think that it should be free of charge for to do the search. Which I think at the moment it's not meant to be I think it's a 20 pound charge we're suggesting I think we should you think you should. I'm not sure but yeah so it's for the individual who's in debt who needs to maybe go and search it or indeed the advisor I'm not searching it as well on the behalf so it should be free of charge. And just a very practical choice then you would think that fees should then be covered by Scottish Government so the register would be. Covered by someone. Yeah well a massive point. There's not going to be a fee you know obviously people are there to be employed but it wouldn't be done by anyone else it would be done by it would be a government agency which would be funded by the Government. Oh and obviously they could charge the creditors for a fee administrative fee for putting register. Do you know that that could be a way of recovering the cost so the creditors pay for it? Yes. Okay thank you. Yes sorry to come back but I think you might have covered this earlier but there's a general agreement about the £1000 threshold in the bill. Now obviously that has been in place for quite a while and I've heard a few people say certain numbers and last week I believe £3000 was mentioned etc but it's going to be updated to some degree but do you know if you get an idea or a clue as to what the best direction that this could go in might be? Good question so I think if consumers don't come out of the bill then you're then going to build as many protections and mitigations as possible and we would be looking at as many things as possible so we're kind of looking at that as a second stage to see because there's probably many other things to look at as well it could be done however on the point of the sum yeah 3000 5000 but what you get into is something whereby you know the more you increase it yes you do protect household items and fair enough but you know this is going to come down to cars at the end of the day right whose value is going to be you know upwards of maybe 5000 4000 or higher you know and what do you do do you take it up to 12 000 to that but then if you take it up to 12 000 you might as well just remove consumers from the bill because that's just going to take so much so much out of it that there's no point so um that was something we would certainly come back to at a point of going well what should it be and I think there should be a discussion about that or it should be oh I would add to that it's a 3000 figure that actually comes to 2010 which was actually when the homeowner debt protection Scotland act went through and where it basically did it was fair because you increase the minimum protection for a car which was a reason more quiet before from an attack in terms of being attached and the law of diligence went from 1000 to 3000 so it's actually stayed at 3000 since 2010 and 11 so you know obviously an obvious thing would be to link that I think that's currently getting consulted on with accounting bank drops at the moment for their bank drops say in a diligence bill that's actually I think planned for this this term but there's an obvious problem here as well and if we can look at even wage arrangements for there's an example of this wage arrangement legislation gets upgraded up the amount that no is protected and wage arrangements in bank account arrangements is updated over three years by whatever the the average rate inflation has been over those three years and did we know what half get caught out this year do you mean because you just updated it in the April there and it looked at the last three years levels of inflation and obviously inflation is now obviously massively went up since then so the point I think is even if you link it to something and update it over so often you can get caught out because as we've seen with the diligence against the Erlins in bank arrangement legislation which is new the bank arrangements have just been upgraded but the diligence against Erlins that that looks at the last three years about the average rate inflation is so and I think cars in value of actually suddenly recently went up in value as well you know sitting in car market it's quite strong at the minute after coming out of covid so there's been more for years now it was quite flat and then it's suddenly up so the thing is it's trying to find the right figure it's hard because it fluctuates constantly and there's a lot of different factors is it just um the idea i mean the thousand pound threshold um that was uh that's been broached everybody is pretty much of the opinion that needs to be higher than that um and but i think possibly the more important element and i think you've mentioned that is not so much where it starts but it's got to be higher in a thousand um is how it increases over time then actually that's really what an important element is you know so it's useful to have heard that thank you very much and one other thing i would decide is i mean another example and i get out i've rather this customer's just come out about to be honest that just makes it easier but for example if i put something into the debt arrangement scheme and they've got one of these securities well the problem is they can still repossess a car so i'm not going to work with this this debt into the debt arrangement scheme because they're going to lose their car and they can lose their car they kind of go to work they kind of pay their debts and all that stuff so it creates a problem so at the moment you know the the debt arrangement scheme wouldn't have prevent the car from repossess so maybe if we did include consumers then there'd need to be something in the bill to say that if uh if the debt was included in the debt arrangement scheme the security couldn't it be uh the security couldn't it be called up effectively based on the the card the item that so the debt would go in but they wouldn't be able to use the security because at the end of the day the debts went out of the debt arrangement so it'd be about putting an additional level of protection into the debt arrangement scheme uh similar to what mike was talking about in time to pay directions and stuff it's about allowing people to keep possession while they reschedule their debts something like that might have to be necessary but i'd rather just the kind of something that makes it simpler and because fundamentally at the bottom line is we don't see the need for this at all that's that's the thing if we if we genuinely saw a need for this i think we'd be we'd be trying to work in terms of how do we make it fair but we don't see the need for it can i come on the back of the of the need can i just add in it says something about um is um it'd be good to see evidence of the work carried out by the scottish government or the law commission on the impact of this bill on consumers um why they think high cost lenders wouldn't enter the market um why a new form of statutory pleasure is actually needed for consumer is there an overwhelming argument that we're not seeing um and why it believes that mainstream lenders will definitely enter this market with low cost loans so um it would be good when you get the chance to speak to the officials to put those questions to them it's useful direction thank you very much for that thank you and pulsary thank you thank you to mr fit mr mackintosh for coming in offering such helpful contributions so far um mindful again of your overall position regarding consumers being removed from the proposed bill um looking around the enforcement implications um in particular on those being concerns raised in written correspondence around the fact that you know people could agree not to be subject to a court order to recover goods with the security attached or what arguments they would be able to offer in defence in court um against um a move against them by um a creditor so un mindful of those issues um what or do you think the processes in the bill are sufficient to protect consumers and do you think the enforcement issues do present concerns i think yeah i think there is problems like you know it's might point under the day at scotland act you can apply for a tank pay direction a tank pay order but the problem with that i want to be a tank pay direction because that's what you apply for when it gets brought to court but the problem with that is it still it doesn't prevent the basis it still means you get a court order against you it's just an installment decree and the lender can still call up the security which basically is take the car so i think maybe we could look at again i'd rather just take the consumer out obviously but you know there is things that we could do for example in scotland we can use statutory moratoriums which basically you know currently would prevent a sheriff officer for arresting your wages or freezing your bank account or attaching your car you know but you know we can ascend the the the powers in the statutory moratoriums to mean that they could not take you to court or court or security while you seek advice and know that you get at the moment is six months so you would get six months to go to speak to a citizens advice bureau or local so there's probably additional protections that we could put in there and also as i say we could look at maybe legislate and we obviously need to come back on that but we could probably look at if there is devices that could be used to sort of protect the consumer you know to allow them to pay the debt off and keep as the key hang is people what keep possession because you know it's something that they probably cannot do without as my English has said they've probably taken this they wouldn't have they wouldn't have gave it to a pawnbroker because they wouldn't have been able to you know they couldn't have they couldn't have given it up you know i mean but they've kept possession and that's what's letting them do this so the key hang any any sort of protections that we do have to if we were to introduce some to have to allow the person to keep possession because that's the key point they need the goods and otherwise that's where the real detriment arises and top of the debt yeah and i agree i mean it's the critical difference in all this is that people are getting to keep items right and that's and for some people the need to keep the item may not be as strong as for others but others will need that item it could be essential items that they're using and yeah probably will be based around the car and that's that's the issue i mean the process of enforcement i mean it's broadly it kind of makes sense if you've got quite certainly want to secure security that you need to have a means to get that back and someone's gone into that by saying okay i'm going to use but but there's usually other measures in between times before you get to that point to get the support and time to pay and all the rest of it but and i think that's more pertinent because it may well be something that that individual absolutely sensually needs and then there will be a further detriment so do everything we can to help them yeah i think that's a really important point i think it also carries over to the point about sole traders you know if you remove the means by which they can earn money to service the debt then you're compounding the problem not solving it and there isn't really a public interest in that happening so yeah and it's also about you know we've also to remember here when we remove somebody's ability to actually earn a living whether that's a consumer or a sole trader because a detriment to other creditors who may be getting that living may be paying their debts as well so this is the danger because what you have is a subprime lender who's maybe around irresponsibly has now got a strong position where they can go and take the car they're going to take the car to enforce their position and as a result of that you know the responsible lender the credit unions or the the housing association has waiting for the rent to be paid or the local authority has been waiting to you know to get their councill tax they've they're suffering a detriment here as well because this person suddenly doesn't have a way of making that living and maybe it's starting to default on their debt so it's that sort of that contagion you know i mean spreading and that's that's the danger here and this is why our responsible lending is really really it causes a lot of detriment not just to the consumer but it can cause detriment and you know this is why a lot of time is money advisors will tell you when they're making people bankrupt because and then it affects all the creditors because it just gets to a situation where you go well it's only a solution left well i think i'll rest on that thank you very much okay thank you um i think jeremy i think you wanted back on you fine okay bill okay thank you um so uh just the kind of one final question from myself um i know some of this has been touched upon but other than what has been discussed today and obviously your position is very clear in terms of the consumers now for that to be to come out with the bill is there anything else that you would like to see actually in the bill and whilst you touched upon the other statutory moratoriums to the post question is it anything else you would like to see in the bill no i think no all the way i would not like to see in the bill but i've already said that yeah it's more about what we do when i see in the bill um but then once we you know can't foresee at this point whether consumers will not come out and then if they don't come out then that puts us in a different ballpark where we need to then work out what we would then say about well what then then needs to happen so so there may be some things we might want to see in if consumers don't come out but we're concentrating on getting consumer out of the spell at this point okay okay are there any particular comments any final comments you would like to put on the record no and i just know what i i all would say is that i respect the the huge amount of work that the scots law commission has done and i read the reports and i know i don't like to be flippant and just sort of turn up at the last five minutes i they think there's been an issue but obviously i think a lot of the consumer sector with blind sighted because the focus has been purely on business which i think right because that's what the bills were about so we've been blindsided and we've turned up at the last minute and sort of go to school and we've got a problem here so but i don't like to be disrespectful to the huge amount of work that the the law commission has done and that is a extensive amount of work and i've read unfortunately i've read it almost it now and actually but i just don't i think on this bit they've got it wrong yes that's it yeah and i would just add that even those who are like proponents of the bill are not have concerns about consumer so you had your evidence last week by one of the witnesses and from there was a previous member of the slc in his submission and indeed the people we had earlier on who and i'll quote not sorry i'll not quote for people from earlier on but i'll quote the other two people who basically said the same thing which was if if consumers the inclusion of consumers is a such a political hot potato then they would well while sliding to keep them in would be and i kind of paraphrase a little bit here but they'd be kind of like accepting that they would be taken out because ultimately and they said that the bill is ultimately for businesses so we can get that fixed that's fine and might be regrettable that you take consumers out but it can be done so even those who are advocating for the bill are kind of going well actually you can yeah consumers yeah fine so i think that opens up an opportunity i think for the msp's department the government to actually go down that route as well okay thank you for that so with that i can i thank myles fit and alan mercantosh for the help this morning and as with the first panel the committee might wish to follow up with further correspondence with yourselves with any additional questions stemming from today's meeting so with that i want to suspend the meeting briefly to allow the panel to leave thank you very much under agenda item number three we're considering an instrument subject to the affirmative procedure no points have been raised on the draft greenhouse gas emissions trading scheme amendments number three order 2022 is the committee content with this instrument yes under agenda item number four we're considering two instruments subject to the negative procedure no points have been raised on ssi's 2022 278 and 279 is the committee content with these instruments yeah under agenda item number five we're considering instrument not subject to any parliamentary procedure no points have been raised on ssi 2022 280 is the committee content with this instrument yes as i could earlier i'll now move the meeting into private