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

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

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

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

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

They add that

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

which is obviously wildly open to interpretation.

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

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

I will rest on that.

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

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

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

That is reassuring. Perhaps committee members can reflect on the matter as we proceed with the bill.

More broadly, we are interested in understanding more about what the commission did to seek the views of consumer groups. What feedback or evidence did you receive in the course of preparing the draft legislation?

I mentioned sections 63, 65 and 66.

I have no further questions. That was a helpful series of responses, so I am happy to rest on that.

I thank the commissioners for their helpful evidence and statements so far. I will touch on some of the aspects around consumer protections, in addition to the issues mentioned by Mr Mundell, with regard to how we can create a mechanism that is effective at protecting consumers.

There has been some focus on the £1,000 placeholder, which, with hindsight, has perhaps been a bit of an unfortunate red herring. In private session, the committee has considered lodging an amendment to provide automatic controls on that figure—some sort of deflator that would automatically correct every financial year. Would you endorse such a mechanism? Would that be a reasonable undertaking, and would you, perhaps, assist us in designing it?

That is helpful background and provides some degree of reassurance on the commentary that we have heard on the proposed legislation.

Responses from law centres were mentioned. We have received a response from Govan Law Centre, which, in effect, compared the enforcement of statutory pledges to warrant sales. I assume that you do not think that that is a fair characterisation.

Particular sections of the bill have been highlighted in that regard. Section 63 entitles a creditor to serve a pledge enforcement notice on a debtor if payment has not been made. Section 65 enables an authorised person—in other words, a sheriff officer—to enter someone’s home to remove moveable goods, subject to the statutory pledge. Section 66 gives a creditor the right to sell someone’s moveable goods at a public auction.

Bearing in mind the fact that we have discussed the protections that we can introduce in relation to particular goods, household vulnerability and exposure, will you explain why the characterisation of the enforcement of statutory pledges as warrant sales is not fair? That will allow us to understand the context better.