My Lords, in the absence of my noble friend Lady Miller of Hendon, and at her request, I beg leave to ask the Question standing in her name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they have made an assessment of the study by the charity Citizens Advice, Set Up to Fail, which suggested that many aspiring home owners have been mis-sold unsuitable and costly home loans that are doomed to fail from the start.

My Lords, independent regulation of mortgages and credit by the Financial Services Authority and the Office of Fair Trading helps to ensure that borrowers are afforded suitable protections and have appropriate means of redress. The Government are also taking steps to help address debt problems, including improving financial capability and funding a range of debt advice to help support those experiencing difficulties in repaying their mortgages. The Citizens Advice report will help to inform the Government's thinking on those issues.

My Lords, I thank the Minister for that reply. Let me try an even simpler question: does he think that the current regulatory regime for vulnerable people who borrow from debt consolidators on second mortgages or who are lured into sale and leaseback arrangements is adequate? If so, can he name one reputable financial services organisation or charity that agrees with him?

My Lords, I am grateful for the simple question, and I will give a simple answer: no, we do not think that the regulatory regime is adequate in the two instances to which the noble Baroness has drawn attention. That is why the Financial Services Authority is addressing its regulatory role and why the Office of Fair Trading is taking on board the additional scrutiny possible because of the passing of the Consumer Credit Act 2006. There are potential difficulties in this area. The Government are all too well aware of the necessity for help for people who may have these problems.

My Lords, the CAB report is very serious and cites some heartbreaking cases, as I am sure that my noble friend is aware. Importantly, it states that, unlike in the crisis in the 1990s, where lenders were at an equivalent level, lenders appear to be going to the court for possession rather more quickly. The CAB report makes serious recommendations on that and on sale and leaseback, which is especially worrying. Will the Government act appropriately to reply to the CAB report?

My Lords, as I emphasised, we are watching the sale and leaseback position especially carefully, because it is giving rise to great anxiety. My noble friend is also right to say that the speed with which some institutions are calling in their debts is giving rise to anxiety. We will ensure that the maximum amount of advice is available to people faced with those problems. I may add that we are talking about economic conditions far removed from those of 1991, when, in any case, the number of mortgage repossessions was three times the level now.

My Lords, does my noble friend agree that, in the most serious cases to which this Question refers, loans are being given that are doomed from the start because the individuals to whom they are given have quite inadequate means to pay them back? In those most serious cases, would not the power of deterrence be of great value by the wider use of criminal prosecution, which could have a great meaning across the board if some well-publicised cases were brought?

My Lords, my noble friend speaks with considerable authority on this area. I have already emphasised that we are all too well aware of the dangers, particularly on sale and rent-back arrangements that can precipitate problems for individuals. We are tightening up the regulatory regime; my noble friend will also be aware that we now have additional powers on, for example, the control of advertising. That is one way in which we can help to control this problem.

My Lords, does the Minister agree that one category of loans doomed to fail from the start is that where the loan value, from the outset, is significantly greater than the value of the house? Will he therefore, through the Chancellor, instruct the current management of Northern Rock to stop offering its Together loan? I was enthusiastically offered one of those on Friday evening; it still offers 125 per cent of the value of the house to people who ring up and require a mortgage.

My Lords, Northern Rock is a private company that takes private decisions at this stage. Government anxieties about Northern Rock are acute, and it will be important to take action in the very near future. We hope that that action will be along the lines that the Government have always advocated.

My Lords, in the light of that point, will the Minister place in the Library what evidence the Government have that the assets of Northern Rock exceed the value of the loans that the Government have arranged to advance to it?

My Lords, those are the figures of a private organisation, and I should have thought that the noble Lord would have recognised that it is public that Northern Rock is owed a hundred billion pounds’ worth of mortgages and that the amount lent from the Treasury is a fraction of that. Of course, none of us denies that Northern Rock is in crisis, and the noble Lord has found a deft way to emphasise its difficulties. He will be aware that the Government are strenuously employed in finding a solution to its problems.

My Lords, the Minister has just told us that in his view the regulatory regime is inadequate. For how long has that been the Government’s view?

My Lords, the regulatory regime to which I referred is the examination that the Financial Services Authority promised to carry out in the summer of last year regarding its powers. It has promised to report in the first quarter of this year; it intends to do so and thus identify where the regulatory regime position needs to be strengthened.