Modifying agreements under the Consumer Credit Act 1974: out with the old and in with the new?

If you’ve spoken to me over the last few weeks, you’ll know much of my working life has been spent thinking about concessions, unilateral variations and modifying agreements (exciting, no?). And some may say that modifying agreements are a little bit like lockdown: you know it’s for the best but it isn’t half frustrating trying to make it work (or maybe I’ve just got lockdown fever…).

I’ve been supporting the Finance & Leasing Association and its lobbying of HM Treasury to help make the modifying agreement provisions easier for lenders to comply with. There’s really good reasons why this should happen (and I’ve just written an update on my commentary on CONC for Issue 111 of Butterworths Financial Regulation Service dealing with this); at the very least, concessions don’t create the best of customer journeys.

The FLA asked me last week whether I could put together some infographics (it seems the recent ones on the FCA’s temporary guidance have gone down well) to help lobby HMT. Now they’ve gone into HMT, I thought I’d share them (and there are four).

Here’s the first: a typical customer journey through a modifying agreement where it will be sent to the customer by post:

And here’s the second: a typical customer journey through a modifying agreement where it will be sent to the customer online:

Here’s the third: some thoughts on the legal requirements for modifying agreements (and the slide is just scratching the surface – there are wonderfully complicated issues including whether there’s a right to cancel under the Financial Services (Distance Marketing) Regulations 2004 or whether a creditworthiness assessment needs to be made under CONC 5.2A):

And here’s the fourth (and final) one: a possible solution for firms if HMT allows a modifying agreement ‘lite’ approach (as I’ve called it; can’t wait for the royalties to roll in….):

It goes without saying that the ‘lite’ approach is plainly easier: the customer knows where she stands instantly and the document provides a clear and simple explanation of the modified agreement’s terms.

Surely HMT cannot say no? Or can they? Time will tell.

If you have any thoughts on these, or want a pdf copy of the slides, please get in touch: russell.kelsall@TLTsolicitors.com.