Month: June 2020

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FCA consults on draft updated temporary guidance to credit card, overdraft and personal loan consumer credit firms dealing with customers needing COVID-19 related payment holidays

Earlier today, on 19 June 2020, the UK Financial Conduct Authority issued a consultation on draft updated temporary guidance to credit card, overdraft and personal loan consumer credit firms dealing with customers needing COVID-19 related payment holidays.

There’s draft guidance for credit cards (including retail revolving credit), for overdrafts and for personal loans. There’s also a draft handbook instrument.

My one page summary is (and you can see a bigger version if you click on it):

If you want a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.

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FCA says mortgage firms must do more to make sure appropriate equity release advice is given

On 17 June 2020, the UK Financial Conduct Authority published a press release saying firms must do more to make sure they are always giving appropriate advice to equity release consumers.

The FCA’s review says the equity release market works well for “many consumers“. But there are three “significant areas of concern” which increases the risks for consumers:

-advice given by firms did not always sufficiently take into account consumers’ personal circumstances;

– consumers reasons for looking at equity release were not always challenged by firms; and

– firms weren’t always able to evidence that their advice was suitable.

The detailed rules on equity release are in Chapter 8 and Chapter 9 of the Mortgages and Home Finance: Conduct of Business Sourcebook.

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FCA publishes updated finalised guidance for mortgages

On 4 June 2020 the UK Financial Conduct Authority published further guidance for customers who are unable to make their mortgage payments because of the impact of COVID-19.

However, and on 16 June 2020, the FCA revised this guidance. These changes say:

– firms should try and give as close to personalised information as possible (following lobbying from the industry that there are likely to be practical problems with providing personalised information);

– there are some changes to the guidance for (a) customers who have not yet had a payment deferral (to suggest a representative example relevant to the customer’s circumstances could be provided instead), (b) customers unable to resume full payments (with a similar suggestion of a representative example) and (c) the interactions with MCOB (particularly on variations and MCOB 7.6.28R and MCOB 7.6.28AR).

The guidance is set to expire on 31 October 2020 but the FCA may review and update before then.

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pay.uk confirms launch of confirmation of payee service in the UK

Earlier this week, on 8 June 2020, Pay.uk published a press release confirming the launch of the confirmation of payee service in the United Kingdom.

Pay.uk says that if a customer’s bank or building society is confirmation of payee enabled, the new service lets the customer know if the customer’s account name matches the recipient’s account name.

Pay.uk’s research suggests:

– 34% of consumers have in the past made bank or building society payments to a person using a nickname; and

– 37% of business brands also trade under a different name to that on their business bank or building society account.

It remains to be seen the extent to which confirmation of payee provides a real level of protection for customers making electronic payments.

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Success for the CMA’s COVID-19 Taskforce

Following on from the Competition and Market Authority’s (CMA) statement in May 2020, holiday accommodation provider, Vacation Rentals, has voluntarily changed its policy after originally failing to offer refunds to all customers whose trips were cancelled.

Vacation Rentals (who operates sites including Hoseasons and Cottages.com) is just one holiday accommodation provider which was reported to the CMA’s COVID-19 Taskforce. Vacation Rentals has now given the CMA a formal commitment that customers will have the option of a full refund if a booking has been cancelled because of restrictions associated with the coronavirus outbreak.

The CMA says some other providers have not yet agreed to follow the approach of Vacation Rental and the CMA continues to investigate.

Read the full update here.

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Financial Ombudsman Service publishes latest edition of ‘Ombudsman News’

On 5 June 2020, the Financial Ombudsman Service (the Ombudsman Service) published its latest edition of ‘Ombudsman News’.

The Ombudsman Service sets out things it will consider when looking at:

– claims by customers under Section 75(1) of the Consumer Credit Act 1974;

– complaints by customers in financial difficulties;

– complaints about motor finance agreements (including expecting businesses to “listen and proactively look for signs of financial difficulties“, expecting firms to be “even more flexible in their forbearance measures” and expecting firms to “fully inform consumers of their options to exit the agreement where necessary/appropriate“); and

– complaints about mortgages.

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FCA consults on changes to CONC 7 following the introduction of the Bounce Back Loan Scheme

On 5 June 2020, the UK Financial Conduct Authority (the FCA) published a quarterly consultation, CP20/7, proposing to make changes to Chapter 7 of the Consumer Credit Sourcebook (CONC).

The proposed changes to CONC follow the introduction of the UK Government’s ‘Bounce Back Loan Scheme’ (or BBLS) which introduced a new category of exempt credit agreement in Article 60C(4A) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO) (for more, please see our earlier blog post). But the RAO did not exempt the collecting of debts due under such BBLS loans.

The draft instrument proposes to amend CONC so that:

– CONC 7.12 is extended so it applies to firms who would be consumer credit lending but for the changes made to the RAO for BBLS loans; and

– the expression ‘regulated credit agreement’ is expanded to include an exempt agreement under Article 60C(4A) of the RAO (but not in CONC 7.1.5G, CONC 7.6 and CONC 7.7.4G).

The deadline for responding to the consultation is 5 July 2020.

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Voluntary terminations for regulated hire purchase and conditional sale agreements – does a customer have to take care of the vehicle whilst collection arrangements are being made?

The current COVID-19 restrictions mean asset and motor finance lenders are unable to collect vehicles as quickly as they’d like when a customer voluntary terminates a hire purchase or conditional sale agreement under Section 99(1) of the Consumer Credit Act 1974. Can you ask your customer to carry on taking care of the vehicle whilst you make arrangements to collect it?

After an agreement has been voluntarily terminated, the customer is likely to be a gratuitous bailee of the vehicle.  This type of bailment is known as a ‘deposit’ because the customer keeps possession of the vehicle without payment.

It’s likely there is two possible types of bailments: (a) involuntary deposit or (b) necessary deposit.

Involuntary deposit – this is where the vehicle is left with the customer against her wishes. In most cases, the customer will need to take reasonable care of the vehicle. But the customer will normally need to make good any damage caused deliberately but not negligently.

Necessary deposit – this is where the vehicle is left with a customer because of a peculiar stress or set of circumstances such as an unforeseen disaster (which the Covid-19 pandemic and lockdown arguably could fall into). The customer is likely to be responsible in negligence or bad faith whilst she has the vehicle.

So how do you protect your position and the vehicle? Talk to your customer. Ask if they’re willing to hold on to the vehicle whilst you make your collection arrangements. And talk to them about insurance, and who is going to pay for it.