Butterworths Financial Regulation Service – updated commentary on CONC and MCOB, and new commentary on BCOBS, published

Issue 113 of Butterworths Financial Regulation Service has now been published. I’ve written a new chapter on CONC 8, and reviewed and revised the existing chapters on CONC (including adding the latest COVID-19 guidance published by the Financial Conduct Authority).

I’ve also written new chapters on MCOB 2A, 3B, 4A and 6A, and reviewed and revised the existing chapters on MCOB.

I’m also delighted to have published brand new commentary on BCOBS. There will be additional new chapters over coming issues but this issue has:

– an introductory chapter on BCOBS; and

– commentary on BCOBS 1, 2, 2A and 3.

HM Treasury publishes new amending regulations changing the form and content of default, enforcement and termination notices

On 11 November 2020, HM Treasury laid before Parliament the Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regulations 2020 and published an explanatory memorandum.

These regulations amend the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983, which prescribe the form and content of:

– an enforcement notice under Section 76(1) of the Consumer Credit Act 1974;

– a default notice under Section 87(1) of the Consumer Credit Act 1974; and

– a termination notice under Section 98(1) of the Consumer Credit Act 1974.

These changes make significant changes to the form and content of such notices. The changes come into force on 2 December 2020.

By Regulation 9 of the Consumer Credit (Enforcement, Default and Termination Notices) (Coronavirus) (Amendment) Regulations 2020, there is a transitional period of six months from 2 December 2020 during which time a notice under Sections 76(1), 87(1) or 98(1) of the Consumer Credit Act 1974 will be compliant if it complies with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 immediately before its amendment on 2 December 2020.

Pay.uk publishes summary paper on consumer protections in payments

On 5 November 2020, Pay.uk published a summary paper on consumer protections in payments.

The summary paper provides an overview of the work Pay.uk has undertaken to explore the consumer protection landscape in the UK for various types of payment transactions. The research highlights:

– There are several viable payment mechanisms available as options to consumers (all of them offering varying levels of payment protection);

– Open Banking and PSD2 mean that there will be a lot more activity in the market, in terms of new payment methods and PISPs, which will accelerate the use of FPS for the purchase of goods and services; and

– Payment protections in the UK do not exist in isolation. They are viewed by consumers together with and/or as supplemental to legal, personal and retailer protections.

FCA announces further proposals to support consumer credit customers impacted by COVID-19

Earlier today, on 4 November 2020, the UK Financial Conduct Authority published a press release setting out its further proposals to support consumer credit customers impacted by COVID-19.

There is:

– a draft updated guidance for consumer credit firms;

– a draft further updated temporary guidance for personal loans;

– a draft further updated temporary guidance for credit cards (including retail revolving credit cards);

– a draft further updated temporary guidance for motor finance;

– a draft further updated temporary guidance for high-cost short-term credit;

– a draft further updated temporary guidance for rent-to-own, buy-now pay-later and pawnbroking agreements; and

– a draft Consumer Credit Instrument updating provisions in CONC 6.7 and 7.3.

The FCA proposes:

– those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total;

– those who have had one payment deferral, will be eligible for another payment deferral of up to three months;

– those with high-cost short-term credit agreements, who have not yet had a deferral, can ask for a one month deferral but no more;

– to allow customers until 31 January 2021 to ask for a payment deferral;

– if a customer has restarted payments after a deferral, they are not entitled to another deferral but should receive tailored support if they are experiencing payment difficulties.

– if customers can afford to make repayments then they should continue to do so;

– borrowers should hold off contacting their lender until the enhanced measures are in place;

– lenders should hold off repossessions of goods, unless there are exceptional circumstances, until 31 January 2021; and

The FCA also proposes to maintain the existing position on overdrafts and premium finance.

The FCA has invited comments by 10am on 6 November 2020.

FCA announces further proposals to support mortgage borrowers impacted by COVID-19

Late yesterday afternoon, on 2 November 2020, the UK Financial Conduct Authority published a press release setting out its further proposals to support mortgage borrowers impacted by COVID-19. There is a draft further updated guidance for firms and a draft updated additional guidance for firms.

The FCA proposes:

– those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total;

– those who have had one payment deferral, will be eligible for another payment deferral of up to three months;

– those who have restarted repayments after an initial payment deferral will be eligible for another payment deferral of up to three months

– to allow borrowers until 31 January 2021 to ask for a payment deferral;

– if borrowers can afford to make repayments then they should continue to do so;

– borrowers should hold off contacting their lender until the enhanced measures are in place; and

– to stop any repossessions (without the borrower’s consent) before 31 January 2021.

The FCA has invited comments by 10am on 5 November 2020.

FCA publishes call for input for its review into change and innovation in the unsecured credit market

Earlier today, on 2 November 2020, the UK Financial Conduct Authority published a call for input asking for views on change and innovation in the unsecured credit market as part of its review on how regulation can better support a healthy unsecured lending market (called the ‘Woolard Review’).

The FCA has also published a dedicated webpage. The deadline for responses is 1 December 2020.

FCA to announce further support for consumer credit borrowers impacted by COVID-19

On 2 November 2020, and following the Prime Minister’s announcement of a further month-long lockdown for England, the UK Financial Conduct Authority issued a press release saying it will announce further support for consumer credit customers impacted by COVID-19.

It seems likely that:

– If a borrower has not yet had deferral already because they are unable to make their repayments because of COVID-19, they will be entitled to ask for a deferral. This could last (depending on the product) for up to six months.

– If a borrower (other than one under a high-cost short-term credit agreement) has already had a payment deferral because of COVID-19, they will be entitled to ask for another deferral.

– If a borrower has already had already benefitted from payment deferrals, and are still unable to make their repayments because of COVID-19, they will need to contact their lender for ‘tailored support’.

The FCA reminds borrowers that “consumer credit customers who can afford to do so continue to make repayments. Borrowers should only take up this support if they need it”.

FCA to announce further support for mortgage borrowers

On 31 October 2020, and following the Prime Minister’s announcement of a further month-long lockdown for England, the UK Financial Conduct Authority issued a press release saying it will announce further support for mortgage borrowers on 2 November 2020.

It seems likely that:

– If a mortgage borrower has not had deferral already because they are unable to make their repayments because of COVID-19, they will be entitled to ask for deferral of up to six months.

– If a mortgage borrower has already had a payment deferral because of COVID-19 of less than six months, they will be entitled to ask for another deferral so the maximum total deferral is six months.

– If a mortgage borrower has already had a payment deferral because of COVID-19 of six months, and are still unable to make their repayments because of COVID-19, they will need to contact their lender for ‘tailored support’.

The FCA is also considering the implications of this approach for the consumer credit industry.

UK Finance and the Building Societies Association have published a joint press release following the announcement.