Legal issues for the UK consumer finance industry
On 1 May 2020, the UK Payment Systems Regulator updated its webpage setting out its general expectations of payment firms in light of the global pandemic, COVID-19.
The PSR expects firms to “be taking reasonable steps to ensure they are prepared to meet the challenges coronavirus could pose to customers and staff” and “report to us immediately if they believe they will be in difficulty or if circumstances could lead to them being unable to offer the full range of their services“.
On 1 May 2020, the Financial Services and Markets Act 2000 (Regulated Activities) (Coronavirus) (Amendment) Order 2020 was published together with an explanatory memorandum.
The effect of this Order is to amend Article 60C of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO) to add a new exemption for credit agreements entered into under the Bounce Back Loan Scheme (but the exemption will not apply to debt-collecting under such agreements).
Interestingly, the explanatory memorandum says this Order is needed to “urgently remove loans made under BBLS from a highly prescriptive consumer credit regulatory regime which is currently inhibiting lenders from granting loans to small businesses”. It remains to be seen whether HM Treasury will have a similar view on the proposed revisions to the modifying agreement provisions.
On 27 April 2020, the UK Financial Conduct Authority published a statement about creditworthiness on the UK Coronavirus Business Interruption Loan Scheme (often called ‘CBILS’) and the Bounce Back Loan scheme (often called ‘BBL’ or ‘BBLS’).
The FCA recognises “the need to make changes to the CBILS scheme immediately“. The FCA says if firms comply with the relevant requirements of CBILS, then it does not expect them to comply with CONC 5.2A-34 where the lending involves a regulated credit agreement. But firms must continue to comply with CONC 5.2A for all other regulated lending.
The FCA expects to make a similar statement when BBL is launched.
On 24 April 2020, the UK Financial Conduct Authority published its final report on the payment protection insurance (PPI) complaints deadline.
The report:
– says the FCA’s PPI campaign has been a success;
– states firms have paid over £38bn of redress to customers; and
– brings an end to the FCA’s project work on PPI (but it will continue to monitor how firms are dealing with complaints submitted before the 29 August 2019 deadline).
Earlier today, on 24 April 2020, the UK Financial Conduct Authority published its finalised temporary guidance to consumer credit firms dealing with customers needing COVID-19 related payment holidays under certain regulated credit and consumer hire agreements for motor finance and high-cost credit.
There’s finalised temporary guidance for motor finance, for rent-to-own, buy-now pay-later and pawnbroking and for high-cost short-term credit.
My one page summary is:
If anyone wants a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.
On 20 April 2020, the UK Financial Conduct Authority published a new webpage setting out its expectations for wet-ink signatures in light of COVID-19 restrictions. The FCA makes it clear its rules do not require wet-ink signatures on agreements. However, firms need to make sure electronic signatures comply with the general law (see our earlier post on the Law Commission’s report on electronic signatures). The FCA reminds firms to consider the Principles for Businesses when using electronic signatures.
Earlier today, on 17 April 2020, the UK Financial Conduct Authority started consulting on temporary guidance to consumer credit firms dealing with customers needing COVID-19 related payment holidays under certain motor finance and high-cost regulated credit and consumer hire agreements.
There’s draft guidance for motor finance, for rent-to-own, buy-now, pay-later and pawnbroking and for high-cost short-term credit. There’s also a draft handbook instrument.
My one page summary is:
If you want a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.
After the UK Financial Conduct Authority introduced temporary guidance to consumer credit firms dealing with certain customers needing COVID-19 related payment holidays on 14 April 2020 (for more, see our earlier post), I’ve produced a one page summary of tips for consumer communications:
If you want a pdf copy of it, please get in touch: russell.kelsall@TLTsolicitors.com.
On 9 April 2020, the High Court handed down judgment in Silvercloud Finance Solutions Limited t/a Broadscope Finance v High Street Solicitors Limited [2020] EWHC 878 (Comm).
Financial services practitioners will be pleased to see His Honour Judge Pearce did not accept the Defendant’s argument that “the Financial Services and Markets Act 2000 renders every “appointed representative” in the position of the Claimant as an agent for the purpose of the law of contract when contracting with potential clients“.
This was because:
– the “word “agent” is not used in that Act, nor is any such unqualified modification of contractual status asserted in Section 1 of the Act“; and
– of the Court’s earlier decisions in R (TenetConnect Services Limited) v Financial Ombudsman [2018] EWHC 459 and Ovcharneko v Investuk Limited [2017] EWHC 2114 (both of which decided the statutory scheme in Section 1 is to create an additional liability on the part of the ‘principal’ “without more generally affecting the rights and obligations of third parties“).
Earlier this week, UK Finance published a guide to making payments safely now we are currently in lockdown because of COVID-19.
The guide provides some useful hints and tips to help consumers make payments safely and avoid the risk of scams.
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