Legal issues for the UK consumer finance industry
On 15 April 2020, the UK Advertising Standards Authority (the ASA) published a decision involving a televsion advert aimed at business borrowers which failed to say a personal guarantee may be necessary.
The ASA banned the advert saying it “disagreed with Funding Circle that it was not necessary to flag it in the ad as a possibility to applicants” and “the possibility that a personal guarantee would be required in a business loan was material information that needed to be stated in an ad“.
On 14 April 2020, the UK Financial Conduct Authority’s guidance for consumer credit firms dealing with customers needing COVID-19 related payment holidays under certain regulated credit came into force.
There’s guidance for credit cards (including retail revolving credit), personal loans (but there are a number of exclusions) and overdrafts.
My one page summary of the guidance is:
If you want a pdf copy of it, please get in touch: russell.kelsall@TLTsolicitors.com.
On 18 March 2020, UK Finance and the Building Societies Association published a note setting out the industry’s approach on:
– payment holidays;
– repossessions; and
– residential buy-to-let mortgages.
Earlier today, on 19 March 2020, the FCA published a new webpage for insurance mediation firms setting out its expectations for firms in light of the coronavirus pandemic.
In essence, the FCA expects firms to comply with the Principles for Businesses (including Principle 6: TCF). But the FCA also sets out its expectation of firms when varying its terms (which apply not just to insurance firms).
The FCA says it expects firms to consider the following if they intend to vary their contract terms:
– Whether there is a written term in the contract that states they are able to make the change that they want to make.
– Are the terms that they intend to rely upon fair and transparent under the Consumer Rights Act 2015 (or the Unfair Terms in Consumer Contracts Regulations 1999 if appropriate)?
– Whether they are applying the term properly, in accordance with the contract (for example, by complying with any notice period set out in the contract).
– Whether due regard has been given to the interests of their customers and treating customers fairly (see FCA Principle 6). Also, to the information needs of their customers and communicating information in a way that is clear, fair and not misleading (see FCA Principle 7).
– Whether there is any other reason in law or any other relevant FCA rules, and whether they are complying with them.
Issue 109 of Butterworths Financial Regulation Service has now been published. This includes updated material in chapters 1 to 5 (dealing with CONC 1 to CONC 4) written by Russell Kelsall.
Issue 109 includes new commentary on:
– the FLA’s proposals for reform of consumer credit;
– the Money Advice Trust’s new Debt & Mental Health Evidence Form;
– recent and forthcoming changes to CONC 3 (including on ‘buy now, pay later’ promotions); and
– some extra commentary on CONC 4.
So Brexit has now been ‘done’. ‘Oven ready’ some people said. So what do we do now the microwave has pinged? Fortunately, at TLT we’ve put together a handy guide for businesses. There’s even a bit on consumer credit and regulated mortgage contracts. Go on – give it a read….
On 5 February 2020, a private members bill, the Goods Mortgages Bill [HL] 2019-2020, had its first reading in the House of Lords. If it becomes law, this bill proposes to abolish the existing laws on bills of sale and create a new system for non-possessory rights.
This is not, of course, the first time such legislation has been suggested. The Law Commission recommended new legislation but Treasury later decided, in May 2018, not to move forward with legislation. A previous private members bill did not progress because Parliament was dissolved in December 2019.
No date has yet to be sent for a second reading.
On 29 January 2020, the UK Financial Conduct Authority published a final notice given to FS Claims Limited (a firm applying for authorisation for claims management activity).
The FCA decided the application was incomplete and, given the failings to provide further information it had asked for, the FCA did not consider the applicant could meet the threshold conditions in the Financial Services and Markets Act 2000.
This is a clear indicator from the FCA that the application process for claims management companies will not be easy.
On 4 February 2020, the UK Financial Conduct Authority published a transparency report stating the number of skill person reports that had been commissioned in Q3 2019.
From the publication, ten reports were commissioned in total but only two were in ‘retail banking’ and one was in ‘retail lending’. The majority (five) were in wholesale financial markets.
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