Legal issues for the UK consumer finance industry
The UK Financial Conduct Authority (the FCA) has published its minutes of a board meeting held on 28 September 2023. The minutes confirm that the board decided:
– to continue to defend the judicial review relating to the FCA’s ban on
Debt Packagers receiving commission; and
– not to suspend the ban whilst the judicial review is proceeding.
Earlier this week, the UK Financial Conduct Authority (the FCA) published its board minutes from the meeting held on 25 May 2023.
Debt management firms may be interested to note that the board discussed the proposed policy statement on debt packagers. The FCA later published Policy Statement 23/5: Debt Packagers: Feedback to CP23/5 and final rules on 2 June 2023 (the FCA’s press release is available by clicking here and you can read my earlier post on the changes to CONC).
The following key points were noted by the FCA’s board members:
– the FCA’s team assured the board that any consequential risk on capacity in the debt advice sector from introducing the ban should be minimal and absorbable; and
– the Board was comfortable with the rationale for setting the implementation period at four months, and concluded that this, along with the mitigating steps the team proposed the FCA take during that period, was sufficient to appropriately balance the interests of firms with the urgent need to protect consumers from the harm.
At the end of June 2023, the UK Financial Conduct Authority (the FCA) published Handbook Notice 110. This set out changes made to the FCA Handbook 2 June 2023 and 30 June 2023. These include:
– changes to CONC 8.3 and TP8 (and changes to PERG 2.9 and PERG 17.7) resulting from the Consumer Credit (Debt Packager Remuneration from Debt Solution Providers) Instrument 2023. This introduces rules and guidance banning debt packers from receiving remuneration from debt solution providers and came into force on 2 June 2023.
– changes to MCOB 11.6 resulting from the Mortgage Affordability Rules (Amendment) Instrument 2023. This implements the Mortgage Charter and allows lenders to offer borrowers a switch to interest-only repayments for six months and a term extension to reduce their monthly repayments and switch back within six months (for more, please see Policy Statement 23/8: Mortgage Charter: enabling provisions and the FCA’s press release). These changes came into force on 30 June 2023.
On 6 July 2022, the UK Financial Conduct Authority published a press release urging consumers struggling with rising prices to seek help from their lenders. This press release follows the publication of a recent ‘Dear CEO’ letter, and press release, to consumer lenders.
The FCA and MoneyHelper are urging consumers to:
– contact their lenders if they are struggling to make their payments;
– contact MoneyHelper if they are worried about money
The FCA and MoneyHelper have also published five top tops:
– open up and talk to someone about your challenges
– work out your debts
– prioritise your debts
– shop around for affordable credit
– set a budget
This press release is in a long line of financial difficulty communications from the FCA. The FCA is expected to publish its review of its final findings into firms’ provision of appropriate support to borrowers in financial difficulty both during and after the COVID-19 pandemic, and next steps. This publication is currently expected on Q3 2022.
On 7 June 2021, the Money and Pensions Service published a press release saying it had released a beta version of the MoneyHelper website to share with partners and stakeholders. The website’s release will allow MaPS to continue gathering feedback and testing before its launch to consumers by 30 June 2021.
Until the MoneyHelper site goes live to consumers, MaPS’ existing websites and services will continue to be accessible.
On 5 May 2021, the Advertising Standards Authority published a ruling against Money Advisor Limited t/a Money Advisor. The complaints related to the claims made on how debts could be ‘written off’.
The ruling records that a TV advertisement for Money Advisor, seen in January 2021, included a voiceover stating “When you’re in debt it’s hard to know where to turn; you can feel trapped by it, you can’t see a way out. Call Money Advisor for help” (with the on-screen text giving examples of debts which had been ‘written off’) (called ‘ad (a)’). Money Advisor’s website also featured a banner with the logo and name of the Money Advice Service (called ‘ad (b)’).
The following complaints were upheld:
– The claim that “We could help you write-off 100 percent of your unaffordable debt” in ad (a) was misleading and could not be substantiated. No evidence was submitted to show that Money Advisor could provide such help.
– Ad (a) misleadingly implied Money Advisor could provide debt advice when it did not have permission from the FCA to do so.
– The claims “Call Money Advisor for help” and “We could help you write-off 100 per cent of your unaffordable debt” in ad (a) were misleading because they suggested Money Advisor provided the service and did not make clear that they passed on leads to third party insolvency practitioners.
– The use of the Money Advice Service name and logo in ad (b) misleadingly suggested an association with that service. The Money Advice Service logo appears “directly underneath a number of five start customer reviews” and this appeared to link the positive customer reviews with the Money Advice Service.
The ASA therefore decided that ad (a) must not be broadcast again, and ad (b) must not appear again in the form complained about.
The FCA has today published its thematic review on the debt management sector, TR 19/1. The FCA has found that most customers are getting better advice and better outcomes. However, there is still work to do for some firms (and two smaller firms have “unacceptably poor standards and practices”).