Consumer Finance Law

6 May 2020

ASA publishes decision on use of phrase “pre-approved” in a consumer credit financial promotion

Earlier today, on 6 May 2020, the UK Advertising Standards Authority published a decision on a consumer credit financial promotion involving ClearScore using the word “pre-approved” without telling the customer that further checks would be needed.

The ASA said “the average consumer would understand the term “pre-approved” in the ad to mean that they were guaranteed to get any loan or product subsequently shown to them as pre-approved when using ClearScore’s services. We noted that the pre-approved offers would be dependent on personal eligibility, subject to the customer providing the correct financial information to ClearScore, and subject to a lender’s own checks. However, there was no information in the ad to indicate that further checks would be made following a pre-approved offer, which could result in the application being declined. Because the claim “pre-approved”, in the context of the ad, was likely to be understood to mean that customers who received “pre-approved” offers would be guaranteed to get those offers, when that was not the case, we concluded that the ad breached the Code”.

The ASA told ClearScore to make sure its advertising complied with CONC and to make it clear that pre-approved offers are subject to additional checks by the lender before approval.

5 May 20205 May 2020

FCA writes to the Financial Ombudsman Service about the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme

On 4 May 2020, the UK Financial Conduct Authority’s Interim Chief Executive, Christopher Woolard, wrote to the Financial Ombudsman Service’s Chief Executive, Caroline Wayman, following the launch of both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS).

Mr Woolard’s letter sets out:

– entering into an agreement made under the BBLS is not a regulated activity because such agreements will be exempt credit agreements (but debt-collecting of those agreements will remain a regulated activity);

– there is no requirement to undertake a creditworthiness or affordability search before entering into an agreement under the BBLS;

– the unfair relationship provisions in Sections 140A to 140C of the Consumer Credit Act 1974 are expected to be dis-applied for agreements made under BBLS ; and

– the FCA’s expectations on creditworthiness assessments under the CBILS.

The FCA also updated its website on 4 May 2020 on the CBILS and BBLS.

5 May 20205 May 2020

Payment Systems Regulator updates its webpage setting out its expectations of firms during the COVID-19 pandemic

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“.

4 May 20204 May 2020

Statutory Instrument to exempt Bounce Back Loan Scheme agreements from regulation published

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.

1 May 2020

CMA Investigates Businesses Failing to Respect Cancellation Rights and Give Refunds

On 30 April 2020, the Competition & Markets Authority (the CMA) launched a programme to investigate reports claiming businesses are failing to respect customer’s cancellation rights during the COVID-19 pandemic.

The CMA’s published guidance sets out its general views about the law and offered brief guidance to businesses and customers on their respective rights.

29 April 202029 April 2020

FCA publishes a statement about creditworthiness provisions for regulated credit agreements made under the UK Coronavirus Business Interruption Loan Scheme and the new Bounce Back loan scheme

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.

28 April 2020

FCA publishes final report on the payment protection insurance complaints deadline

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).

24 April 20204 May 2020