Posts

Posted on

High Court hands down judgment on unfair relationship provisions involving a business borrower and the burden of proof

On 3 September 2019, the High Court handed down judgment in Promontoria (Henrico) Limited v Samra [2019] EWHC 2327 (Ch). The customer challenged the relationship arising out of the agreement as being unfair under the unfair relationship provisions in Sections 140A to 140C of the Consumer Credit Act 1974 (the CCA) because of (a) the assignment of the agreement from Clydesdale Bank plc to Promontoria (Henrico) Limited and (b) a claim that the lender gave a positive indication about future lending to the customer. It also considered the impact of the reversed burden of proof under Section 140B(9) of the CCA.

The Court decided the relationship arising out of the agreement between the lender and the customer was not unfair. The Court had real concerns over the customer’s evidence (see, for example, paragraph [24] of the judgment). But ultimately it did not consider the issues raised, after deciding “it was not necessary to go through the list of factors [set out in Deutsche Bank (Suisse) SA v Khan [2013] EWHC 482 (Comm)] in every case, or particularly useful to do so in a case such as this where the allegations of unfairness are somewhat diffuse” (see paragraph [94] of the judgment), meant there was any unfairness in the relationship.

The Court’s decision on the burden of proof is, however, important. It decided (see paragraph [26]) that:

“This … does not however mean, in my judgment (and Mr Hill did not contend) that where Mr Samra makes allegations of fact on which he relies he does not have the burden of proving them to the normal civil standard. The onus placed on the creditor is as to the relationship between it and the debtor, and does not have the effect that factual allegations made by Mr Samra must be accepted unless they can be positively disproved by contrary evidence.”

Now the High Court has given such a clear view on the burden of proof, it must now follow that the position is clear: a customer must prove the facts he says create unfairness arising out of the relationship and (once proven) the burden then shifts onto the lender to prove those facts (as proven) do not mean the relationship is unfair to the customer.

Posted on

Updated practice note on the interaction between the consumer credit regime and guarantees

We’ve recently updated a practice note, published by Practical Law and written by Russell Kelsall and Paula Twist, entitled: ‘The interaction between the consumer credit regime and guarantees’. We’ve updated it to consider, amongst other things, the recent extension of the FOS’ remit so that it can consider complaints from certain guarantors.

If you’re a subscriber to Practical Law, you can visit the practice note by clicking here or by visiting: https://uk.practicallaw.thomsonreuters.com/w-015-0686.

Posted on

Draft legislation to introduce five month transitional period for Brexit changes to the SECCI

In the last few days, HM Treasury published a new draft statutory instrument: the Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 3) Regulations 2019.

If it becomes law (which seems likely), Regulation 14 will delay the changes to the SECCI caused by Brexit (and set out in the  Consumer Credit (Amendment) (EU Exit) Regulations 2018) so that there is a five month transitional period after ‘exit day’.

Posted on

FCA sets up an implementation group to help the mortgage industry deal with proposed new rules for ‘mortgage prisoners’

On 27 August 2019, the UK Financial Conduct Authority set up a working group to help the mortgage industry deal with the implementation of its proposed new rules, set out in consultation paper 19/14, to deal with so-called ‘mortgage prisoners’.

The FCA has published a website (which it will update) summarising the discussions with the working group.

The current members of the group are:

– Building Societies Association
– UK Finance
– Ipswich Building Society
– Buckinghamshire Building Society
– Furness Building Society
– Tipton and Coseley Building Society
– West Bromwich Building Society
– OneSavings Bank
– UK Asset Resolution Ltd.
– Leeds Building Society
– Kensington Mortgages
– Yorkshire Building Society
– Link Asset Services
– Mortgages Plc

Posted on

European Payments Council publishes a press release about the impact of a “no-deal” Brexit on payments from customers based in the EU

On 2 September 2019, the European Payments Council published a press release on the operational impacts of a “no deal” Brexit on credit transfers and direct debits from the Single Euro Payments Area.

The European Payments Council sets out steps which should be taken to prepare for a “no deal” Brexit. Firms should consider these steps as a matter of urgency.

Posted on

Law Commission publishes its report on the electronic execution of documents

On 4 September 2019, the Law Commission published a webpage summarising its findings following its report into the electronic execution of documents. The webpage includes a very useful summary of the law. This broadly says that electronic signatures are generally (except for some exceptions) lawful and do not need to be signed in a particular way. But there are more complications for deeds which must be signed in the presence of the witness.

The Law Commission has recommended setting up a working party to consider some practical solutions (for example, video witnessing of deeds) and a further review of the law on deeds.

You can download:

– the summary paper by clicking here; or

– the full report by clicking here.

Posted on

FCA publishes research paper on measuring culture

On 4 September 2019, the UK Financial Conduct Authority published a webpage on ‘measuring culture’. This has always been considered to be a difficult topic to measure. But now three researchers at the London School of Economics have published their research suggesting how it can be measured.

The insight raises some interesting thoughts. It is important to remember that it has been published on the FCA’s website. Given culture is so important to the FCA, it’s therefore very likely the FCA will expect firms to give consideration to the researchers’ views and whether firms can manage and measure culture in their businesses.