Our regulatory experts provide their monthly bite size overviews of the major legal and regulatory developments and news for the consumer, asset and automotive finance sectors.
FCA publishes policy statement on proposals to amend CONC
The FCA is to broadly implement the rules on consumer credit proposed in February 2015, while also taking into account some of the comments that were put forward. The rules first implemented from January 2015 to combat misconduct have been retained, notwithstanding criticisms. With regards to credit broking, the FCA will implement minor proposed changes to the rules, although it will be delaying the implementation of the mandatory requirement to notify web domains using GABRIEL pending further consideration.
The FCA has decided that it does not have the necessary information to develop a view on broker remuneration. It is proposing to engage with those stakeholders who have offered to employ the rules and commission some work to inform its decision-making process.
Other notable changes including removing the requirement for Credit Reference Agencies to notify any person that has conducted a search of an individual's credit file in the previous month of any amendment or removal of information. The FCA is also not proceeding with its proposal that 'interest-free' should be treated as a rate of interest triggering the requirement to provide a representative example in relation to financial promotions.
The full details have been published in a Policy Statement.
We have written an article on these changes for Credit Today, which we shall make available following its publication.
New rules on whistleblowing
The FCA and Prudential Regulation Authority (PRA) have laid down new rules on whistleblowing to codify good practice already found in the financial services industry. The new rules will only apply to certain consumer credit firms; however they will act as non-binding guidance for all other regulated firms.
This is seen as a continuation of the FCA's work in recent years to encourage and increase the number of people coming forward as whistleblowers, which has resulted in a significant increase in the number of reports received.
FCA consults on handling PPI complaints
The FCA has issued a statement regarding whether or not further intervention in PPI complaints handling was required, either in light of the Supreme Court judgement in Plevin or more generally.
For more information on the Plevin case, see our analyses "The Supreme Court rules on unfair relationships - where does that leave us?" and "Non-disclosure of commission renders relationship unfair".
In the statement, the FCA sets out two new consultations, firstly on the introduction of a deadline for consumers to make their PPI complaints, and secondly on rules and guidance about how firms should handle PPI complaints fairly in the light of the Plevin judgment. The proposed rules and guidance are designed to ensure a fair and consistent approach to handling PPI complaints and give the FCA grounds on which to act if it feels that firms are not handling PPI complaints appropriately.
New rules banning opt-out selling across financial services
Following on from extensive consultation in light of the March 2014 General Insurance Add-Ons Market Study, the FCA has released a Policy Statement containing an overview of the consultation feedback and setting out the rules banning opt-out selling across financial services and supporting informed decision-making for add-on buyers.
The new rules will come into effect from 1 April 2016.
Joint consultation to improve access to financial advice
Along with HM Treasury, the FCA has begun a major joint consultation on measures to improve access to financial advice for customers. This is the first milestone in the Financial Advice Market Review which launched on 3 August. The consultation will focus on the following questions:
- What kind of financial advice do consumers want?
- Are there gaps between the financial advice that consumers want, and the financial advice that they can access and afford?
- How can these gaps be closed?
- What role could technology, such as "robo-advice", play in improving access to financial advice?
The call for input provides more information, and the consultation will run until 22 December 2015, with a final report to be published ahead of Budget 2016.
Latest Data issues update
The Data Bulletin No.4 has been published on the FCA website, providing an update into a number of areas, including work regarding financial promotions, the Consumer Credits authorisations process, and how firms and consumers contract FCA.
The update can be found here.
Call for evidence on review of regulation of Claims firms
A review led by Carol Brady, chairperson of the Chartered Trading Standards Institutes Board, has been announced into the way claims firms are regulated in light of concerns that some CMCs continue to fuel speculative claims and create significant social nuisance through unsolicited calls and texts and misleading marketing.
A call for evidence was launched on 2 October and the review is anticipated to be completed by early 2016. A formal consultation for proposals will be published later this year.
Consumer Rights Act comes into force
The new Consumer Rights Act 2015 came into force on 1 October, replacing various laws on business-consumer transactions, amongst them the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982. The new Act is relevant to every business that deals with consumers, and also applies to digital content.
Among the rights granted by the new Act are the right reject goods of an unsatisfactory quality within 30 days for a full refund, and the right to at least a partial refund if goods do not last a reasonable length of time, which can be up to six years. The Department for Business, Innovation and Skills has produced a summary and a checklist to help businesses get to grips with the new legislation.
For more information, please see our update on this topic.
Clarity on new DISP rule changes
The FCA has given an update on the new DISP complaint handling rules. Link back to previous alerts? They have confirmed that members who only have consumer credit permissions will need to comply with the new rules in terms of recording and treatment of complaints, but will continue to report under the old Form B, which can be found here.
Those members with mixed credit and non-credit permissions will use the new Form A for non-consumer credit reporting, and Form B for consumer credit.
The FCA's September quarterly consultation paper includes additional clarification on the new complaints recording at Chapter 7.
FCA Statement on WeRe Bank
This 'self-proclaimed' bank has been a topic of discussion at a number of FLA Fraud Committee meetings this year, as members have received cheques from customers of the bank. The FCA has now issued a statement about the bank, which may be of use when customers attempt to use cheques issued by WeRe Bank.
Consumer buy-to-let registration
As of 9 September 2015, the FCA is open to accept applications to lenders wishing to register as a consumer buy-to-let firm, as the broking of buy-to-let mortgages will no longer be a regulated credit activity. It will, however, be subject to certain legislative framework, as set out in the Mortgage Credit Directive Order 2015.
Appeal by VWFS on residual input tax
An appeal by Volkswagen Financial Services (UK) Limited in respect of residential input tax incurred in connection with its hire purchaser tax has been allowed by the Court of Appeal.
The judgment contradicts HMRC policy in the Revenue & Customs Brief 82/09 that it is necessary for the taxpayer to be able to trace overhead costs into the price of specific taxable outputs in order to recover the associated input tax.
It also raises the possibility of other taxpayers in the asset finance sector attempting to renegotiate PESMs with HMRC or defend assessments already raised against them.
The judgment can be read here.
FCA updates website on mortgage credit directive
A new series of factsheets for brokers and lenders has been released on the FCA's Mortgage Credit Directive webpage.
The updated website can be seen here.
Consumer Credit and Regulation updates
The FCA has released new updates on Consumer Credit and Regulation. Among other things, these look at the new step-by-step consumer credit guides available for firms.
In case you missed it:
Greg Standing gives the lowdown on the new Consumer Rights Act
Our Finance Litigation briefing for September 2015 consider the Court of Appeal ruling in McMullon v Secure the Bridge Ltd amongst others