United Kingdom

Topic: Consumer credit

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FCA consults on motor finance discretionary commission models and consumer credit commission disclosure

On 15 October 2019, the FCA published Consultation Paper 19/28: Motor finance discretionary commission models and consumer credit commission disclosure (CP19/28). In CP19/28 the FCA is proposing a ban on commission models where the amount received by the broker (including motor dealers) is linked to the interest rate that the customer pays and which the … Continue Reading

New consumer credit video: The FCA’s motor finance review – lessons for the wider consumer credit market

In our latest consumer credit video, Matthew Gregory, John Coley and Simon Lovegrove take a look at the FCA’s motor finance review and consider what it means for the consumer credit industry generally. Among other things the motor finance review discussed training, which is a key part of the Senior Managers and Certification regime. We … Continue Reading

FCA launches review of the Credit Information Market

On 27 June 2019, the FCA launched a market study to examine how the credit information market operates and the impact it has on consumers. The FCA will report on its preliminary conclusions on these themes in Spring 2020 including, if appropriate, a discussion of potential remedies. The FCA is not formally consulting on the … Continue Reading

Advocate General opinion on the interpretation of Article 16(1) of the Consumer Credit Directive

On 23 May 2019, there was published on InfoCuria (Case-law of the Court of Justice) the opinion of Advocate General Hogan as regards the interpretation of Article 16(1) of the Consumer Credit Directive which concerns the entitlement of a consumer to a reduction in the cost of credit where he or she has fully or … Continue Reading

FCA final report on review of retained provisions of the CCA

On 25 March 2019, the FCA published its final report (the Report) on its review of retained provisions of the Consumer Credit Act 1974 (CCA). The FCA took over responsibility for regulating consumer credit in April 2014. As part of the transfer, Parliament repealed some CCA provisions and some were replaced by FCA rules. The … Continue Reading

FCA sets out expectations of consumer credit firms

On 21 March 2019, the FCA published a speech from Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations, on the FCA’s interaction with the consumer credit sector. Highlights from the speech include: the FCA will be doing further work to understand both the motivation for, and the impact of, relending on both consumers … Continue Reading

FCA Portfolio Strategy letter to firms providing high cost lending products

On 6 March 2019, the FCA published a Dear CEO letter it had sent to firms setting out the regulator’s view of the key risks that high cost lenders pose to their consumers or the markets they operate in. The Dear CEO letter applies to firms providing the following products: guarantor loans; high-cost short-term credit … Continue Reading

FCA acts to address unclear and excessive motor finance costs

On 4 March 2019, the FCA published its final findings following a review of the motor finance sector. The FCA wanted to understand the use of motor finance products, and to assess the sales processes employed by firms and whether the products could cause consumer harm. The FCA reports that it has serious concerns about … Continue Reading

FCA announces proposals to fundamentally reform the way banks charge for overdrafts and extends protections for other high-cost credit products

Introduction On 18 December 2018, the FCA announced the next package of measures forming part of its high-cost credit review. It has announced proposals to change how banks charge for overdrafts. It has also made new rules strengthening the protections for consumers using home-collected credit (doorstep lending), catalogue credit and store cards and it is … Continue Reading

Treasury Committee inquiry into consumers’ access to financial services

On 9 November 2018, the Treasury Committee (the Committee) announced the launch of a new inquiry (the Inquiry) into consumers’ access to financial services. The Committee will scrutinize whether certain groups of consumers are excluded from obtaining a basic level of service from financial services providers. It will also examine whether vulnerable consumers pay more … Continue Reading

HM Treasury consults on breathing space and statutory debt repayment plan proposals

On 30 October 2018, HM Treasury published a consultation (the Consultation) on the policy proposal for the implementation of a breathing space and statutory debt repayment plan, both announced in the 2017 Conservative party manifesto. The two proposals should be viewed separately. The first proposal, breathing space, would give an individual in problem debt the … Continue Reading

FCA Dear CEO letter – HCSTC loans

On 15 October 2018, the FCA published a Dear CEO letter regarding an increase in complaints about unaffordable lending and setting out how the regulator expects high-cost short-term credit (HCSTC) firms to manage the impact. The Dear CEO letter begins by stating that firms should take prompt action to: assess their lending activity to determine … Continue Reading

FCA sets out expectations for debt packager firms

Introduction On 5 October 2018, the FCA published a Dear CEO letter to debt packager firms. The service that these firms provide include: gathering customer information; providing debt counselling advice on the debt solutions available; recommending a debt solution for the customer; and, referring on to a third party provider. Upon this referral, the firm … Continue Reading

FCA thematic review on impact of credit broking remuneration models at point of sale

On 27 September 2018, the FCA published Thematic Review 18/2: Impact of credit broking remuneration models at the point of sale (TR18/2). The FCA review considered whether inter-firm commission affects how consumers are sold credit and whether commission arrangements are resulting in consumer harm. The FCA’s research as part of the review did not find … Continue Reading

Creditworthiness Assessment Bill 2017-19: first reading

On 12 September 2018, there was presented in the House of Commons the Creditworthiness Assessment Bill 2017-19 (the Bill), where it received its first reading. The Bill, a private members bill, if enacted, will amended the Financial Services and Markets Act 2000 to require the FCA to ensure that firms carrying on credit-related regulated activities … Continue Reading

Policy Statement 18/19: Assessing creditworthiness in consumer credit

Introduction On 30 July 2018, the FCA published Policy Statement 18/19: Assessing creditworthiness in consumer credit – Feedback on CP17/27 and final rules and guidance (PS18/19). In PS18/19 the FCA summarises and responds to feedback to Consultation Paper 17/27: Assessing creditworthiness in consumer credit (CP17/27). It also publishes final rules and guidance in its Consumer … Continue Reading

Four former directors of online consumer credit broker banned by FCA for misleading customers

On 25 July 2018, the FCA published final notices that it has issued to four former directors and shareholders of Secure My Money Limited (now dissolved), prohibiting them from performing any function relating to any regulated activity: Mark Kennedy. David Mullins. Edward Booth. Christopher Brotherton. The final notices state that that between November 2013 and … Continue Reading

FCA publishes outcomes of pawnbroking sector review

On 10 July 2018, the FCA published the outcomes of its pawnbroking sector review. The review itself highlighted a number of positive aspects of the sector as well as risks. Positive features included: business models focused heavily on customers with quality of service and relationships being paramount; product terms were flexible and personalised in the … Continue Reading

Commission issues an evaluation roadmap on the Consumer Credit Directive

The European Commission has published an evaluation roadmap of the Consumer Credit Directive (CCD).  The evaluation of the CCD is expected to conclude in 2019. The evaluation will gather evidence regarding the functioning of the CCD in its totality and in particular, regarding the following aspects: design and distribution phases of credit products; cross-selling of … Continue Reading

FCA publishes outcome of high-cost credit review

On 31 May 2018, the FCA announced proposals designed to protect consumers who use overdrafts and high-cost credit. The proposals are contained in: Consultation Paper 18/12: High-cost Credit Review: Consultation on rent-to-own, home-collected credit, catalogue credit and store cards, and alternatives to high-cost credit, discussion on rent-to-own pricing (CP18/12); and Consultation Paper 18/13: High-cost Credit … Continue Reading

High-cost credit: what next?

On 2 May 2018, the FCA published a speech by its CEO Andrew Bailey, entitled High-cost credit: what next? At the beginning of his speech Mr Bailey explains that the FCA’s current focus is on overdrafts, rent-to-own, home collected credit and catalogue credit because of their particular risks to consumers. In terms of the FCA’s … Continue Reading