Credit Consumer Finance

Consumer financing loan

Rules and guidelines applicable to consumer credit institutions are. Governing outlook | Consumer financing | July 2018 EZV has issued two consultative documents after examining the risk of consumer damage in the expensive short-term credit area. CP18/12 proposes new FCA regulations and guidelines in the areas of rent-to-own, home-collected credit, catalog credit and store credit in order to enhance customers' openness and equity in the functioning of these services.

EZV also discusses its intentions for further work on the evaluation of possible regulations to establish an upper limit for the prices of rent-to-own goods and the amount and nature of a possible upper limit. The CP18/13 establishes potentially new regulations to: enhance the transparency and contents of customer information; establish instruments that allow clients to charge the costs of using an advance; and provide users with advance notification to take advantage of unanticipated advances.

FCA also proposes actions to: facilitate simplification of bankoverdraft price structure; establish a possible upper limit for bankovers; tackle repeated use of bankovers by clients. EZV is discussing new guidelines setting out the elements that should be taken into account by FIs, in accordance with the Consumer Law Act 2015, when developing and revising conditions of amendment in their consumer agreements.

A number of elements that companies should take into account in order to ensure that the conditions for amendment are transparent and fair are taken into account in the preparation and review of the amendment conditions, including: the extent and effect of the amendment and whether the grounds for the amendment of the amendment are sound; the clarity of the amendment; the possibility for the consumer to withdraw from the contract if he does not wish to agree to the amendment.

In December 2018, the FCA is planning to release feed-back on the guidelines. As soon as the guidelines are ready, they should be consulted in connection with the abusive clause materials available on the FCA website and the Competition and Market Authority guidelines on abusive contractual conditions. SMCR, which entered into effect in March 2016 for depositor protection companies and is due to enter into effect on 10 December 2018 for two-tier insurance companies, will be expanded from mid to late 2019 to cover all companies subject to solistic regulation by the FCA.

With a view to mitigating consumer damage, the existing system for authorised personnel will be replaced by the existing system of rules for authorised personnel, with the objective of enhancing personal responsibility for those in managerial posts. Applicants for executive posts must be authorised by the FCA before they take up their duties and have a declaration of responsibility.

Certifying system applies to staff who do not hold executive positions but who, due to their positions, could cause damage to clients, the company and/or brand equity. At least once a year, undertakings must 'certify' that these persons have the necessary competences to carry out their tasks.

FCA also proposes the introduction of new codes of good practice applicable to most workers in the finance service area. In 2017, the FCA launched a consultation on new regulations for the assessment of credibility and affordable pricing. Nevertheless, the stakeholders expressed concern that the suggested regulations went beyond increasing openness and attempted to significantly modify the current scheme.

As an example, the suggested regulations would not allow companies to take households' incomes into consideration, which could result in some clients being affected by economic marginalisation. The FCA announced after receiving sector feed-back that it would issue a policy statement in the Summer of 2018 outlining its new credit assessment regime for consumer credit.

There has been a major transformation of the consumer finance sector as a whole over the last decade, notably through the transposition of new EU rules. These include the Consumer Credit Directive (CCD) in 2011, the Consumer Rights Directive, which was transposed over several years between 2013 and 2015, the Mortgage Credit Directive (MCD) in 2016 and most recently the Second Payment Services Directive of 13 January 2018.

As regards granting credit to the consumer, we now have equal rules in the EU Member States concerning the obligation to give certain information to the consumer before concluding a credit contract or a hypothec. Therefore, we are not currently planning to implement new EU rules with a specific impact on the consumer finance sector before the end of the transitional phase suggested.

Will a new supervisor be needed, or must extra power be given to an incumbent supervisor? The FCA will still govern companies that grant credits and loans to individual persons for non-business purpose after leaving. Does an equivalent or accreditation system exist for the accreditation of third country schemes? The consumer credit and MCD regulation systems have been harmonized across the EU, as mentioned above, with all Member States obliged to transpose the CCCDs and MCDs into their own legal systems as maximal harmonization guidelines.

There is currently no system for the recognition of different countries' systems of regulations. Is the UK Government's present policies such that (subject to the conditions of a forthcoming UK-EU commercial agreement) substantial changes in regulations or implementation are likely after Brexit? It is not our expectation that the UK authorities will make significant changes to the consumer credit or regulate mortgages system immediately after Brexit, as the law in this area has changed several times recently.

Brexit, however, as much of the UK's consumer finance legislation is already in place and is built on the transposition of EU directives such as CC and MCD, offers the sector the possibility to engage in lobbying with the UK authorities and the FCA on their proposals to simplify the present arrangements for consumer credit and mortgage lending in specific areas.

Governments will be more willing to move away from a domestic economy in these areas, as borrower typically seek a credit or mortgages in their home countries rather than buying abroad. The FCA is likely to take a "wait and see" stance in proposing changes to the current Brexit regulations and legal provisions in order to prevent companies from having to make several changes to their system, process and documentations, which could not only be expensive but also confuse the borrower.

There is no need from a UK legal point of view for companies located in the UK and lending only to UK-based clients to take special measures to get ready for Brexit. Companies currently relying on passport fixing under the Banking Consolidation Directive or the MCD to supply consumer finance from another Member State to the United Kingdom or viceversa will, however, need to consider whether they wish to maintain these offerings after Brexit in the competent jurisdiction(ies).

Failing that, and if no equality arrangements have been agreed between the UK and the EU, companies will have to choose whether to establish a local office or a local affiliate in their jurisdictions and what this could mean in order to obtain the necessary official authorisations or licences.

August 15, 2018Personal and corporate checking account vendors must begin to publish standardized information about services uptime, help lines, and the number of operating and safety events that help clients benchmark the services they can get from different vendors. September 1, 2018Confirmations are obligated to meet the new CONC 6 standards.

Article 7 in respect of a credit cardholder who is in continuing indebtedness. October 1, 2018The new regulations and guidelines for the compensation and incentive of consumer credit personnel enter into force. February 15, 2019Companies must begin to publish opening accounts and exchange credit cards notices. April 1, 2019The FCA is obliged to inform the Ministry of Finance about the maintained regulations of the Consumer Credit Act 1974 with its recommendation as to whether the present regulations should be completely or partially abolished or implemented in CONC regulations and guidelines.

It will also be the responsibility of the Financial Ombudsman Service to settle any dispute concerning loss adjustment undertakings.

Mehr zum Thema