If you’ve spoken to me over the last few weeks, you’ll know much of my working life has been spent thinking about concessions, unilateral variations and modifying agreements (exciting, no?). And some may say that modifying agreements are a little bit like lockdown: you know it’s for the best but it isn’t half frustrating trying to make it work (or maybe I’ve just got lockdown fever…).
I’ve been supporting the Finance & Leasing Association and its lobbying of HM Treasury to help make the modifying agreement provisions easier for lenders to comply with. There’s really good reasons why this should happen (and I’ve just written an update on my commentary on CONC for Issue 111 of Butterworths Financial Regulation Service dealing with this); at the very least, concessions don’t create the best of customer journeys.
The FLA asked me last week whether I could put together some infographics (it seems the recent ones on the FCA’s temporary guidance have gone down well) to help lobby HMT. Now they’ve gone into HMT, I thought I’d share them (and there are four).
Here’s the first: a typical customer journey through a modifying agreement where it will be sent to the customer by post:
And here’s the second: a typical customer journey through a modifying agreement where it will be sent to the customer online:
Here’s the third: some thoughts on the legal requirements for modifying agreements (and the slide is just scratching the surface – there are wonderfully complicated issues including whether there’s a right to cancel under the Financial Services (Distance Marketing) Regulations 2004 or whether a creditworthiness assessment needs to be made under CONC 5.2A):
And here’s the fourth (and final) one: a possible solution for firms if HMT allows a modifying agreement ‘lite’ approach (as I’ve called it; can’t wait for the royalties to roll in….):
It goes without saying that the ‘lite’ approach is plainly easier: the customer knows where she stands instantly and the document provides a clear and simple explanation of the modified agreement’s terms.
Surely HMT cannot say no? Or can they? Time will tell.
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.
After the UK Financial Conduct Authority introduced temporary guidance to consumer credit firms dealing with certain customers needing COVID-19 related payment holidays on 14 April 2020 (for more, see our earlier post), I’ve produced a one page summary of tips for consumer communications:
There’s guidance for credit cards (including retail revolving credit), personal loans (but there are a number of exclusions including motor finance) and overdrafts.
Issue 109 of Butterworths Financial Regulation Service has now been published. This includes updated material in chapters 1 to 5 (dealing with CONC 1 to CONC 4) written by Russell Kelsall.
Issue 109 includes new commentary on:
– the FLA’s proposals for reform of consumer credit;
– the Money Advice Trust’s new Debt & Mental Health Evidence Form;
– recent and forthcoming changes to CONC 3 (including on ‘buy now, pay later’ promotions); and
Issue 108 of Butterworths Financial Regulation Service has now been published. This includes updated material, and new chapters, in chapters 5, 6A to 6D, 10, 11, 13 and 16 (dealing with CONC 4, 5A, 5B, 5C, 5D, 9, 10, 12 and 15) written by Russell Kelsall.
In addition to reviewing the existing commentary on CONC 4 (including the FCA’s consultation paper, CP 19/28, on commissions), Issue 108 includes new commentary on:
– high-cost short-term credit (in CONC 5A);
– rent-to-own (in CONC 5B);
– overdrafts (in CONC 5C and 5D);
– prudential rules for debt management firms (in CONC 10);
On 29 March 2019, the Consumer Credit (High Net Worth Exemption) Instrument 2019 came into force. This amends CONC App 1.4.3R(2) by adding the Association of Accounting Technicians to the list of bodies whose members can provide a statement of high net worth under CONC App 1.4.
