The Ombudsman Service sets out things it will consider when looking at:
– claims by customers under Section 75(1) of the Consumer Credit Act 1974;
– complaints by customers in financial difficulties;
– complaints about motor finance agreements (including expecting businesses to “listen and proactively look for signs of financial difficulties“, expecting firms to be “even more flexible in their forbearance measures” and expecting firms to “fully inform consumers of their options to exit the agreement where necessary/appropriate“); and
The current COVID-19 restrictions mean asset and motor finance lenders are unable to collect vehicles as quickly as they’d like when a customer voluntary terminates a hire purchase or conditional sale agreement under Section 99(1) of the Consumer Credit Act 1974. Can you ask your customer to carry on taking care of the vehicle whilst you make arrangements to collect it?
After an agreement has been voluntarily terminated, the customer is likely to be a gratuitous bailee of the vehicle. This type of bailment is known as a ‘deposit’ because the customer keeps possession of the vehicle without payment.
It’s likely there is two possible types of bailments: (a) involuntary deposit or (b) necessary deposit.
Involuntary deposit – this is where the vehicle is left with the customer against her wishes. In most cases, the customer will need to take reasonable care of the vehicle. But the customer will normally need to make good any damage caused deliberately but not negligently.
Necessary deposit – this is where the vehicle is left with a customer because of a peculiar stress or set of circumstances such as an unforeseen disaster (which the Covid-19 pandemic and lockdown arguably could fall into). The customer is likely to be responsible in negligence or bad faith whilst she has the vehicle.
So how do you protect your position and the vehicle? Talk to your customer. Ask if they’re willing to hold on to the vehicle whilst you make your collection arrangements. And talk to them about insurance, and who is going to pay for it.
To ask the Chancellor of the Exchequer, what steps is he taking to limit enforcement action by debt collection agencies during the COVID019 pandemic.”
HM Treasury’s response is:
“The Government’s priority is to support as many people as possible who have had extreme disruption to their lives as a result of COVID-19. Debt collection firms are regulated by the Financial Conduct Authority (FCA).
The FCA has announced a series of measures to provide consumers with temporary relief if they are facing payment difficulties during the COVID-19 pandemic. This includes requiring firms to provide consumers with 0% interest on the first £500 of an arranged overdraft for three months and allowing consumers either a 3-month payment holiday or to make nominal payments towards credit cards, store cards, catalogue credit and certain personal loan agreements.”
On 7 May 2020, the UK Financial Conduct Authority updated its webpage for firms dealing with complaints during COVID-19. The webpage suggests firms should “take all reasonable steps to ensure as much complaint handling as possible continues through staff working from home, where this can be done fairly and effectively“. But the FCA warns claims management companies should allow firms “a reasonable amount of extra time, beyond 8 weeks, to give a final response before referring complaints to the Ombudsman Service“.
On 10 May 2020, and after the Prime Minister’s statement made to the nation at 7pm, the UK Financial Conduct Authority published an update saying firms should continue to following the Government’s advice until told otherwise.
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.
On 30 April 2020, the Competition & Markets Authority (the CMA) launched a programme to investigate reports claiming businesses are failing to respect customer’s cancellation rights during the COVID-19 pandemic.
The CMA’s published guidance sets out its general views about the law and offered brief guidance to businesses and customers on their respective rights.
– states firms have paid over £38bn of redress to customers; and
– brings an end to the FCA’s project work on PPI (but it will continue to monitor how firms are dealing with complaints submitted before the 29 August 2019 deadline).
