RMI response to the Law Commission Bills of Sale Consultation

Transcription

1 RMI response to the Law Commission Bills of Sale Consultation Introduction The Retail Motor Industry Federation (RMI) would like to thank the Law Commission for the opportunity to respond to the above consultation and requests that this submission, representing the views of our members, is considered during the review process. The RMI is the UK s leading automotive retail trade body, representing a vast range of businesses that provide motor industry products and services throughout the UK. The RMI has been representing the industry for over 100 years and its membership includes; franchised car and commercial vehicle dealers, independent garages, bodyshops, motorcycle dealers, auction houses, petrol retailers and cherished number plate dealers, who provide automotive sales and services to motorists and businesses throughout the UK. Overall position The RMI is overall in support of the recommendations made by the Law Commission. As it currently stands, RMI members and the automotive retail industry, namely used-car dealers, are reporting issues of reputational damage and time consuming costly settlements as a consequence of dealer s part-exchanging vehicles, to later discover the vehicle has a logbook loan attached. Consumers who purchase these vehicles are then often approached by finance companies informing them a loan is in arrears and/or repayments need to be made. A consumer expects a trader to be fully aware of a vehicles history and in these cases, it can appear to the consumer the trader has deliberately acted deceitfully. Companies, such as auctions, will go through steps of due diligence to check vehicle finance registers, attempting to ensure a vehicle is clear of debt, however, they are not able to detect a logbook loan attached to a vehicle. It is for these reasons that amendments must be made to the current system and the RMI is encouraged that the Law Commission is actively taking steps to address the issue. Questions and answers The following comments are reflective of RMI members; the proposals will have a direct impact on four specific RMI organisations; National Franchised Dealers Association (NFDA), National Association of Motor Auctions (NAMA), National Motorcycle Dealers Association (NMDA) and Independent Garage Association (IGA). National Franchised Dealers Association (NFDA) The NFDA represents the interests of franchised vehicle dealers, HGV technicians and commercial vehicle dealerships in the United Kingdom. Membership consists of over 80% of the UK s 4,900 franchised car sales outlets, representing around 40 manufacturer franchises. NFDA members offer the widest range of apprenticeships, employing traditional automotive apprentices such as technicians, to more unexpected apprenticeships in, for example, law and accountancy. Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 1

2 Independent Garage Association (IGA) The IGA is the largest representative body of the UK s circa 20,000 independent garages. The IGA established its consumer facing brand, Trust My Garage ( TMG ) in TMG built upon the IGA s established code of practice for independent garages and provides a code of conduct for businesses which received Trading Standard approval in National Association of Motor Auctions (NAMA) NAMA is the RMI s automotive auction representative, representing auction companies selling cars, commercial vehicles, as well as motorcycles, off road vehicles and motor homes. NAMA currently holds 90% of the UK s motor auction houses in its membership. 1.5 million vehicles are sold at auction every year; this is 43% of the total UK wholesale market. National Motorcycle Dealers Association (NMDA) The NMDA represents the interests of motorcycle dealers throughout the UK. Membership consists of around 40% of the UK s 500 motorcycle dealers, representing all of the main franchises. The NMDA is the industry leader establishing the motorcycle apprenticeship trailblazer. Questions Chapter 7: The case for reform Question 1: Do consultees agree that bills of sale should not be banned or abolished? 1.1 Yes. Questions 2: Do consultees agree that the law of bills of sale should be reformed? 2.1 Yes. Chapter 8: Proposals for reform: a new legislative framework Question 3: Do consultees agree that the Bills of Sale Acts should be repealed and replaced with new legislation regulating how individuals may use their existing goods as security while retaining possession of them? 3.1 Yes. Question 4: Do consultees agree that: 1. the phrases bill of sale, security bill and personal chattels should be replaced? 4.1 Yes 2. the new legislation should use the term goods mortgage to refer to secured loans over goods generally? 4.2 N.A. 3. the new legislation should use the term vehicle mortgage to refer to secured loans over vehicles? Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 2

3 4.3 Yes. The RMI strongly encourages the use of the term vehicle mortgage when referring to secured loans over vehicles. Question 5: Do consultees agree that the new legislation should regulate transactions where individuals use goods they already own as security for a loan or other nonmonetary obligation and retain possession of the goods? 5.1 Yes In particular, should the new legislation: (1) apply only to security granted by individuals? 5.2 Yes (2) cover transactions where the obligation is secured in mon-monetary? 5.3 N.A. (3) provide that goods are considered to be in the possession of the borrower if they remain under the borrower s control? 5.4 N.A. Question 14: Do consultees agree that where a regulated credit agreement is secured on a vehicle the vehicle mortgage document should include prominent statements that: (1) the lender owns the vehicle until the loan is repaid 14.1 Yes. (2) in the event of default, the borrower risks losing possession of the vehicle 14.2 Yes. Do consultees have views on: (3) the suggested formulations for the prominent statements? 14.3 N.A. Chapter 10: Proposals for reform: modernising the registration regime Question 17: Do consultees agree that: (1) there should no requirement to register vehicle mortgages at the High Court? 17.1 Yes. (2) instead, a logbook lender should not be entitled to enforce a vehicle mortgage against a third party or trustee in bankruptcy unless the vehicle mortgage has been registered with a designated asset finance registry? 17.2 Yes. Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 3

4 (3) priority should be determined by the date and time that the details of the vehicle mortgage become publicly available? 17.3 Yes. Question 18: Do consultees agree that: (1) a government entity should designate asset finance registries as suitable to register vehicle mortgages? 18.1 Yes. (2) to provide an asset finance register which meets the needs of lenders and traders, asset finance registries seeking designation should meet four criteria: a. adequate data-sharing; b. a suitable cost structure; c. robust technology (coupled with indemnities); and d. a complaints system? 18.2 Yes. We welcome other comments on the registration of vehicle mortgages There are a number of existing vehicle finance registers that are already fully established and operating effectively, notably HPI, Experian and CDL. These organisations offer a robust and reliable data source for checking outstanding finance on a particular vehicle The RMI suggests that HPI, Experian and CDL are included as designated registers. These organisations are (within the scope of capability), available to both trade and the public through online platforms, ensuring they are easily accessible and reliable. Question 19: We expect that the designated asset finance registries will initially be HPI, Experian, CDL. We welcome comments on whether there are likely to be new entrants to this market As stated within the answer to question 18, the RMI fully endorses the use of HPI, Experian and CDL as holding the position of designated asset finance registries. The RMI has a strong working relationship with each of these organisations, which is also experienced by many industry stakeholders HPI and Experian have been established in the industry for a notable period and are widely used across the automotive retail industry, offering a number of services beyond finance registers CDL is a newer organisation than the two former but has firmly established itself within the industry. It is the case however, that CDL does not necessarily hold the same level of recognition as HPI or Experian Due to the market domination of the three organisations, the RMI holds that it is difficult to predict whether there will be additional new entrants to the market. However, it is notable that previous new entrants to the dealer market have withdrawn within only a few years of establishing themselves. Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 4

5 Question 22: Do consultees agree that to maintain the accuracy of the registers: (1) lenders should be required to enter notices of satisfaction in respect of satisfied vehicle mortgages and goods mortgages? 22.1 Yes. (2) there should be a procedure for the borrower (at the lender s cost if successful) to enter a notice of satisfaction where the lender refuses to do so? 22.2 Yes. (3) re-registration of vehicle mortgages and goods mortgages should be required every ten years? 22.3 Yes. Chapter 11: Proposals for reform: protecting borrowers Question 23: Do consultees agree that: (1) the requirement for a court order before repossession should be extended to all regulated credit agreements secured by a goods mortgage? 23.1 Yes The RMI is in full agreement that the requirement for a court order before repossession should be extended to all regulated credit agreements by a goods mortgage RMI members have consistently struggled with this situation and their customers. Question 26: Do consultees agree that if the borrower protection measure we propose are enacted: (1) vehicle mortgages would not be used to secure the purchase of new vehicles on credit? 26.1 Yes. (2) no further intervention is necessary? 26.2 Yes. Chapter 12: Proposals for reform: protecting private purchasers Question 28: Do consultees agree that: (1) a private purchaser who acts in good faith and without actual notice of the goods? 28.1 Yes. (2) the protection should apply to all goods subject to a goods mortgage, not just vehicles? Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 5

6 28.2 Yes. (3) if the private purchaser did not act in good faith and/or had actual notice of the goods mortgage, lenders should only be entitled to repossess from them with a court order? 28.3 N.A. (4) the proposed new legislation should contain a regulation-making power to amend its provisions, including the repeal of the protection granted to private purchasers of vehicles, if vehicle provenance checks were to become free (or almost free) and a routine part of buying a second-hand vehicle? 28.4 Yes. Question 30: Do consultees agree that the FCA should be given jurisdiction to curb abuses in the way that logbook lenders treat private purchasers? 30.1 Yes. Question 31: Do consultees agree that FOS should have jurisdiction to hear complaints against logbook lenders made by private purchasers of vehicles subject to logbook loans? 31.1 Yes. Chapter 13: General assignments of book debts Question 32: Do consultees agree that registration of general assignments of book debts serves, in principle, a valuable purpose? 32.1 Yes. Question 33: Do consultees agree that a general assignment of book debts should be evidenced in a document which contains: (1) the names and addresses of the parties? (2) a statement that the book debts are assigned? (3) the date of the general assignment? (4) sufficient information to identify the class of book debts in question? (5) if the general assignment is time-limited, the duration? (6) the borrower s signature in the presence of a witness? (7) the name, address and occupation of the witness? 33.1 Yes, the RMI agrees that all seven of the above should be included in an evidence document. Question 34: Do consultees agree that the following changes should be made to the regime for registering a general assignment of book debts at the High Court: (1) the need for an affidavit should be abolished? (2) documents should be submitted by ? Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 6

7 34.1 Yes (3) the general assignment should be validly registered from the date and time of the automatic reply to the ? (4) the seven clear day time limit for registration should be abolished? (5) registration should be renewed every 10 years? Chapter 14: Absolute bills of sale Question 35: Do consultees agree that: (1) the requirement to register absolute bills should be abolished? 35.1 Yes (2) there is no need to continue to regulate the use of absolute bills? 35.2 N.A. Retail Motor Industry Federation 201 Great Portland Street, London, W1W 5AB 7