Retail Finance Seminar Call for Input: Review of retained provisions of the Consumer Credit Act 10 and 17 May 2016 Jo Owens Principal Associate
Call for Input What is it?
What is the Call for Input? FCA required to undertake a review and to report to HM Treasury by 1 April 2019 Part 5 of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014 82 CCA provisions repealed as part of the OFT to FCA transfer 167 retained provisions of the CCA to be reviewed together with associated regulations FCA could make recommendations for legislative change FCA s aims include: simplify the regime where possible preference is to have a flexible rules-based framework makes change easier to modernise the regime is it fit for purpose? strike a balance between disproportionate burdens on business and appropriate degree of consumer protection (burden proportionate to benefit?) balance between high standards of conduct and innovation/creativity what should the FCA modify, update, replace or remove?
What is the Call for Input? FCA seeking to scope the review at this stage responses due by 18 May 2016 8 questions set out in the document : scope of the review: what should it be? should it include all of the retained provisions? what should be included/excluded and why? what should be the main priority of the review? should the review extend more broadly? what should the timescales be? should certain provisions be considered earlier? Why? how should the FCA engage with stakeholders? how should the FCA conduct the review?
Call for Input Scope of the review
Scope of the Call for Input a major review retained in April 2014 because: conferred specific rights or obligations on consumer or third parties (e.g. s75) derive from the Consumer Credit Directive (e.g. withdrawal) provide for specific sanctions on the lender/owner provide that contravention is a criminal offence or involve a role of the courts FCA s rule making powers do not permit the imposition of rules on consumers or unauthorised persons and FCA range of sanctions is different complex consumer credit regime: CCA and associated regulations FSMA 2000 and associated orders FCA Handbook codes and good practice guidance imbalance with other regimes MCOB, insurance? what should the FCA focus on? benefit to consumer versus burden on firms (multiple agreements, modifying agreements)? complex (multiple agreements, modifying agreements)? limited flexibility to change so leave as is (CCD requirements)? extend beyond to other matters relevant to or connected with the retained provisions? is the overall aim substance over form?
FCA s current thinking considering focusing on particular retained provisions rather than reviewing all not yet decided which provisions should be reviewed or the priority to determine these not intending to extend the scope of the review beyond the retained provisions unless substantial interactions FCA could recommend earlier changes to Treasury seeking views FCA proposing to conduct the review in-house may seek external help FCA proposing to establish an expert stakeholder consultative group
Call for Input Our thoughts
Our thoughts substance over form address complexity have a single point of reference? start the review now legislative change can take years! staged review with priorities based on: unfair burden and no consumer benefit quick wins could transfer to CONC without difficulties smarter communications and innovation the usual suspects multiple agreements modifying agreements consequences of improper execution (ss65 and 127(3) CCA) voluntary termination some terms from Part 2 of the CCA already defined in the RAO variations s78a and 82(1) deal with as rules and guidance? some provisions already set out in CONC 6
Our thoughts challenges for digital agenda form of consent required by section 176A challenges of what is meant by transmission? need to future proof regime to keep up with innovation unenforceability or a private right of redress? SECCI, statements, NoSiAs and NoDs and copy agreements requirements risk of error great, sanctions are draconian yet often no consumer detriment increase in litigation/cmcs form and content of statements and notices too prescriptive constrain innovation and the digital agenda smarter communications? information overload? the hire regime complex and inflexible draconian challenges of digitisation joint customers s185 little flexibility? business to business lending
Call for Input Next steps
Next steps responses due by 18 May 2016 send responses to FCA by: online form email to CCAreview@fca.org.uk or post to Charlie Gluckman, CCA Review, Strategy & Competition Division over the next few months FCA will: consider all responses finalise the scope of the review establish the consultative stakeholder group publish an update on progress by Q4 2016
Jo Owens Principal Associate 020 7919 0865 Joowens@eversheds.com eversheds.com 2015 Eversheds LLP Eversheds LLP is a limited liability partnership