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Retail Finance round-up - 15 September 2016

Retail Finance round-up - 15 September 2016

  • United Kingdom
  • Financial institutions - Retail finance

15-09-2016

The Law Commission has this week published its final report on bills of sale. The Commission has made a number of recommendations for reform, including the repeal and replacement of the Bills of Sale Acts with a new Goods Mortgages Act. This Act would govern the way individuals may use goods they already own as security for loans, while retaining possession of them. The Commission intends to tie the new Act to the existing Consumer Credit Act 1974, in particular to the protections afforded to individuals under a regulated hire purchase agreement.

This is our final weekly Retail Finance round-up. We will be launching a new Retail Finance round-up covering the key developments of the month, so look out for our new monthly briefings launching soon!

Regulatory updates

Government updates, legislation and case law

Industry news

You may have missed…

FCA webpage update

The FCA has published new content on the following webpages: 

  • The Monthly PPI refunds and compensation webpage – The FCA has updated this webpage to include the relevant figures for June 2016. The FCA has confirmed that a total of £262.2 million was paid in June 2016 to customers who complained about the way they were sold payment protection insurance (PPI). This takes the amount paid to £24.8bn since January 2011.
  • The Promoting competition webpage – The FCA has uploaded a video of a speech by Mary Starks, the FCA’s Director of Competition, in which she explains how competition can help markets work better for consumers.  She discusses how competition can drive better quality, value and choice, as well as encourage innovation.
  • The Senior Managers and Certification Regime webpage – The FCA has published information on the requirement on banks and building societies to submit Form H via the Gabriel System, even where they have a nil return.  It outlines the process for submitting the form electronically, whilst also providing a link to a paper copy.
  • The Regulatory sandbox page – The FCA has updated the webpage to include information on how to apply for the sandbox, including the process for submitting an application form, and the eligibility criteria against which an application will be assessed.

Chancellor steps up industry engagement

On 7 September 2016 Phillip Hammond, Chancellor of the Exchequer, hosted a meeting with members of the European Financial Services Chairmen's Advisory Committee (EFSCAC) to discuss issues relating to the UK financial services industry in preparation for negotiations between the UK and the EU following Brexit. The meeting also covered the attendees’ views on how the Government can offer support to the industry in the lead up to the Autumn Statement.

As part of the Chancellor’s engagement with a variety of sectors including technology and financial services, the HM Treasury has confirmed that the Chancellor will also hold a series of bilateral and group discussions with domestic and international firms ahead of chairing a further roundtable with representatives from financial services firms in October 2016.

Treasury Committee publishes responses from banks on overdraft charges

In July 2016, Andrew Tyrie MP, Chairman of the Treasury Committee (the Committee), wrote to the Chief Executives of 13 banks, seeking information on their charges, including paid and unpaid, on both authorised and unauthorised overdrafts, for each type of personal banking account they offer.

All 13 banks have now responded and the Treasury Committee has published those responses on its website.

Commenting on the responses and the CMA’s final report of its Retail Banking Investigation, the Committee emphasised its concerns on the level of complexity of overdraft charges.

Parliament answers questions on money laundering and open banking standard

On 8 September 2016, Parliament published its answers to questions relating to money laundering and the open banking standard confirming the following:

  • When questioned on the steps the Government intends to take to ensure continued cooperation with EU member states to prevent money laundering once the UK leaves the EU, Parliament emphasised the fact that the UK was a founding member of the Financial Action Task Force (FATF) which sets the global standards to combat money laundering and terrorist financing, and the EU Commission and a majority of EU Member States are also FATF members. Parliament confirmed that the UK will continue to play a leading role in tackling illicit financial flows through working with the FATF to ensure that standards are implemented effectively and through engaging bilaterally with countries on operational issues.
  • When questioned on what assessments the Government has made since the Open Banking Standard report of February 2016, on (a) cyber security, (b) data protection and (c) fraud risks an open banking environment introduces, Parliament noted that the Open Banking Working Group, which was set up at the request of the Government, published the report setting out their views and not the Government policy. Parliament referred to the CMA’s final report on its retail banking investigations and the CMA requirement that nine leading UK banks create an open API (Application Programming Interface) to allow access to customer account information as set out in the revised Payment Services Directive (PSD2), which will come into force in January 2018.

New webpage on Brexit next steps

Parliament has launched a new webpage which includes impartial analysis of the UK’s referendum for remaining in or leaving the European Union. The webpage sets out research on the impact of Brexit on key policy areas and explains the process for leaving the EU.

Law Commission report on bills of sale

Bills of sale have been revived in recent years as logbook loans. The Law Commission (the Commission) carried out a consultation on bills of sale in September 2015, and has now published its final report, Bills of Sale.  

A logbook loan is a type of sub-prime lending, where the borrower gives the lender a bill of sale on a vehicle they already own. The borrower may continue to use the vehicle so long as they keep up the repayments, but risks having it seized on default.

In its report, the Commission has made a number of recommendations for reform, including the repeal and replacement of the Bills of Sale Acts with a new Goods Mortgages Act. This Act would govern the way individuals may use goods they already own as security for loans, while retaining possession of them. The Commission intends to tie the new Act to the existing Consumer Credit Act 1974, in particular to the protections afforded to individuals under a regulated hire purchase agreement.

If the Commission's recommendations are accepted by the Government, the next stage would be for the Commission to draft the Bill.

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