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Retail finance round-up - 17 September 2015

  • United Kingdom
  • Financial services - Retail finance


The Financial Conduct Authority has published a number of helpful guides this week, on the Handbook and on consumer credit authorisation. Links for the guides are set out below.

The Law Commission has published a consultation on bills of sale to propose reform of the law relating to log book loans (a means by which individuals can use vehicles they own as security for loans, while retaining possession and use). The current legislation relating to use of logbook loans, notably the Bill of Sale Act 1878, is considered by the Law Commission to offer little or no protection to vulnerable borrowers and those wishing to buy goods subject to bills of sale. The consultation closes in December 2015.

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SRA Board agree to be sole regulators for certain consumer credit activities

On 9 September 2015, the Solicitors Regulation Authority (SRA) announced that solicitors should be able to carry out certain consumer credit activities under SRA authorisation, provided they are central to the legal services they provide. This will mean that firms will not need to be regulated by the FCA for the purposes of providing such consumer credit activities but will still maintain client protections.

The SRA is due to publish guidance for firms on carrying out such consumer credit activities in the Autumn. It is envisaged that once both the Legal Services Board and the FCA approve the approach, the changes will take effect within the SRA Handbook from 1 April 2016.

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FCA publishes Reader’s Guide to its Handbook

The FCA has published a readers guide to its Handbook, which is intended to introduce readers to the FCA Handbook and its rules and guidance. The guide covers topics including ‘What is the Handbook?’, ‘Where can I find the Handbook?’ as well as covering the structure and content of the Handbook modules.

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FCA publishes series of consumer credit authorisation guides

On 10 September 2015, the FCA published the following guides to help firms that are applying for permission to carry on a consumer credit regulated activity:

The FCA has also published an accompanying webpage that includes videos relating to the authorisation process.

FCA to move GABRIEL to new location on 21 September 2015

On 14 September 2015, the FCA published a webpage announcing that it will move GABRIEL, its online regulatory reporting system, to a new location on 21 September 2015. From this date, users will no longer need to wait until the following day to check the validation of PSD files.

Users’ login details will not change and users can continue to log into GABRIEL by selecting Proceed to GABRIEL as usual.

The FCA has published a quick reference guide (QRG) on GABRIEL that explains how to log-in, change personal details, and change or request a new password, and has confirmed that it intends to migrate firms to a new URL for submitting direct communications by the end of 2015. It will publish details of the change and testing times in due course.

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Payment Services Regulator announces appointment of 21 members to the Payments Strategy Forum

The Payment Services Regulator has announced the appointment of 21 members for an initial term of 2 years.

The forum will create working groups of people with expertise, which include advocates for consumers, retailers, high street banks and payment system operators, to inform of its work and achieve its goals.

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FCA issues feedback on the proposals for implementation of the EU Payment Accounts Directive (PAD)

As part of the implementation of the PAD provisions in respect of payment account services, the FCA have prepared a UK list of services and suggested terms and descriptions to describe these services.

The FCA called for feedback on this list earlier in June and recently issued a feedback statement which set out:

  • General issues that were highlighted in the feedback that related to:
    • the scope of PAD;
    • lack of clarity around the process of standardising terminology across the EU; and
    • time that service providers such as banks and building societies would be given to integrate terms and definitions into consumer documents and marketing materials.
  • A summary of the feedback concerning the definition of a ‘service’ in the context of payment accounts.
  • A summary of the proposed revisions made to the list of services.

Finalising the list of services is the first step towards implementing the PAD and it is unlikely that service providers will be required to incorporate any new terminology before autumn 2017.

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Finance (No 2) Bill 2015: Committee of the whole House passes proposed Bank Levy Changes

On 8 September 2015, the House of Commons passed four Clauses and two Schedules without amendment.  The Clauses and Schedules were: Clause 43 (Insurance premium tax: standard rate), Clause 45, (CCL: removal of exemption for electricity from renewable sources), Clause 16 and Schedule 2 (Bank levy rates for 2016 to 2021) and Clause 17 and Schedule 3 (Banking companies: surcharge).

The remainder of the Bill will now go to a Public Bill Committee from a date to be announced and to conclude by 20 October 2015.

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Council of the EU publishes Corrigendum to the Mortgage Credit Directive

On the 9 September 2015, the Council of the EU published a corrigendum (9646/15) to the Mortgage Credit Directive (2014/17/EU), making minor amendments to recital 26 and Annex II – these can be found on page 8 of the corrigendum.  Member states have 8 days to object to the changes.

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European Parliament announces indicative date for plenary session on PSD2

The European Parliament has announced that it will consider the proposed Directive on payment services in the internal market (PSD2) in its plenary session to be held from 5 to 8 October 2015.  PSD2 will incorporate and repeal the current Payment Services Directive and update the current framework on payment services.

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Law Commission consults on bills of sale

On 9 September 2015, the Law Commission published a consultation paper, together with a consultation summary, on reform of the law relating to log book loans (a means by which individuals can use vehicles they own as security for loans, while retaining possession and use).

The paper acknowledges that current legislation relating to use of logbook loans, notably the Bill of Sale Act 1878, is out of date and offers little or no protection to vulnerable borrowers and those wishing to buy goods subject to bills of sale. At present, there are serious consequences for those who default on payments, with borrowers often losing possession of their vehicles quickly whilst having to deal with interest and other substantial charges. In light of this, the Law Commission proposes that the current legislation is repealed in its entirety and replaced, with consideration being given to the following three key proposals:

  • Protecting borrowers from abrupt repossession:  Where a borrower is in temporary financial difficulties but has already repaid more than one third of the log book loan, lenders should have to apply for a court order before repossessing the vehicle. There is a need to ensure that repossession is seen primarily as a last resort.
  • Giving borrowers the voluntary right to terminate the log book loan:  A borrower with no realistic prospect of repaying a log book loan should be able to hand over the vehicle to the lender in full and final settlement of the loan (following which, the borrower would no longer be liable for the outstanding amount or associated charges).
  • Protecting private purchasers:  Where an individual has bought a vehicle for private purposes, in good faith and without knowing that it is subject to a log book loan, they should become the owner of the vehicle – this is a similar position to that provided under current hire-purchase law.

The Law Commission is also consulting on proposals that would simplify the regime for registering log book loans. Please also see an executive summary to the consultation for more information.

The consultation closes on 9 December 2015. This will be followed by a final report in summer 2016.

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Chancellor announces Autumn Statement for 25 November 2015

The Chancellor George Osborne has announced that there will be an Office for Budget Responsibility forecast alongside the Spending Review on Wednesday 25 November 2015.  The Government will publish a joint Autumn Statement and Spending Review on this date.

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BBA appoints new Chair

Noreen Doyle has been appointed as the new BBA Chair, with effect from 17 October 2015.  Ms Doyle is currently Chair of the Board of Credit Suisse International and Credit Suisse Securities (Europe) Ltd and Vice Chair of Credit Suisse Group.  She succeeds Sir Nigel Wicks who has served as BBA Chairman for the last three years.

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Committee on Payments and Market Infrastructure (CPMI) and the World Bank consult on payment aspects of financial inclusion

CPMI and the World Bank have issued a consultative report relating to payments aspects of financial inclusion.  The World Bank and CPMI Task Force have been examining demand and supply-side factors affecting financial inclusion in the context of payment systems and services and were tasked with suggesting measures to address these issues.  This consultative report reflects the work of this Task Force.

Responses to the report are due by 7 December 2015, after which a final version of the report will be issued. 

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Figures released by Finance and Leasing Association show a new five year high in consumer finance

Figures released by the FLA show that in July 2015, asset finance new business rose by 2% and consumer finance new business rose by 8% with a 13% increase in the number of cars bought by consumer finance. The figures show that the industry has financed 28.2% of all UK investment in machinery, equipment and purchased software in the twelve months to June 2015, resulting in a new five year high. A further breakdown of the figures is available for asset finance, consumer finance and car finance.

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The Lending Standards Board publishes its annual report and accounts for 2014/15

The Lending Standards Board (LSB) has published its annual report and accounts for 2014/15.  In his summary, the Chief Executive of LSB Robert Skinner, commented on LSB’s highlights in the year and plans for the future, including:

  • There was just one change to Board membership in the year - Jonathan Rees joined LSB last July and replaces Alan Whiting who left the Board after completing nine years as an independent Director of the Banking Code Standards Board and the LSB.
  • The Lending Code and the scope of the LSB’s activities evolved during the period, particularly in the area of support for those who find themselves in financial difficulties.
  • In 2014, LSB introduced a new Associate Subscriber category to allow debt collection and debt purchase firms to subscribe to the Lending Code.
  • LSB welcomed seven new Subscribers in the year, taking the total count of registered firms to 42 at 1 April 2015.
  • The relationships with the FCA and Financial Ombudsmen continue to develop, with regular meetings to share the forward agenda and discuss concerns.
  • There will be more research pieces undertaken during the next period, which will enable more collaborative work with Subscribers to identify good practice and which result in improvements to the Code.
  • How customers who are in, or who are at risk of getting into financial difficulties are treated, will continue to be a major focus of work.

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Citizens Advice reports that it has helped with more than 90,000 PPI issues in the last decade

Citizen Advice has announced that its latest trends report reveals that it has helped people with more than 90,000 PPI issues since the charity launched its complaint against the mis-selling of PPI more than a decade ago.

The number of PPI issues that Citizens Advice dealt with peaked in 2013 at 15,000. This was attributed to an agreement by the banks to pay compensation to those affected.

Since the mis-selling of PPI, most banks have been putting increased sums away to cover upcoming PPI compensation payouts. The FCA has also fined some banks for mis-handling complaints. 

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