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New Markets - New Opportunities?. Regulatory Update Keith Cooper, Aaron Berry. Today. Enforcement outcomes Guidance update Future Questions. Debt collection - Aktiv Kapital, HFO, MBNA, CCF Credit - Toothfairy Finance, Safeloans, Home Collected Credit, SAS, NIZ, Neil John Taylor, LNS
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Regulatory Update Keith Cooper, Aaron Berry
Today • Enforcement outcomes • Guidance update • Future • Questions
Debt collection • - Aktiv Kapital, HFO, MBNA, CCF • Credit • - Toothfairy Finance, Safeloans, Home Collected Credit, SAS, NIZ, Neil John Taylor, LNS • Debt management • - Baker Evans, MADL, Parkgate, IVAC, CPN, Bliss Finance, JST, Chase Saunders • Secured • - First Plus, Charging Order Project – major banks and credit card providers, Bankruptcy Annulment, Bills of Sale
What prompts enforcement action? • Evidence • OFT does not intervene in individual complaints – but does need good quality information to take action • Need permission of complainant to use details of their complaint as evidence • Will seek further information where appropriate – for example, witness statements to bolster complaint information
Proactive: Competence visits Compliance reviews Reactive: Complaint trends Adviser/consumer complaints Consumer Direct FOS & Regulators Media How does the OFT obtain evidence? • Information gathering powers • Information gathering powers • Trading Standards information • Information direct from business rivals, trade bodies
What constitutes good complaint evidence? • Proportionality – number of complaints v size of business • Include all trader’s details (name, address, etc) and ensure correspondence tells a chronological story, include supporting documents • Identify/explain persistent breaches of guidance • Provide OFT progress updates on complaints
Produced in line with requirement under S25A Consumer Credit Act 1974 (CCA) • ‘Fitness test’ - Guidance focuses specifically on behaviours we consider unfair or improper (whether unlawful or not) under section 25 of the CCA • (Primarily) minimum standards • Guidance is not exhaustive - outlines unfair practices with illustrative examples Guidance
Super Complaint on up-front fees and cold calling Guidance primarily intended to inform credit brokers of principles to have regard to in developing and implementing their business practices and procedures and to identify behaviours which may lead to OFT intervention Consultation issued on 1 June 2011, final Guidance expected at end of 2011 Credit Brokerage
General principles of fair business practice Marketing practices Service provision Post-contractual issues Refund of brokerage fees Complaints handling Credit Brokerage Guidance - Scope
Debt collection guidance • Communication • False representation of authority/legal position • Harassment • Deceptive and/or unfair methods • Unfair charges • Visits • Statute barred debts • Debt sale and purchase – new section • Focus on creditors’ own actions
Debt management guidance • Follows the compliance review in September 2010 • 129 audited businesses warned to address non-compliances • Current outcome: 43 licence surrendered; 11 revocation notices issued; work ongoing
Guidance overview • Based on compliance review and enforcement experience • Takes account of new practices • Clarity – specific business practices • Scope extended – lead generation and (some) claims management • Clear on what we regard as unacceptable business practices for all in the industry
General principles of fair business practice Lead generation Advertising Advice Contracts Handling clients’ money Complaints handling Regulatory compliance & enforcement Debt Management Guidance - Scope
Implying that options are ‘risk-free’ Falsely stating that the service is ‘free’ or ‘impartial’ Unsolicited cold calls Unbalanced poor advice that lacks clarity Offering to ‘repair’ a consumer’s credit rating Failing to monitor and review a plan once set up Examples of poor practice
Other current guidance projects • Mental capacity guidance – July/August 2011 • Group licensing guidance – July/August 2011 • Unfair relationships guidance – July/August 2011
Current/future regulatory focus • Tackling areas of serious consumer harm – vulnerable consumers who cannot help themselves (e.g. through FOS or courts) • Debt collection • Debt management • Up-front fees/credit brokerage • Bills of sale/secured lending • Home credit • Mobility Aids - Security Products - Scams
Financial Conduct Authority • Consultation on type of credit regulation we should have • Complex question – change won’t happen overnight • More information in the Autumn • In the mean-time, business as usual
Keith.Cooper@oft.gsi.gov.uk Aaron.Berry@oft.gsi.gov.uk Questions? Contacts