REGULATORY

FCA consultation on future regulatory treatment of CCA regulated first charge mortgages

The FCA has published a consultation (CP15/36) on the future regulatory treatment of Consumer Credit Act 1974 (CCA) regulated first charge mortgages – these are first charge mortgages entered into prior to 31 October 2004 falling below the relevant financial threshold. As from 21 March 2016, their administration will be a regulated mortgage activity and the CCA will no longer generally apply. Customers will be entitled to an enhanced annual statement and firms will need to comply with MCOB rules on arrears and payment shortfalls. The consultation runs until 18 December 2015. 

FCA, 6 November 2015

Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 3) Order 2015

The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 3) Order 2015 (SI 2015/1863) has been published. The Order provides (1) that CCA regulated first charge mortgages prior to 31 October 2004 will be regulated as mortgages from 21 March 2016, (2) clarifies the scope of the exemption from regulation as a credit agreement for mortgage contracts and home purchase plans and (3) retains an existing CCA exemption for equitable mortgages used as bridging loans after they become subject to MCOB regulation.

Legislation.gov.uk, 5 November 2015

PRA speech on governance and the role of boards

The PRA has published a speech given by Andrew Bailey, Deputy Governor, Prudential Regulation and Chief Executive Officer, on governance and the role of boards in banks, insurers and major investment firms. The speech will be helpful to boards and their members in understanding better their obligations under the Senior Managers and Certification Regime due to come into force next Spring. 

Bank of England: PRA, 3 November 2015

Regulatory stability and the role of supervision and governance

The Bank for International Settlements has published a keynote address by Mr Jaime Caruana, General Manager of the BIS, on regulatory stability and the role of supervision and governance. 

Bank for International Settlements, 3 November 2015 UK

Asset finance market records two years of growth

The Finance & Leasing Association has published new statistics finding that asset finance new business (primarily leasing and hire purchase) grew by 3% in September compared with the same month last year.

FLA, 5 November 2015

Consumer finance grows 9% in September

The Finance & Leasing Association has published new figures showing 9% growth in consumer finance new business in September, in comparison to the same month last year.

FLA, 5 November 2015

Motor finance sees growth from new 65 registration plate

The Finance & Leasing Association has published new figures finding that point-of-sale consumer new car finance was up 10% by volume and 16% by value in September, compared to the same month last year.

FLA, 5 November 2015

CASES

Contractual penalty clauses and unfair terms

In co-joined appeals, the Supreme Court reviewed the law relating to contractual penalty clauses where the leading authority is a century old. The Court considered that the penalty rule had "not weathered well." To set the penalty rule back on its proper course, as originally recognised in the equitable origins of the doctrine, the key questions to be asked when considering whether a contractual provision is a penalty are: (1) Is a provision penal? If it is a genuine pre-estimate of loss, the provision will be valid. If a provision is not a genuine pre-estimate of loss, this is a relevant factor, but whether it is actually penal requires the consideration of other factors; (2) Are the means by which the contracting party's conduct is to be influenced "unconscionable" or "extravagant" by reference to some norm? Is the provision a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation? With respect to the second appeal where the fairness of the charge was considered in relation to the Unfair Terms in Consumer Contracts Regulations 1999, while it may have fallen within the grey list of potentially unfair terms, it was not within the primary test for unfairness (i.e. contrary to the requirement of good faith etc.) for the same reasons that the charge did not amount to a penalty.

Cavendish v El Makdessi and ParkingEye v Beavis [2015] UKSC 67, 4 November 2015

CashEuroNet agrees to provide redress to customers

CashEuroNet UK LLC, has agreed with the FCA a redress scheme following concerns in relation to its lending criteria. 

FCA, 4 November 2015