Mon 22 Oct 2018

Brexit impacts on Consumer Credit regime

The publication of the snappily titled Consumer Credit (Amendment) (EU Exit) Regulations 2018 () on 2 October 2018 saw some minor fiddling with the Consumer Credit regulatory regime in anticipation of 'exit day' - currently scheduled for 29 March 2019.

The new Regulations only provide for immediate changes required to primary and secondary legislation as a result of Brexit.  They do not extend to removing any gold plating of the regulatory regime by the Government of the day on the implementation of the Consumer Credit Directive in February 2011, or before or since then.

Other than some very minor tweaks to the Consumer Credit Act 1974 (CCA), the Consumer Credit (Green Deal) Regulations 2012 and the Financial Services Act 2012 (Consumer Credit) Order 2013, the main changes are to the Consumer Credit (Disclosure of Information) Regulations 2010 as follows:

  • As regards the pre-contract consumer credit information to be disclosed to customers in relation to overdrafts, the form of information will no longer be called the "European Consumer Credit Information" (or "ECCI" for short).  If firms use the optional form set out in Schedule 3 to the 2010 Regulations to provide customers this information, then they will need to change the name at the top of the form to: "Pre-contract Consumer Credit Information (Overdrafts)". 
  • Similarly the name "Standard European Consumer Credit Information" should be removed from the top of the first page of your SECCI templates.  After eight years of referring to this prescribed information form as the 'SECCI', we'll all need to go back to referring to this information as the 'PCI' or 'PCCI', whatever your preference.
  • The final change applies to the table 5: additional information in the case of distance marketing of financial services which appears in both the ECCI and the SECCI.  Where it says in column 1 of the SECCI "The creditor’s representative in your Member State of residence" we are to substitute "The creditor’s representative in the United Kingdom".  Similarly, where it says in column 1 of the SECCI "The creditor’s representative in [the UK] [your Member State of residence]" in the ECCI, we are to substitute "The creditor’s representative in the UK".

Although the Regulations have already been published, they will only come into effect on 'exit day'.  There are, however, no transitional provisions in the Regulations that would allow firms to make these changes gradually.  The expectation clearly is that firms will make the changes immediately, though in practice this is likely to be interpreted to be "as soon as reasonably practicable".  We would recommend preparing amended forms in advance and to diary ahead to bring these into play on exit day.

Failure to provide a customer with the specified information in accordance with the 2010 Regulations before the regulated agreement is made means that the agreement is enforceable against the customer on an order of the court only (section 55(2) of the CCA).  One would anticipate that courts would take a sympathetic approach, and not decline a request for an enforcement order for this type of minor breach of the Regulations.

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