COVID-19 Consumer Legal Newsletter: 30/06/2020 – Issue 5
Welcome to the fifth COVID-19 update from Beagles Insight—the research arm of the LegalBeagles Consumer Legal Forum. This free advice forum has over 100,000 registered users and has helped members of the public deal with over 800,000 legal problems since it started in 2007.
Insights from the Forum
Compared to July 2019 when the site had 242,979 unique views, this July saw 141,117 suggesting that the rate of progress in restarting court cases and other legal matters is still slow. This is mirrored by Law Society research which demonstrates a slowing of business activity for law firms across the UK, however, we have seen a 5% increase in users since last month, suggesting that we are trending towards more activity, which we expect to continue as lockdown requirements continue to loosen. The trends below have been identified from amongst this increasing activity.
Lending – A new trend on the forum has been the beginning of questions around the impact of COVID-19 related payment holidays on consumer lending. Despite a statement by the FCA released on the 20th March, which said that payment holidays should not affect credit files, questions have come up on the forum indicating that a payment holiday has impacted their credit. This is supported by data released by This Is Money, which suggests that of 59% of mortgage brokers have reported clients being rejected for a home loan due to taking a payment break, their data suggests this could impact over 1.8m people.
It seems that banks are bypassing the FCA guidance by adding ‘Have you taken a mortgage holiday’ to their lending criteria questions. This means that technically credit reference files have not been negatively affected, however missed payments are still affecting lending decisions, creating a similar outcome.
Employment – The employment forum remains very busy, questions continue to rise around redundancy, demonstrating the impact of the ending of the fully funded furlough programme.
We have seen a further rise in questions around health and safety, in relation to return to work, particularly with regards to employee obligations to enforce the new government face mask requirements, as well as their own personal health and safety rights, if they feel their employer is not sufficiently enforcing the new regulations on customers entering their workplace.
In relation to employment tribunals, cases are now being given hearing dates well into 2021, and ET3 responses are taking weeks to get out from the tribunal to the claimant. It seems that wherever possible preliminary hearings are still being undertaken via telephone, which although not unheard of pre COVID19 has now become the norm.
There are reports of a small number of “in-person” tribunal hearings taking place, however, this by no means heralds the start of returning to normal. The impact on an already overstretched tribunal system of this backlog of cases is getting progressively worse.
Most Searched Questions
Court Claims – We are currently in a situation where no claims have been issued by debt companies since March 17th 2020. We’re now starting to see claims companies offer settlements of up to 80% off the outstanding balance to clear accounts.
The debt purchase industry is still working but in a skeleton format. Telephone enquiries to major companies reveal significant staffing challenges. Call centre teams are still furloughed or working from home, presenting significant regulatory challenges particularly around disclosure compliance and CCA requests.
The voluntary decision by both parking and debt companies to place a hold on issuing claims has allowed the court system to continue to operate, however, we also expect to see a situation in the future where there is a sudden flood of claims as litigation teams resume activity.
Consumer Issues – There have been a number of enquiries surrounding consumer rights around drafting Letters Before Action against suppliers who have failed to provide refunds for cancelled services. Some companies seem to be struggling to provide estimates of when they will be able to provide refunds and are unable to meet the standard 14 days.
The Good, the Bad and the Ugly
As mentioned previously both debt purchasing companies and private parking companies seem to have privately taken the decision to refrain from making new claims. However, it is important to remember that when claims do restart, this will lead to a higher volume of claims entering the system, potentially creating a bottleneck
Money Claims Online – Challenges are becoming evident in the money claims online system. Concerns have been raised about issues such as orders or notices of action being issued after their own deadline. At the same time, the phone lines are now completely out of operation, meaning that both claimants and defendants are currently unable to receive any assistance. This has created a situation where claims can be entered or defended, but both parties may then not be informed of orders and filing deadlines. This will likely create a greater burden of set aside hearings and appeals in the future.
Consumer Issues – Concerns have been raised on the forums by members who have purchased consumer goods and are subsequently unable to access any form of post-sales customer services. This raises questions both around companies’ responsibility to consumers to provide after-sales support, as well as questions around how this affects consumer rights, such as returns policies.
Could do better
14-day refunds – Greater clarity could be given to both consumers and companies over their refund rights and obligations, allowing consumers to have greater certainty, whilst avoiding creating a further economic burden on companies which may already be struggling as a result of the pandemic.
What can be done?
On Lending – It seems clear that work needs to be done to address the issues around lending created when individuals took a payment holiday during the pandemic. At the time it was communicated that this would not affect credit decisions which will have factored into many individuals’ decisions to take payment holidays. Continuing to allow banks to base lending decisions on this issue could potentially create long term and lasting damage for individuals who were more adversely impacted by the crisis.
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