BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

[Budgie]

Starting off this thread whilst we await the consultation papers.

Consumer Affairs Minister Edward Davey has announced that a review of consumer credit and personal insolvency will be undertaken by the Government. It will cover a number of areas, including:
􀂃
How consumers enter into credit commitments, including the way in which credit is sold and the extent to which consumers understand what they are committing to;
􀂃
What issues arise during the lifetime of a loan from both the consumer and the lender perspectives; and
􀂃
What happens if things go wrong; are the current insolvency solutions fit for purpose?

The review will be an opportunity for all stakeholders to provide evidence on what is working well, and where the Government can intervene to relieve pressures in the system.

The BIS will send us the Call for Evidence and consultation as soon as they are issued.
Contact at BIS is Armelle Bailey.
Contacts for this consultation will be Edward Davey and Mark Hoban

[Budgie]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

14 July 2010 10:45 Department for Business, Innovation and Skills (National)

Consumer Affairs Minister Edward Davey has announced that a review of consumer credit and personal insolvency will be undertaken by the Government.

The Minister met with the All Party Parliamentary Group on Debt and Personal Finance, where he announced the review. It will be conducted jointly with Mark Hoban, the Treasury’s Financial Secretary, and will cover a number of areas, including:

· How consumers enter into credit commitments, including the way in which credit is sold and the extent to which consumers understand what they are committing to;

· What issues arise during the lifetime of a loan from both the consumer and the lender perspectives; and

· What happens if things go wrong; are the current insolvency solutions fit for purpose?

The review will be an opportunity for all stakeholders to provide evidence on what is working well, and where the Government can intervene to relieve pressures in the system. It is an opportunity to reshape consumer credit policy and will lead to a full consultation later this year, or early next year.

Edward Davey said:

“This is an opportunity not only to improve the safeguards on consumer credit products, where this is necessary. It’s also a chance to cut unnecessary regulatory burdens, which increase costs and stifle competition.

“As Consumer Affairs Minister, I want to be sure that people can get fair deals on credit cards, loans and other products on the market - improving access for the financially excluded; having an insolvency regime where those who can, pay, but those who can’t are helped to make a fresh start; and ensuring a regulatory framework that’s fair to consumers and creditors alike.”

The Call for Evidence will be issued after the summer recess, which should lead to a consultation on specific proposals later this year or early 2011.

Notes to Editors

[Budgie]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Parliamentay Written Answers to Questions

Monday 19 July 2010



Mr Davey: I recently announced a joint BIS and HM Treasury review of consumer credit and personal insolvency and my Department will be issuing a formal call for evidence after the summer recess. The review will cover all phases of the consumer credit lifecycle including the decision to borrow, the lifetime of a loan and what happens when things go wrong. I see this as an opportunity to ensure that we have a regulatory framework that is fair to consumers and creditors alike.

Among other things, the formal call for evidence will give industry and consumer groups the opportunity to provide evidence on how they think the findings and recommendations of the OFT review should be taken forward, including whether interest rate caps are an appropriate solution to the problems found in the market.

[Budgie]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Personal email to Budgie

Dear xxxxxxxxx,

With apologies for the delay in replying, I've now had the chance to speak to colleagues here about the EC Judgement.

As you know, the Government has committed in the Coalition Agreement to introduce stronger consumer protections including measures to end unfair bank and financial transaction charges. The Government has been considering how best to take forward this commitment and believes that it should be done in the context of a wider strategic approach to strengthening and streamlining consumer protections and advocacy. This issue will therefore be addressed as part of the joint BIS and HM Treasury Consumer Credit and Personal Insolvency Review launched by Edward Davey and Mark Hoban on 14 July.

We want to strengthen our evidence base on the impacts of recent voluntary, market driven initiatives around personal current accounts and on any continuing consumer detriment in this area. A Call for Evidence for the Review will be issued after the summer recess, which should lead to a consultation on specific proposals later this year or early 2011. We will consider the EC Judgement as part of this work.

We'll make sure to send you the Call for Evidence and consultation as soon as they are issued. In the meantime if I can be of further help, please do not hesitate to get in touch.

best wishes,

Armelle

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Excellent, I shall look forwards to that one

[Budgie]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Update today


Dear xxxxxxxxx,

Many thanks for your email. We're expecting the Call for Evidence to be published in the next few weeks. I've asked my colleague Tord Johnsen (copied above) to include you in the circulation list so that it comes to you as soon as it is issued.

with best wishes,

Armelle

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

This should be published tomorrow (Friday)

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

BIS - The review will cover all aspects of the consumer credit lifecycle from the decision to take out a loan through the lifetime of the loan, including what happens when things go wrong. This is an opportunity to ensure that we have a regulatory framework which is fair to both consumers and the industry. A call for evidence in support of the review was published on 15 October 2010: Managing borrowing and dealing with debt


(link not working yet)


When it does shall we start a new thread with it on ?

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Bank charges commitment 'closer' - Â*Money News - MSN Money UK
------------------------------- merged -------------------------------
Government plans to tackle consumer credit | Money | guardian.co.uk

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

So much for BIS saying ''there is an anticipation there will not be a significant amount of media coverage surrounding this publication''.

BBC News - Credit cards: Cap on interest in the pipeline

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Here it is Consumer Credit and Personal Insolvency: call for evidence | Consultations | BIS

[EXC]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

From the 'plain English' document:

BANK CHARGES
We think people are still unclear about bank charges,
and we want to know whether lenders are doing
enough to help people understand them and whether
they could be fairer. We also want to look at what
would happen if banks could only charge a fixed
amount for going overdrawn.

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

Consumer Minister, Edward Davey, and Financial Secretary to the Treasury, Mark Hoban, have today launched a joint call for evidence into how people can get a fairer financial deal as part of the Government’s review into consumer credit and personal insolvency.

The Department for Business, Innovation and Skills (BIS) and Treasury want to establish how people can get a fairer deal when borrowing money, and if they can manage their borrowing better. The review will also determine how best to improve the help available to those who run into financial difficulty.
The call for evidence invites people to have a say on how the existing consumer credit and personal insolvency regimes might be improved. It seeks views on a number of Coalition commitments, including:
• tackling unfair bank charges;
• introducing a seven-day cooling off period for store cards;
• introducing a power for a regulator to cap interest rates on credit and store cards; and
• requiring credit card providers to make electronic statements available to enable consumers to judge whether an alternative credit card would provide better value for money.
Consumer Minister Edward Davey said:
"Well-informed, empowered consumers are central to our vision for how a credit market between customers and lenders should work. I want to encourage both to take responsible decisions and to strengthen protection where necessary - particularly for the most vulnerable.
“If things go wrong people face a confusing array of debt remedies, so I also want to examine how the existing insolvency regime can be made to work better."
Financial Secretary to the Treasury Mark Hoban said:
"This Government is committed to curbing unsustainable lending and helping individuals manage their finances better. I believe that improved competition will deliver a better deal for everyone, and that financially capable consumers are best placed to drive competition."
Following the call for evidence, the Government plans to publish its proposals from the results of this review in 2011.
Notes to editors:

1) Edward Davey announced there would be a review of consumer credit and personal insolvency on 13 July 2010. You can see the press notice on this here: http://nds.coi.gov.uk/content/Detail...3&NewsAreaID=2
2) All the relevant documents, video and podcast can be found here: www.bis.gov.uk/consumer-credit. Interested parties have two months to respond.
3) BIS wants to hear from members of the public as well as interested businesses and charities. We have set up an easy-to-use Survey Monkey poll on our website with ten questions that cover a range of credit issues, such as:

• How confident are you that you have the skills and knowledge to enter into credit agreements?
• Where would you look for help and advice if you were to experience debt problems?
• Which of the following debt solutions have you heard of?
• What factors do you think might stop you seeking early advice if you were in debt difficulty

4) For further information, contact Olivia Campbell on 020 7215 5363 or Olivia.Campbell@bis.gsi.gov.uk

5) BIS' online newsroom contains the latest press notices, speeches, as well as video and images for download. It also features an up to date list of BIS press office contacts. See http://www.bis.gov.uk/newsroom for more information.

Contacts


NDS Enquiries
Phone: For enquiries please contact the issuing dept
ndsenquiries@coi.gsi.gov.uk


Will have a good read

Have put an announcement up Legal Beagles Consumer Forum - Announcements in Forum : BEAGLES' ANNOUNCEMENTS Hopefully we'll get some input

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

QUESTIONS

Q1. Should the Government extend regulations on advertising for credit products beyond the cost of credit?
Comment
Evidence
Q2. Should consumer credit advertising rules be aligned with those which the FSA applies to secured credit?
Comment
Evidence
Managing borrowing and dealing with debt
35
Q3. What would be the impact of a 7-day cooling off period for store cards on (a) consumer behaviour and (b) lenders?
Comment
a) consumer behaviour
Evidence
Comment
(b) lenders
Evidence
Managing borrowing and dealing with debt
36
Q4. We would welcome your in views on the following OFT recommendations from the review of high cost credit:
a. that the Government works with lenders to provide information on high-cost credit loans to consumers through price comparison websites.
Comment
Evidence
b. that the Government explores whether there is scope under the European Consumer Credit Directive for a requirement that high-cost credit suppliers must include 'wealth warning' statements on advertisements for high-cost credit
Comment
Evidence
Managing borrowing and dealing with debt
37
c. that the Government works with credit reference agencies to explore ways in which payday lenders and rent-to-buy suppliers could provide suitable information to credit reference agencies about the payment performance of their customers, in turn allowing those with good payment records to use mainstream lenders more easily in the future
Comment
Evidence
d. that the OFT collects essential information on the high-cost Credit sector, such as the volume, value and pricing of credit, levels of repeat business and defaults among customers as needed. This will help OFT understand the effect of its recommendations and provide better evidence for future policy making
Comment
Evidence
Managing borrowing and dealing with debt
38
e. that the relevant trade associations for home credit suppliers, payday lenders and pawnbrokers establish a code or codes of practice covering best practice policy including on: complaints and advice to customers, policies on rolling over of loans, limits for amounts to lend to consumers, avoiding misleading consumers through advertisements and ensuring that consumers are aware of the ultimate owners of brand names
Comment
Evidence
Q5. Is there a need for greater sharing of data between the consumer credit industry and other bodies, including utility companies, local authorities and HMRC?
Comment
Evidence
Managing borrowing and dealing with debt
39
Q6. It has also been suggested that there needs to be greater transparency around credit scoring and the impact of credit scores on charges. Do you agree?
Comment
Evidence
Q7. Which of the stakeholder proposals at Annex A do you consider would bring benefits to industry or consumers and what would these be? Please provide evidence in support of your view.
Comment
Evidence
Managing borrowing and dealing with debt
40
Q8. Do you believe that the current voluntary, market-driven initiatives to address concerns about unarranged overdraft charges are delivering, or will deliver, sufficient improvements for consumers? If not, what would the wider implications of limiting bank charges be? Please provide evidence in support of your views.
Comment
Evidence
Q9. Should interest rates on credit and store cards be subject to a cap? If so, should this apply to all interest rates or only those which apply to existing borrowing?
Comment
Evidence
Managing borrowing and dealing with debt
41
Q10. Are there any alternative measures which would reduce the scope for consumers to be exposed to higher interest rates on credit and store cards?
Comment
Evidence
Q11. How effective have the Competition Commission's remedies been at improving prices for home credit customers? Is further action needed to ensure that consumers of home credit get a fair deal?
Comment
Evidence
Managing borrowing and dealing with debt
42
Q12. What role should the court play in the debt recovery process? Should it be restricted to genuine points of law and disputes between the parties?
Comment
Evidence
Q13. Are court-based enforcement mechanisms fit for purpose? If not how would you like to see them improved or added to?
Comment
Evidence
Managing borrowing and dealing with debt
43
Q14. What impact would a £25,000 threshold have on your ability to enforce unpaid debts by means of 1) charging orders and 2) orders for sale? What alternative action might you take?
Comment
1) Charging orders
Evidence
Comment
2) Orders for sale
Evidence
Managing borrowing and dealing with debt
44
Q15. How can debtors be encouraged to seek early support to help manage their debt problems?
Comment
Evidence
Q16. Do the current debt relief options strike the right balance between the needs of the debtor and the rights of creditors?
Comment
Evidence
Managing borrowing and dealing with debt
45
Q17. What problems are encountered with the current range of debt solutions and how could they be improved to ensure all debtors have an option and that the choices are clear?
Comment
Evidence
Q18. Is there sufficient flexibility within the current range of debt solutions to allow for debtors changing circumstances?
Comment
Evidence
Managing borrowing and dealing with debt
46
Q19. Do the current options allow and encourage those who are in a position to repay their debts to do so? If not, why not, and how might any incentives be improved?
Comment
Evidence
Q20. Do the current options allow a person to deal effectively with a temporary income ‘shock’ and if not, what is needed?
Comment
Evidence
Managing borrowing and dealing with debt
47
Q21. Is some form of moratorium on creditor action required to a) allow a short time period for a debtor to seek and act on advice from a qualified adviser and b) allow a more extended period for a debtor suffering from a temporary difficulty to recover and start making repayments once more. If so, how might such an arrangement work, and what safeguards are required to ensure that creditor rights are protected?
Comment
Evidence
Q22. How does a person find out where to go for debt advice and assistance? What are the advantages and disadvantages of each method?
Comment
Evidence
Managing borrowing and dealing with debt
48
Q23. How does a person know that he/she has been given the ‘right’ advice?
Comment
Evidence
Q24. What evidence do you have to suggest that debtors end up in the ‘wrong’ solution and what is the scale and impact –for the debtor, the creditors, and the economy?
Comment
Evidence
Managing borrowing and dealing with debt
49
Q25. Is it clear in all circumstances what the ‘right’ solution should be?
Comment
Evidence
Q26. How often do debtors move from one remedy to another and could the costs be reduced in any way?
Comment
Evidence
Managing borrowing and dealing with debt
50
Q27. Should there be more consistency on how a debtor’s income, assets and expenditure are calculated and treated in different procedures?
Comment
Evidence
Q28. Should any changes be made to investigation and enforcement action in relation to debtors entering insolvency procedures?
Comment
Evidence
Managing borrowing and dealing with debt
51
Q29. What outcomes should such investigations be looking to achieve – for example, should they just relate to restrictions on future conduct or should they also impact on a debtor’s discharge from his/her liabilities?
Comment
Evidence
Q30. Are the practical effects of entering the different debt remedies satisfactory e.g. future access to financial services? Should this be influenced by the outcome of any investigation/enforcement?
Comment
Evidence
Managing borrowing and dealing with debt
52
Q31. Is there a role for a “gatekeeper” to provide a common entry point to all formal insolvency procedures? If so, what would be the benefits and costs, who would perform such a function and how would the system operate?

[Amethyst]

Re: BIS & HM Treasury Consumer Credit and Personal Insolvency Review - Consultation

This is a great question

Q8. Do you believe that the current voluntary, market-driven initiatives to address concerns about unarranged overdraft charges are delivering, or will deliver, sufficient improvements for consumers? If not, what would the wider implications of limiting bank charges be? Please provide evidence in support of your views.

Background

Bank charges
37. The Coalition is concerned that some charges levied by banks -- particularly for unauthorised overdrafts -- may make it difficult for consumers to keep control of their finances. There are several possible reasons for this:
- the charges may not be clear to the consumer at the time of opening their bank account;
- the range of charges applicable may be complicated;
- consumers may incur these charges without meaning to and may not immediately become aware that they have incurred them; and
- unauthorised overdraft charges are often high compared to the cost of other forms of borrowing.
38. The Government welcomes the ongoing work of the OFT12 and lenders to address concerns about unarranged overdraft charges. However, we remain concerned that voluntary, market-driven solutions alone may not deliver sufficient improvements. We want to see charges that are fair, clear and proportionate for consumers and banks and this is why we committed to including measures to end unfair bank and financial transaction charges in our Coalition Agreement.
39. In considering how to deal with this issue, we need to bear in mind how banks charge for current accounts more generally in the UK. At the moment, current accounts are often free as long as they remain in credit. This system is partly due to the fact that banks are able to make money by imposing other charges, including on unauthorised overdrafts. In considering the best interests of consumers and banks we need to look at the possible impact of any options on the system as a whole to ensure that it delivers the fairest and most sustainable outcome possible for all customers and for lenders.
12 http://www.oft.gov.uk/shared_oft/rep...ts/OFT1275.pdf
Managing borrowing and dealing with debt
17
40. The response to this Call for Evidence will help inform our consideration of whether there is a need for immediate Government action in this area above and beyond ongoing voluntary initiatives. It will also help to shape the United Kingdom's negotiation of and response to the Consumer Rights Directive13.

the last bit, about the UK negotiations on the CRD - thought that was already in hand through the contigent/ancillary charges consultation we did last month ?