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

[EXC]

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

As I suspected it's quite wide ranging and we need to decide if we want to respond to it all or just particular elements.

I've sent it to Tom. Obviously we've got a bit of a head start as much of our last BIS response can be broadly duplicated. But in light of the other consumer group responses to the CRD consultation, I'm inclined to think we should make it more punchy.

[Amethyst]

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

More punchy yes probably, but still measured and realistic - I'd like to get a bit more in about the Billing proposal too if we can.

[EXC]

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

This is a great question

Yes it is and the answer is that UOD charges are still raking in the same amount as they always did and that charging structures have moved away from a single easily-understood charge to a bewildering and incomprehensible array of them which differs from bank to bank.

The consultation disappointingly concentrates only on 'charges for unauthorised overdrafts' and doesn't mention unpaid item fees and we need to get a breakdown of the recent revenue figures published by the OFT - which I'll FoI them about.

Have a think if there's anything else we need from them to include.

[Amethyst]

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

We need to push the OPT IN as opposed to OPT OUT again too. The LSB working group are due to report back on that in november aren't they ?

[EXC]

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

Indeed.

Was just trying to check if it was November but can't find anything. It would be handy to have it for our response - I'll ask LCSB.

[dad]

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

I see the 'stakeholders', ie the credit industry, are keen to kill off unenforceability with the list of desires in Annex A.

I love that complete neutering of consumer protection is described as 'improvements'!

Dad

[Amethyst]

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

they have pretty much killed it off already with the repeal of 127(3) this wants to go that extra step, but of course it can't be retropective, or can it ?

Made the CCA bits worth looking at Red and have Bolded in the second list the good stuff -

Have BIS made the preceeding consultation docs available do we know ? I'd like some more info on reasons for these thoughts, I know most top half have come from the lenders tho lol.

Annex A: stakeholders’ suggestions for improvements to consumer credit and insolvency regimes
Decision to borrow
· replace any remaining areas of automatic unenforceability of credit agreements with unenforceability without a court order or another appropriate penalty
· rationalise the requirements around signing of agreements so that more agreements can be concluded on line
· rationalise/repeal section 18 of the Consumer Credit Act (CCA) setting out the requirements which apply to multiple agreements
· align all provisions concerning the cancellation of agreements with those which apply to the new right of withdrawal introduced by the Consumer Credit Directive
· repeal or rationalise the CCA provisions which apply to modifying agreements
· rationalise the requirement to provide statements for people who have moved house or entered into an IVA
· require consumers to show genuine disadvantage before a breach of the CCA can make an agreement unenforceable
· review the need for sections 99 and 100 of the CCA concerning Voluntary Terminations
· review the provisions of section 185 CCA 1974 concerning information to be provided to joint account holders
What happens when things go wrong
· requirement for banks to identify and act quickly on snowballing penalty charges/unmanageable debt
· provision of emergency borrowing facilities with limited duration and capped interest rates
· greater public monitoring and review of credit licence holders
· enhanced power to suspend a consumer credit licence
· establish a "warning order" for credit licensing along the lines of estate agents
· enhanced access to criminal records
· accelerated appeals process
· provide for restorative justice
· limit ability of creditors to add excessive interest and charges to bad debt
· ban on orders for sale except in exceptional circumstances and for all unsecured debts below £25,000
· minimum debt thresholds for charging orders (at least £25,000)
· regulate private bailiffs effectively
· ban repossession of goods secured by sale
· rationalise role of Financial Ombudsman Service (FOS)
Managing borrowing and dealing with debt
29
· tighten credit licensing requirements to set a higher standard for debt management providers

[Brian]

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

Yes to all the issues identified in the document:seagull:...

can I go now?

Bri

[EXC]

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

I'm still waiting on LCSB to find out when exactly the opt-out standards will be published and if we'll have them by the consultation deadline.

I've FoI'd OFT on unpaid item charges revenue (for 2006 it was a whopping £1b of the total £2.6b) and I've also asked about the Consumer Direct charging scenarios page hits - which I suspect are minimal - so we can demonstrate that the scenarios just aren't doing what they're supposed to ie inform consumers.


Hi Robert

I understand that the minimum standards on opt-outs are to be agreed by December. We just wanted clarification if this is on schedule and also if the standards will be published and when.

The reason we ask is that it would be helpful to have them for inclusion in our response to the BIS/HMT Call for Evidence - Consumer Credit and Personal Insolvency, for which the deadline is 10 December.

Kind regards

Nick



Nick, hi.

Yes we are on track. I’ll get back to asap re the expected publication date.

Kind regards

Robert



Hi Haris

I'd like to request some information under the Freedom of Information Act.

The information requested is for inclusion in our response to BIS/HMT Call for Evidence - Consumer Credit and Personal Insolvency review.

1) Further to the OFT's 28 September publication of estimates of revenues derived from insufficient funds charges for the years 2007 - 2009, what is breakdown for unpaid item charges (i.e. for 2006 the figure was £1b) for these years?

2) The Consumer Direct website has a page devoted to links to the charging scenarios pages of 11 banks http://www.consumerdirect.gov.uk/bef...kaboutcharges/ When did the page go live and, to date, how many hits has this page received and how many times have any of the11 links been clicked?

Kind regards

Nick

[EXC]

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

We need to make a decision on whether we respond to the entire consultation or just some of it.

My view is that it would be too large a task to answer all 31 questions meaningfully. Certainly we'd want to respond to Q8 and maybe half a dozen others but we do need to decide to get the ball rolling. Any thoughts?

[Amethyst]

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

Funnily enough i was making a start on this this morning - hence the post regarding the seven day cooling off period on store cards... see what interest there is in each sector but yes prioritising is needed, as we won't have as much comment on advertising of credit (which ASA see to handle ok anyway) #have highlighted the ones I think we have most interest it (obviously some peeps will be more interested in areas than others) but I think thats a decent start. We do of course want to concentrate on Q8 which will be the main part of our response but the others are worth covering in some depth, and the unhighlighted parts I guess leave unless someone shows a specific interest.

Bit sad not many people have commented or shown any interest in this tbh, I really don't see how waving a placard outside the hoP or banks or fsa will give people any greater input into their futures than this will.

Q1. Should the Government extend regulations on advertising for credit products beyond the cost of credit?

Q2. Should consumer credit advertising rules be aligned with those which the FSA applies to secured credit?


Q3. What would be the impact of a 7-day cooling off period for store cards on (a) consumer behaviour and (b) lenders?


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.

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

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

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

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


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?


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?



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.


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.



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?



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?



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?



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?



Q13. Are court-based enforcement mechanisms fit for purpose? If not how would you like to see them improved or added to?




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?

1) Charging orders

2) Orders for sale



Q15. How can debtors be encouraged to seek early support to help manage their debt problems?


Q16. Do the current debt relief options strike the right balance between the needs of the debtor and the rights of creditors?


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?



Q18. Is there sufficient flexibility within the current range of debt solutions to allow for debtors changing circumstances?



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?



Q20. Do the current options allow a person to deal effectively with a temporary income ‘shock’ and if not, what is needed?



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?



Q22. How does a person find out where to go for debt advice and assistance? What are the advantages and disadvantages of each method?


Q23. How does a person know that he/she has been given the ‘right’ advice?



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?



Q25. Is it clear in all circumstances what the ‘right’ solution should be?



Q26. How often do debtors move from one remedy to another and could the costs be reduced in any way?




Q27. Should there be more consistency on how a debtor’s income, assets and expenditure are calculated and treated in different procedures?


Q28. Should any changes be made to investigation and enforcement action in relation to debtors entering insolvency procedures?


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?



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?


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?

[EXC]

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

Burt: Lib Dems leading the fight against unfair bank charges | The Liberal Democrats: News Detail



Burt: Lib Dems leading the fight against unfair bank charges

Tue, 09 Nov 2010

“For too long the balance of power between banks and their customers has been skewed in the banks’ favour. We want a system that is fairer for customers and that is what the Liberal Democrats in Government are determined to deliver.”
Co-chair of the Liberal Democrat Parliamentary Business, Innovation and Skills Committee, Lorely Burt has been invited to advise the Coalition Government on introducing fairer banking practices.

Lorely Burt has campaigned against unfair overdraft and penalty charges and has been asked by Liberal Democrat Business Minister Ed Davey to advise the Government’s Consumer Credit and Personal Insolvency Review.

Commenting, Lorely Burt said:

“Liberal Democrats have been leading the fight against unfair bank charges.

“For too long the balance of power between banks and their customers has been skewed in the banks’ favour. We want a system that is fairer for customers and that is what the Liberal Democrats in Government are determined to deliver.”

Commenting further, Ed Davey said:

“The Government is committed to protecting the interests of consumers and Vince Cable and I are very keen to deal with the issue of unfair bank charges.

“That is why we have included the issue as part of our review of Consumer Credit and Personal Insolvency. If the evidence comes out in favour of action we will not hesitate to act.

“Lorely Burt MP and Which? have been very active in this area and we look forward to working with them.”

[Amethyst]

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

Come on peeps, I already know my views, but this isn't a ''what Ame, EXC and Tom think'' consultation, its what YOU think, so please lets have a few answers to some of these questions. The purple ones I think are most relevant to us. Theres a thread about the Store Cards question 3 Ban instant credit store cards ????? - Legal Beagles Consumer Forum already.

I thought some people would be up in arms about what they are proposing for the Consumer Credit Act too ! See Question 7 !!!!!!!

Q1. Should the Government extend regulations on advertising for credit products beyond the cost of credit?

Q2. Should consumer credit advertising rules be aligned with those which the FSA applies to secured credit?


Q3. What would be the impact of a 7-day cooling off period for store cards on (a) consumer behaviour and (b) lenders?


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.

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

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

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

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


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?


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?



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.

Originally Posted by Annex A
Annex A: stakeholders’ suggestions for improvements to consumer credit and insolvency regimes
Decision to borrow
· replace any remaining areas of automatic unenforceability of credit agreements with unenforceability without a court order or another appropriate penalty
· rationalise the requirements around signing of agreements so that more agreements can be concluded on line
· rationalise/repeal section 18 of the Consumer Credit Act (CCA) setting out the requirements which apply to multiple agreements
· align all provisions concerning the cancellation of agreements with those which apply to the new right of withdrawal introduced by the Consumer Credit Directive
· repeal or rationalise the CCA provisions which apply to modifying agreements
· rationalise the requirement to provide statements for people who have moved house or entered into an IVA
· require consumers to show genuine disadvantage before a breach of the CCA can make an agreement unenforceable
· review the need for sections 99 and 100 of the CCA concerning Voluntary Terminations
· review the provisions of section 185 CCA 1974 concerning information to be provided to joint account holders
What happens when things go wrong
· requirement for banks to identify and act quickly on snowballing penalty charges/unmanageable debt
· provision of emergency borrowing facilities with limited duration and capped interest rates
· greater public monitoring and review of credit licence holders
· enhanced power to suspend a consumer credit licence
· establish a "warning order" for credit licensing along the lines of estate agents
· enhanced access to criminal records
· accelerated appeals process
· provide for restorative justice
· limit ability of creditors to add excessive interest and charges to bad debt
· ban on orders for sale except in exceptional circumstances and for all unsecured debts below £25,000
· minimum debt thresholds for charging orders (at least £25,000)
· regulate private bailiffs effectively
· ban repossession of goods secured by sale
· rationalise role of Financial Ombudsman Service (FOS)
Managing borrowing and dealing with debt
29
· tighten credit licensing requirements to set a higher standard for debt management providers

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.



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?



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?



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?



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?



Q13. Are court-based enforcement mechanisms fit for purpose? If not how would you like to see them improved or added to?




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?

1) Charging orders

2) Orders for sale



Q15. How can debtors be encouraged to seek early support to help manage their debt problems?


Q16. Do the current debt relief options strike the right balance between the needs of the debtor and the rights of creditors?


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?



Q18. Is there sufficient flexibility within the current range of debt solutions to allow for debtors changing circumstances?



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?



Q20. Do the current options allow a person to deal effectively with a temporary income ‘shock’ and if not, what is needed?



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?



Q22. How does a person find out where to go for debt advice and assistance? What are the advantages and disadvantages of each method?


Q23. How does a person know that he/she has been given the ‘right’ advice?



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?



Q25. Is it clear in all circumstances what the ‘right’ solution should be?



Q26. How often do debtors move from one remedy to another and could the costs be reduced in any way?




Q27. Should there be more consistency on how a debtor’s income, assets and expenditure are calculated and treated in different procedures?


Q28. Should any changes be made to investigation and enforcement action in relation to debtors entering insolvency procedures?


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?



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?


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?

[EXC]

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

http://europa.eu/rapid/middayExpress...guiLanguage=en

Bank fees to become more transparent and easier to compare for EU consumers
The European Commission met the banking industry and consumer advocates today to launch a self-regulatory initiative to ensure that the cost of bank accounts is transparent and comparable for consumers. The first chance for consumers to test the results should come in early 2012 when the practical solutions – to be identified by the industry in mid-2011 – should be in place. The initiative follows a study on bank fees published in September 2009 which showed that opaque bank fees make it very difficult for consumers to compare offers; the study also found market fragmentation, excessive prices paid by consumers and low customer mobility. The dialogue with the banking industry on improving the situation for consumers started at the European Consumer Summit in March 2010. The industry has responded to the Commission's invitation to deliver a practical solution. The Commission's expectations from today's launch are based on best practice already existing in several Member States. They entail resolving three core problem areas: (1) complex bank fees terminology (2) the lack of comparability of banking fees, (3) the absence of basic information on bank fees. The initiative is one of the fifty proposals identified in the recently adopted Single Market Act.

[EXC]

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

Bingo.

So the charging scenarios website pages of the 7 biggest banks have had a total of just 21,152 hits and an embarrasing 261 for the OFT.

Even taking into account that they don't hold the data for a further 3 smaller banks, it must mean that of the 50m account holders in the UK, only 1 in 2000 have seen the scenarios.

We can now conclusively demonstrate that this flagship initiative to make the PCA market more competitive has utterly failed.




Dear EXC

Freedom of Information Act 2000

Thank you for your email of 18 October 2010.

In your email you have asked to be provided with industry level figures for the total revenue derived from unpaid item charges for the years 2007 to 2009. You have also asked when the links to the charging scenarios of various PCA providers went live on the Consumer Direct website and, to date, the number of hits it has received and how many times each of the links has been clicked.

Duty to confirm whether or not information requested is held
Under the Freedom of Information Act 2000 ("FOIA") we have a duty to confirm whether or not information requested is held and to supply that information unless there are good reasons for not doing so.
I can confirm that the OFT does hold some of the information requested.

Our response
As you aware, our recent update report on personal current accounts (PCAs) contains information on industry revenue from unarranged overdraft charges referring to both charges levied for unarranged overdraft borrowing (paid item charges) and unpaid item charges, and their equivalents.1 In order to present this data we wrote to the major PCA providers in Great Britain and Northern Ireland to seek this information.

In their responses to our information request, a number of banks did not provide a breakdown between revenue made from paid item charges and unpaid item charges. We are therefore unable to provide you with the breakdown of industry-level unpaid item charges revenue for the years 2007 to 2009.

With regard to your second question, the links to banks' Charging Scenarios from the Consumer Direct page went live on 8 July 2010.2 In total there have been 261 visitors ('hits') to the Charging Scenarios' page since it was created. Unfortunately Consumer Direct's web tracking programme does not allow us to collect data on the number of users who have clicked on the links to the Charging Scenarios of individual banks, as it does not collect data on external links.

Duty to provide advice and assistance
Section 16 of the FOIA provides a duty when responding to requests to provide advice and assistance.

Although we cannot provide you with the number of times that links from the Consumer Direct page to individual banks' Charging Scenarios have been 'clicked', we are able to give you an indication of the number of people looking at Charging Scenarios in total. From the time of the introduction of the Charging Scenarios (the deadline for the largest banks was 30 June this year) to October this year there were 21,152 visitors to the Charging Scenarios of seven of the largest UK banks. However, the number of consumers looking at Charging Scenarios online is likely to be larger than this as a number of other banks provide Charging Scenarios and we do not have data on the number of hits for these 3 banks. In addition, customers can obtain a print-out of the scenarios from branches and we do not have the number of customers who have received these.

1 See Table 3 on page 27 of Personal current accounts in the UK, Progress update, September 2010 (OFT1275) (available at http://www.oft.gov.uk/shared_oft/rep...ts/OFT1275.pdf)
2 The link can be found at Consumer Direct - Think about charges.
3 This is a total figure for the seven banks, not an average figure per bank.

With respect to industry-wide revenue figures for unpaid item charges, as you will be aware, the OFT continues to monitor the PCA market to ensure that there is movement towards an equilibrium that works well for consumers. It intends to publish regular updates on progress, with the next scheduled for March 2011. If appropriate, subsequent updates may contain a breakdown of unpaid item charge revenue.