New rules will protect consumers from harmful fee-charging credit broking practices,

[Legal Beagles]

New rules have been introduced by the Financial Conduct Authority (FCA) today to tackle poor practice in the credit broking market which is causing serious detriment to consumers.

http://www.fca.org.uk/news/new-rules...king-practices

[EXC]

Re: New rules will protect consumers from harmful fee-charging credit broking practic

We are therefore introducing new rules. We are doing so without prior consultation, in
reliance on section 138L of the Financial Services and Markets Act, on the grounds that the
delay involved in consulting would be prejudicial to the interests of consumers.

The new rules come into force on 2 January 2015. We are planning a consultation in January
2015 on various consumer credit matters, and will take that opportunity to consult on whether
to retain or modify the new rules, and whether to introduce additional rules.

We consider that making these rules is a proportionate response to the recent growth of
complaints and evidence of serious consumer detriment in this area, and that it achieves a fair
balance with the legitimate commercial interests of firms.

This is quite a good move by FCA.

The FCA has also received relevant intelligence from consumer groups and others who are seeing increasing complaints from people who have had money taken from their accounts unexpectedly and often by more than one broker.

That'll include us then.

The FCA’s concerns relate to:

•a lack of transparency, resulting in consumers often not realising they are dealing with a broker rather than a lender;

•fees being taken without informed consent, for example where terms and conditions are hidden or misleading;

•consumers being misled as to the purpose of giving their payment details;

•firms passing on consumers’ details, including their payment details, without informed consent, to other firms who also take a fee; and

•consumers facing difficulty in identifying the firm that has taken a fee, and in obtaining a refund from the firm or a response to their complaint.

Today’s announcement is part of a package of measures which will also require credit brokers to:

•include their legal name, not just their trading name, in all advertising and other communications with customers;

•state prominently in all advertising that they are a credit broker and not a lender; and

•report quarterly to the FCA listing their website domain names, if they charge fees to customers.

Consumers will also have a 14-day right of cancellation where credit broking contracts are entered into as distance contracts, for example online.

Over 40 per cent of consumer credit complaints received by the FCA relate to credit brokers, 80 per cent of which relate to firms who charge upfront fees. The FCA has also received relevant intelligence from consumer groups and others who are seeing increasing complaints from people who have had money taken from their accounts unexpectedly and often by more than one broker.

The FCA is investigating a number of credit broking firms; seven firms have been stopped from taking on new business and, to date, three further cases have been referred for enforcement action.

[Nibbler]

Re: New rules will protect consumers from harmful fee-charging credit broking practic

Good as seems it can't just be in their site T&Cs, or a tick box or similar.

Must be a clear notice that is sent and agreed to by reply.

Information notices and customer confirmation: a ban on credit brokers charging fees, or requesting payment details for that purpose, unless:

• the broker has provided an explicit notice to the customer (an ‘information notice’), setting out:
  • the firm’s legal name;
  • a statement that the firm is, or is acting as, a credit broker (not a lender);
  • a statement that a fee will or may be payable;
  • the amount or likely amount of the fee;
  • when and how the fee will be payable; and
  
  
• the customer has acknowledged receipt of the notice, and awareness of its contents (the ‘customer confirmation’).

Each broker will have to send its own information notice, and receive its own customer confirmation, before being able to charge a fee. The information notice and customer confirmation must be on paper, by email, or in another durable medium, and the broker will have to keep records of them.

[enaid]

Re: New rules will protect consumers from harmful fee-charging credit broking practic

Tip of the iceberg, but a very welcome start for us consumers.
A long way to go and a lot of rules and regs to go through, but keep on complaining folks it shows it does help.

[Amethyst]

Re: New rules will protect consumers from harmful fee-charging credit broking practic

Here's the 'One Minute Guide' for the to$$ers that run these companies.

Hope they can read.

Who should read this?

• All credit brokers

Background

Some credit brokers use payment details provided by customers to take payment of their fees. We are aware of a number of brokers who take fees up front, before any services are provided, and without customers authorising the payment or realising that payment would be taken. We are also aware of brokers passing customers’ details, including payment details, to other firms who also take fees without the customer’s informed consent.
Practices such as these may be in breach of the law and our rules. The FCA can investigate and take action where we think firms are not meeting our expectations, or where there may have been consumer detriment. The following guide can act as a reminder to firms of their existing obligations and new rules which have been put in place to further protect consumers.
What are the existing rules?

Credit brokers must adhere to our rules, in particular the Principles for Businesses (PRIN) and our Consumer Credit sourcebook (CONC):

• Treating customers fairly: Principle 6 requires firms to pay due regard to the interests of their customers and treat them fairly and Principle 7 requires firms to communicate with customers in a manner which is clear, fair and not misleading. Firms should ensure, for example, that their charging policy is clear and accessible.
• Authorisation and consent: CONC 2.5 prohibits firms from taking a fee from a customer’s bank account without express authorisation. We expect the amount or likely amount of the fee to be disclosed as early as practicable in the process.
• Sharing of personal information: CONC 2.5 also prohibits firms from unfairly passing customers’ personal data – including payment details – to third parties, without consent or for a purpose other than that for which consent was given. This is also likely to breach the Data Protection Act.
• Advertising and marketing: CONC 3.3 requires financial promotions (including websites) to be clear, fair and not misleading. Firms must not mislead as to their identity or status, for example by stating or implying that they are a lender where this is not the case.
• Transparency of status: CONC 3.7 requires brokers to make clear in financial promotions and other documents intended for customers their status, including the extent of their powers, the nature of the service they provide and any links with lenders.
• Transparency of fees and commissions: CONC 4.4 deals with fee disclosure and CONC 4.5 with commission disclosure. Any fee payable by the customer must be disclosed at an early stage and agreed in writing before a credit agreement is entered into. The disclosure must include how and when the fee is payable and whether a refund may be available.
• Refunds: Section 155 of the Consumer Credit Act entitles the customer to a refund (less £5) of any brokerage fee if a credit agreement is not entered into within six months of an introduction to a source of credit, and CONC 6.8 provides guidance on this. A broker should respond promptly to any request for a refund.

What are the additional rules from 2 January 2015?

In addition to the rules above, firms will have to comply with the following:

• Information notices and customer confirmation: The new CONC 4.4.3R prohibits firms from charging fees in connection with credit broking, and requesting payment details from customers for that purpose, unless:
  • the broker has provided an explicit and clear notice to the customer (an ‘information notice’), setting out:
    • the firm’s legal name;
    • that the firm is, or is acting as a credit broker (not a lender);
    • a statement that a fee will, or (where relevant) may, be payable:
    • the amount or likely amount of the fee; and
    • when and by what means the fee will be payable; and
    
    
  • the customer has acknowledged receipt of the notice, and awareness of its contents (the ‘customer confirmation’).
  
  

Each firm has to send its own information notice, and receive its own customer confirmation, before it may charge a fee or request payment details. The information notice and customer confirmation must be on paper, by email, or in another durable medium; and the firm must keep records of them.
The CONC 4.4.3R rules do not apply to broking agreements secured on land.

• Transparency: The new CONC 3.7.5R and 3.7.7R require credit broking firms:
  • to include the firm’s legal name (as it appears in the Financial Services Register) to be included in all financial promotions and communications with customers;
  • to state prominently in all financial promotions that the firm is a credit broker and not a lender (where that is the case); and
  • if the firm is both a credit broker and a lender, to state prominently in all financial promotions that relate solely to its credit broking that the promotion is of the firm’s services as a credit broker and not its services as a lender.
  
  

Quarterly report of websites: The new SUP 16.12.29C and Annex 38AR will require credit-broking firms, if they charge fees, to notify the FCA quarterly of their domain names in the form of data item CCR008. The report should be submitted on paper or by email.
Right to cancel: CONC 11.1R is amended to clarify that credit broking contracts that are distance contracts have the 14-day right of cancellation and right to a refund required by the Distance Marketing Directive.

[EXC]

Re: New rules will protect consumers from harmful fee-charging credit broking practic

From the FT.

Speaking before the FCA announcement, Steven Cooper, chief executive of personal banking at Barclays, said: “This is an issue on the rise and one largely caused by the lack of transparency on these broker sites.

“Customers are telling us time and time again that they simply weren’t aware of the charges they were going to incur or that in many cases they were going to receive multiple fees after their details were passed around. That lack of transparency needs to be urgently addressed.”

Data from the bank shows brokers made about 250,000 failed attempts a week in October to take money from customer accounts, which fell through often because of a lack of funds.