Legal News

THE ART AND THE SCIENCE
PART 36 OFFERS EXPLAINED

Gateley Legal

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Litigation is expensive for everyone involved. It’s unsurprising, then, that the Civil Procedure Rules (“CPR”), which underpin litigation in England and Wales, contain extensive provisions encouraging and facilitating settlement, both before and after proceedings are issued. One such provision is the unique and self-contained settlement procedure contained in CPR Part 36. Settlement offers made pursuant to this Part are, inventively, called “Part 36 offers”.

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MOVING TO THE CLOUD
HORIZON SCANNING FOR FINANCIAL SERVICES FIRMS

Walker Morris LLP

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Use of cloud technology in streamlining processes and enhancing the customer journey in the sale and maintenance of financial services products offers businesses obvious benefits, with the Bank of England (BoE) stating that “using the cloud allows businesses to work in a more agile way…from file sharing to managing fraud”.

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EARNING ARRESTMENT
IT’S DONE DIFFERENTLY IN SCOTLAND

Brodies LLP

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This series looks at the enforcement options available to creditors to recover sums due by a debtor in Scotland. In a previous edition we looked at Inhibition which is similar to a Charging Order in England. In this edition, we now turn to look at how Earnings Arrestment operates in Scotland.

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FAIR AND SQUARE?
REGULATED AND EXEMPT LOAN AGREEMENTS

Hill Dickinson

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Liverpool, the location of the 2022 CCTA conference, is also the backdrop for a recent decision on the boundary between regulated and exempt agreements, and on the ‘unfair relationship’ question.

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INHIBITION
IT’S DONE DIFFERENTLY IN SCOTLAND

Brodies LLP

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In the context of debt recovery litigation, the obtaining of a decree (judgment) should not be an end in itself and this is particularly true in relation to volume debt recovery litigation. The purpose of a court decree is to enable the creditor to obtain payment from his debtor of the sums of principal, interest and expenses (legal costs) due in terms of the decree. To achieve payment, either in full, or by instalments over a period of time, it is important that the creditor has a clear and defined strategy in relation to, firstly, the selection of accounts for litigation, to ensure that they are appropriate to be litigated on and, secondly, the enforcement of decrees to maximise the prospects of repayment.

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A LANDMARK JUDGMENT
LLOYD VERSUS GOOGLE LLC

Hill Dickinson

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The dispute involved former director of consumer watchdog ‘Which?’, Mr Lloyd against Google LLC alleging breach of duties as data controller under the Data Protection Act 1998 (DPA). Mr Lloyd alleged that Google had been secretly tracking online activity of millions of iPhone users and had used the data for commercial purposes without the users’ knowledge/consent. He sought to bring the claim acting as representative for all individuals affected. Compensation of £750 was sought in respect of each individual, which would result in a total damages order of £3 billion if successful.

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SIGNIFICANT CHALLENGES AHEAD
REVIEW OF THE PRE-ACTION PROTOCOLS

Restons Solicitors

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The start of 2022 sees the continuation of the Civil Justice Council review of the pre-action protocols (PAP), which may result in changes to the process. While some would be welcomed, others may present significant challenges to the debt collections industry. There are four key areas which are being looked at for debt claims; however, one key message should absolutely remain the same and that is to encourage engagement between the debtor and creditor (or their appointed representative). Increased engagement helps to reduce the number of claims being initiated through what is already a creaking justice system. The original debt PAP unfortunately did not have that desired effect.

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CROSSING THE WATERS
HOW TO FUND YOUR BUSINESS

Walker Morris

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Lending money is what you do. Swapping your lender hat for a borrower one requires careful consideration. Navigating the various funding options available with the specialist lenders in the market is about finding the best fit for your business. And what about raising funds via issuing shares? The following sets out the pros and cons of common funding options for consumer finance businesses.

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DIVERSITY AND INCLUSION
A REGULATORY ISSUE

Addleshaw Goddard

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Diversity is by its nature diverse. When the Financial Conduct Authority (FCA) talks about diversity in financial services firms, it is referring to a broad range of backgrounds and characteristics which apply to a firms' work force and leadership, as well as the customers it serves. Through several speeches and papers published over the last year or so, the FCA has clearly indicated that diversity and inclusion are priority considerations and will remain so in the coming years.

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UPSETTING THE APPLE CART
DEBT DEFERMENT: CCA/FSMA IMPLICATIONS

Locke Lord

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The Court of Appeal in CFL Finance v Laser Trust (2021) decided that the Consumer Credit Act 1974 (“CCA”) can apply to a settlement agreement, where payment of a debt by an “individual” is deferred, even if the CCA did not apply to the debt prior to the settlement, as in this case, where a loan of £3 million had been made to a company, guaranteed by Mr Gertner.

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SETTLING THE MEANING OF CREDIT
CFL FINANCE LTD V GERTNER

Gateley

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Until very recently it was considered common ground that terms embodied in a settlement agreement or Tomlin Order, by which parties settle a dispute, are not subject to the CCA. However, the recent Court of Appeal case of CFL Finance Ltd v Gertner raises the possibility that some settlement agreements and/or schedules to Tomlin Orders entered into between funders and individuals might be regulated by the CCA.

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A HIDDEN COST?
COMMISSION CLAIMS AND THE DECISION IN WOOD AND PENGELLY

Walker Morris

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We are seeing a growing number of claims by borrowers concerning alleged undisclosed commission payments by lenders to brokers/agents/introducers. If the borrower was not aware that commission would be paid at all, such payments may be classed as 'secret commission'. If they were aware that commission may be payable but not of the amounts, such payments may be classed as 'half secret commission'. In both scenarios, the broker and lender may face claims from the borrower.

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A TAX ON BUSINESS?
THE DOUBLE WHAMMY OF THE CIVIL COURTS

Equivo

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Those using the civil courts to recover debt have faced a double whammy during 2021. Firstly, the government’s response, in March 2021, to its consultation on aligning fees for paper based and online claims, was that online discounts had fulfilled their role in persuading major users to move online and it was now unfair to distinguish between those who continued to issue on paper and those who issued online.

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UNDISCLOSED COMMISSION
A SOURCE OF RELIEF?

Locke Lord

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The failure by a broker to disclose to a borrower that the lender will be paying commission to the broker can in certain circumstances enable the borrower to unwind the loan, without having to pay interest and the lender having to pay the commission to the broker. In March 2021, the Court of Appeal lowered the bar for borrowers seeking such relief.

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PLEASE MIND THE GAP
BROKER OVERSIGHT

Addleshaw Goddard

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Lenders' being subject to regulatory obligations for oversighting their credit brokers are nothing new – the OFT "Credit brokers and intermediaries guidance" in 2011 set out the expectation for lenders to take responsibility for the actions or omissions of their brokers and take reasonable steps to satisfy themselves that business associates (including brokers) weren't engaging in unfair business practices or acting unlawfully. Since the FCA became responsible for regulating consumer credit in April 2014, lenders have had obligations under CONC to oversight their brokers and ensure they have the correct permissions.

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HOOPS AND HURDLES
UPDATE FOR CREDITORS

Gateley

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Over the last two years we have seen the government make a huge shift towards helping debtors manage their finances and their mental wellbeing.  While this is fantastic for debtors, creditors are forced to jump through more hoops and over more hurdles to bring the cash in. This article covers a few of the changes and what creditors must do to stay compliant.

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LEES V. LLOYDS
COURT DISMISSES REPETITIVE DATA SUBJECT ACCESS REQUESTS

Gateley

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In the case, Lees v. Lloyds, the data subject, Mr Lees (the claimant) issued a claim against Lloyds Bank Plc (Lloyds) for failing to provide an adequate response to various Data Subject Access Requests (DSARs) in breach of the Data Protection Act 2018 (DPA 1998) and General Data Protection Regulation (GDPR).

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RESPONDING TO DATA BREACH CLAIMS
A COMMON SENSE APPROACH

Walker Morris LLP

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In the run-up to GDPR, the focus was on the fines that data protection regulators can impose for infringements. Another issue that has become increasingly significant is that of data breach claims, compensation and costly group litigation. Under GDPR and the Data Protection Act 2018, individuals can claim through the courts for compensation for "material" (i.e. financial) and/or "non-material" damage, including distress and loss of control over their personal data.

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FORBEARANCE
TOO MUCH OF A GOOD THING?

Brodies

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The Financial Conduct Authority (FCA) warned consumers in its Mortgages and Coronavirus: Information for Consumers Guidance of 27 January 2021 that: "If a repossession on your home is stopped and you don’t keep up with payments, the total amount you owe will increase. This is because interest will continue to be charged (plus any fees and charges you may owe according to your lender’s tariff of charges). This means you are likely to get less back later if your property is repossessed and then sold by your lender. If property prices fall in the time between now and when your property is sold, you might get less back, or even nothing, if your property is sold for less than you owe."

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A NEW SHERIFF IN TOWN?
CONSUMER SCOTLAND ACT 2020

Brodies LLP

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Consumer Scotland Act 2020: A New Sheriff in Town? The Consumer Scotland Act 2020 was passed by the Scottish Parliament on 6 May 2020 and received Royal Assent on 9 June 2020. The Act provides for the creation of a new consumer body to be called ‘Consumer Scotland’ which the Scottish Government intends to be ‘an unashamed champion for consumer interests and rights’ in Scotland. Business Minister, Jamie Hepburn, commented that: “Consumer Scotland will be a dedicated champion for everyone across Scotland, focused on investigating consumer harm and developing solutions to tackle it.” The Act may not yet be on the radar of businesses operating in the business to consumer sector in Scotland, but it probably should be.

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A DIGITAL DREAM
DOING BUSINESS AT A DISTANCE

Shoosmiths

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Recently published figures show that the battle for new customers is tilting in favour of financial services businesses prepared to engage with their customers at a distance. One particular and instantly recognisable lender attracted most account switchers for the first time as ‘customers desert high street rivals’,

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SCHOOL’S OUT
A REAL WORLD LESSON IN PUBLIC SECTOR LEASING

Gateley Legal

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The beauty of the leasing industry is that almost anything can be leased to almost anyone (subject to satisfactory credit checks). Need to finance a helicopter, sixteen dumbbells, a Volkswagen, and a deep fat fryer? Sure. There’s a finance house out there willing to talk numbers. Sole trader/limited company/partnership/plc? Not a problem. The leasing industry operates across the regulated and unregulated sectors and welcomes all. Well, almost.

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