The Competition & Markets Authority
Works to promote competition for the benefit of consumers in the EU. It took over from the Competition Commission & Office of Fair Trading in 2014.
They are responsible for:
Investigating mergers between companies, that could restrict competition.
Conducting market studies to identify competition problems
*Investigating breaches of anti-competition law & bringing criminal proceedings against those that commit crimes and the 'cartels offense' under Enterprise Act 2002.
*Enforcing consumer protection legislation to address practices that adversely affect consumers ability to exercise choice.
*Co-operating with industry regulators to use their powers.
Consumer Credit Legislation
The FCA control the responsibility for regulating consumer credit and released a new sourcebook - the consumer credit sourcebook (CONC). The FCA grants firms licenses, and continue to monitor the performance of individuals and businesses.
Consumer Credit Act 1974
regulate, control, supervise certain types of lending, providing borrowers with protection from unscrupulous lenders. This act applies to ALL lenders and sets a clear standard for consumer credit.
Property exempt, unless loans are raised on a property for other purposes.
Suppliers of loans must be licensed.
Clients must receive a copy of the loan agreement.
Cooling-off period applies.
Misleading marketing is forbidden.
Credit agencies must disclose information held about a customer on request.
ANNUAL PERCENTAGE RATE (APR) = TOTAL COST OF THE LOAN
the total cost is interest rate + any additional fees and costs to the customer.
This allows a 'like-for-like' comparison of borrowing the same amount from different lenders.
Consumer Credit Act 2006
Improvements to the 1974 act have been made in 3 areas:
enhance consumer rights - consumers are able to challenge unfair lending.
Improved regulation by higher standards and 'targeted action'.
*Regulation extended to more kinds of consumer credit.
Apr 2007: Scope of FOS expanded to consumer credit disputes. Unfair relationships test introduced in order for businesses to be challenged in court (taking into account other aspects like eligibility).
Apr 2008: Upper limit on regulated loan size removed. Unfair Relationships Test covered existing and new.
Oct 2008: More information is to be given to customers on a regular basis (account info, arrears notices etc).
Consumer Credit Regulations (EU Directive) 2010
Advertising & APR: anywhere there is a reference to an interest rate it must include a representative example. It must reflect at lease 51% of expected business from the advert.
Creditworthiness & adequate explanations: Lenders must properly assess a borrower's creditworthiness. A borrower must be given credit agreement and an explanation of it should a borrower ask questions.
Pre-contractual information & agreements: Must be clear, easy to read, and given in good time for a customer to make a good decision.
Right of Withdrawal: Customer has 14 days to withdraw after entering an agreement. The borrower must repay any outstanding amounts plus interest for each day the borrowing was taken.
Many changes were made to the information that needs to be given to a customer.
Other Consumer Credit Regulation
Many regulations have been repealed and replaced with the content of the consumer credit sourcebook.
Section 3 states communication should be CLEAR. FAIR. NOT MISLEADING.
There are also new rules relating to high-risk payday lending. Any of this credit should be carried with a warning: WARNING, LATE REPAYMENT CAN CAUSE YOU SERIOUS MONEY PROBLEMS. FOR HELP, GO TO MONEYADVICESERVICE.CO.UK
There has been an increased surge in trying to generate interest in, and access to, pensions to enable provision for retirement.
THE PENSIONS ACT 1995: Prevention of fraud, improved administration, better security for pensions following the 'Maxwell Affair' (pensions being used to meet company obligations)
PENSIONS ACT 2004: Pensions Protection Fund established to protect defined-benefit members, and Pensions Regulator created.
THE PENSIONS ACT 2008: enabling and encouraging more people to build up a private pension. In 2012 Auto-Enrolment was introduced for qualifying employees.
THE TAXATION OF PENSIONS ACT 2014: Increased ways members of Money-Purchase schemes to take their payments to provide greater freedom and choice.
The Pensions Regulator (TPR)
Works 'to improve confidence in work-based pensions by protecting the benefits of scheme members and encouraging high standards and good practice'.
To protects benefits & rights of occupational, and personal pension schemes; to promote understanding and good admin of workplace schemes; to reduce the risk of claims to PPF; Maximise employer compliance; minimise impact on employer growth.
Aims to identify & prevent potential problems, by assessing risks in industry such as: inaccurate funding/ record keeping, fraud, lack of knowledge etc. Impact & likelihood of event taking into consideration and firms with high risk are monitored more closely.
Investigation: in order to identify & monitor risks. Schemes report to TPR regularly.
Putting things right: recovering unpaid contributions, disqualifying trustees, fine/prosecution
Acting Against Avoidance: Employers can't deliberately avoid their obligations.
Voluntary codes of practice can be used. Employees must have sufficient knowledge of scheme.
Pension Protection Fund (PPF)
Protects members of defined-benefit & hybrid pension schemes, where an employer has become insolvent and cannot pay core benefits. PPF protects both money-purchase & defined benefit in cases of fraud.
100% of the fund for those that have reached pension age, or those already in receipt of pension due to health.
90% for current/ ex-scheme members aged below scheme pension age. (subject to a cap)
Limits are increased by 3% for those with 20+ years of membership to a scheme.
Compensation will increase by RPI up to 2.5%.
Benefits are maintained by 1. Taking over assets of insolvent companies and 2. A levy on all private defined benefit schemes, split into 3 parts:
1. Pension protections Levy: based on risk & scheme (how many members).
2. administration levy: covering the ongoing costs of PPF
3. Fraud Compensation Levy: To compensate members that suffer a loss due to dishonesty.
Unfair Contract Terms
Customers have rights.
clear and honest information before they buy
Get what they pay for
Goods being fit for purpose
Faults being corrected free of charge or a refund being given
The Consumer Rights Act 2015
This act gives consumers enhanced rights when things go wrong.
when goods are faulty, services fail, there is no skill in the provision of services, unfair contract terms are all covered, and the FCA/ Trading Standards have increased powers to deal with it.
If a business doesn't provide a service that was paid for, the business must align it with what was agreed or provide a full refund.
This act intends to minimize a number of disagreements going to court. An Alternative Dispute Resolution (ADR) has been available for businesses to engage with since July 2015.
Whether Mediation, adjudication or arbitration, it can be binding and enforced in courts.
Unfair Contract Terms (Usage)
This applies to contracts between business and consumer.
FAIRNESS: Must be balanced between consumer and business in good faith. Any unfair terms, (high charges, allowing business to change terms or price after contract signing) the customer will not be bound by.
TRANSPARENCY: Clear, easy to read and understand. If any ambiguity, the interpretations most favourable to the customer will be used.
GOOD FAITH: If a contract is imbalanced, causing significant harm to the customer it will be in breach of good faith.
Advertising Standards Authority (ASA)
Set up in 1962, independent self-regulatory body, covering virtually all advertisements:
Papers, Posters, direct mail, cinema commercials, the Internet, Prize Draws, Television, Radio etc.
There ASA can take action against offending adverts. If after a discussion with the business about the advert, they fail to make changes, the ASA can withdraw advert and in cases of serious misconduct take to legal proceedings (trading standards).
ALL ADVERTS SHOULD BE:
LEGAL: Contains nothing that breaks the law, or causes anyone to do so.
DECENT: Containing nothing that is likely to cause widespread offence (contexttaken into account)
HONEST: Not exploiting lack of knowledge/ inexperience of consumers
TRUTHFUL: Not misleading by inaccuracy, ambiguity, omission
Standards of Lending Practice
Self-regulation of the lending industry. Replaced Lending Code for personal customers (oct 2016). Firms must also comply with Credit Acts 74, CONC, 2010 Credit Directive.
SLP Sets out principles for businesses to follow:
1. Financial Promotions & Communications: Must be clear, fair, not misleading
2. Product Sales: must be sold a product that meets their needs & is affordable
3. Account maintenance & servicing: customers dealt with quickly, securely, and accurately.
4. Money Management: Help customers manage their finances, identifying signs of stress, helping to avoid financial difficulty.
5. Financial Difficulty: appropriate support and fair treatment
6. Customer Vulnerability: Inclusive product range, flexible enough to meet vulnerable customers needs.
7.Governance & Oversight: policies in place to ensure customers receive a fair outcome when dealing with the firm.
These standards cover unsecured loans, credit cards, overdrafts.
Data Protection Act 1998 (Definitions)
Applies to ANY STRUCTURED SET OF DATA - Physical or digital.
Definitions used in the act:
Data Subject: A person who's personal data is processed.
Personal Data: Information relating to a living individual that can be identified from it.
Sensitive Personal Data: Explicit consent must be given to process this data (race, religion, politics, health, criminal proceedings).
Processing: Covers all aspects of owning data. Collection, recording, organisation, keeping, disclosure, erasure.
Data Controller: The legal person (company) who determines what information is kept, why, and how.
Data Processor: The employee who processes personal data on behalf of the data controller.
Data Protection Principles
8 Data Protection Principles:
1. Data must be processed FAIRLY & LAWFULLY. Must tell the customer what information is kept, and why. Customer must give consent, unless it's needed for contracts, legal reasons.
2. Must be obtained for a SPECIFIC & LAWFUL PURPOSE
3. Data must be ADEQUATE BUT NOT EXCESSIVE (bear this in mind for the FactFind).
4. Must be ACCURATE & UP TO DATE
5. NOT be kept for LONGER THAN NECESSARY
6. Data Subjects have RIGHTS. (copy of information held for £10, given in 40 days and this to be corrected if incorrect).
7. MUST KEEP DATA SECURE from misuse, destruction, leaking.
8. Must NOT be transferred to a country OUTSIDE THE EU unless that country ensures an adequate level of protection for the rights and freedoms of data subjects (comparable to EU).
Data Protection Enforcement
the INFORMATION COMMISSIONER is responsible for the application of DPA, educating organisations about their responsibilities and taking action to enforce.
If a breach of the act is discovered, the commissioner has the following powers:
1. Serve information notices - requiring a business to give specific information in a time period.
2. Issue undertakings - improving an organisations compliance through specific actions
3. Serve Enforcement Notices - 'stop now'. comply with specific steps.
4. Consensual Assessments/ audits - checking organisation compliance
5. Assessment notices - enforced audits
6. Issue Financial Fines - up to £500,000 for serious breaches.
7. Prosecute - criminal offences
8. Report to Parliament - issues of concern
They can also prosecute a data controller that fails to comply with an information/ enforcement notice; make proper notification (register details of personal data compliance) to the IC; processes data without authorisation from IC. (maximum penalty £5,000 unless crown court is used, then no limit).
Data Protection Regulation (General)
The EU data protection directive in force is DATA PROTECTION DIRECTIVE 1995. This is now being updated to take into account social media on MAY 2016, taking effect from MAY 2018.
The right to be 'forgotten' from a company.
Explicit consent must be provided before being added to mailing lists.
Old & New subscribers must give consent.
Individuals can more easily access data held about them and have a right to be informed if their data has been hacked.
New fines can be enforced that can be as much as 4% of annual turnover!
Data collected across many EU countries will be monitored by DATA PROTECTION AUTHORITY = the LEAD AUTHORITY. This is normal at the business head office.
Foreign companies that have customer bases and offices in the EU must comply with EU regulations.