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Asset Finance: Brexit impact limited, but an appetite for further reform?

Whilst much uncertainty remains as to the future arrangements for asset financiers doing business across Europe, we can now say that in terms of specific legislative requirements upon the operation of asset financiers within the UK, required changes would appear to be limited to the deletion of references to “standard European consumer credit information” (SECCI) from CCA regulated consumer credit agreements as reported in our last Briefing.

The Consumer Credit (Disclosure of Information) Regulations 2010 have been amended so that references to “SECCI” (the Standard European Consumer Credit Information) are deleted – the documents shall now simply be known as the Pre-Contract Credit Information.

The change was made under the Financial Services and Economic and Monetary Policy (Consequential Amendments) (EU Exit) Regulations 2020 (SI 2020/1301), which in turn triggers Regulation 14 of the Financial Services (Miscellaneous) (Amendment) (EU Exit) (No.3) Regulations 2019 (2019/1390).

Save for deletion of the references no additional changes are made to the required Pre-Contract Information, and a grace period for compliance applies up to 30 May 2021.

In theory if financiers overlook deleting the appropriate words after 30 May 2021 regulated Agreements would be in breach of section 55 of the Consumer Credit Act 1974 with the effect that Agreements would be unenforceable without a court order, but in practice this would be a mere formality and it is almost unimaginable that relief would not be granted by any court involved in enforcement proceedings.

However, it is worth noting that the extraction of the UK from the EU has perhaps added to the momentum for the reform of the UK consumer credit regime.

It is fair to say from even the most neutral perspective that much of the complexity and indeed illogicality of the legislative scheme applying to consumer hire and consumer credit in the UK has been the result of the piecemeal implementation of EU law in the UK over the years, most notably perhaps in the 2006 and 2010 reforms.

In early December 2020 the FLA, CCTA, BVRLA and others sent a briefing paper “Consumer Credit Act – the case for reform” to the Government calling for significant reform of the CCA.

The paper notes that the current legal and regulatory regime for consumer credit “is complex, out-of-date, inflexible and hard to navigate,” referring to 27 statutory instruments made under the CCA, various consumer protection legislation, FCA rules, and FSMA legislation.

In this context some readers will recall previous attempts to simplify the CCA regime by for example excluding all business users from the scope of its protection, but against this it is fair to say that since then the direction of travel in Government thinking has been very much in terms of extending Consumer type protection to all small businesses, so it will be interesting to see how this tension is ultimately resolved as and when the Government has any bandwidth for significant reform in this area.