Out-Law News | 05 May 2021 | 10:57 am | 1 min. read
The UK Financial Conduct Authority (FCA) has confirmed which forms consumer credit firms must use for disclosing precontractual information as post-Brexit transitional arrangements come to an end.
The changes apply from 1 June 2021, and affect firms subject to regulations 8, 10 and 11 of the Consumer Credit (Disclosure of Information) Regulations 2010.
Under transitional provisions, firms have been able to use previous European consumer credit information forms, or new post-Brexit pre-contract consumer credit information forms to provide precontractual information.
From 1 June, they will only be able to use the post-Brexit forms. The FCA warned that if the Disclosure Regulations are not complied with, the credit agreement is only enforceable against the debtor on an order of the court under the Consumer Credit Act 1974.
Financial services regulation expert Andrew Barber of Pinsent Masons, the law firm behind Out-Law, said: “Firms for which these changes are relevant must make sure they have made the necessary systems changes and updated their staff about which forms they must use from 1 June if they are not already using the post-Brexit forms.
“Non-compliance with the Disclosure Regulations that underlie the requirements for using these various forms makes the agreement unenforceable against the debtor without a court order. So this is a critical change for lender firms to make sure they and their intermediaries get right,” Barber said.
The requirements affect firms which are subject to regulation 8 of the Disclosure Regulations, and which enter into distance contracts with customers. From June, they must only use the new pre-contract credit information form.
Barber said current working practices made compliance even more critical.
“Given the pandemic and changes to business practices generally, distance contracting may well have been increasing. Firms approaching business in this way, or that have perhaps newly begun doing so as a result of Covid-19, need to be aware of the change to the permitted forms and ensure their systems are updated by the deadline,” Barber said.
Firms engaged in regulated authorised non business overdraft agreements and subject to regulations 10 and 11 must use the new pre-contract consumer credit information (overdrafts) form.
11 Mar 2021