ARTICLE...
The Consumer White Paper
As a result of the 'credit crunch' the Government has launched a Consumer White Paper designed to modernise Britain's consumer legislation ensuring the challenges emerging from the changed economic climate are met. The 'credit crunch' is associated with rising levels of debt therefore it is unsurprising the white paper includes additional assistance for those finding themselves in increasing amounts of debt.
In addition to setting up schemes designed to compensate consumers who have been ripped off by scams, or by defective products, the paper aims to implement the proposals made in the Consumer Law Review of 2008. The review aimed to simplify consumer law, ensure the law applies to 'the digital age' and make sure that consumers receive fair treatment. The Credit Services Association (CSA)/Debt Buyers and Sellers Group (DBSG) of course responded to this consultation highlighting their opposition to sending statements to debtors in an IVA or where they have gone away. In addition the CSA raised the issue of requests for statements having become a tool for debt avoidance.
The white paper concentrates on the following issues which are applicable to our industry:
Helping people in difficulty with debt
Throughout the white paper the issue of giving debtors information is raised. The government aim to do this in the form of pre-contractual information and opening up the free advice sector through additional funding and creation of the self-help scheme. Additionally a 30 day breaching space has already been agreed with utility companies, credit card providers and with CSA members. The Insolvency Service is also producing a debtors' guide outlining all of the options available to debtors.
The government aim to introduce a range of statutory debt remedies to complement IVA's and bankruptcy. In April 2009 the Debt Relief Order came into force and this will be followed by the Approved Debt Management Scheme in April 2010.
Tackling Poor Business Practice
Positively the Government intend to stop misleading debt management advertisement and to stop debt management scams. The Government intends to improve practices in the debt collection industry by using the CSA, the association must ensure members are investigating disputes correctly and the association's website must be updated to include a consumer advice section. Furthermore unsolicited credit card cheques will be banned and the implementation of the Consumer Credit Directive will bring with it responsibilities for lenders to check their customers credit worthiness and give information on products.
A New Approach to Enforcement
Government will ensure the OFT is empowered to ensure that individuals are compensated for breaches of legislation. Consumers will also be informed of when they are due compensation and how to go about claiming this. On the other hand the paper does raise the possibility that businesses will get the opportunity to correct the breach before compensation would be paid. Formal action would be reserved for those who fail to do so.
It is also proposed that the penalties for silent calls will be increased above the £50,000 limit.
Modernising Consumer Law
Consumer law in the UK is the most developed in the world, it affords the greatest protection to consumers. However the law is fragmented and as a result difficult to understand. It needs to be brought into the 'digital world' so that it is applicable to sales made over the internet. As a result the Government will negotiate with the EU over the Consumer Rights Directive to achieve simplicity and protection. All consumer law will eventually be brought into a Consumer Rights Bill for ease of understanding.
However of particular importance to the industry is the undertaking to review sending statements and arrears notices (as required by the Consumer Credit Act) where a debtor is in an IVA or has gone-away. This is following intense lobbying from the DBSG. Earlier in the year the Department for Business, Enterprise and Regulatory Reform released a policy statement stating that they will consult on sending abridged statements where the debtor cannot be found. The white paper confirms this consultation will be released in autumn 2009 and will be accompanied by an impact assessment; the DBSG is currently compiling data to assist with this assessment.
Finally the paper states 'The Government remains committed to carefully scrutinising proposals for new regulations that impact on business.' We will wait and see...
Robert Bell
Compliance Executive, CSA & DBSG
