Changes in the leasing world in 2013

As 2014 has begun, it seems an appropriate time to review some of the most important changes that have occurred in the leasing world in the past 12 months. However, to begin with we will pay special attention to the Financial Conduct Authority’s (FCA) power to publicise warning notices.

New powers to name and shame

The FCA has issued information on how it will publicly release details of firms that are under investigation. Previously, the Office of Fair Trading (OFT) - the regulator in Consumer Credit cases - only published information about enforcement proceedings at a later stage in the enforcement process, once it had been decided that action needed to be taken. Now, however, the FCA will publish information during the investigation stage if it believes such a step to be appropriate.

After a period of consultation, the FCA has said that information will be made public through a warning notice statement that will, in most cases, name the firm under investigation and, in certain circumstances, also name individuals. The FCA’s intention is to use such notices to publicly illustrate the sort of behaviour considered unacceptable and to make the enforcement process more transparent.

In deciding which cases and details to publish, the FCA will consider the circumstances of the case and whether publishing details, and specifically what details, would be appropriate. Before making its final decision, the FCA will also consult the firm or person under investigation and will take into account any reasons why publishing details about the business, or person, would be unfair.

The warning notice statement itself will normally include a brief summary of the facts which demonstrate the nature of the FCA’s concerns.

Although this is not a huge departure from the system currently in place under the OFT, allowing the regulator to publish details before guilt or misconduct has been conclusively established is a little worrying. The FCA would no doubt argue that if your conduct is good, then there is nothing to fear from these changes. However, it will be interesting to see if retractions are publicised to the same extent as the initial warning notice if firms are acquitted of any misconduct.

Looking back, looking forwards

And finally, it’s that time of year to cast an eye back over events of the past 12 months and also to look ahead at what is coming up over the next year.

Unquestionably the biggest developments this year, and especially over the last six months, have been those to do with the FCA. The transfer of consumer credit regulation from the OFT, as well as the accompanying changes found in the FCA sourcebook, present a huge amount of work for lenders, both between now and the end of the financial year,  and then from 1 April onwards.

The Consumer Rights Bill has also given us a fair bit to talk about and will continue to do so once it receives Royal Assent, which is believed to be early next year. The proposals for a structured system of tiered remedies is a significant departure from the existing law and will require procedural and policy changes by some lenders.

At the start of the year we looked at EU proposals to overhaul pan-European anti-money laundering rules, which are still on-going. In addition to this the European Commission is expected to publish legislative proposals in 2014 harmonising money laundering and terrorist financing offences, and related criminal penalties, across the EU. All in all, expect more EU compliance to be heading your way in 2014 if you are a lender.

Also on the issue of money laundering, the FCA is expected to publish proposed guidance for consumer credit firms on financial crime issues around the turn of the financial year. Also due in April 2014 is a paper from the FCA on key risks it sees in the market and its priorities for intervention. This will hopefully give lenders some guidance as to where they can expect the FCA to be particularly proactive as it gets up to speed throughout the year.

With all that to come, it looks like 2014 will have little regulatory respite for lenders.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

John Perez


I head the Lender Services division, acting for motor finance lenders and leasing companies on volume collection/recoveries instructions and on specialist defended cases.