GC16/2: Proposal to issue guidance on the FCA’s view of enforcing security under the Consumer Credit Act 1974

We invite views on the proposal to issue guidance, which explains how we will interpret provisions of the Consumer Credit Act 1974 (CCA) regarding the enforcement of security in relation to a regulated credit agreement or a regulated consumer hire agreement.

Why are we proposing to issue guidance on this?

In February 2015 we published a consultation on proposed changes to our consumer credit rules and guidance, including in relation to guarantor loans. We published a feedback statement and final rules in Policy Statement (PS15/23) in September 2015 and stated that, in our view, taking or demanding payment from a guarantor (for example, under a direct debit or continuous payment authority) would not amount to ‘enforcement’ of security for the purposes of section 87 of the CCA and so would not require a default notice.

After reconsidering the matter we have now revised our view of how a court is likely to interpret the relevant CCA provisions. We are therefore consulting prior to issuing guidance to update the statement made in PS15/23.

Guidance Consultation 16/2 [PDF]

Who does this guidance affect?

This guidance is relevant to firms with regulated agreements involving a guarantee or indemnity (or other form of security), consumers and other interested stakeholders.

Whilst this guidance will not be binding on firms, we will take it into account in deciding whether a firm has followed the law and whether any supervisory or enforcement action is warranted.

We want to hear what you think

Please send your comments by email to martin.goulden@fca.org.uk.

Please send us your comments by 18 March 2016.

We are aware of technical difficulties with the previous email address to submit feedback on our consultation. We apologise to anyone who has been affected by this. We have resolved these problems, however if you submitted feedback between 19 February 2016 to 29 February 2016, or received a bounce-back email, please resend it to the address above.