Topic 5 - Other Rules Flashcards
What is the Competition and Marketing Authority (CMA)?
Non-ministerial department of the Dept of Business Innovation and Skills.
It works to promote competition for the benefit of consumers.
It aims to make markets work well for consumers, business and the economy.
What is CMA responsible for?
7 items.
Investigating mergers that may restrict competition.
Conducting market studies and investigations.
Investigating breaches of competition law
Bring criminal charges against cartels.
Enforcement of Consumer Protection and Unfair Trading Laws
Coop with regulators.
Considering regulatory references and appeals.
What Acts and Regulations govern Consumer Credit in the UK?
4items
Consumers Credit Acts
1974 and 2006
Consumer Credit Regulations 2010
Consumer Credit Sourcebook (CONC).
Who is responsible for licensing consumer credit business?
FCA assesses whether a business is fit to hold a licence before granting one.
This includes -
Lenders
Brokers
all businesses “concerned with the provision of credit”.
What does the FCA’s Approved Persons Regime mean for consumer credit firms?
Individuals who undertake significant or management functions need to be approved by the FCA.
What is the purpose of the Consumer Credit Act 1974?
4 items
Regulate, Supervise and Control lending to individuals.
Provide borrowers with protection from unscrupulous lenders.
It sets out the standards by which all lenders from multinational banks to individual moneylenders must conduct their business.
Including safeguards under which potential borrowers are advised of the regulatory requirements of the firm.
What loans aren’t covered by the CCA 1974
2 items 1 exemption
Loans for the purchase of a private dwelling.
Home improvement loans (from the same provider as the Mortgage)
Loans raised on security of a home but for other purposes are not exempt.
What are CCA 1974’s main provisions?
6 items
Suppliers of loans and Credit must be licensed.
Clients must receive a copy of the loan agreement.
A cooling-off period applies except when the loan is signed on the lender’s premises
Undesirable marketing Practices banned.
Credit reference agencies must disclose info held on request. And correct errors.
Introduced APR to allow comparisons between suppliers.
How is the APR calculated?
It’s the total annual cost of borrowing. Its two main elements are
Interest Rate
Additional costs and fees for arranging the loan.
CCA 2006 made improvements in what three areas?
Consumer rights and redress - Enhanced client’s rights to challenge unfair lending and access to dispute resolution.
Targeted action to drive out the rogues.
Make regulation fit for all consumer credit transactions.
What is the Unfair Relationships Test?
It enables borrowers to challenge credit agreements in court on the basis of the relationship between borrower and lender being unfair.
What is the Upper Limit for loans covered by the Consumer Credit Act?
None.
It was abolished in April 2008.
What prompted the Consumer Credit Regulations 2010?
EU Consumer Credit Directive 2008.
What are the main requirements of the Consumer Credit Regulations 2010?
4 items
Advertising and APR - must include a representative rate reflecting at least 51% of the business the ad is expected to generate.
Creditworthiness and adequate explanations- the borrowers creditworthiness must be assessed and the credit agreement must be adequately explained to them.
Pre-contract info and agreements - given in good time before the borrower enters into agreement. It must be clear and legible.
Right of Withdrawal- within 14 days of taking out the borrowing or getting a copy of the agreement.
CONC 3 : financial promotions and communications with customers.
What must communications with customers be?
Fair and not misleading.
Plain language.
Specify who is making the offer.
What rules does CONC provide for high-cost short term credit like pay-day loans?
Must carry the message “WARNING: Late repayment can cause you serious money problems. For help go to moneyadviceservice.org.uk”
Why is there a pension crisis in the UK?
Inadequate personal provision
Ageing population
Leading to increasing demands being placed on the state system.
How have efforts been made to address the pension crisis?
Building confidence and understanding of Pensions.
Incentivising / compelling people to join a pension scheme.
What body has regulatory responsibilities for pensions?
The Pensions Regulator.
What provides some protection to members if the employer providing a pension scheme becomes insolvent?
The Pension Protection Fund
What is The Pensions Regulator’s Mission Statement?
To improve confidence in work-based Pensions by protecting the benefits of scheme members and encouraging high standards and good practice in running pension schemes.
What are the Pensions Regulator’s objectives?
5 items
Protect benefits and rights of occupational pension scheme members.
To protect members who have direct payment arrangements.
Good administration of work-based pension schemes.
Reduce instances of need to rely on the Pension Protection Fund.
Maximise employer take up of auto-enrolment.
Minimise impact on the growth of an employer.
In taking a proactive approach The Pensions Regulator assesses risks to it meeting its statutory objectives.
What are those risks…
4 items
Inadequate funding
Inaccurate records
Lack of knowledge amongst trustees
Dishonesty and fraud.
The Pensions Regulator considers which two factors when considering risk events?
Likelihood - of an event occurring
Impact - on the scheme and it’s members
The Pensions Regulator.
What is the consequence of a higher risk profile?
Schemes with a higher risk profile will be more closely monitored than those with a lower risk level.
The Pensions Regulator’s Powers fall into what three categories?
Investigating Schemes to identify and monitor risks.
Putting right if things go wrong
Action Against Avoidance - ie the deliberate avoidance of pension obligations by employers.
How does the Pensions Regulator ensure it has sufficient INFORMATION to fulfil its investigatory role?
3 items
Schemes make regular returns to the Regulator.
Trustees notify Regulators of significant changes
Regulator demands early notification if the scheme discovers that it cannot meet funding requirements.
What action can the Pensions Regulator require to put things right?
5 items
Demand specific remedial action within a timescale.
Recover unpaid contributions from an employer
Disqualify trustees
Impose fines
Prosecute
What are the two main actions the Pensions Regulator can take when Acting Against Avoidance?
Issue contribution notices requiring the employer to make good its debt.
Financial support directions for underfunded schemes.
What does the Pensions Act 2004 require of Pensions Regulator and Pension scheme trustees?
Issue voluntary code of practice.
Trustees should have sufficient knowledge and understanding of pension and trust law, scheme funding and investment and the trust deed and other documents relating to the scheme.
What is the PPF and what is its purpose?
Payment Protection Fund
Protects members of private sector final salary and defined-benefit element of hybrid pension schemes.
What is a hybrid scheme?
Pension scheme that combines defined benefit and money purchase schemes.
When does the PPF provide protection?
Where contributions have stopped due to the insolvency of the employer and there are insufficient funds to pay all members.
In cases of fraud and misappropriation who does the PPF compensate?
Members of both defined benefit and defined compensation schemes.
What compensation does the PPF provide for members of defined benefit schemes when the employer goes bust leaving an insufficiently funded scheme?
100% for those already reached the pension age or claiming.
90% for current and ex-members below pension age. Subject to a benefit cap.
What step is taken to ensure PPF compensation maintains its value over time?
Payments are increased in line with the CPI up to a max of 2.5%
Who is PPF funded?
Two items (2nd split into three).
Taking over assets of pension schemes of insolvent employers.
Levy on all private sector defined-benefit schemes -
- pension protection levy - made up of scheme-based and risk-based levies.
- admin levy - covering set up and on-going costs
- fraud compensation levy
Unfair Contract Terms.
What rights do consumers have?
Clear, honest information before purchase.
Get what you pay for.
Goods should be fit for purpose; services performed with care and skill
Faults corrected FOC or refund / replacement provided.
Consumer Rights Act 2015
Covers what 5 situations?
When goods are faulty
When services don’t match what was agreed
When goods and services are not provided with reasonable care and skill
Unfair Contract Terms.
How enforcers like FCA and Trading Standards respond to breaches in Consumer Law.
What is ADR?
What does it involve?
Alternative Dispute Resolution.
The business involved in a dispute engages a resolution specialist (with consumer’s permission).
This may involve -
Mediation
Adjudication - can be appealed in court
Arbitration - can’t
Binding on client and firms. Can be enforced by courts.
To what does the Unfair Contract Terms legislation apply?
Contracts between business and consumer. Particularly relating to rights and obligations of the parties and terms that seek to exclude or diminish liability to a consumer.
Unfair Contract Terms legislation.
Covers which 3 main areas
Fairness
Transparency
Good Faith
Unfair Contract Terms legislation.
In terms of Fairness contracts should be…
Fair - should not create an imbalance between the parties to the detriment of the consumer.
Show good faith.
What contract terms are deemed unfair?
3 t&C issues
Disproportionate cancellation fees
Terms that can be redefined by a business after the customer has committed
Terms that let the business set the price after the customer has agreed.
Are unfair terms binding?
No, but customer can elect to be bound by them.
If only part of a contract is unfair then the rest of the contract can continue to take effect.
The Advertising Standards Authority’s Advertising Code states that adverts must be what four things?
Legal
Decent - unlikely to cause offence
Honest
True
Advertisers are allowed to express opinions in what circumstances?
Provided it is clear that it is opinion not fact.
Anything that goes beyond subjective opinion must be objectively substantiated.
When did Standards in Lending Practice replace the Lending Code.
1 October 2016 for personal clients
1 July 2017 for micro-enterprises
What 6 main areas does Standards of Lending Practice cover?
3 relate to the firm’s process
3 relate to client’s circumstances
Promotions and Communications - clear, fair and not misleading
Sales - affordable and meets needs
Account Management and Servicing - timely, secure accurate.
Money Management - customers to receive help managing their money
Financial Difficulty - appropriate support and fair treatment.
Customer Vulnerability - must have a strategy for vulnerable clients
What products are covered by the Standards of Lending Practice?
4 items
Unsecured loans
Credit cards
Overdrafts
Charge Cards
Who monitors compliance with the appropriate laws and the Standards of Lending Practice?
Lending Standards Board (LSB)
What does the LSB expect firms to do in terms of Governance and Oversight?
Firms are expected to put in place policies and procedures to ensure a fair outcome for clients in dealing with credit firms.
What data does the DPA cover?
Any structured set of personal data. including manual filing systems.
What is the purpose of data protection legislation?
Give individuals control over the use of personal data about themselves held by organisations.
How is personal data defined?
Information relating to a living individual who can be identified from the information or from a combination of that information and other information in the possession of the data controller.
Who are -
Data Subject
Data Controller
Data Processor
Data Subject - the person who’s data is being processed
Data Controller - the organisation/ employer that keeps the data.
Data Processor - the employee who processes the data for the Data Controller
What are the 8 data protection principles?
- Data must be processed fairly and Lawfully.
- Data must be obtained for a specific lawful purpose and must not be processed for reasons other than that purpose.
- Data must be adequate and relevant.
- Data must be accurate and up to date.
- Data must not be kept for longer than it is needed.
- Data must be processed in line with the subjects rights. (To receive a copy, have inaccuracies corrected).
- Date must be kept in a secure manner.
- Must not be transferred outside the EEA unless country’s protection Standards is of a similar level to the EEA
Who oversees enforcement of the Data Protection Rules?
The Information Commissioner
The Information Commissioner has what two responsibilities?
Educate organisations about their responsibilities and individuals about their rights.
Take action to enforce DPA.
What powers does the The Information Commissioner have?
8 times
Request information
Issue instructions to organisations to improve compliance
Serve enforcement notices - stop orders where there has been a breach.
Conduct Consensual Assessments (audits)
Conduct compulsory audits.
Fines - up to £500k
Prosecute
Report to Parliament
What criminal offences can The Information Commissioner prosecute you for?
Failure to comply with an information order or enforcement notice.
Failing to register with The Information Commissioner
Process data without authorisation.
What is GDPR? How does it expand upon the definition of personal data.
The EU’s General Data Protection Regulation.
Information such as an online identifier, like an IP address can be personal data.
Genetic and biometric data.
How much is a Subject Access Request dee?
£10
Until GDPR comes into effect on 25 May 2018.
After which a fee may be charged to cover admin costs when a request is unfounded or excessive.
GDPR introduces the right to erasure. What is another way of looking at this right?
The right to be forgotten.
GDPR when does an individual have the right to suppress the processing of personal data.
4 items
Where the accuracy is contested
Where an individual has objected to processing and the firm’s is considering whether it has the right to override this objection.
Where processing is unlawful but the individual requests restriction instead of erasure
Where the data is no longer required by the firm but the individual requires it for a legal case.
GDPR
What is data portability?
Allows individuals to obtain and reuse their personal data for their own purposes across different services.
Data must be provided free of charge in a universally readable form within a month.
GDPR
When do folk have the right to object?
Processing based on legitimate interests
Direct marketing
Processing for scientific/ historical research and statistics
GDPR
What are the rights of an individual in respect of automated decision making and profiling?
They have the right not to be subject to a decision made via automated processing when it has a legal effect on the individual.
Firms must ensure that individuals can request human intervention, receive an explanation and challenge it.
