The monthly round-up of news, guidance, legislation, and case law from Shelter's Specialist Debt Advice Service.
News and legal updates
In this month's legal round up, find details on new guidance for car finance discretionary commission complaints, survey on universal credit deductions, new IMA report on workloads and wellbeing, and MaPS' debt advice strategy consultation.
Car finance discretionary commission complaints
The FCA announced that it is reviewing the car finance market and whether individuals might have been overcharged on their car finance agreements.
From 28 January 2021, the FCA banned discretionary car finance commission arrangements. This had the effect of removing incentives for brokers to increase the interest rate charged to customers.
The FCA has stated that there have been a high number of complaints to motor finance firms claiming compensation for commission arrangements prior to the 2021 ban.
More recently, the Financial Ombudsman Service (FOS) has published guidance on complaints about car finance commission. FOS has also found in favour of two complainants and the FCA anticipate an increase in complaints being made.
The FCA has paused the 8-week deadline for motor finance firms to provide a final response to complaints until 25 September 2024.
The FCA has also extended the time limit for a complaint to be made to FOS after receiving a final response from the individuals’ provider from six months to 15 months. This only applies for final responses sent between 12 July 2023 and 20 November 2024.
FCA to undertake work in the motor finance market
PS24/1: Temporary changes to handling rules for motor finance complaints
Financial Ombudsman: guidance on complaints about car finance commission
Debt Camel: ‘Car finance commission scandal – can you get a refund?’
Survey on deductions during breathing space and bankruptcy
The Public Law Project (PLP) has published a survey seeking views on Universal Credit deductions that continue during a debt relief order moratorium and/or a breathing space moratorium.
PLP advisors survey - deductions during breathing space and bankruptcy
FCA statement on judicial review of debt packager measures
The Administrative Court has refused permission for Promethean Finance Limited to bring a judicial review claim to challenge the FCA’s rules that ban referral fees for debt packagers.
The FCA banned referral fees for debt packager firms from 2 October 2023. A debt packager is a firm that receives referral fees for referring individuals to ‘solution providers' such as an IVA firm. The FCA previously stated that it has seen evidence of debt packagers appearing to manipulate customers’ details in order to meet criteria for an IVA.
FCA statement on judicial review of debt packager measures
New IMA report on workloads and wellbeing
The IMA has published its latest report into workloads and wellbeing in the debt advice sector. The report is based on a survey of IMA members that took place in October and November 2023.
Overall, the report finds some improvements in conditions across the sector, such as:
respondents are more likely to report not being targeted to see a fixed number of clients this year
relatively few respondents with targets report that they struggle to meet these
less overtime worked
The report shows that there are still some challenges, including increased case complexity and ongoing concerns about confirmation of advice letters. These appear to be compounded by insufficient funding, poor salaries, and little job security.
The IMA is hoping to engage with stakeholders such as the Money and Pensions Service and the FCA to discuss the findings.
IMA report: workloads and wellbeing
Research into concerns around Individual Voluntary Arrangements
The Insolvency Service will be undertaking research into the experiences of individuals when taking out an Individual Voluntary Arrangement (IVA).
The Insolvency Service states that specific issues and concerns have been raised which can have negative impacts for those who are most vulnerable. The research seeks to establish whether there is ‘identifiable poor-quality take-on’ (‘miss-selling’) across the IVA market its prevalence.
The outputs of the research will be used by the Insolvency Service to consider whether there is a need to incorporate changes to the regulatory framework.
Insolvency Service: Research into concerns around Individual Voluntary Arrangements
Money and Pensions Service consultation on its debt advice strategy
The Money and Pensions Service (MaPS) has published a consultation seeking views on its proposals for the delivery of its debt advice strategy. The consultation sets out MaPs’ approach to debt advice up to 2028.
The consultation closes on 3 April 2024.
Consultation on MaPS proposals for the delivery of its debt advice strategy
Case law
There are no new case summaries this month.
Find debt case law summaries by topic on Shelter Legal.
Liability orders and costs
Debt advisers will be all too familiar with council tax debts. Citizens Advice reported in 2020 that 9 in 10 debt clients have council tax arrears. When arrears remain unpaid local authorities use liability orders to enforce them.
Jake Winters looks at when a local authority can add costs to a liability order, and how a client can challenge unreasonable costs.