Consumer-duty-deadline Closing in.

[Dustydog]

The FCA have driven this upgrade of the current Law .
The immediate deadline firms must consider is 30 April 2023, when they must have finished their review of existing open products. For closed products or services, the rules will come into force on 31 July 2024.
This upgrade may well have an impact on caravan manufacturers extended Warranties??
I don’t know yet but am sure some of you will know the full answer. It has already had a major affect on the Financial Ombudsman Service who have seen a drastic uplift in complaints. The link below will give some more detail.

UK firms urged to address looming Consumer Duty deadline

A new looming Consumer Duty deadline means there will be no relaxed start to 2023 for UK financial services firms, according to one legal expert.

www.pinsentmasons.com

 

[otherclive]

Wonder if it’s worth forwarding a copy to NCC et al 😂

 

[Raywood]

Not sure what effect it will have on caravans unless poor build systems are included.
Looking at vulnerable customers though, could this include disabled ones?

 

[Dustydog]

Not sure what effect it will have on caravans unless poor build systems are included.
Looking at vulnerable customers though, could this include disabled ones?

I think it may have implications on caravan insurance and associated covers including warranties etc. I’m not sure and expect more will unfold.

 

[ProfJohnL]

From the information im the Link, it clearly states the impact of the revision only applies to services and products that were subject to FCA regulation. This would not directly affect caravan manufacturers unless they operate financial services. (however I wish it would make them ensure their products are suited to the real world applications)

I don't think it will affect product warranties, except where the warranty is based on an insurance product.

 

[Buckman]

From the information im the Link, it clearly states the impact of the revision only applies to services and products that were subject to FCA regulation. This would not directly affect caravan manufacturers unless they operate financial services. (however I wish it would make them ensure their products are suited to the real world applications)

I don't think it will affect product warranties, except where the warranty is based on an insurance product.

I would like to think that the finance house will be targeted and they are the ones that could put pressure on manufactures, but then pigs will fly!

Manufacturers seem to rely on the fact that they cannot be held responsible for the poor quality of their goods as it is the dealer that takes the brunt of the consumer's wrath.

 

[ProfJohnL]

I would like to think that the finance house will be targeted and they are the ones that could put pressure on manufactures, but then pigs will fly!

Manufacturers seem to rely on the fact that they cannot be held responsible for the poor quality of their goods as it is the dealer that takes the brunt of the consumer's wrath.

Finance house will definately be affected as they are under the FCA overview. in the context of caravanning, the product and service the finance house will be responsible for is the finance package, not the physical product sold by the dealer.

 

[Buckman]

Finance house will definately be affected as they are under the FCA overview. in the context of caravanning, the product and service the finance house will be responsible for is the finance package, not the physical product sold by the dealer.

I think that is incorrect as when you buy on finance your first port of call should be the finance house as they are the supplier. Surely your contract is with the finance house and not the dealer?

A finance house carries a lot of weight because if they refuse to finance goods due to poor quality, the manufacturer will soon go bust. I assume that they have more influence over a manufacturer than any caravan dealership?

 

[ProfJohnL]

I think that is incorrect as when you buy on finance your first port of call should be the finance house as they are the supplier. Surely your contract is with the finance house and not the dealer?

A finance house carries a lot of weight because if they refuse to finance goods due to poor quality, the manufacturer will soon go bust. I assume that they have more influence over a manufacturer than any caravan dealership?

You have taken the wrong end of the stick, The "product" in the documentation I believe refers to the finance house's offering where the finance house now has to make sure the type of finance package is suited to the customers circumstances. In other words there has to be more due diligence by the finance house to prevent them funding customers who will not be able to sustain the repayments.

As far as I'm aware the FCA does not tell caravan manufacturers or dealers how to make or sell caravans.

I'm actually very much in favour of this, as a colleague of mine has power of attorney over their partner who has mental problems. Despite the PoA, the partner's has obtained numerous credit schemes which has basically bankrupted them becasue the credit companies did not have to do the full checks before agreeing to the loan.

 

[Raywood]

I would have said that if the partner referred to does not have the full mental capacity to understand the loan legalities, it would not be unenforceable. It could however ruin your credit rating if I am correct. The credit companies may not have had to do the full credit checks but the failure to do so can be regarded as their problem.

 

[ProfJohnL]

I would have said that if the partner referred to does not have the full mental capacity to understand the loan legalities, it would not be unenforceable. It could however ruin your credit rating if I am correct. The credit companies may not have had to do the full credit checks but the failure to do so can be regarded as their problem.

I posted the comment to illustrate a real situation. I'm not about to go into any further detail or comment more about it becasue it's actually far more complex than just that.

Whilst others may comment and offer suggestions, I will not expose any more details or engage in any further correspondence on this particular issue.

 

[Dustydog]

Finance house will definately be affected as they are under the FCA overview. in the context of caravanning, the product and service the finance house will be responsible for is the finance package, not the physical product sold by the dealer.

I don’t quite follow that Prof. Surely the point of Section 75 is to offer the purchaser a far wider protection making the lender, Card company liable if the product purchased fails ? Don’t the two go fully together?

 

[ProfJohnL]

I don’t quite follow that Prof. Surely the point of Section 75 is to offer the purchaser a far wider protection making the lender, Card company liable if the product purchased fails ? Don’t the two go fully together?

There are probably better words to express the relationship of the finance house to the product purchased with the finance package, but the finance houses product ( the item they create and offer to the customer) is the finance package, not the item purchased with the funds. And that is the part the FCA can regulate. As far as I can see the FCA do not regulate the use to which the funds can be used for by the customer.

The Consumer Credit Act section 75 is a separate piece of legislation that jointly links the liability for product reliability to both the dealer and the finance house.

 

[Dustydog]

This may give a clearer layman’s explanation for those not fully conversant with the Legislation.

Section 75

Section 75 of the Consumer Credit Act offers protection to people who make purchases with a credit card. Here we look at the requirements, and how you can make a claim.

www.experian.co.uk

 

[Raywood]

I posted the comment to illustrate a real situation. I'm not about to go into any further detail or comment more about it becasue it's actually far more complex than just that.

Whilst others may comment and offer suggestions, I will not expose any more details or engage in any further correspondence on this particular issue.

I do understand. I did mention it as in my work we had several claims involving this sort of thing and it is quite complicated, I would not want to give a firmer answer on the bare facts you gave.

 

[Jcloughie]

I fully understand and agree with the Prof's comments, I also sympathise with the confusion caused by the terminology used.

I have never been happy using the word ‘product’ for a financial service. Perhaps that's just me. But the OP’s link also talks about ‘manufacturers’ in terms of those who create the product or service.

I have always been conditioned to think that manufacturing and product relate to something tangible.

In the same way that other professionals work I would be more content with using the term service.

This extract explains my thinking.

Businesses can offer both services and products in exchange for payment, but they do have some major differences. A service is a process that is intangible. This means it doesn't have physical dimensions to it; it can't be measured or weighed. Services usually provide some kind of tangible product in the end, but not always.

A product or a good is a physical thing. Products are always the result of a process. You have the product of a pizza after you go through the process of making a pizza.

Some customers can feel uncomfortable paying for a service because they can't see an end result before purchasing.

John

 

[ProfJohnL]

jcloughie' s description perhaps expresses the difference in more easily understood terms, but the finance industry dies use the the word product for their types of business.

 

[RogerL]

I fully understand and agree with the Prof's comments, I also sympathise with the confusion caused by the terminology used.

I have never been happy using the word ‘product’ for a financial service. Perhaps that's just me. But the OP’s link also talks about ‘manufacturers’ in terms of those who create the product or service.

I have always been conditioned to think that manufacturing and product relate to something tangible.

In the same way that other professionals work I would be more content with using the term service.

This extract explains my thinking.

Businesses can offer both services and products in exchange for payment, but they do have some major differences. A service is a process that is intangible. This means it doesn't have physical dimensions to it; it can't be measured or weighed. Services usually provide some kind of tangible product in the end, but not always.

A product or a good is a physical thing. Products are always the result of a process. You have the product of a pizza after you go through the process of making a pizza.

Some customers can feel uncomfortable paying for a service because they can't see an end result before purchasing.

John

I'm very comfortable with a financial service feature being referred to as a product, for instance a particular type of account - the term "product" has been used for decades in the finance and pensions business.

 

[Jcloughie]

I'm very comfortable with a financial service feature being referred to as a product, for instance a particular type of account - the term "product" has been used for decades in the finance and pensions business.

Do you have the same thoughts about the term ‘manufacturer’ as in the OP’s link?

John

 

[RogerL]

Do you have the same thoughts about the term ‘manufacturer’ as in the OP’s link?

John

No - "manufacturer" implies making something physical - "provider" covers services - "suppliers" covers them both

 

[Dustydog]

The only words that matter in Law are those used by the FCA.

 

[Buckman]

There are probably better words to express the relationship of the finance house to the product purchased with the finance package, but the finance houses product ( the item they create and offer to the customer) is the finance package, not the item purchased with the funds. And that is the part the FCA can regulate. As far as I can see the FCA do not regulate the use to which the funds can be used for by the customer.

The Consumer Credit Act section 75 is a separate piece of legislation that jointly links the liability for product reliability to both the dealer and the finance house.

The finance house is selling you two products. The item you buy and then the means to finance that item? After all they own the product and it is fully paid up.

 

[Jcloughie]

No - "manufacturer" implies making something physical - "provider" covers services - "suppliers" covers them both

I completely agree, but for me, the physical and tangible extends to ‘product’ aswell.

This is from the OP’s link.

The new rules come with significant consequences if, on review, a manufacturer finds that a product does not meet the needs of the identified target market. For existing products, a firm must make changes to ensure that the product does meet the needs of the target market or must stop distributing the product. In addition, manufacturers must provide information to distributors in good time to enable them to comply with their own obligations.

I suspect that if either or both words are comfortable to use for someone they are most likely to have a financial background.

All things financial are alien to me. 🥵

John

 

[RogerL]

I completely agree, but for me, the physical and tangible extends to ‘product’ aswell.

This is from the OP’s link.

The new rules come with significant consequences if, on review, a manufacturer finds that a product does not meet the needs of the identified target market. For existing products, a firm must make changes to ensure that the product does meet the needs of the target market or must stop distributing the product. In addition, manufacturers must provide information to distributors in good time to enable them to comply with their own obligations.

I suspect that if either or both words are comfortable to use for someone they are most likely to have a financial background.

All things financial are alien to me. 🥵

John

I don't have a financial background (manufacturing and distribution) but I've bought various financial products over the years - eg pension plans, life assurance and mortgages.

 

[ProfJohnL]

We need to clear up a few points:-

According to Wilipedia

"The Financial Conduct Authority is a financial regulatory body in the United Kingdom, but operates independently of the UK Government and is financed by charging fees to members of the financial services industry. "​

The law is defined by the words of the Act Of Parliament as interpreted by the courts. Whilst the FCA is charged with overseeing the financial services sector, and it has the authority to initiate actions against alleged transgressions, it can only present cases to the courts for the courts to judge. However the FCA is widely regarded as having expert knowledge of these matters and is unlikely to take action without being pretty certain of success. Consequently whilst is word is not the law, it is likely to represent the law. Any decision of sanctions the FCA would like to enforce could be challenged in court.

The document DD posted was from a private company, and represented their view of the situation. I have no reason to believe it is fundamentally flawed, but at the same time you cannot assume it is without error.

The document is clearly designed to be for consumption by the Financial Services Sector, and as often happens different specialities develop some unique phrases and terms which may have a specific meaning in the sector but in common parlance it might be interpreted differently.
Consequently if such a document is read by a person who is not steeped in the sectors practices, they could misconstrue some of the references and language.

Within the document there are referees to other "FCA documents" (from the FCA not private firms) that only apply to organisations that are subject to FCA oversight. This strengthens the notion this Consumer Duty change is directed at the Financial services, and not the whole of the physical manufacturing sector.

I should stress here that I would be in favour of similar duty being placed on all manufactures and sellers, and to some extend the CRA does do this but not in such exacting ways.

Specifically concerning the description of a "Manufacturer" the document defines it as:-

"According to the FCA’s finalised guidance (121 pages / 1.13MB PDF) at FG 6.4, a firm is a manufacturer if it creates, develops, designs, issues, manages, operates, carries out, or – for insurance or credit purposes –"​

​