The recent decision by one of the main bank owned invoice financiers to withdraw from the provision of credit protection has highlighted a continuing debate within the industry on issues arising from the interface between bad debt protection on the one hand and the provision of insurance on the other hand.
It is now widely understood within the industry that the provision of insurance is a regulated activity under the Financial Services and Markets Act 2000 (“FSMA”) which requires providers to be authorised and regulated by the Financial Conduct Authority.
The Government recently announced that it does not intend to legislate to implement the September 2016 Law Commission proposals to modernise the archaic Bills of Sale regime:
“Given the concerns that were raised in the consultation, the small and reducing market and the wider work on high-cost credit, the government will not introduce legislation at this point in time. The government will continue to work with the FCA as they carry out their high-cost credit review, and then further consider government action on alternatives to high-cost credit in light of the FCA’s review”.
The Law Commission is reviewing the difficult subject of the electronic execution of documents, and in particular deeds.
In principle all legal documents should be capable of electronic execution, but some doubt remains about the position regarding deeds in view of the statutory requirement for deeds to be witnessed.
It has been almost 6 months since the GDPR regime came into effect, and early signs would suggest that the invoice finance industry has adapted well to the new requirements.
As expected there was something of a last-minute rush to ensure compliance, but fears were perhaps eased by helpful comments from the Information Commissioner such as she made on BBC Radio 4’s Today programme on 25 May 2018:
“We are not looking for perfection. We do not have thousands of inspectors going out and checking people’s homework. What we do have are millions of people that have new rights and they can make a complaint against a company to our office”.
As long ago as late 2014 the Government indicated its intention to outlaw prohibitions of assignment in commercial contracts in an attempt to support the invoice finance industry as a key provider of alternative finance to UK SMEs.
We reported in the Winter 2017 edition of the Briefing that we had been informed by BEIS that they were content with a revised form of the Business Contract Terms (Restrictions on Assignment of Receivables) Regulations, which were first proposed as long ago as December 2014.
Whatever might eventually happen with Brexit, most informed observers will have recently had cause to reflect upon the differential between data protection law in the European Union and that in other advanced jurisdictions such as the US. The recent publicity involving Facebook has emphasised the fact that European Union law is light-years ahead of other mature jurisdictions in this respect.
Invoice financiers are gearing up for the introduction of the GDPR which will introduce significant reforms to data protection law, and are keenly interested in the outcome of discussions which are likely between UK Finance and the Information Commissioner’s Office (“ICO”).
It was almost 3 years ago in December 2014 when the Government announced its intention to bring forward legislation outlawing bans on assignment in commercial contracts.
Following an extensive consultation process since 2009 the final version of the Pre-Action Protocol for Debt Claims as dictated by the Ministry of Justice came into force on 1 October 2017.
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