Monthly commercial law update: Top 5 developments in October

The clocks have gone back and the nights are drawing in (in case you hadn't noticed): time for this month’s October update, highlighting news and developments in October which affect commercial lawyers.

Consumer protection: Consumer Rights Bill due to come into force on 1 October 2015

The Department for Business and Skills has published a brief summary of plans to implement the measures in the Consumer Rights Bill, ahead of the legislation coming into force on 1 October 2015, pending Parliament's approval.

It confirms that training and advice to local and national enforcers will be provided in due course to assist businesses in implementing the new law. Guidance is due in April 2015.

Advertising and marketing: CAP amends remit for cause-related marketing

The Committee on Advertising Practice has reviewed its remit for ‘offline’ causes and ideas marketing and decided to restrict it to include only causes and ideas marketing that appears in paid-for space, except where the marketing includes a direct solicitation of donations.

This decision will itself be subject to a 12 month review and took effect from 14 October 2014. It does not affect CAP's online remit over causes and ideas. In 2010, CAP committed to reviewing the advantages and disadvantages of continuing to regulate marketing communications, in all media, for causes and ideas after a two-year pilot period of its online remit extension.

The concept of causes and ideas marketing is a wide one, and the ASA examines a diverse range of marketing material under its current remit, including, for example:

  • environment-related campaigning leaflets (eg anti-wind farm and other developments);
  • government health and safety campaigns (eg posters to promote giving up smoking or prevent drink-driving);
  • marketing by charities and pressure groups (eg websites soliciting donations or posters encouraging people to espouse certain charitable or political causes); and
  • various other categories of causes and ideas marketing.

CAP says that it assessed various options against its existing policy objectives, in particular: whether action was proportionate; whether it was targeted where it was needed; and whether it presented risks to the ASA in terms of limits it may have imposed on freedom of speech. The options that it considered against these criteria were the following: maintaining the status quo; restricting its remit; extending its remit; and creating a new Code section for causes and ideas marketing. A detailed report on the changes is contained in its regulatory statement.

Bribery and corruption: Definitive sentencing guideline on bribery, fraud and money laundering

The Sentencing Council has confirmed that the definitive sentencing guideline on fraud, bribery and money laundering offences came into effect on 1 October 2014.

Companies now face fines of up to 400% of their illicit profits, if found guilty. The new guideline also places victim impact at the centre of considerations when determining an appropriate sentence. The previous guideline for confidence fraud only referred to the harm to victims as an aggravating factor, and the banking and insurance guideline made no reference to the impact the offence may have on either an individual who has had their account or identity compromised or on a corporation which has suffered loss.

The new guideline may mean higher sentences for some offenders compared with the current guideline, particularly where the financial loss is relatively small but the impact on the victim is high. It also aims to ensure the victim’s vulnerability is given due weight.

The Sentencing Council has also broadened how harm is described, so sentencers are not restricted in what they take into account.

Supply of goods and services: Late payment rules

Updated Department for Business, Innovation & Skills guidance emphasises that public authorities must pay for procured goods and services within 30 days. The guidance clarifies the application of the EU Late Payment Directive 2011/7/EU to payments between public authorities and businesses. Under the Directive, debtors must pay interest and reimburse the reasonable recovery costs of the creditor if they do not pay for goods and services on time. The limits are 60 days for business and 30 days for public authorities. Implementing legislation came into force on 16 March 2013, with the original guidance published on 11 March 2013.

Financial services: Wonga to write off loans

Wonga will have to make immediate changes to its business after it entered into a voluntary requirement with the Financial Conduct Authority (FCA).

Wonga will introduce new interim lending criteria aiming to improve customer outcomes, and will work to put in place a new permanent lending decision platform as soon as possible. The FCA took over regulation of consumer credit in April 2014 and requested information from Wonga about the volume of its relending rates. The regulator determined from the information received Wonga was not taking adequate steps to assess customers’ ability to meet repayments in a sustainable manner.

The FCA and Wonga agreed an approach for remedial redress for any customers affected by inadequate affordability assessments, including: around 330,000 customers currently in excess of 30 days in arrears, who will have the balance of their loan written off; around 45,000 customers between 0 and 29 days in arrears who will be asked to repay their debts but without interest and charges, with an option to pay over an extended period of four months

The FCA has also required Wonga to appoint someone, reporting to the FCA, to monitor the new lending decision platform to endure it has the desired effect. Payday lending has been the subject of much controversy recently.

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