FCA Requirements Notice: Amalgamated Finance Ltd.

1.
Requirements

1.1.
Must not:

(1)
enter into any regulated consumer credit agreement;

(2)
secure a charge (whether legal or equitable) on any customer’s property in
relation to a bridging loan it has made to a customer; or,

(3)
enter into any consumer credit agreement that uses or relies on any term
that seeks to exclude or restrict the statutory rights of consumers under
the Consumer Credit Act 1974 (CCA) by asking a consumer to declare that
the agreement is a particular type of agreement and/or exempt from
regulation under the CCA or the Financial Services and Markets Act 2000
(FSMA).

1.2.
Must not:

(1)
take any step to enforce any regulated consumer credit agreement or
security provided in relation thereto that is enforceable on an order of the
court by reason of sections 65(1), 105(7) or 111(2) of the Consumer
Credit Act 1974 (CCA) without first obtaining an enforcement order under
section 127 of the CCA;

(2)
take any step to enforce any regulated consumer credit agreement or
security provided in relation thereto, that is only enforceable following the
FCA issuing a written notice allowing the agreement to be enforced in
accordance with section 28A of the Financial Services and Markets Act
2000 (FSMA) and the Financial Sevices and Markets Act 2000 (Regulated
Activities) (Amendment) (No. 2) Order 2013, where no such notice has
been given;

(3)
take any step to enforce any regulated consumer credit agreement or
security provided in relation thereto without complying with sections 65,
77A, 87, 88, 93, 105, 111, 113 and/or 130A of the CCA;

(4)
take any step to recover any outstanding debt due under a regulated
consumer credit agreement to the extent that such debt comprises
irrecoverable interest having regard to section 77A of the CCA and/or
section 93 of the CCA; or

(5)
apply for an enforcement order under section 127 of the CCA in relation to
any consumer credit agreement already entered into without:

(a)
providing the court, the debtor and any other surety with a list of
the potential CCA breaches set out in Annex 1;

(b)
inviting the court to consider, under section 140A of the CCA,
whether the relationship between the debtor and creditor arising
out of the agreement (or the agreement taken with any related
agreement) is unfair to the debtor because of one or more of the
following:

(i)
any of the terms of the agreement or of any related
agreement;

(ii)
the way in which the creditor has exercised or enforced any
of his rights under the agreement or any related agreement;

(iii)
any other thing done (or not done) by, or on behalf of, the
creditor (either before or after the making of the agreement
or any related agreement).

1.3.
For the avoidance of doubt:

(1)
issuing a claim for possession under Part 55 of the Civil Procedure Rules
constitutes an enforcement of an agreement for the purposes of the above
requirements;

(2)
the taking or retaking of goods or land by AFL whether under a possession
order already obtained under part 55 of the Civil Procedure Rules, and
whether by consent or otherwise, is an enforcement for the purposes of
the above requirements.

3


ANNEX 1

POTENTIAL BREACHES OF CONSUMER PROTECTION LEGISLATION BY

AMALGAMATED FINANCE LIMITED

AND CONSEQUENCES

1.
This list was drafted by the Office of Fair Trading (“OFT”) following an
investigation into the breach of a range of requirements under the
Consumer Credit Act 1974 (“CCA”) by Amalgamated Finance Limited in a
number of consumer credit cases. The Financial Conduct Authority adopts
the list having taken over the regulation of consumer credit from the OFT
on 1 April 2014.

2.
The list is intended to ensure that in any case where AFL (hereinafter
referred to as ‘the Company’) seeks to enforce improperly executed
consumer credit agreements that proper and complete consideration can
be given by the court to:

2.1.
The range of legal issues raised by the lending and other business
practices of the Company;

2.2.
whether any application made by the Company for an enforcement
order under section 127 CCA should be dismissed bearing in mind:

a)
the extent and nature of the contraventions by the
Company,

b)
the prejudice caused to any person, including both the
debtor and surety, by those contraventions,

c)
the degree of culpability for it; and

bearing in mind the court’s powers under section 127(2) and
sections 135 and 136 CCA.

POTENTIAL BREACHES OF CONSUMER PROTECTION LEGISLATION

3.
The agreement in this case is improperly executed: it is a regulated
consumer credit agreement and its terms fail to comply with the form and
content requirements set down in sections 60, 61 and 105 CCA and the
associated Consumer Credit (Agreements) Regulations 1983 or Consumer
Credit (Agreements) Regulations 2010 as appropriate. The Company will
provide the Court with a list of the relevant form and content requirements
that have not been complied with in each case.

4.
In addition, the Company may have breached one or more of the following
provisions of the CCA in the course of its business:

4.1.
canvassing
consumers
off
trade
premises
contrary
to the

prohibition in sections 49 or 154 CCA;

4.2.
for secured agreements, the duty of the Company to provide a
copy of the unexecuted agreement containing a notice in a
prescribed form indicating the right of the consumer to withdraw
from the prospective agreement at least seven days prior to the
provision of a second copy for signature under section 58(1) CCA;

4.3.
for secured agreements, the provision by the Company of a
consideration period under sections 61(2) & (3) CCA, after
compliance with section 58(1), of not less than seven days prior to
signature, during which the Company must have refrained from
approaching the consumer except in response to a specific request
made by the consumer;

4.4.
the duty of the Company under section 61A or 63 CCA to supply a
copy of the executed agreement to the consumer for that consumer
to keep after signature;

4.5.
the duty of the Company to provide periodic statements to the
debtor in a prescribed form indicating, amongst other things, the
balance owed under the agreement, pursuant to section 77A and
the Consumer Credit (Information Requirements and Duration of
Licences and Charges) Regulations 2007;

4.6.
the duty of the Company to serve a Default Notice, in a prescribed
form, on the debtor before seeking to enforce any security or
recover possession of land following a breach by the debtor,
pursuant to sections 87 and 88 CCA;

4.7.
the requirement not to oblige the debtor to pay increased interest
on default under section 93 CCA;

4.8.
for secured agreements, the duty of the Company under sections
105(4) and 105(5) CCA to supply a copy of any security instrument
to the surety;

4.9.
for secured agreements, the duty of the Company to serve a copy
of the Default Notice on the surety pursuant to section 111 CCA;

4.10. the requirement to serve six monthly notices of judgment obtained

under section 130A CCA;

4.11. under section 140A, the relationship between the creditor and the
debtor arising out of the agreement (or the agreement taken with
any related agreement) may be unfair to the debtor because of one
or more of the following –

a)
any of the terms of the agreement or any related
agreement;

b)
the way in which the creditor has exercised or enforced any
of his rights under the agreement or any related agreement;

c)
any other thing done (or not done) by, or on behalf of, the
creditor (either before or after the making of the agreement
or any related agreement); and

4.12. the requirement that any introducer had to be a licensed credit-
broker, as per sections 21 (now substituted by article 36A of the
Financial Services and Markets Act 2000 (Regulated Activities)
Order 2001/544) and 145(2) CCA.

CONSEQUENCES

5.
A failure to comply with the form and content requirements in sections 60,
61 and 105 CCA and the associated secondary legislation renders the
agreement unenforceable without a court order under section 127 CCA. A
retaking of goods of land to which a regulated agreement relates is an
enforcement of the agreement (section 65(2) CCA).

6.
Breach of the prohibition in sections 49 or 154 CCA is a criminal offence
and a relevant matter for the court to consider when deciding whether to
make an enforcement order under section 127 CCA.

7.
Breach of sections 58(1), 61, 61A or 63 CCA renders the agreement
unenforceable without a court order under section 127 CCA.

8.
Failure to comply with the duty to provide periodic statements in section
77A CCA above renders the agreement unenforceable during the period of
non-compliance, pursuant to section 77A(6)(a) CCA. In addition, section
77A(6)(b) CCA imposes an interest freeze during the period of non-
compliance, such that the relevant debtor ‘shall have no liability to pay
any sum of interest to the extent calculated by reference to the period of
non-compliance or to any part of it.’

9.
Failure to provide a Default Notice pursuant to sections 87 and 88 CCA
provides consumers with a defence to any action for the recovery of land
or the enforcement of a security.

10.
No debtor is liable under any contract for default interest claimed in
contravention of the requirement in section 93 CCA (having regard to
section 173 CCA).

11.
Breach of sections 105(4) and 105(5) CCA renders the agreement
unenforceable without a court order under section 127 CCA. If such an
application is made and dismissed (except on technical grounds only)

section 106 CCA (ineffective securities) shall apply to the security and,
amongst other things, it shall be treated as never having effect.

12.
Failure to serve a copy of the default notice on any surety (if a different
person from the debtor) renders the agreement. unenforceable against the
surety (in respect of the breach or other matter to which the notice
relates) without a court order under section 127 CCA.

13.
No debtor is liable for post-judgment interest in respect of any period in
which any of the notices required under section 130A CCA should have
(but have not) been served.

14.
Where the court considers the relationship between the debtor and
creditor is unfair under section 140A CCA, it may make an order under
section 140B CCA doing any of the things set out in section 140B(1)(a)-
(g). In any proceedings, if the debtor or surety alleges that the
relationship between the creditor and the debtor is unfair to the debtor, it
is for the creditor to prove the contrary (section 140B(9)).

15.
If the debtor was introduced to the creditor by an unlicensed credit-
broker, whether directly or indirectly through another credit-broker, the
agreements were not enforceable unless the OFT had made an order
under section 148(2) or 149(2) CCA prior to 1 April 2014. The OFT has not
made any such order, nor has any application been made for such an
order. Credit broking includes the effecting of introductions of individuals
desiring to obtain credit to other credit-brokers. Therefore, to investigate
this issue it will be necessary for the Companies, and any intermediate
credit brokers, to disclose the source of their introduction to the debtor.