- •Commercial Law
- •Contents
- •Preface
- •Abbreviations
- •Table of Statutory Provisions
- •Table of Cases
- •1 Introduction
- •1 Introduction
- •2 What is agency?
- •3 Nature and characteristics of agency
- •4 The different types of agency
- •5 Conclusion
- •6 Recommended reading
- •1 Introduction
- •2 The authority of an agent
- •3 Agency by ratification
- •4 Agency of necessity
- •5 Conclusion
- •6 Recommended reading
- •1 Introduction
- •2 Duties of an agent
- •3 Rights of an agent
- •4 Commercial agents and principals
- •5 Disclosed agency
- •6 Undisclosed agency
- •7 Termination of agency
- •8 Recommended reading
- •Introduction
- •1 Introduction
- •2 Background
- •3 Development of the sale of goods
- •4 Equality of bargaining power: non-consumers and consumers
- •5 Impact of the European Union
- •6 Contract of sale
- •7 Contracts for non-monetary consideration
- •8 Contracts for the transfer of property or possession
- •9 Recommended reading
- •1 Introduction
- •2 Background
- •3 Sale of Goods Act 1979, section 12: the right to sell
- •4 Sale of Goods Act 1979, section 13: compliance with description
- •5 Sale of Goods Act 1979, section 14(2): satisfactory quality
- •6 Sale of Goods Act 1979, section 14(3): fitness for purpose
- •7 Sale of Goods Act 1979, section 15: sale by sample
- •8 Exclusion and limitation of liability
- •9 Acceptance
- •10 Remedies
- •11 Recommended reading
- •1 Introduction
- •2 Background to the passage of property and risk
- •3 Rules governing the passage of property
- •4 Passage of risk
- •5 The nemo dat exceptions
- •6 Delivery and payment
- •7 Remedies
- •8 Recommended reading
- •1 Introduction
- •2 Background
- •3 Provision of Services Regulations 2009
- •4 Supply of Goods and Services Act 1982
- •5 Recommended reading
- •1 Introduction
- •2 Background
- •3 Electronic Commerce (EC Directive) Regulations 2002
- •4 Distance selling
- •5 Recommended reading
- •Introduction
- •1 Introduction
- •2 CIF contracts
- •3 FOB contracts
- •4 Ex Works
- •5 FAS contracts
- •6 Conclusion
- •7 Recommended reading
- •1 Introduction and background
- •2 Structure and scope
- •3 UNIDROIT Principles of International Commercial Contracts
- •4 Conclusion
- •5 Recommended reading
- •1 Introduction and background
- •2 Open account
- •3 Bills of exchange
- •4 Documentary collections
- •5 Introduction to letters of credit
- •6 Factoring
- •7 Forfaiting
- •8 Conclusion
- •9 Recommended reading
- •1 Introduction
- •2 Hague and Hague-Visby Rules
- •3 Charterparties
- •4 Time charterparty
- •5 Common law obligations of the shipper
- •6 Common law obligations of the carrier
- •7 Bills of lading
- •8 Electronic bills of lading
- •9 Conclusion
- •10 Recommended reading
- •Introduction
- •1 Introduction
- •2 Background
- •3 Development of negligence
- •4 The move to strict liability
- •5 Types of defect
- •6 Developments in strict liability
- •7 Recommended reading
- •1 Introduction
- •2 Personnel
- •3 Meaning of ‘product’
- •4 Defectiveness
- •5 Defences
- •6 Contributory negligence
- •7 Recoverable damage
- •8 Limitations on liability
- •9 Recommended reading
- •Introduction
- •1 Introduction
- •2 Background
- •3 Enforcement strategy
- •4 Criminal law controls
- •5 Civil law enforcement
- •6 Recommended reading
- •1 Introduction
- •2 Scope of the 2008 Regulations
- •3 Prohibition against unfair commercial practices
- •4 Codes of practice
- •5 Misleading actions
- •6 Misleading omissions
- •7 Aggressive commercial practices
- •8 Commercial practices which are automatically unfair
- •9 Offences
- •10 Recommended reading
- •1 Introduction
- •2 Background
- •3 Controls over misleading advertising
- •4 Comparative advertising
- •5 Promotion of misleading or comparative advertising
- •6 Recommended reading
- •1 Introduction
- •1 Introduction
- •2 History of banking regulation: early policy initiatives
- •3 New Labour and a new policy
- •4 The Financial Services Authority
- •5 The Coalition government
- •6 Conclusion
- •7 Recommended reading
- •1 Introduction
- •2 What is a bank?
- •3 What is a customer?
- •4 Bank accounts
- •5 Cheques
- •6 Payment cards
- •7 Banker’s duty of confidentiality
- •8 Banking Conduct Regime
- •9 Payment Services Regulations 2009
- •10 Conclusion
- •11 Recommended reading
- •1 Introduction
- •2 European banking regulation
- •3 The Financial Services Authority
- •4 Financial Services Compensation Scheme
- •5 Financial Ombudsman Scheme
- •6 Financial Services and Markets Tribunal
- •7 The Bank of England
- •8 Bank insolvency
- •9 Illicit finance
- •10 Conclusion
- •11 Recommended reading
- •1 Introduction
- •1 Introduction
- •2 Evolution of the consumer credit market
- •3 Consumer debt, financial exclusion and over-indebtedness
- •4 Irresponsible lending
- •5 Regulation of irresponsible lending
- •6 Irresponsible borrowing
- •7 Ineffective legislative protection for consumers
- •8 A change of policy
- •9 Lessons from the United States
- •10 Conclusion
- •11 Recommended reading
- •1 Introduction
- •2 Crowther Committee on Consumer Credit
- •3 Consumer Credit Act 1974
- •4 Formalities
- •5 Cancellation of agreements
- •7 Documentation of credit and hire agreements
- •8 Matters arising during the currency of credit or hire agreements
- •9 Credit advertising
- •10 Credit licensing
- •11 Unfairness test
- •12 Other powers of the court
- •13 Financial Ombudsman Service
- •14 Enforcement
- •15 Consumer Credit Directive
- •16 Conclusion
- •17 Recommended reading
- •Bibliography
- •Index
518 |
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The government’s policy towards consumer credit |
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saving what they could afford, borrowing what they could afford to repay, and |
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using direct debit facilities and ATM machines in the LINK network. |
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Ineffective regulation was another important issue limiting the growth of |
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credit unions in the United Kingdom. Prior to the Credit Union Act (CUA) |
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1979, credit unions were regulated under the Companies Act 1948 or the |
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Industrial and Provident Societies Act 1965, both of which were deemed |
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inappropriate.168 The government announced in November 1999 that credit |
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unions were to be brought within the scope of the FSMA 2000.169 From July |
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2002, credit unions have been subject to an increased level of regulation by the |
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FSA. As a result of this, credit unions are members of the Financial Services |
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Compensation Scheme (FSCS),170 a timely change, and one which was consid- |
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ered central to the credibility and viability of the movement more generally. |
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Members will benefit because their savings are protected and a large proportion |
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will be refunded in the event of a collapse. |
9â Lessons from the United States
It is suggested that one way in which the government could improve access to affordable credit is to follow the legislative approach adopted in the United States. It was estimated that approximately 20 per cent of US households lacked access to affordable credit and that 22 per cent of adults did not have either a current or savings account.171 In order to overcome this problem, the Community Reinvestment Act (CRA) 1977 required financial institutions to take steps to meet the credit needs of their entire community. In practical terms, the principle objective of the Act was to persuade banks and savings associations to meet the financial needs of borrowers in designated moderate and low income communities. This legislation was enacted to prevent financial institutions from ‘red-lining’, or refusing to offer loans to, low and moderate income communities. Swindle noted that ‘the concern was that banks would treat entire geographic areas as off limits for financing’.172 The CRA 1977 was introduced as part of a large and ambitious reform programme that covered a whole range of housing and community issues. This legislation requires banks to meet the credit needs of communities, including low and moderate income neighbourhoods. No specific criteria are set out in the Act for assessing the performance of banks and savings associations. However, the extent to which a financial
168 R. Berthoud and T. Hinton, Credit Unions in the United Kingdom (Pinter Publishers, London, 1989).
169 HM Treasury Press Release, ‘Enhanced role for credit unions’, 16 November 1999, available at www.hm-treasury.gov.uk.
170 FSMA 2000, ss. 212–14.
171 E. Kempson, A. Atkinson and O. Riley, Policy Level Response to Financial Exclusion in Developed Countries: Lessons for Developing Countries (Personal Finance Research Centre, Bristol University, 2004).
172 G. Swidler, ‘Making the Community Reinvestment Act work’ (1994) 69 New York University Law Review 387.
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10â Conclusion |
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institution complies with the Act’s requirements will be taken into account |
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by financial regulatory agencies if the bank or savings association wishes to |
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expand, merge or acquire another like institution. The CRA 1977 is enforced |
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by agencies that are required to evaluate the bank’s record of meeting the credit |
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needs of its designated communities and to ‘take such record into account in its |
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evaluation of an application for a deposit facility by such institution’.173 |
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Swidler noted that ‘the CRA 1977 is a controversial piece of legislation’,174 |
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a view supported by Dahl et al. who commented that the CRA 1977 ‘played a |
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controversial role in encouraging financial institutions to make loans in neigh- |
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bourhoods with low or moderate incomes’.175 The CRA 1977 is still politically |
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popular and it has been argued that ‘the legislation has had a major influence on |
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reinvestment activity throughout the country and has brought greater attention |
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to local needs, especially in low-income and minority areas’.176 Brooke-Overby |
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described this legislation as ‘a crucial step toward, if not a key to, solving the |
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problems of inadequate housing, urban decay, and violence that have become |
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issues of national importance’.177 |
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Could a similar law be introduced in the United Kingdom? The introduc- |
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tion of such a controversial piece of legislation remains unlikely because it rep- |
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resents a radical step toward imposing a series of social and moral obligations |
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on providers of credit. However, despite the best efforts of the government to |
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improve people’s access to consumer credit, it could be argued that the best way |
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for such access to be improved would be by primary legislation based upon the |
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CRA 1977. |
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Q6 Outline the key measures which have been introduced to promote access to |
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affordable credit. |
10â Conclusion
The chapter began by identifying the problems that have been caused by access to convenient credit: high levels of personal debt, over-indebtedness and financial exclusion. These problems have been exacerbated by the irresponsible lending practices of creditors and the inappropriate level of protection provided by the CCA 1974. Accordingly, the government has introduced several initiatives aimed at improving people’s access to affordable credit. Lack of access to affordable credit ‘imposes significant costs on individuals … and society as a whole’.178
173 R. Art, ‘Social responsibility in bank credit decisions: the community reinvestment act one decade later’, (1987) 18 Pacific Law Journal 1071.
174 See Swidler, above n. 172.
175 D. Dahl, D. Evanoff, and M. Spivey, ‘Community reinvestment act enforcement and changes in targeted lending’ (2002) 25(3) International Regional Science Review 307.
176 G. Garwood and D. Smith, ‘The Community Reinvestment Act: evolution and current issues’ (1993) 79 Fed. Res. Bull 251.
177 House of Commons Votes and Proceedings,Â5thÂJulyÂ2000. 178 HM Treasury, Spending Review 2004 (London, 2004).
520 |
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The government’s policy towards consumer credit |
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For individuals it can lead to higher credit charges, limited access to financial |
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products and services and lack of security, and it can inhibit employment.179 |
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Furthermore, lack of access to affordable credit contributes to child poverty, |
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imposes additional costs on the state benefit system and is directly linked to |
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social exclusion.180 Social exclusion has been described as ‘complex and multi- |
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dimensional’ and it creates problems for families, the economy and ‘for soci- |
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ety as a whole’.181 The previous Labour government must be commended for |
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attempting to tackle this issue, which was largely ignored by a succession of |
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Conservative administrations. The SEU has been hailed as a success, but did |
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it achieve its objective in relation to access to affordable credit? There is little |
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evidence to suggest a reduction in the number of people who are financially |
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excluded. |
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The long-term solution could be legislation on community reinvestment |
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based on the CRA 1977 in the United States. Unfortunately, it appears that the |
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Coalition government does not have the political will to implement such a con- |
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troversial piece of consumer legislation. It appears that the government’s policy |
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towards the provision of credit in the United Kingdom has reverted to the pos- |
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ition prior to the recommendations of the Crowther Committee and the intro- |
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duction of the CCA 1974. After three decades of what can best be described as |
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a ‘laissez faire’ approach towards the regulation of the consumer credit market, |
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the government has decided, no doubt influenced by the impact of the ‘credit |
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crunch’ and increasing levels of consumer debt, to restrict the amount of credit |
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available through a series of legislative measures. In this author’s opinion, such |
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measures will have a minimal impact on the problems faced by an ever-increas- |
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ing percentage of the population in accessing affordable credit. |
11â Recommended reading
Borrie, G. ‘The credit society: its benefits and burdens’ (1986) Journal of Business Law (May) 181
Brown, S. ‘The Consumer Credit Act 2006: real additional mortgagor protection?’ (2007) Conveyancer and Property Lawyer (July/August) 316
â ‘Using the law as a usury law: definitions of usury and recent developments in the regulation of unfair charges in consumer credit transactions’ (2011) 1 Journal of Business Law 91
Howells, G. ‘The consumer credit litigation explosion’ (2010) 126 Law Quarterly Review (October) 617
Lomnicka, E. ‘The reform of consumer credit in the United Kingdom’ (2004) Journal of Business Law 129
179 Ibid.â 180â HM Treasury, Child Poverty Review (London, 2004)
181The government defines social exclusion as ‘a shorthand term for what can happen when people and areas suffer from a combination of linked problems such as unemployment, poor skills, low income, unfair discrimination, poor housing, high crime, bad health and family breakdown’. See Social Exclusion Unit, Tackling Social Exclusion: Taking Stock and Looking to the Future (ODPM Publications, London, 2004).
521 11â Recommended reading
Nield, S. ‘Responsible lending and borrowing: whereto low-cost home ownership?’ (2010) 30(4)Legal Studies 610
Patient, J. ‘The Consumer Credit Act 2006’, (2006) 21(6) Journal of International Banking Law and Regulation 309
Ryder, N. ‘The credit crunch: the right time for credit unions to strike?’ (2009) 29(1)
Legal Studies 75