In the event that the UK leaves the EU without a deal on 29 March 2019, lenders will need to ensure that certain amendments are made to the documentation provided to customers both pre-contract and at the point of sale, to omit specific EU references. The changes are set out in The Consumer Credit (Amendment) (EU Exit) Regulations 2018.
The changes include:
- deleting the words “(Standard European Consumer Credit Information)” from the front page of the SECCI;
- for overdrafts, replacing the words “European Consumer Credit Information” in the ECCI with “Pre-contract Consumer Credit Information (Overdrafts)”;
- removing the reference to “your Member State of residence” in the SECCI and substituting this with “the United Kingdom”;
- deleting any references to the “SECCI” in any other part of the customer journey, such as the adequate explanations, which could otherwise lead to customer confusion; and
- where applicable, deleting any references and links to the European Commission’s Online Dispute Resolution platform in any customer communications, terms and conditions and on the firm’s website.
Whilst these changes are relatively minor in form and do not have any substantive impact on the documentation itself, failing to make the required changes to the SECCI or ECCI could lead to the pre-contract information not being drafted in strict compliance with the Consumer Credit (Disclosure of Information) Regulations 2010 and therefore lead to the credit agreement being enforceable against the customer on an order of the court only.
When do the changes need to be made?
The proposed changes will come into effect on 29 March 2019 in the event of a “no-deal” Brexit. However, given the current uncertainty regarding the outcome of Brexit negotiations in the UK, this does not leave firms with a sufficient timeframe in which to implement the changes required to the documents from a systems perspective in the event a no-deal becomes certain in the coming months. HM Treasury has therefore proposed a transitional period to take effect from exit day until 1 September 2019 to provide firms with more time to make the required changes to the pre-contract information. This should help mitigate the risk of any unintended enforceability consequences arising as a result of the protracted Brexit negotiations.
If a deal is reached prior to 29 March 2019, these changes won’t take effect until after the end of any agreed transitional period, currently expected to be from 1 January 2021.