A study from the Finance & Leasing Association (FLA) has identified how the UK compares to other established markets when considering consumer credit regulation and alternative dispute resolution (ADR).
The independent study, in conjunction with Eversheds Sutherland, compares the UK’s approach with those in France, Germany, Italy, Poland, and New York State.
The study found the UK to be an outlier in several areas:
- It uniquely combines law, regulation, guidance, and principles in its regulatory framework.
- It allows private legal claims for regulatory breaches and includes unfair relationship provisions relating to consumer credit.
- The UK and Italy are the only jurisdictions with unenforceability sanctions for breaches of consumer credit law.
In terms of ADR:
- The UK’s Financial Ombudsman Service (FOS) is unique in deciding cases based on fairness, not strictly the law.
- It is the only jurisdiction requiring firms to apply past FOS decisions, effectively making the FOS a quasi-regulator.
- This approach can lead to inconsistent decisions and has enabled a lucrative market for claims management firms, a phenomenon not seen in the other jurisdictions.
The study has been shared with HM Treasury, the Financial Conduct Authority (FCA), FOS and stakeholders to support ongoing reform efforts.
The findings of the study have direct relevance to the Consumer Credit Act (CCA) reform agenda and to the current review of the UK’s redress arrangements being carried out by HM Treasury, FCA and FOS as well as to the wider regulatory reform agenda.
Comparative Regulatory Burdens Study – Finance & Leasing Association
