Registry Trust, the not-for-profit organisation which maintains the Register of Judgments, Orders and Fines for the UK & Ireland, has responded to the Financial Conduct Authority’s (FCA) consultation on a ‘new Consumer Duty’ as part of its campaign to increase awareness and fairness of the County Court Judgment (CCJ) process.
The FCA’s draft ‘new Consumer Duty’ sets out new measures to ensure that financial services firms are doing all they can to focus on positive customer outcomes and prevent foreseeable financial harm occurring. Registry Trust very much supports the FCA’s proposals but took the opportunity in the consultation to highlight how a small change to the way firms process payments of County Court Judgments (CCJs) could make a big difference to the financial wellbeing of vulnerable consumers.
The issue we raise relates to the process for ensuring CCJs are marked as ‘satisfied’. It is not well known but when consumers do settle a CCJ debt in full, they still have to inform the courts (in England & Wales) or Registry Trust (in other jurisdictions) and provide proof of payment in order for it to be shown as ‘satisfied’ on the Register of Judgments, Orders and Fines and therefore on their credit file. Low levels of awareness of the need to do this, and the fact that consumers may be under a great deal of stress, means that many do not ensure the CCJ is marked as ‘satisfied’ even though it has been settled. This is a growing problem with the number of judgments being ‘satisfied’ falling. ‘Partial settlements’ are also not currently recognised on the Register, leaving those who have come to a mutual agreement with the claimant with no way of evidencing it when trying to access further credit. This means that the market is operating with incomplete, inaccurate information on consumers’ financial circumstances and behaviours. We are concerned that these market information gaps are causing vulnerable consumers unnecessary financial harms such as limiting access to fair, affordable credit and hindering efforts to build financial resilience and inclusion.
This could be addressed with a simple step which would cause relatively little disruption, but we believe would have a significant positive impact. We argue in our response to the FCA’s consultation that creditors should be required to notify the courts or Registry Trust when a CCJ has been fully or partially settled, rather than expect consumers to do this. We will be making the same point to the other sector regulators such as OFCOM, OFGEM, OFWAT.
This could help to:
*deal with many of the foreseeable harms the regulator has identified;
*promote genuine competition for financially excluded consumers by enabling more efficient, inclusive providers to provide access to fair credit based on accurate, up to date information; and
*rebuild credit and wider financial inclusion post Covid-19 by bringing affected people back into the mainstream financial system.
For us, this seems more in keeping with the intention behind the proposed Consumer Duty. The FCA wants firms to operate in the interests of consumers. To do this, surely firms should put as much effort into treating consumers fairly when they are in financial difficulty, or are trying to re-build their finances and credit rating, as they do when marketing and selling products. The FCA also refers to firms mitigating the risk of foreseeable harms. We would argue the harms caused by not ensuring CCJs are marked as satisfied are certainly foreseeable and firms could and should take more responsibility for mitigating the risk of those harms occurring.
We hope that our concerns and recommendations will be taken on board in the final version of the ‘new Consumer Duty’. Ensuring CCJs are marked as satisfied is a small step that could have a big impact on consumers’ financial health and wellbeing. It could make a real difference to the financial resilience of the most vulnerable consumers and have a knock on positive impact for the economy and society.
Registry Trust’s mission is to share it’s ‘public data on monetary judgments for public good’ to promote responsible lending and borrowing, inform policy, empower consumers, and enable good business decisions. It operates TrustOnline; the only service which provides members of the public and businesses with immediate access to search the Register.