Against a backdrop of a changing landscape for financial services firms, understanding the legal and regulatory challenges within the asset finance sector is more important now than ever before.

On June 13th, Shoosmiths hosted a Legal and Regulatory workshop with Asset Finance Connect at their Summer Conference in London.

The Conference was attended by delegates from a variety of firms operating in the asset finance industry, including lenders, brokers and credit reference agencies.

Wayne Gibbard, Stephen Dawson, Jonathan Mills, David Farnell and Inayah Noormahomed-Qureshi from Shoosmiths hosted the workshop, which focused on Consumer Duty and Fraud. They were also joined by Dr Chris Fitch, the Money Advice Trust’s Vulnerability Lead and Research Fellow at the University of Bristol’s Personal Finance Research Centre.

Below are the key takeaways from the workshop:

Consumer Duty

• The Financial Conduct Authority’s expectations are clear; firms need to be ready for the 31 July 2023.
• Firms must have robust implementation plans and must maintain evidence to demonstrate the steps they are taking (and have taken) to achieve the milestones in those plans.
• Consumer Duty is about embedding a consumer focussed culture, with consumer outcomes at the heart of what the firm does.
• Vulnerability is not easy to understand and consequently can be difficult to assess, there is no one size fits all approach but firms can adopt a variety of tools and frameworks to achieve a consistent approach to the assessment.
• When considering vulnerability, as well as considering “who”, firms should pay attention to “what”. What are customer’s vulnerable to and what support can the firm offer to support the customer’s individual needs?
• Inclusive design principles are an excellent way for firms to support individual customer needs, as well as improving the journey for all customers.

Fraud

• It is vital that every lender develops bespoke anti-fraud measures, which suit its particular asset finance products and operational processes. In that sense, there is some commonality of approach with lenders’ plans for complying with the Consumer Duty.
• Each lender’s goal should be to embed robust measures within its operational processes and encourage staff vigilance, so that they alert managers whenever something doesn’t seem right. Prevention is better than cure.
• Measures should include thorough checking procedures and clear reporting lines, augmented by regular audits and reviews. Whenever a lender uncovers a fraud, big or small, it is important to discuss the incident afterwards and learn from it.
• If the lender suspects fraud, it is critical to seek legal advice promptly. Depending on the nature of the fraud and how quickly the lender has discovered it, there may still be a chance to mitigate the lender’s exposure to financial losses. The lender may also be concerned about regulatory compliance and avoiding reputational damage. Getting the right advice ensures that the lender’s internal communications remain confidential and that it chooses the right course of action, which may involve pursuing civil and/or criminal law remedies against those involved in the fraud.

For further information, please contact Stephen Dawson at stephen.dawson@shoosmiths.com or Wayne Gibbard at wayne.gibbard@shoosmiths.co.uk