Coronavirus and Financial Services Disputes - part 4

What do you need to know? #4

This is our fourth note dealing with issues arising from the Coronavirus outbreak which may be of interest to those dealing with financial services disputes and litigation.

Since our last publication on 27 April 2020, we have seen the Courts continue to grapple with the demands of remote working. Our experience tells us that the Courts remain very much open for business. This update highlights two cases which have been considered by the Courts over the last month – each of which has its own “COVID-19 focus”. Unsurprisingly, we also continue to see high levels of engagement with regulated firms by the FCA and a focus on mitigating the impact of COVID-19 on consumers. In addition to the usual content of this publication, this update also looks at issues to be considered in the context of enforcing debt claims during COVID-19, and some of the factors that should be considered if you are contemplating taking enforcement steps.

THE COURT SERVICE

Courts continue to remain open for business. On 14 May 2020 the Judiciary published Amended Listing Priorities in the County Courts - click here. It sets out categories of cases which the County Courts are continuing to prioritise.

Two decisions which have been released by the Courts are particularly noteworthy:

1. In Re TPS Investments (UK) Ltd [2020] EWHC 1135 (Ch) (11 May 2020), His Honour Judge Hodge QC has provided guidance on the preparation of hearing bundles for remote hearings of short applications. HHJ Hodge QC reiterated that hearing bundles should only contain essential documents – he provided:

“There are two relevant lessons to be learned from the present case. First, engage the advocate who will be conducting the actual hearing at an early stage, to advise as to what documents are “essential” so that they can be included, and all other documents excluded, from the hearing bundle. Secondly, provide a searchable index to the bundle if this is possible; but, if it is not, ensure that all the pages of the bundle (including any index and divider pages) are individually, and sequentially, paginated so that it can be readily searchable by scrolling down the file”.

The full decision of 11 May 2020 can be found by clicking here.

2. In Arkin v Marshall and another [2020] EWCA Civ 620 (11 May 2020), the Court of Appeal considered the stay of possession proceedings brought about by the new Practice Direction PD51Z. PD51Z served to stay possession proceedings during the COVID-19 pandemic. The Appellants argued that PD51Z was made ultra vires, or alternatively, that the Court below was wrong to conclude that it was intended to apply to all possession proceedings under CPR Part 55. The Court of Appeal refused the appeal. The full decision of 11 May 2020 can be found by clicking here.

THE FINANCIAL OMBUDSMAN SERVICE

In a published exchange of correspondence between the FCA and FOS, the FCA asked FOS to confirm that when handling complaints arising from COVID-19, it will take account of “operational challenges faced by firms during the [pandemic] and the FCA’s revised expectations of what constitutes compliance with [the FCA’s] rules, guidance and standards as well as what counted as good industry practice”. FOS responded to the FCA noting:

“As you note, in deciding what is fair and reasonable in the circumstances of an individual complaint, we must take into account relevant law; regulators’ rules, guidance and standards; codes of practice and what the ombudsman considers to have been good industry practice at the time. We do not make decisions with the benefit of hindsight. What this means is that we will take account of the FCA’s revised expectations of what constitutes compliance with its rules, guidance and standards, as well as good industry practice at this time. This includes guidance which gives firms additional flexibility to help them deal with difficult conditions. And, I know you will recognise the importance of the FCA maintaining a clear record of the changes it has made and the circumstances in which they apply.”,

The exchange of correspondence can be found by clicking here and here.

THE FINANCIAL CONDUCT AUTHORITY

The FCA continues to engage with industry issues arising from COVID-19. Recent publications include coverage of:

the FCA’s proposals for continued support to mortgage customers during COVID-19. This can be found by clicking here. The publication released on 22 May 2020 notes:

“Our expectations are clear – anyone who continues to need help should get help from their lender. We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice…Where consumers can afford to re-start mortgage payments, it is in their best interests to do so. But where they can’t, a range of further support will be available. People who are struggling and have not had a payment holiday, will continue to be able to apply until 31 October.’

At the date of publication of this note, the FCA’s final guidance on the extension of support to mortgage customers has not been published, though we expect it to provide that firms should not commence or continue repossession proceedings against customers before 31 October 2020. Further insight on this topic can be found on our website by clicking here.

the FCA’s expectations of how regulated firms should handle post and paper documents. This can be found by clicking here. The publication, released on 13 May 2020 notes:

“Firms should demonstrate to us any steps they have taken to mitigate the impact of non-compliance with postal and paper processes and then return to full compliance as soon as practical. Firms could, for example, collect post and process paper-based work as frequently as they can, if this is not possible daily; and ensure they return client funds promptly, where they are unable to proceed with a transaction due to a delay and/or change in situation.”

UK FINANCE

UK Finance has reported on the proposed extension of the FCA’s guidance for mortgage customers and has recorded that “Latest figures from UK Finance show 1.82 million mortgage payment holidays have been issued as of 20 May 2020 – equivalent to one in six mortgages.” This can be found by clicking here.

Separately, UK Finance has published a FAQs document on “Chargeback Rights and Section 75 and the Coronavirus”. The FAQ’s set out some “frequently asked questions about chargeback rights and rights under Section 75 of the Consumer Credit Act in the context of holiday cancellations and difficulties following the recent outbreak of the coronavirus.” The FAQs can be found by clicking here.

ENFORCEMENT ACTION DURING COVID-19

Whether or not enforcement action is appropriate at the current time will depend on a wide range of factors. Such factors include (but are by no means limited to) the individual circumstances of cases, the prevailing regulatory guidance and a firm’s own policies and procedures. What though, should you be aware of if you embark on pursuing enforcement action against contractual counterparties?

In a publication from the Cabinet Office of 7 May 2020, the UK Government urged contractual counterparties to “act responsibly and fairly, support the response to COVID-19 and protect jobs and the economy”. It is framed as “non-statutory guidance”. Our analysis of the guidance can be found by clicking here.
Court Processing Times – Claimants issuing claims with the County Court Money Claims Centre should be aware that processing times are somewhat longer than they may otherwise be. Processing times are published here and at the date of this update the processing time for the issue of a new claim is 21 working days from receipt and 23 working days to deal with a general application. It is likely therefore that the period in which enforcement action can be concluded will be much longer than usual in this Court.
Enforcement Agents – The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 took effect on 25 April 2020 and impacts Enforcement Officers’ ability to recover goods during the COVID-19 pandemic. The new Regulations prevent Enforcement Agents taking control of goods at residential premises and on highways during the COVID-19 restrictions. They also serve to extend the period of time for taking control of goods in some cases. Close attention should be given to these regulations if recovery by way of enforcement agents is anticipated. The full regulations can be found by clicking here.
Enforcement work that does not involve bailiffs remains a priority workstream for the County Courts and is listed on the County Court Listing Priorities of May 2020. To this end, the enforcement of judgments can still be progressed during the pandemic by means of applications such as Third Party Debt Orders and Charging Orders.