The government has announced that it will not review logbook loan reform as part of its Goods Mortgages Bill. The decision has been described as ‘deeply disappointing’ by the Money Advice Trust.
The Bill, announced in the June 2017 Queen’s Speech, was drafted by the Law Commission following a comprehensive review commissioned by the Treasury in September 2014 and published two years later. It had been expected to be passed into law via special Parliamentary procedures that exist for uncontroversial Law Commission Bills of this kind.
Instead, the government announced it “will not introduce legislation at this point in time”, and will instead “continue to work with the FCA as they carry out their high-cost credit review, and then further consider government action on alternatives to high-cost credit” in light of its findings.
Jane Tully, director of external affairs at the Money Advice Trust said“ The government has snatched defeat from the jaws of progress by deciding not to introduce its Goods Mortgages Bill – a deeply disappointing decision, particularly given how uncontroversial the proposed reforms were.”
“The government was right to ask the Law Commission to look into this issue back in 2014, and since then a significant amount of work has gone into producing a Bill that had widespread support – only for it to fall at this final hurdle. We hope the government will reconsider. In the meantime, the urgency of addressing problems in the logbook loan market remains. It is now even more important that the FCA takes immediate action to improve consumer protections in this industry – and gives a clear statement of its intent as soon as possible.”
Bills of Sale are commonly used to secure a ‘logbook loan’ on goods you already own – usually a car – and are a form of high-cost lending based on legislation that dates back to the 19th century. The advice sector has repeatedly raised concerns about consumer detriment arising from this type of lending.