V5 Loans Limited Commitment to Responsible Lending

(BILLS OF SALE FOR LENDING REGULATED UNDER THE CONSUMER CREDIT ACT)

1. GENERAL OBLIGATIONS

V5 Loans shall:
1.1 Conduct their business lawfully; comply with all relevant legislation, regulatory guidance, judicial decisions and general rulings of regulatory authorities.
1.2 Trade honestly, responsibly, ethically and treat customers fairly.
1.3 Behave at all times with integrity and endeavour to ensure, where applicable, that credit-brokers and all other persons with whom V5 Loans has commercial relationships do likewise.
1.4 Act responsibly and with care in the day-to-day conduct of their business.
1.5 Not misrepresent facts to a customer concerning any aspect of a credit transaction. We shall also take all reasonable steps to ensure, where applicable, that brokers and any other intermediaries, when acting, as agents of ours, do not misrepresent facts regarding such transactions to a customer.
1.6 Respect confidential information supplied to them in the course of their business.
1.7 Ensure that credit documentation embodies, in plain and intelligible language, all the express terms and conditions of the agreement, which affect the customers’ rights and obligations.
1.8 Provide adequate training for members of their staff, agents, associates and any other person who performs any duties on behalf of ourselves, bringing this list and the principles contained in it to their attention and requiring them to carry out their duties in accordance with it.
1.9 Comply with obligations and any conditions which may be imposed by the OFT with regard to their respective licences under the Consumer Credit Act 1974 (the Act).
1.10 Follow, where applicable, any requests conveyed by the Association and emanating from the Bank of England, the OFT, the Financial Services Authority (the FSA) (or other relevant authority), and the enforcement authorities.
1.11 Ensure fairness in all dealings with customers including, but not limited to, their dealings with customers both before and after the making of the agreement or any related agreement and the manner in which those agreements are enforced.
1.12 Ensure that our interest in the assigned vehicle is registered, within 24 hours of the making of the agreement, with a recognised Asset Finance Register such as HPI Ltd.
1.13 V5 Loans shall not use Bills of Sale, as a security instrument, to finance the purchase of any goods sold to the customer by ourselves, or by any third party suppliers.

2. SPECIFIC OBLIGATIONS

2.1 Advertising and Marketing
2.1.1 We shall not use direct mail indiscriminately, shall act responsibly and prudently in their advertising and marketing and ensure that all their advertising is truthful and not misleading.
2.1.2 We shall ensure that all advertising and promotional literature is fair and reasonable, does not contain misleading information and complies with all relevant legislation, in particular the provisions of the Consumer Credit Act 1974 (the Act) and the Regulations made under it. This includes the inclusion and disclosure of the “APR” in the statutory form, where required by domestic and community law.
2.1.3 We shall ensure that all advertising complies with the British Code of Advertising, Sales Promotion and Direct Marketing, the Radio Advertising Standards Code, the Television Advertising Standards Code, OFCOM and other relevant codes of practice of similar standing.
2.1.4 We shall not engage in high-pressure selling or other aggressive sales practices such as pressurising a customer to sign up to a credit agreement without affording him the opportunity to consider the Pre-contract information, ask questions about the agreement and ask for and obtain further information and explanation.

2.2 Responsible Lending
2.2.1 We shall not engage in any behaviour that the OFT considers may constitute “irresponsible lending”. We must have regard to: “Irresponsible Lending-OFT guidance for creditors”- August 2010 and as amended from time to time.

2.3 Explanations of the credit product
2.3.1 Before the customer is bound by any credit agreement or offer, we shall provide the customer with Pre-contractual information (PCI) by means of the form required by law at that time. We shall explain to the customer that they may take away the PCI to consider the terms of the offer of credit before the making of the agreement and the customer should be afforded such an opportunity.
2.3.2 We shall provide adequate explanations to the customer, in order to place the customer in a position enabling him to assess whether the proposed credit agreement is adapted to his needs and to his financial situation by explaining, but not limited to: a) the Pre-contractual information to be provided; b) the risk, on default of the agreement, that additional interest and default fees may be charged; c) the risk of losing the asset (usually a vehicle) on which the credit is secured, how it would be repossessed, and the loss this could entail; d) that repossession under the Bill of Sale can take place without a court order and that members may enter customer’s premises to take possession of the vehicle; e) that repossession can result in significantly higher additional costs and may not clear all of the debt owed ; and f) that there is a provision for voluntary termination and the terms and conditions which apply.
2.3.3. Where we have clear grounds to suspect that the explanation provided has not placed the customer in a position whereby he is enabled to assess whether the agreement is suited to his needs and his financial situation, wes shall provide further explanation to the customer.
2.3.4 In all circumstances we should provide the customer with an opportunity to ask questions about the credit agreement. We should also advise the customer how to ask for further information and explanation about the credit agreement from him.

2.4 Assessment of affordability
2.4.1 We shall, before granting credit or increasing the amount of credit to be provided to the customer, undertake an assessment of the creditworthiness of the customer to assess the borrower’s ability to undertake any proposed credit commitment, or specific additional credit commitment, in a sustainable manner, without the customer incurring (further) financial difficulties and/or experiencing adverse consequences.
2.4.2 The assessment of affordability should be based on information and evidence obtained from: a) the customer, having provided evidence of his ability to repay the credit; and b) a credit reference agency, where necessary.
2.4.3 We shall take particular care in relation to applications for credit from young people in the age range 18-21 years.
2.4.4 We shall continuously monitor our credit granting practices and our assessment techniques to ensure that we are prudent and realistic in the prevailing economic circumstances. We shall not be less rigorous in assessing the customer’s ability to repay by reason of the sole fact that security is offered.
2.4.5 To the extent that we might use credit-scoring techniques, we shall abide by the principles set out in the publication “Guide to Credit Scoring 2000”, as subsequently amended or updated. Where we do not use credit-scoring techniques we should be prepared to make clear to a declined applicant whether or not a refusal relates to a credit reference agency report.
2.4.6 We shall ensure that where a customer is refused credit and believes the refusal to be unreasonable the customer is given the name or title of a senior official who will review the application.
2.4.7 We shall provide appropriate assistance, in the form of information and guidance, to young (as defined above) and/or vulnerable customers.

2.5 The Regulated Consumer Credit Agreement
2.5.1 We shall use plain and intelligible language in all agreements, Pre-contract information documents and communications with customers. We shall use prescribed wording where that is required by law.
2.5.2 We shall ensure that their agreements (and any related agreements) with consumers do not contain unfair contract terms.
2.5.3 We shall advise customers of the contractual interest rate(s) applicable to their agreements for credit, the basis on which default interest and charges, repossession charges and any other charges are calculated and, when they will be charged.
2.5.4 We shall advise customers how any agreed variation of the terms and conditions of their agreement will be notified and shall give customers at least 14 clear days written notice before any variation takes effect.
2.5.5 We shall comply with all statutory and other reasonable requests by customers for information about their agreements and accounts within 14 days of receiving a written request or otherwise within the period specified by law.
2.5.6 We shall supply copies of documentation and statements of account as required by law and within the prescribed timescale.
2.5.7 We, where applicable, shall comply with their legal obligations in relation to the provision of Pre-contractual information and the 14 day right of cancellation in respect of distance contracts under the Financial Services (Distance Marketing) Regulations 2004.
2.5.8 We shall assist customers seeking advice and guidance.

3 GUARANTEES AND BILLS OF SALE

3.1 Guarantees
3.1.1 We shall advise individuals proposing to give a guarantee or other security for a customer’s liability that: a) by giving the guarantee or security he or she might become liable for payment of the loan amount instead of or in addition to customer; b) he or she should seek independent legal advice before entering into the guarantee or security.
3.1.2 We shall be deemed to have complied with the requirements of 3.1.1 where guarantees and other securities contain a clear and prominent notice to the above effect.

3.2 Bills of Sale
3.2.1 We shall comply with the requirements of The Bills of Sale Act 1878, the Bills of Sale Ireland Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882, the standard industry practice of ensuring that the members’ interest in the assigned vehicle is registered, within 24 hrs of the making of the agreement with a recognised Asset Finance Register such as HPI Ltd, other relevant laws, codes of practice and this Code insofar as it is compatible with the foregoing.
3.2.2 We shall provide the customer with the Industry Standard “Bill of Sale Borrower Information Sheet”.

4 DEALING WITH CUSTOMERS EXPERIENCING FINANCIAL DIFFICULTIES

4.1 We shall establish and implement policies and procedures for dealing with customers whose accounts fall into arrears that are fair, clear, not misleading and members agree to fully comply with both the word and spirit of the section entitled “Handling of default and arrears” of the OFT Irresponsible Lending Guidance.
4.2 Any policies and procedures for dealing with customers whose account falls in arrears shall make specific provision for, amongst other matters, the fair and appropriate treatment of vulnerable customers such as those known to or reasonably believed to lack the mental capacity to make relevant financial decisions at a particular time.
4.3 We shall consider cases of financial difficulty sympathetically and positively, treat customers in default or arrears difficulties with understanding, forbearance and due consideration and encourage their customers to contact them should they experience financial difficulty.
4.4 We shall, where appropriate, refer customers to debt counselling organisations and notify customers where they can get free advice, such as Citizens Advice Bureaux, Money Advice Centres, National Debtline, the Consumer Credit Counselling Service or Consumer Direct. We will work with debt counselling organisations to assist their customers.
4.5 We shall suspend, for a period of not less than 30 days, the active pursuit of recovery of a debt from a customer in default or payment difficulties under circumstances in which a bona fide debt advisor is assisting the customer in a agreeing a repayment plan.
4.6 If V5 Loans passes a customer’s account to another person to collect overdue payments, such as a debt collector or solicitor, we will inform the customer.

5 ENFORCEMENT AND DEBT COLLECTION

5.1 We shall have due regard to the Debt Collection Guidance issued by the Office of Fair Trading (the OFT) and in particular shall not engage in any unfair business practices identified in that Guidance.
5.2 V5 Loans shall have due regard to: “Irresponsible Lending-OFT guidance for creditors” and in particular shall not engage in any irresponsible lending practices identified in that Guidance under the heading “HANDLING OF DEFAULT AND ARREARS”.
5.3 V5 Loans shall ensure, by reviewing annually their debt collection procedures and those of any third parties they employ, that they conform to high ethical standards and allow for proper consideration of the customers circumstances and in particular: a) encourage customers in financial difficulties to inform them of their difficulties at the earliest possible moment (and we will endeavour to respond sympathetically, without prejudice to our rights); b) provide in all relevant correspondence the name or title of a specially trained member of staff who may be contacted if difficulties arise; and c) take into consideration, before determining whether to enforce an agreement, all information supplied by the customer or otherwise in relation to the cause of any default and the customer’s future ability to repay. If the customer has disclosed multiple debt problems, we shall inform the customer of the availability of advisory services.
5.4 V5 Loans may suspend the pursuit of recovery of a debt from a borrower, under circumstances in which notification has been given and/or it is reasonably believed that the borrower lacks the mental capacity to make relevant financial decisions regarding the management of his debt at that time, unless or until a reasonable period of time has been allowed for relevant evidence to be provided as to the likely impact of the capacity problem on the borrower’s ability to manage his debt and deal with a debt recovery business. The appropriate means of collecting evidence, in appropriate circumstances, could be to use the standard Debt and Mental Health Evidence Form (DMHEF), developed between MALG and the Royal College of Psychiatrists.
5.5 We shall not impose charges, of whatever nature, on customers who are in arrears unless the nature of those charges are disclosed at the Pre-contract stage and are limited to doing no more than covering the member’s costs.
5.6 We shall allow for alternative, affordable, payment amounts when the borrower or his appointed debt advisor or representative makes a reasonable proposal.
5.7 We shall regard the lawful seizure of a secured asset as a serious enforcement option, to be taken only when attempts of have failed with the customer, to mutually agree a realistic and sustainable arrangement to clear arrears.
5.8 V5 Loans should not, except in exceptional circumstances such as proven identity fraud, consider seizure of the vehicle unless- a) the amount of the customer’s arrears shortfall is no less than the equivalent of: b) the sum of the last two payments required to have been made, under a monthly paid agreement, before that time; or
c) the sum of the last four payments required to have been made, under a weekly paid agreement, before that time; and
d) the requirements of section 87B (Notice of Sums in Arrears) of the Act have been complied with prior to serving a Default Notice under section 87 (1) of the Act. 8
5.9 Notwithstanding the provisions of the Bills of Sale Act 1878, the Bills of Sale Ireland Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882, V5 Loans shall, upon the lawful seizure of the vehicle, hold the vehicle in safe keeping for a period of not less than 14 days to allow the customer to make representations to resolve the matter or to make application to the court under section 7 of the Bills of Sale Act (1878) Amendment Act 1882 to restrain V5 Loans from selling the vehicle. V5 Loans shall take all reasonable steps to ensure that seized vehicles are sold for the highest obtainable market price.
5.10 We shall not apply for a charging order on the customers home (the property) to secure an outstanding debt, except under the following circumstances:
a) the outstanding debt is no less than £500 and, for whatever reason, a member is unable to gain lawful possession of the assigned vehicle; or
b) the outstanding debt is no less than £500 and “bad faith” by the customer is shown, which includes; intent to deceive or mislead a member to gain some advantage, dishonesty or fraud in the transaction.
5.11 Where we have obtained a charging order under 5.10 (a) or (b), we shall not seek an order of the court for the sale of the judgments debtors’ home.
5.12 We shall allow customers who are in arrears under the agreement, the option to voluntary surrender the assigned vehicle as full and final settlement of all claims against the customer except where:
a) a default notice has been served under s87 of the Act, the default notice remains unsatisfied and instructions have already been issued to an authorised person to recover the vehicle; or
b) it is established that the vehicle has sustained malicious damage of whatever nature.
5.13 V5 Loans shall provide the customer with information on the voluntary surrender option at the Pre-contract information stage and at the time a default notice is served. We shall not place undue pressure on the customer to adopt this option.

6. THIRD PARTY PURCHASERS

6.1 V5 Loans will afford innocent purchasers of vehicles, that are subject to a Bill of Sale, the same protection as afforded under the Hire-Purchase Act 1964 Part III – “Title to Motor Vehicles on Hire-Purchase or Conditional Sale”, but only insofar as title shall transfer to the innocent purchaser in the event that V5 Loans failed to register his interest in that vehicle with a relevant Asset Finance Register Company within 24 hours of execution of the agreement.

7. DEBT COLLECTION AGENCIES

7.1 V5 Loans shall ensure that any Debt Collection Agencies they employ shall be licensed under the Consumer Credit Act 1974.
7.2 V5 Loans shall monitor those Debt collection agencies compliance with the Consumer Credit Act 1974, regulations under that Act, relevant codes of practice, debt collection guidance issued by the Office of Fair Trading and this Commitment insofar as it is compatible with the foregoing.

8 DATA PROTECTION AND CONFIDENTIALITY OF INFORMATION

8.1 V5 Loans shall respect personal information supplied to them by customers and shall inform customers of the purposes for which this information is intended to be used and disclosed, before it is given by the customer.
8.2 V5 Loans shall observe a strict duty of confidentiality about their customers (and former customers) personal financial affairs and shall not disclose details of customers accounts or their names and addresses to any third party, except for the purposes of filing with credit reference agencies and in the following cases:
a) where they are legally compelled to do so;
b) where there is a duty to the public to disclose;
c) where the interests of the member requires disclosure;
d) where disclosure is made at the request, or with the consent, of the customer.
8.3 We shall not use exception © above to justify the disclosure for marketing purposes of details of customers” accounts or their names and addresses to any third party, including other companies within the same group.
8.4 If we use the services of credit reference agencies and/or fraud prevention agencies shall ensure that any information they supply about customers and the conduct of their accounts to credit reference agencies and/or fraud prevention agencies is complete and accurate.
8.5 V5 Loans shall at all times comply with the Data Protection Act 1998 when obtaining and processing customers” personal data and shall explain to their customers that they have the right of access, under that Act, to their personal records held on computer files.
8.6 We shall advise customers of their right not to receive marketing information from the member or a third party with whom the member is connected. Members shall comply in that regard with the requirements of the Data Protection Act 1998 and the Privacy and Electronic Communications (EC Directive) Regulations 2003.

9 COMPLAINTS PROCEDURE

9.1 General
9.1.2 We shall deal promptly and at an appropriate management level with complaints. We shall establish a complaints procedure and furnish information on request about their complaints procedure. Customers shall be told what further steps are available if they believe that the complaint has not dealt with satisfactorily. These steps include the complaint being referred to a senior manager of V5 Loans, to the CCTA and the ultimate resort of the unresolved complaint being referred to the Financial Ombudsman Service (FOS).

9.2 Customer Complaints
9.2.1 If a customer makes a complaint that is not dealt with to the satisfaction of the customer, we will refer it to a senior executive.
9.2.2 Where a complaint cannot be resolved by conciliation, the customer shall be entitled to seek resolution by the Financial Ombudsman Service.
9.2.3 Nothing in this list restricts or is intended to restrict the rights of a customer or a member to pursue remedies through the Courts or the Financial Ombudsman Service.
9.2.4 We shall notify customers of the complaints procedure, including the customer’s right to seek resolution of the complaint under the Conciliation Scheme and the Financial Ombudsman Service.