27/09/2017

New rules drafted to replace the two 19th century Bill of Sales Acts, which currently regulate log book loans and other arrangements where individuals pledge their goods as security, are the subject of an HM Treasury consultation seeking views on

• whether the law needs reforming
• whether the draft rules are appropriate to be implemented via the Law Commission’s special procedures for uncontroversial legislation

The government originally asked the Law Commission to review the Bill of Sale Acts because of concerns about consumer detriment as the increasing popularity of logbook loans resulted in the number of Bills of Sale rocketing from 3,000 in 2001 to more than 30,000 in 2016.

The Law Commission concluded that the Acts were archaic and caused problems for lenders, borrowers and innocent purchasers alike. Its proposed solution, which was to replace them by clauses added to the Goods Mortgages Bill, was covered in ‘Goods Mortgages Bill to Give More Protection (E, W)’ (CPA News; 12 July).

‘Goods Mortgages Bill’ summarises the HM Treasury consultation paper and includes the Law Commission’s final report and the draft clauses. It also highlights other issues on which HM Treasury is seeking views, including

• the risks and benefits of extending the scope of the Bill to Northern Ireland
• the modernisation of the registration regime – which currently adds between £35 and £51 to the cost of each logbook loan yet serves ‘very’ little purpose. The Law Commission has proposed that, instead of a requirement to register at the High Court, vehicle mortgages should be registered with suitable asset finance registries designated by HM Treasury.

‘Bills of Sale: Current project status’ includes links to reports and related documents.