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Fair Trading Act 1986/Consumer Guarantees Act 1993
– still an unwelcome anachronism 12 Section 20(1)(b) sensibly clarifies that
misleading or deceptive conduct that contravenes the relevant
provisions of the Financial Advisers Act (FAA) does not
also contravene the general misleading and deceptive prohibitions
in Part 2. This removes a degree of "overlapping
liability" between these two statutes.
13 In addition, the amendment made to the Fair
Trading Act under section 567 of the Bill sensibly removes the
overlapping liability between the Part 2 prohibitions under the
Bill and the Fair Trading Act.
14 We submit that removal of overlapping
liability should be extended so that:
14.1 liability under Parts 3, 5 and 6 of the
Bill cannot also give rise to liability under the Fair Trading Act,
and
14.2 liability under Parts 2, 3, 5 and 6 of the
Bill cannot also give rise to liability under the Consumer
Guarantees Act.
15 Overlapping liability has long been an
unwelcome anachronism of our securities laws, and has led to great
uncertainty in the financial services market. Removing it is, in
our view, imperative, and will result in a much higher level of
certainty for (and therefore contribute to greater efficiency in)
our capital markets.
16 More specifically, this removal:
16.1 will mean market participants no longer
face double liability under multiple pieces of consumer legislation
for breach of broadly identical legal tests arising from the same
circumstances
16.2 should lower insurance costs
16.3 will give issuers more confidence that
they can enter into a single regulatory settlement with the FMA,
and not then have to address the same issues with another regulator
and risk facing a different outcome, and
16.4 will recognise that these issues are
optimally dealt with by the FMA, which is resourced with specialist
personnel to deal with them.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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Any attempt to recover payments while a company is in administration would be thwarted by the moratorium on creditors.
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