Ms R, Essex

For lenders, the enforcement of security and guarantees is not simply a back-end legal process to be activated when borrowers’ default.

It sits at the heart of prudent risk management, shaping both the lender’s approach to structuring facilities and the borrower’s understanding of their obligations.

A misstep can not only limit recovery but also expose a lender to legal challenge, regulatory scrutiny or reputational harm.

With growing regulatory oversight and increased borrower sophistication, lenders are expected to demonstrate that they have acted lawfully, proportionately and in good faith throughout the enforcement process.

That means carefully balancing the contractual and statutory rights available with wider considerations around fairness, market perception and long-term commercial relationships.

Security enforcement

Security in banking and finance is far from a one-size-fits-all approach and can take the form of fixed or floating charges, equitable charges or more bespoke arrangements.

When enforcement becomes necessary, lenders must consider existing legal frameworks, including the Insolvency Act 1986 and the Law of Property Act 1925, as well as the specific terms of the security instrument itself.

This is not just a box-ticking exercise. The appointment of receivers or administrators demands compliance with statutory notice requirements.

The complex hierarchy of priorities between secured and preferential creditors must be respected, whilst lenders will be held to the highest standard of good faith, with an obligation to achieve a proper price on any sale.

Failure to meet these duties exposes lenders not only to claims from borrowers but also to challenges from other creditors whose interests may be affected. Overlooking even a small procedural step can undermine enforcement and damage relationships.

By ensuring that security is properly structured at the outset and that enforcement strategies are designed with statutory and fiduciary duties front of mind, lenders can safeguard both recovery and reputation.

Guarantee enforcement

Personal and corporate guarantees are often a first line of protection, yet they are also the most frequently contested when defaults occur.

Courts will closely examine challenges raised by guarantors, which often include:

• Questions of capacity, such as whether a director had authority to bind the company or whether an individual had the mental capacity to consent.
• Technical defects in execution, including failures to meet statutory formalities under the Companies Act 2006 or the Statute of Frauds 1677.
• Variations to the underlying facility without the guarantor’s consent, which can discharge liability altogether.

Independent legal advice for guarantors, supported by clear documentary evidence, can help reduce disputes later.

Guarantees should be drafted to anticipate possible changes to the borrower’s obligations and executed with meticulous care.

Balancing legal and commercial considerations

Ultimately, enforcement is not only about legal rights. Lenders must weigh recovery prospects against the costs of enforcement, the potential reputational impact and the effect on ongoing commercial relationships.

By structuring securities and guarantees carefully at the outset, complying with statutory requirements and planning their enforcement strategy in advance, lenders can strengthen their position and maximise recovery while reducing the risk of challenge.

Palmers’ Banking and Finance team can provide tailored advice on structuring or enforcing security and guarantees for the banking sector and other lenders.

The first consumer protection provisions of the Digital Markets, Competition and Consumers Act 2024 (DMCC Act) came into force earlier this year.

This marks one of the most significant reforms to UK consumer law in over a decade and is already being felt by businesses across the UK.

The introduction of the new rules did not come with much fanfare, which is why any business dealing with consumers should look closely at how its goods and services are marketed: the Act brings stronger enforcement and tougher penalties for breaches.

Key changes under the DMCC

There are a number of important changes within the DMCC that consumer-facing businesses should now be abiding by:

• Direct enforcement powers for the CMA: The Competition and Markets Authority (CMA) can now investigate and determine breaches without court proceedings and impose fines of up to the higher of £300,000 or 10% of global turnover. Most cases will be handled through the CMA’s civil/administrative route; some consumer offences remain criminal and can still be prosecuted under existing legislation.
• Civil and criminal routes: Enforcement is primarily civil/administrative, but certain offences under the consumer protection regime remain criminal and may lead to prosecution.
• Banned/unfair practices: Certain practices are now clearly unlawful or will be treated as unfair, including commissioning or facilitating fake reviews and presenting prices that exclude unavoidable fees (often called “drip pricing”).
• Contracts and subscriptions: The DMCC introduces a new subscription contracts framework to improve clarity on pre-contract information, renewal/cancellation, reminders and transparency. Much of this regime requires secondary legislation and guidance and is not yet fully in force for most businesses.
• Enhanced Consumer Measures (ECMs): The CMA (and courts) can require businesses to provide redress, take compliance steps, or make changes that improve consumer choice.
• Online interface powers: The CMA can issue Online Interface Notices and, where appropriate, seek court Online Interface Orders requiring traders and, in some cases, relevant intermediaries (e.g., domain registries/hosts/search services) to remove or amend unlawful online content.

The CMA has indicated it will prioritise tackling the most harmful practises in its first year of using these powers. Likely areas of focus include:

• Hidden fees revealed late in the buying process
• Misleading or false information
• Aggressive or manipulative sales practices (especially targeting vulnerable consumers)
• Unfair or unbalanced contract terms
• Areas where the CMA has already acted, such as drip pricing and fake reviews

Why this matters for your business

Under the DMCC, fines are swifter, far larger and reputational damage can be significant.

Businesses should start reviewing their practices immediately, including:

• Contracts: Ensure terms are clear, balanced and compliant.
• Marketing and pricing: Check all promotions, reviews and pricing displays (including fees) against the new rules.
• Robust procedures: Introduce compliance checks for sales and marketing teams.
• Learning and development: Equip staff in customer-facing, marketing and compliance roles to understand the new regime.

If you would like advice on reviewing your contracts, policies or compliance systems in light of the DMCC, please contact the commercial law specialists at Palmers Solicitors.