The Financial Conduct Authority (FCA), Britain's financial regulator, said Nov. 5 that Ethica Resolve Limited agreed to pause payment demands in the current proposed court claim and notify affected consumers while related issues are addressed.
The agreement limits the pause to that claim and the period in which regulatory and legal questions are handled. Ethica must tell affected consumers that they are not under an enforceable obligation to pay at this stage. The FCA has not decided whether the specific debts can be enforced; it said a court may determine that.
Ethica services and collects debt for creditors and is authorized by the FCA. It acts for West 28th Street Limited, which bought the loans from a third party and is not authorized or regulated by the agency. The companies will not seek default judgments against people who do not answer a legal claim. Ethica is also to identify affected consumers who may be vulnerable, and the FCA said further safeguards for vulnerable consumers are being arranged.
The FCA urged people who receive formal court papers to take them seriously and consider independent legal or debt guidance.
The disputed balances are linked to disguised remuneration arrangements, which paid workers—often contractors, consultants and agency workers—through loans instead of ordinary salaries. In a Nov. 2 statement, the FCA said such arrangements had been used to avoid tax.
HM Revenue & Customs (HMRC) says its separate loan charge may apply to qualifying disguised remuneration loans made on or after Dec. 9, 2010. Eligibility depends on conditions that include when a loan was received, whether it was repaid by April 5, 2019, and whether the tax was settled by Sept. 30, 2020. The FCA's action does not determine the tax treatment of any individual case.
The agreement follows the FCA's Nov. 2 warning to check repayment demands, which urged consumers to examine claims tied to the same type of arrangements.
