FCA Restricts Ethica Debt Collection Over Disguised Remuneration Loans

The Financial Conduct Authority (FCA) has intervened over demands for repayment of loans linked to disguised remuneration schemes, with debt-servicing firm Ethica Resolve Limited agreeing to restrictions while regulatory and legal issues are resolved. The FCA-authorised firm collects debts for creditors and has been acting for West 28th Street Limited, which bought the purported loans from a third party. West 28 is not authorised or regulated by the FCA. Under the agreed requirements, Ethica will write to affected consumers to explain that they do not currently have an enforceable obligation to pay. It will also stop making further payment demands in the current proposed court claim while the issues are unresolved. Ethica and West 28 have additionally agreed not to seek default judgments against people who have not responded to a legal claim. The FCA said some people dispute whether they owe the claimed amounts and whether the debts can legally be enforced. No decision has yet been made on enforceability, which may ultimately be determined by a court. The restrictions are intended to protect consumers from avoidable harm in the meantime; they do not settle the underlying disputes. People who receive formal court documents should not ignore them and should consider getting independent legal or debt advice. Ethica is also required to identify affected consumers who may be vulnerable, with additional protections being put in place. The FCA said consumers who believe they have faced undue pressure over a debt can report it to the regulator. The loans were associated with schemes that often paid contractors, consultants and agency workers through loans rather than regular salaries; HM Revenue & Customs has published guidance for those affected.