We've intervened and Ethica Resolve Limited (Ethica), an FCA authorised firm that services and collects debt on behalf of creditors, has agreed to restrictions. These follow demands it made for people to repay loans, or purported loans, provided as part of disguised remuneration schemes.
Ethica is acting on behalf of West 28th Street Limited (West 28), which bought disguised remuneration loans from a third party. West 28 is not authorised or regulated by the FCA.
Disguised remuneration schemes[1] saw people – often contractors, consultants and agency workers – paid for their work through loans instead of regular salaries. HMRC has published guidance for those affected[2].
Some of those affected dispute liability for the amounts being claimed and challenge whether the debts can be legally enforced. If they're unenforceable, borrowers cannot be forced to pay the money back or have any of their assets seized against the debt without a specific order.
Under the requirements we’ve agreed[3], Ethica:
- Will write to affected consumers, explaining that they do not have an enforceable obligation to make payment at this stage. (This means they do not need to pay now while regulatory and legal issues relating to the purported loans are resolved.)
- Will not make further demands for payment from affected consumers in the current proposed court claim while regulatory and legal issues are resolved.
- Additionally, Ethica and West 28 will not ask a court to make a judgment against someone who has not responded to a legal claim. This is known as a ‘default judgment’.
However, consumers should not ignore any formal court documents they receive on this issue. They should consider seeking independent legal or debt advice before deciding what to do.
Additional protections for vulnerable consumers are being put in place and Ethica will identify affected consumers who may be vulnerable.
It has not yet been decided whether the debts can be enforced, which may be decided by a court.
The requirements agreed protect consumers from avoidable harm while the relevant regulatory and legal issues are resolved.
Consumers should not be subject to undue pressure when being contacted about a debt. If you believe you have been subjected to this type of behaviour, you should report it to us[4].