Loan repayment demands halted pending legal resolution
Consumers facing disguised remuneration loan demands from Ethica Resolve Limited do not need to pay now under restrictions agreed with the Financial Conduct Authority (FCA). Whether the debts are enforceable remains unresolved.
Payment demands on hold
Following FCA intervention, authorised debt servicer and collector Ethica Resolve Limited agreed to restrictions on its collection of disguised remuneration loans or purported loans.
Ethica will write to affected consumers explaining that they have no enforceable payment obligation at this stage.
It will make no further payment demands in the current proposed court claim while regulatory and legal issues are resolved.
Ethica and creditor West 28th Street Limited will also not seek default judgments against people who have not responded to legal claims.
Additional protections for vulnerable consumers are being introduced, and Ethica will identify affected consumers who may be vulnerable.
The requirements aim to prevent avoidable harm while the issues are resolved.
Loans in place of salaries
West 28th Street Limited bought the loans from a third party and is not authorised or regulated by the FCA.
The schemes paid people, often contractors, consultants and agency workers, through loans rather than regular salaries.
HMRC has published guidance for those affected.
Some consumers dispute liability and legal enforceability.
If debts are unenforceable, borrowers cannot be forced to repay or have assets seized against the debt without a specific order.
Whether these debts can be enforced remains undecided and may require a court decision.
Protection is not cancellation
The restrictions pause collection demands but do not settle whether the debts are enforceable.
Consumers must not ignore formal court documents and can seek independent legal or debt advice before deciding how to respond.
The FCA asks consumers to report undue pressure over debt collection.