FCA acts to protect consumers facing demands for disguised remuneration scheme loan repayments

Key dates

2026-11-02

The FCA published an earlier statement warning about demands for repayment of disguised-remuneration scheme loans, the possible need for a Validation Order and undue pressure in debt collection.

2026-11-05

The FCA published the intervention and the restrictions agreed with Ethica Resolve Limited and West 28th Street Limited.

Suggested considerations

• Firms servicing or collecting historic disguised-remuneration loans should identify affected portfolios, pause demands and litigation activity falling within the FCA restrictions, and confirm the precise scope of any agreed requirements with the FCA.
• Ethica should complete and evidence the required consumer communications, including the explanation that payment is not currently enforceable, and maintain records of recipients, delivery attempts and unresolved cases.
• Compliance teams should review whether correspondence, telephone contact, default notices, letters of claim and court instructions could create undue pressure or inaccurately imply that immediate payment is legally required.
• Firms should establish a vulnerability-identification and support process covering consumers experiencing health, financial or comprehension difficulties, with appropriate escalation, reasonable adjustments and management information.
• Debt servicers should verify the creditor's ownership, the chain of assignment, the original lender's regulatory status and any applicable consumer-credit permissions or exemptions before pursuing repayment.
• Legal and compliance teams should assess whether any proposed enforcement requires an FCA Validation Order or other court permission, recognising that a Validation Order is not guaranteed and that the FCA has stated that the debt may remain unenforceable if required permission is not granted.
• Firms should ensure that no default judgment is sought in the affected claims and that consumers continue to receive accurate information that formal court documents should not be ignored.
• Senior management should review outsourcing, agency and oversight arrangements where an authorised firm acts for an unauthorised debt purchaser, including conduct risk, consumer-outcome monitoring and escalation to the FCA where harm may have occurred.

What changed

Ethica must write to affected consumers explaining that they do not currently have an enforceable obligation to pay and therefore do not need to make payment at this stage. Ethica must not make further demands for payment from affected consumers in the current proposed court claim while the relevant issues remain unresolved. Ethica and West 28 must not seek default judgments against consumers who have not responded to a legal claim. Ethica must identify affected vulnerable consumers and put additional protections in place. The FCA has not determined that all such loans are unenforceable; enforceability may ultimately be decided by a court. Independent commentary indicates that the intervention follows repayment demands and legal correspondence concerning historic contractor-loan, loan-base

Who is affected

• Ethica Resolve Limited as an FCA-authorised debt servicing and collection firm
• West 28th Street Limited as the unauthorised purchaser or owner of the purported disguised-remuneration loans
• Consumers who received remuneration through purported loans, including contractors, consultants and agency workers
• Creditors, debt purchasers, debt servicers and law firms involved in collecting or litigating historic disguised-remuneration loan claims
• FCA-authorised firms servicing consumer debts on behalf of unauthorised creditors

Related regulations

• Financial Services and Markets Act 2000
• Consumer Credit Act 1974
• FCA Principles for Businesses
• FCA Consumer Duty under PRIN 2A
• FCA Consumer Credit sourcebook (CONC), including debt-collection conduct requirements