UK FCA cautions borrowers over disguised remuneration loan repayment demands

The Financial Conduct Authority (FCA) has cautioned people receiving demands to repay disguised remuneration loans to consider carefully whether to pay if they are unsure of their liability. Some consumers have received legal letters threatening court action and seeking immediate repayment after the original providers sold the loans to third parties. The schemes paid workers, often contractors, consultants and agency workers, through loans rather than salaries to avoid tax. Those seeking repayment may ask the FCA to agree to a Validation Order, providing formal permission to enforce the loans. Agreement is not guaranteed. Where an order is required but not granted, the debt remains unenforceable. Borrowers cannot be forced to repay unenforceable debts or have assets seized against them without a specific order. People uncertain about their liability are encouraged to review HM Revenue and Customs guidance and consider legal advice. Consumers should not face undue pressure when contacted about debts and should report such conduct to the FCA. Anyone experiencing health, financial or other difficulties, or who does not understand what is happening, should raise this with those contacting them.