Demands for disguised remuneration scheme loan repayments

These schemes, typically involving contractors and agency workers, used loan arrangements to avoid tax. With HMRC's loan charge in force, questions have emerged about whether such loans are enforceable. The FCA notes that some consumers are receiving legal letters threatening court action and demanding immediate repayment.

For compliance teams, this signals potential breaches of FCA rules on debt collection, fair treatment, and communications. Firms involved in servicing or collecting these loans should urgently review their practices to ensure they do not pursue unenforceable debts or use aggressive tactics. Key actions include: assessing exposure to disguised remuneration loans, reviewing debt collection scripts and legal letters for compliance with CONC and Principles, ensuring clear communication about disputed liabilities, and considering consumer vulnerability.

The FCA may expect firms to handle complaints fairly and avoid threatening language. This is a moderate impact for consumer credit and debt collection firms, with reputational and regulatory risks if not addressed. Firms should also monitor for similar issues in other loan types.