Debt purchasers not authorised by the Financial Conduct Authority cannot sue in the county courts

[Joanna Connolly]

On 24 April 2019 I was successful in a consumer credit claim appeal. The Claimant debt purchaser admitted they were not authorised by the Financial Conduct Authority but said they could rely on the S.55 FSMA 2000 exemption because they had a valid servicing agreement in place with an affiliated 3rd party who was authorised by the Financial Conduct Authority.

It was accepted by both parties on the facts of the case that there was a valid servicing agreement in place. The issue was could the Claimant debt purchaser rely on the S.55 Exemption to issue proceedings in the county court.

The Circuit Judge held as a general principle of law that the Claimant debt purchaser was not able to rely on the FCA authorisation of an affiliated 3rd party (and the exemption under s.55 FSMA) for the purpose of bringing a claim. The agreement was unenforceable, and the order of the court below was set aside, and the Claim dismissed

[cymruambyth]

Brilliant. Congratulations, a great result. Out of curiosity, can they sell the debt on to a different company who could enforce in court or could they gat the relevant licence and then take it back to court?

[Joanna Connolly]

The claim in this case was dismissed so they can't..

[cymruambyth]

Next query! If a debt is sold to an unauthorised company and is then sold on to a regulated company, does this have an impact on the ‘assignment chain’ with regards to the enforcement of the debt with legal action?

[Joanna Connolly]

Depends on whether the assignment is compliant with S.136 and S.196 Law of Property Act