Covid-19: legislation bringing into force BBLS exemption published
05 May 2020On 1 May 2020, an Order and explanatory memorandum were published by The Treasury.
The Order1 amends the Regulated Activities Order2 (RAO) and the explanatory memorandum describes the Order as emergency legislation in response to the Covid-19 pandemic. The Order came into force on 4 May 2020.
The Order contains exemptions to the requirement under article 60B of the RAO that those who enter into regulated credit agreements as a lender, or who exercise the rights of the lender under such an agreement, must hold the required permission under Part 4A of FSMA3. The exemptions under article 60C of the RAO all relate to the nature of the credit agreement in question.
The amendment to article 60C of the RAO exempts credit agreements under which a lender provides a borrower with credit of £25,000 or less for business purposes where the credit agreement is entered into under the Bounce Back Loan Scheme (BBLS). The effect of this is that such credit agreements will not need to satisfy the very prescriptive requirements of the Consumer Credit Act 1974 or the Financial Conduct Authority’s Consumer Credit Sourcebook.
Article 39H of the RAO, which excludes from regulation debt related activities carried out by persons connected to an agreement (e.g. the lender) under certain circumstances, is amended to provide that where a lender carries out the activity of debt collecting in relation to a BBLS loan the activity is not excluded from the activity specified in article 39F of the RAO. The result of this is that where a lender carries out the activity of debt collecting in relation to BBLS loans, the activity is a specified activity for which permission under Part 4A of FSMA is required.
The Order also contains a transitional provision under which a lender who enters into a loan under the BBLS and who had permission under Part 4A of FSMA to carry on the activity of debt collecting in accordance with article 60B(2) of the RAO, will continue to have permission to carry on that regulated activity, but in accordance with article 39F(1) of the RAO.
1 Financial Services and Markets Act 2000 (Regulated Activities) (Coronavirus) (Amendment) Order 2020 which amends article 60C of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/554).
2 Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/554)
3 Financial Services and Markets Act 2000
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