Reston Solicitors CPR 31.14

[Amethyst]

Re: Reston Solicitors CPR 31.14

In here is where chapter 14a is added, doesn't seem to be updated in the primary legislation yet but is in force at july 2013

[Amethyst]

Re: Reston Solicitors CPR 31.14

Yes I'd the FCA for clarification xx

[Amethyst]

Re: Reston Solicitors CPR 31.14

Statutory Instrument 2001 No. 1201
The Financial Services and Markets Act 2000 (Exemption) Order 2001

http://webarchive.nationalarchives.g...1/20011201.htm

I see no 55 ?

Perhaps others may find out but i'd write back pointing this out asking for clarification or ask the FCA 1st.

If it's included in a defence the over riding objective dictates that the parties should narrow the issues down so there should be no issue in pointing the law out to anyone.

M1

Other exclusions

55. Article 53 is also subject to the exclusions in articles 66 (trustees etc.), 67, (profession or non-investment business), 68 (sale of goods and supply of services), 69 (groups and joint enterprises), 70 (sale of body corporate) and 72 (overseas persons).


is http://www.legislation.gov.uk/uksi/2...rticle/55/made

( sale of body corporate maybe?)

[Nibbler]

Re: Reston Solicitors CPR 31.14

Article 53 of that is '53. Advising on investments'

Certainly not consumer credit

[R0b]

Re: Reston Solicitors CPR 31.14

Do the attached documents help you guys? Legislation website is years out of date so these from Westlaw provides up to date legislation and shows which sections are in force.

[Nibbler]

Re: Reston Solicitors CPR 31.14

So.......

Article 55 is: http://www.legislation.gov.uk/uksi/2...article/2/made

60I is this? http://www.legislation.gov.uk/uksi/2...article/6/made

[Nibbler]

Re: Reston Solicitors CPR 31.14

So wonder what [MENTION=551]pt2537[/MENTION] makes of those?

[mystery1]

Re: Reston Solicitors CPR 31.14

Attached you will find the reply from Restons, please digest and let me know your views.

55.— Persons exercising, or having the right to exercise, the rights of the person who provided
credit under a regulated credit agreement
(1) A person within the description in sub-paragraph (3) (“P”) is exempt from the general prohibition
in respect of any activity of the kind specified by article 60B(2) of the Regulated Activities Order
(regulated credit agreements)2
carried on in relation to a qualifying agreement provided that the
conditions in sub-paragraphs (4) and (5) are satisfied in respect of the agreement.
(2) Where P is exempt from the general prohibition in respect of any activity of the kind specified
by article 60B(2) of the Regulated Activities Order by virtue of sub-paragraph (1), P is also exempt
from the general prohibition in respect of any activity of the kind specified by article 39E(1)
(debt-counselling) or 39F(1) (debt-collecting) of the Regulated Activities Order carried on in relation
to the qualifying agreement in an exempt period.
(3) P is within the description in this sub-paragraph if P—
(a) is not the original lender;
(b) does not grant, is not required to grant, and does not promise to grant credit under the
qualifying agreement or any other regulated credit agreement; and
(c) does not undertake any activity of the kind specified in article 39D(1) (debt adjusting),
39E(1) or 39F(1) of the Regulated Activities Order, or which would be so specified but for
article 39H(1) of that Order, except in an exempt period.
(4) The condition in this sub-paragraph is that—
(a) P has entered into a servicing arrangement in relation to the qualifying agreement; or
(b) an exempt period has not expired.
(5) The condition in this sub-paragraph is that—
(a) P has arranged for the servicer to comply with the provisions listed in sub-paragraph
(6); and
(b) where P (and not the servicer acting on behalf of P) varies the qualifying agreement, P
complies with the provisions listed in sub-paragraph (6).
(6) The provisions are—
(a) any provision of, or made under, the Act applicable to authorised persons that relates
to the exercise of the right of the lender under a regulated credit agreement to vary terms
and conditions of the agreement (including, in particular, the right to vary the rate of interest,
charges, or other amount due to the lender under the agreement); and
(b) the requirements of, or made under, section 82 of the Consumer Credit Act 1974
(variation of agreements)3
.
(7) For the purposes of this paragraph, there are excluded from articles 39E(1) and 39F(1) of the
Regulated Activities Order activities carried on by P under or for the purposes of a servicing
arrangement.
(8) In this paragraph—
“an exempt period”is the period of thirty days beginning on the day after the day on which
a servicing arrangement came to an end;
“the original lender” means the person who provided credit under the qualifying agreement;
“a qualifying agreement” means a regulated credit agreement under which P exercises, or
has the right to exercise, the rights of the original lender;
SI 2001/1201 Page 40
“regulated credit agreement”has the meaning given in article 60B of the Regulated Activities
Order;
“the servicer” means the person with whom P enters into a servicing arrangement, where
that person is an authorised person4
with permission to carry on an activity of the kind
specified in article 39F, 39G (debt administration) or 60B of the Regulated Activities Order;
“a servicing arrangement” means an arrangement between P and the servicer for the servicer
to exercise on P's behalf P's rights under a qualifying agreement other than the right to
transfer, assign or otherwise dispose of those rights.



[ 60B.— Regulated credit agreements
(2) It is a specified kind of activity for the lender or another person to exercise, or to have the right
to exercise, the lender's rights and duties under a regulated credit agreement




39F.— Debt-collecting
(1) Taking steps to procure the payment of a debt due under a credit agreement or a relevant article
36H agreement is a specified kind of activity.


39H.— Activities where person has a connection to the agreement
(1) There are excluded from articles 39D(1), 39E(1) and 39F(1) activities carried on by a person
who is—
(a) the lender under the agreement,
(b) the supplier in relation to that agreement,
(c) a person carrying on an activity of the kind specified by article 36A by way of business
and who has acquired the business of the person who was the supplier in relation to the
agreement, or
(d) a person who would be carrying on an activity of the kind specified by article 36A by
way of business but for the exclusion in article 36B where the agreement was made in
consequence of an introduction (by that person or another person) to which article 36B
applies.








60I. Arranging administration by authorised person
A person (“A”) who is not an authorised person does not carry on an activity of the kind specified
by article 60B(2) in relation to a regulated credit agreement where A—
(a) arranges for another person, who is an authorised person with permission to carry on
an activity of that kind, to exercise or to have the right to exercise the lender's rights and
duties under the agreement, or
(b) exercises or has the right to exercise the lender's rights and duties under the agreement
during a period of not more than one month beginning with the day on which any such
arrangement comes to an end.





Those seem to the sections required. If the clever bods have not dissected it by then i'll give it a go later.

M1

[lawyer123]

Re: Reston Solicitors CPR 31.14

I truly agree with you, spoke to my advisors and they said that this a Standard letter Reston's have sent:

[R0b]

Re: Reston Solicitors CPR 31.14

Although I'm not well versed in FSMA here's my stab at it.

(1) A person within the description in sub-paragraph (3) (“P”) is exempt from the general prohibition in respect of any activity of the kind specified by article 60B(2) of the Regulated Activities Order(regulated credit agreements)2 carried on in relation to a qualifying agreement provided that the conditions in sub-paragraphs (4) and (5) are satisfied in respect of the agreement.

P is within the description in this sub-paragraph if P—
(a) is not the original lender;
Satisfied

(b) does not grant, is not required to grant, and does not promise to grant credit under the qualifying agreement or any other regulated credit agreement; and
Satisfied

(c) does not undertake any activity of the kind specified in article 39D(1) (debt adjusting),39E(1) or 39F(1) of the Regulated Activities Order, or which would be so specified but for article 39H(1) of that Order, except in an exempt period.
Satisfied - see below

For guidance we look to the FCA handbook PERG 2.11.8

The exemption in paragraph 55 of the Schedule to the Exemption Order covers special purpose vehicles and other entities which are part of a structured finance transaction and which meet the specified conditions. It confers exemption from the general prohibition on a person (“P”) for the regulated activity of exercising, or having the right to exercise. the lender’s rights and duties under a regulated credit agreement (and associated regulated activities) where there is an arrangement for an authorised person who holds a relevant permission to service the loans, or such an arrangement has ended in the previous 30 days.

As highlighted above, the intention of this particular paragraph covers very specific situations and is not intended to cover situations where a company has purchased a debt (assuming this is the case on this issue?). As for authorised person with permission see below.

(2) The exemption is available to a person (“P”) who:
(a) is not the original lender;
(b) does not grant or promise to grant, and is not required to grant, credit under any regulated credit agreement;
(c) has entered into a servicing arrangement with an authorised person who has permission to carry on the regulated activities of debt collecting, debt administration or consumer credit lending (“the servicer”), under which the servicer is to exercise on P’s behalf P’s rights under a regulated credit agreement (other than P’s right to dispose of those rights); and
(d) does not undertake the regulated activities of debt counselling, debt adjusting or debt collecting in relation to a regulated credit agreement other than during an “exempt period”. An “exempt period” is the period of 30 days beginning on the day after the day on which a servicing arrangement came to an end. Where, for example, a servicing agreement comes to an end suddenly or unexpectedly, P has a grace period of 30 days to find a new servicer and enter into a new servicing arrangement, and may service its own loans in that period without being authorised.

Referring back to the letter of Restons

... the creditor (Cabot Financial (UK) Limited) ... appointed Cabot Financial (Europe) Limited to service the portfolio of debt as master servicer. Cabot Financial (Europe) Limited then appointed Cabot Financial (Marlin) Limited as sub-servicer.

So, it seems Restons is implying that Cabot Financial (UK) Limited is actually the "Person" for the purposes of the exemption and they appear to satisfy (d) as they are not authorised to carry out such regulated activities. The key point to note is (b) in that Cabot Financial (UK) Limited must have entered into a servicing arrangement with someone who has permission to carry out the regulated activities. Does Cabot Financial (Europe) Limited or Cabot Financial (Marlin) Limited have permission or authorised to carry out such activities? Well looking at the FSA register, both firms currently have interim permission.

Cabot Financial (Marlin) Limited

Debt administration	Active
Debt collecting	Active

Cabot Financial (Europe) Limited

Consumer credit business	Entering into a regulated credit agreement as lender; and exercising, or having the right to exercise, the lender's rights and duties under a regulated credit agreement.	Active
Credit brokerage	Credit broking Or Credit broking limited to credit intermediation	Active
Debt administration	Debt administration	Active
Debt collecting	Debt collecting	Active
Debt-Adjusting on a Commercial Basis	Debt adjusting on a commercial basis	Active
Debt-counselling on a commercial basis	Debt-counselling on a commercial basis	Active

On the basis of the above I am inclined to say that all is above board. The only argument I could see advancing in court is that Cabot are abusing this section which is specifically intended to cover Special Purpose Vehicles (usually used for a specific or narrow purpose such as isolating risk form the parent company) and this is not the case - which is where it gets awfully complex and I would be way out of my depth trying to discuss or event formulate an argument on SPV's, let alone anyone trying to understand it!


A very top level argument against Cabot is that Cabot Financial (UK) Limited since incorporation was not set up as an SPV, they had previously been given authorisation and permission to conduct regulated activities and could therefore never fall into paragraph 55 of the FSMA (Exemption) Order.

[lawyer123]

Re: Reston Solicitors CPR 31.14

Thanks for the advise, so does our argument stand in court that Cabot cannot base the debt as there registration has lapsed, why don't Cabot out their registered company on the claim form?

[R0b]

Re: Reston Solicitors CPR 31.14

In short - No. Just because Cabot (UK) Financial Limited cannot collect debt or conduct any regulated activities, they have essentially entered into a service agreement with a subsidiary company (possibly another argument here) which enables that subsidiary to exercise Cabot UK's rights to collect the debt as they are authorised as it stands to conduct regulated activities.

You can still request the servicing agreement to confirm they have done so but as the companies are part of the group structure of Cabot it wouldn't surprise me if they concocted one up there and then upon request.

Hope that makes sense.

[Amethyst]

Re: Reston Solicitors CPR 31.14

Do you need to be registered to own consumer credit debts in the first place ?

(ie can any old sod buy a portfolio of debt and engage an FCA regulated firm to collect it ?)

[Nibbler]

Re: Reston Solicitors CPR 31.14

http://www.lexology.com/library/deta...b-2daa677616c0

[R0b]

Re: Reston Solicitors CPR 31.14

That's a good question and without looking into it I couldn't say for certain but it seems you've asked two questions there.

Whether you can own a debt you purchased whilst being authorised but subsequently have no authorisation may likely be one for the courts to consider - i'll see if i can find anything on this but is probably going to be little or next to nothing in terms of guidance.

I don't think anyone can just go and buy debt as I believe it could fall into a regulated activity under investments as it could be argued that the purchasing of a debt is in fact an asset and investment.