Tag: CBILS

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FCA writes to the Financial Ombudsman Service about the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme

On 4 May 2020, the UK Financial Conduct Authority’s Interim Chief Executive, Christopher Woolard, wrote to the Financial Ombudsman Service’s Chief Executive, Caroline Wayman, following the launch of both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS).

Mr Woolard’s letter sets out:

– entering into an agreement made under the BBLS is not a regulated activity because such agreements will be exempt credit agreements (but debt-collecting of those agreements will remain a regulated activity);

– there is no requirement to undertake a creditworthiness or affordability search before entering into an agreement under the BBLS;

– the unfair relationship provisions in Sections 140A to 140C of the Consumer Credit Act 1974 are expected to be dis-applied for agreements made under BBLS ; and

– the FCA’s expectations on creditworthiness assessments under the CBILS.

The FCA also updated its website on 4 May 2020 on the CBILS and BBLS.

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FCA publishes a statement about creditworthiness provisions for regulated credit agreements made under the UK Coronavirus Business Interruption Loan Scheme and the new Bounce Back loan scheme

On 27 April 2020, the UK Financial Conduct Authority published a statement about creditworthiness on the UK Coronavirus Business Interruption Loan Scheme (often called ‘CBILS’) and the Bounce Back Loan scheme (often called ‘BBL’ or ‘BBLS’).

The FCA recognises “the need to make changes to the CBILS scheme immediately“.  The FCA says if firms comply with the relevant requirements of CBILS, then it does not expect them to comply with CONC 5.2A-34 where the lending involves a regulated credit agreement.  But firms must continue to comply with CONC 5.2A for all other regulated lending.

The FCA expects to make a similar statement when BBL is launched.