In regards to licensing, 'We' would not need a license to collect this debt as we would chase the defaulter and then continue with legal action.
The
Office of Fair Trading disagrees.
You are likely to need a consumer credit licence if you:
- lend money that is not for a first charge mortgage
- allow your customers time to pay for goods and/or services that they buy from you (including hire purchase)
- hire or lease out goods and/or services for more than three months
- introduce buyers to someone else who will lend them money
- help people with debt problems
- adjust a consumer's existing debts
- consolidate debts on behalf of a customer
- give debt advice
- collect debts arising from consumer credit or hire agreements where you are not the creditor
- carry out administration duties in relation to a credit or hire agreement
- provide information about a consumer's credit rating
- offer to repair someone's credit rating
- act as a credit reference agency
.
The
Consumer Credit Act 1974 Also disagrees.
Businesses needing a licence.
(1)Subject to this section, a licence is required to carry on a consumer credit business or [F1a consumer hire business or an ancillary credit business] .
(2)A local authority does not need a licence to carry on a business.
(3)A body corporate empowered by a public general Act naming it to carry on a business does not need a licence to do so.
The Consumer Credit Act 1974 stipulates that debt collectors fall under the "ancillary credit business"
Types of Ancillary Credit BusinessesTypes of ancillary credit business.
(1)An ancillary credit business is any business so far as it comprises or relates to—
(a)credit brokerage,
(b)debt-adjusting,
(c)debt-counselling,
(d)debt-collecting,
(da)debt administration,
(db)the provision of credit information services, or
(e)the operation of a credit reference agency.
This is already way too long, so I am jumping to section 7.
(7)Subject to section 146(6), debt-collecting is the taking of steps to procure payment of debts due under consumer credit agreements or consumer hire agreements.
The
Consumer Credit Act 2006 specifies that debt collectors do not fall under the new exceptions, except in certain cases where the collector has legal rights of audience in court (Barrister / Solicitor / Legal Professional) and is conducting business related to "contentious business" or an already undertaken legal action.
I am very sure that you could get away with certain of these activities - but I am equally certain that they are specifically prohibited by the 1974 Act.
The legal action would cover any licensing requirements. If the court ruled that we would have to collect the debt (IE They didnt issue an Attachment to Earnings or a CCJ etc) then we would have to look into outsourcing the actual physical collection activities to registered and licensed firms.
As above, this isn't how it's meant to work. You don't legally get to harass people for a while, then start a legal action, then outsource debt collection if the court doesn't issue a judgement / wage garnishment order.
I'm not taking any position as to whether or not this is a good idea - I'm just pointing out that you need a license to undertake the described activities in relation to a debt for which you aren't the creditor (and you don't meet one of the 2006 Act exceptions). Otherwise you face investigation by the Office of Fair Trading, penalties under the Consumer Credit Acts, and possible harassment charges under the
Protection from Harassment Act 1997 depending on your specific conduct.
There's the strong possibility that your mark isn't going to know about the legal rights available to him/her, or might be all kinds of dodgy as far as the original loan, tax avoidance and other matters. In that case, you might be able to get away with doing whatever you want to do without having the full weight of the law behind you. But there is very little room for debate as to whether the law currently requires you to have a licence. What you're proposing falls very clearly under the requirements listed for licencing. if you're doing debt collection prior to initiation of a court case and you aren't the creditor, you need a licence.
What's more, the lending companies or individuals themselves may need to be licenced, particularly if the loans are denominated in £ rather than
BTC (and for recovery purposes they would likely need to be). It's debatable what the court's position on
BTC-denominated debts will even be, but the Consumer Credit Acts set out licencing and reporting requirements for business engaged in the business of lending. So if you got yourself into trouble in this process you could also get your clients into trouble for simply being in the business of lending. More info
here.
This could eventually work, and it might eventually be called for. But unless you know something big that I do not, you may have to substantially adjust your proposed business model. And my guess is that at the moment there isn't a large enough UK-only
BTC debt market to support it. Then again, if your lawyers believe that you can get away with doing it, go to town. But if you're doing this in the absence of good legal advice, I'd strongly suggest you seek some before you take any further steps to make this happen.