On 4 December 2020, the FCA issued a guidance consultation for firms collecting payments under a Bounce Back Loan (BBL) where the collection of that debt is a regulated activity.

The BBL scheme is a government scheme that enables smaller businesses to access finance more quickly during the COVID-19 pandemic. On 24 September 2020, the Chancellor announced the introduction of pay as you grow (PAYG) – a system providing flexibility for repaying a BBL. The FCA is consulting on proposed guidance for firms that will be providing PAYG options.

The FCA explains that chapter 7 of the Consumer Credit sourcebook (CONC) applies to firms when they carry out regulated debt collection under the BLL scheme. Collecting debts under the BBL scheme may be a regulated activity where the borrower is a sole trader or small partnership, so CONC 7 and Principle 6 can apply to these types of borrowers. The proposed guidance aims to detail how firms can:

  • Use and offer PAYG options in a manner compliant with CONC 7.
  • Recognise vulnerability and respond to the needs of vulnerable customers.
  • Assist borrowers who need debt advice.

The layout of the proposed guidance is as follows:

  • Chapter 2 – the FCA sets out how firms may comply with CONC 7 when offering PAYG options to borrowers.
  • Chapter 3 – the FCA provides guidance on how firms can recognise vulnerability and respond to the particular needs of vulnerable customers.
  • Chapter 4 – the FCA sets out the steps that firms can take to assist borrowers who need debt advice.
  • Chapter 5 – the FCA reminds firms of its recognition of the Lending Standards Board’s Standards of Lending Practice for business customers.

The deadline for comments on the draft guidance is 18 December 2020.