Part II Regulated And Prohibited Activities

Enforceability of agreements

F128ACredit-related agreements made unenforceable by section 26, 26A or 27

(1)

This section applies to an agreement that—

(a)

is entered into in the course of carrying on a credit-related regulated activity, and

(b)

is unenforceable because of section 26, 26A or 27.

(2)

The amount of compensation recoverable as a result of that section is—

(a)

the amount agreed by the parties, or

(b)

on the application of either party, the amount specified in a written notice given by the FCA to the applicant.

(3)

If on application by the relevant firm the FCA is satisfied that it is just and equitable in the circumstances of the case, it may by written notice to the applicant allow—

(a)

the agreement to be enforced, or

(b)

money paid or property transferred under the agreement to be retained.

(4)

In considering whether to allow the agreement to be enforced or (as the case may be) the money or property paid or transferred under the agreement to be retained the FCA must—

(a)

if the case arises as a result of section 26 or 26A, have regard to the issue mentioned in subsection (5), or

(b)

if the case arises as a result of section 27, have regard to the issue mentioned in subsection (6).

(5)

The issue is whether the relevant firm reasonably believed that by making the agreement the relevant firm was neither contravening the general prohibition nor contravening section 20.

(6)

The issue is whether the provider knew that the third party was (in carrying on the credit-related regulated activity) either contravening the general prohibition or contravening section 20.

(7)

An application to the FCA under this section by the relevant firm may relate to specified agreements or to agreements of a specified description or made at a specified time.

(8)

“The relevant firm” means—

(a)

in a case falling within section 26, the person in breach of the general prohibition;

(b)

in a case falling within section 26A or 27, the authorised person concerned.

(9)

If the FCA thinks fit, it may when acting under subsection (2)(b) or (3)—

(a)

limit the determination in its notice to specified agreements, or agreements of a specified description or made at a specified time;

(b)

make the determination in its notice conditional on the doing of specified acts by the applicant.