When Your Creditors Takes You to Court, What Do You Do?

Your creditors can take you to court (make a claim) if you don’t repay your loan or honour any other terms of your repayment agreement. You shouldn’t ignore such a situation. In fact, you should know how to respond in advance.

Taking action swiftly will stop the situation from escalating. Failing to take the necessary action can result in more debt. You could also lose your home among other possessions like a vehicle.

First and foremost, it’s worth noting that such cases (i.e., defaulting on bank debt, credit card debt, payday loans, building society loans, etc.) usually end up in a county court. When your creditor goes to court, an order known as a CCJ (County Court Judgment) is granted. If you don’t agree with the order, i.e., there is a mistake, and you don’t owe your creditor, you need to fill out some forms from the court. The same applies if you are not in a position to pay back.

Creditor action

Before you are taken to court by a creditor, they are required to send a warning letter informing you that they will take legal action if you don’t pay back within a specified period. If you don’t get a warning letter, there is a basis to stop legal action.

Your creditor is required to try and sort out the issue with you before going to court so it is important to do whatever you can to reach an amicable solution before it’s too late.

Claim form

When court action commences, you will receive a claim form as well as a response pack from the court. Claim forms have information about the debt such as how much you owe. The response pack has several forms such as forms to accept or deny you owe money. If you deny, there is a form you must send back confirming you received the documents.

You should read these documents carefully and act accordingly observing the stated deadline otherwise a court order will be issued. When this happens, you must pay back the amount your creditor claims. This applies even if you deny you owe the creditor anything. In most cases, you will also have to incur additional costs like interest.

A typical claim form highlights how much the creditor is claiming plus interest if they are interested in claiming.

An authentic claim form should have; a claim number and official court stamp. If you are presented with a fake claim form, you have grounds to launch a harassment case against your creditor. Consult a debt advisor for guidance on how to go about harassment by creditors.

You can find more details about the claim in a document known as particulars of claim which is usually sent with the claim form or separately within 14 days after the claim form is sent.

Response pack

Creditors hardly chase you for loans you haven’t taken so if you accept your creditors’ claims, you will need to fill and admission form. If not, fill a defence form. You also need to fill a form known as acknowledgement of service confirming you received the documents. Responses must be forwarded within 14 days or 28 days if you need more time to fill the defence form. You can request for more time in the acknowledgement of service.

If you accept your creditor’s claim, it is advisable to contact them and try to get an out-of-court agreement. This option is cheaper for you. However, you are still required to fill and return the court documents. If you need help responding, the UK has some reputable free debt advice services you can use like https://www.citizensadvice.org.uk.

Remember to fill the admission form, detail your financial situation and send it to your creditor (not the court) if you accept you owe the amount stated. Also, make a copy of your admission form for record keeping.

Making an offer

When making an offer, state how much money you can afford per instalment as well as when you will pay each instalment. If your creditor agrees, you can ask the court to prepare an order involving a judge or without a hearing.

If your creditor declines your offer, a judge or court official will make a fair decision without a court hearing in most cases. You can ask for the case to be re- determined if you are not happy with the final verdict. This must be done within 14 days.

In cases where there is no repayment offer, the creditor decides the amount as well as the time you should pay. They can even demand the entire amount immediately. Most orders are public knowledge so it can be difficult securing loans in the future.

If you owe less than stated

If you own a fraction of the money in the claim, you can accept you owe (some money) but disagree on the amount. In such a case you must fill the admission and defence form detailing your issues with the amount and send the documents to court. The court will decide on the way forward through a hearing.

If you don’t owe any money

If you don’t owe anything, complete the defence form highlighting your reasons. You should take this option if you have evidence. It is advisable to seek debt and legal advice to come up with compelling reasons.

There are free debt advice services in the UK. Although you should take out credit card loans, payday loans, overdraft loans etc., that you can pay back comfortably, defaulting isn’t the end of the world. You just need to understand your options when your creditors take legal action.

What Happens to Credit Card Debt and Other Debt When You Die?

Are your credit card debts cancelled when you die or do they become the responsibility of your loved ones? This is a very important question, yet many credit card holders don’t know the answer. Here’s what you need to know.

According to Andrew Shaw, StepChange Debt Charity’s debt advice policy coordinator, the rules vary depending on a number of factors.

If you live in England and Wales, for instance, your debts can “die” with you in some cases. Sometimes creditors can write off debt belonging to deceased individuals or simply stop pursuing such debt; however, aren’t obligated by law to do so.

Also, some alternatives may be addressed in insurance policies. For instance, if the deceased has a policy that covers outstanding debt if they die, such policies can take care of credit card debt among any other debt the policyholder may have.

It’s also a matter of the type of debt. If the credit card debt has joint names, the responsibility of paying the debt is automatically passed on to the other person i.e., surviving account holder. However, most credit cards are issued for individual names.

Outstanding debt owned by a person when they die can also be repaid using proceeds of their estate. This is usually done in a probate process. If the money isn’t enough to repay the debt/s or the deceased estate is insolvent, a trustee is usually appointed to share the proceeds fairly among all creditors.

A creditor or representative of the deceased can get an insolvency administration order. In case the deceased has jointly owned property, proceeds of the property are shared depending on the nature of the joint ownership. If all parties had equal ownership, the property is transferred to the surviving owner and creditors can’t force a sale. However, the surviving person can be obligated to pay an amount equal to the deceased person’s shares if there is an insolvency administration order.

Creditors can force a sale to recover their money if the joint owners owned separate shares i.e. tenants in common. The shares of the deceased are treated as their estate in such a case.

If you think your home is at risk because of debt accumulated by a deceased joint owner, seek legal advice immediately. After the estate is dealt with, relatives of the deceased are not responsible for any outstanding debt.

Emma Gunn’s take

According to Emma Gunn of ThisisMoney.co.uk, family members should take some steps when a loved one passes on to avoid confusion with lenders as well as help settle any liable outstanding debt smoothly.

You’ve probably heard of companies or creditors who keep sending bills to deceased persons or fail to terminate accounts and then charge deceased persons late fees/penalties. Some creditors go as far as harassing loved ones.

To avoid such problems, it’s important for outstanding debt or credit contracts of loved ones to be listed. Contacts of banks/lenders should also be known in advance. Doing this is important when it comes to managing mortgage debt, credit card debt and student loans among other debt after the death of a loved one. The information should extend to insurance, savings and pension information to ensure there are no late fees among other charges added to existing debt or bills.

In most cases, you need documentation such as a death certificate to stop charges/fees, so it’s important to take extra copies when you register the death. You should also record when you contact creditors/banks, who you spoke with and file any correspondence in case there is a dispute in the future.

Remember to include utility companies in the list from mobile phone contracts to energy bills. Some utility companies don’t cancel contracts, but it’s worth asking. There may be an outstanding balance or due payments that can be deducted from the estate.

As mentioned above, the rules change for joint bank accounts among other joint credit accounts like mortgages or loans. Your partner may/may not be held jointly liable when you die.

The debt may be split, or he/she may be wholly liable. The key is; contacting creditors immediately. If you are struggling with payments, let the creditors know. Most will be willing to create a new repayment plan or offer repayment holidays.

What is an IVA? What You Need to Know

What is an IVA?

An IVA (Individual Voluntary Arrangement) can be defined as a formal legally binding agreement made between an individual and creditors. The agreement highlights how a person is required to pay back their creditors. Since they are formal and legal, they must be approved by a court. IVAs can be flexible enough to suit the needs of the person who is in debt. However, they are generally expensive. An IVA can also attract some risks.

How an IVA works

IVAs are a form of insolvency like bankruptcy although they are different in many ways. For instance, an IVA must be prepared by an insolvency practitioner (a qualified person) who may be an accountant or lawyer.

Insolvency practitioners render their services at a fee which may vary from one practitioner to another. They deal with creditors on behalf of their clients for the entire IVA period.

Individuals who decide to get IVAs work out repayment plans with their insolvency practitioners. The repayment plan is then presented to creditors. If they agree to all the details in the plan, the agreement becomes valid, and all parties must adhere to it.

You must make monthly repayments as agreed. The money should be sent to the insolvency practitioner who then distributes the money to creditors as agreed. A portion of the monthly repayments is usually deducted by the insolvency practitioner as fees. It’s advisable to find out what your insolvency practitioner will

charge you before getting into an IVA. As mentioned above, some practitioners charge more than others.

When can you take an IVA?

IVAs can be taken to repay a variety of common debts ranging from; overdrafts and catalogue debts to personal loans, rent arrears or mortgage shortfalls. You can also consider taking an IVA to help you with your tax debt i.e., council tax arrears, income tax, national insurance contributions, court fines, student loans, etc. You can get a conclusive list of all the debt covered by IVAs in the Citizens Advice official website. [1]

Who can take an individual voluntary agreement?

You need to be in debt to consider taking an IVA given IVAs are necessary for lessening a person’s debt burden. What’s more; you need some spare income every month (at least £100). Most creditors don’t accept IVAs with payments less than £100. If you have more than one debt, you’ll need more money. However, there are exceptions to this if you have something valuable you can sell. Many creditors will overlook the amount of spare income or regular income you have if you own a valuable asset which you can sell and repay your debt periodically or with a lump sum. In a nutshell, anyone with debt burden and some regular income or valuable asset can qualify for an IVA.

Is an IVA a good option for you?

IVAs can be flexible allowing you some much needed time to repay multiple debts. You can reduce your monthly debt repayment by as much as 70% using an IVA. The agreement can also offer you some much-needed protection against creditor actions such as auctioning your property, petitioning for bankruptcy, etc.

However, they are usually expensive in the long-term and tend to come with other cons. For instance, you may not be able to save money or make important contributions like pension payments during the duration of the agreement. You may also be forced to re-mortgage your home/use any equity. An IVA can also affect your ability to get another job since IVAs are public. Anyone including potential employers can get access to your IVA. An IVA also appears on a

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person’s credit report for years (usually six years) which can make it hard to get loans in the future. Last but not least, your IVA may fail if your circumstances keep changing and you struggle making repayments. You must consider all the above before deciding whether or not an IVA is a good option for you.

What next after an IVA?

Most IVAs last for 5 to 6 years although the period can vary and usually ends after all the debt is settled. Once an IVA ends, the insolvency practitioner is supposed to issue a completion certificate. You should ask for one. The practitioner should also ensure your IVA record is removed from the insolvency register.

Important considerations

You should come up with a detailed budget before taking an IVA to ensure you can repay your preferred amount comfortably. It’s also advisable to take time and choose a reputable IVA provider to avoid high fees. A reputable provider will also ensure you get the best possible terms with your creditors.

A Quick Guide to UK Pensions

Building your pension fund is vital for retirement especially if you want to avoid relying on short-term loans like payday loans later in life. Here is a quick guide to UK pensions.

1. State pension

Most people in the UK get some state pension. This type of pension is paid by the state or government. You gain entitlement to a state pension if you have been making national insurance contributions partly or throughout your working life. State pension offers the pensioner a secure source of income for life. The pension usually increases on a yearly basis based on the inflation rate. Although state pension meant is for individuals who have been working and contributing, you can qualify for the pension if you claim certain benefits or when you are bringing up children.

Rate

Since April 2016, the UK state pension was set to a flat rate. For the 2018/2019 tax year, the flat rate is £164.35 a week. However, a person can qualify for more if they are entitled to additional state pension. The entitlement is subject to the previous system (before April 2016). A person can also receive less when they are “contracted out” of additional state pension.

Qualification

To qualify for full state pension, you require 35-years national insurance (NI) record. To be eligible for any state pension, you require at least 10 years on your NI record.

Claiming

You can claim state pension when you are just about to reach state pension age (4 months before). You can check your state pension age here: https://www.gov.uk/state-pension-age.

You can also defer your pension by doing nothing. If you don’t claim state pension, it stays intact until you claim. The pension increases by 1% every 9 weeks you defer or approximately 5.8% per year. The increase is paid together with regular pension payments when you claim.

2. Defined benefit pension

If you have been working for a large organization or for the government/public sector, you most likely have a DB pension. Defined benefit pension is salary- related. The pension pays a secure income for a lifetime which increases every year. The amount of money you get in a DB pension is dictated by factors such as years you have contributed to the scheme as well as your salary during that period. In regards to salary, the pension calculation can consider the average career pay or your pay at retirement.

Claiming

You can claim your DB pension when you attain the normal retirement age (65 years) or earlier depending on the type of scheme although this may reduce the amount you get significantly.

When you claim your pension, you can take a portion tax-free. The pension scheme rules dictate the amount you take although you can take approximately 25% of the total pension benefits as a tax-free sum. As mentioned above, claiming can reduce the amount you receive significantly so if you must claim, it is recommendable to claim a lower amount.

You can also transfer your DB pension to a scheme that allows you more flexible access. Although this option is ideal when you want to access the pension sum at will to avoid taking out short-term loans like payday loans during emergencies, you give up some benefits by choosing this option.

You should speak to an FCA regulated financial adviser before making such a decision since some pension schemes may be scams.

3. Defined contribution pension

This type of pension scheme is built up after which a retirement income is drawn. The pension amount is dictated by how your investments perform, the charges you pay as well as the amount you/your employer contributes. Personal, workplace and stakeholder pension schemes are part of defined contribution pensions.

You can what you like with your defined contribution pension after reaching 55 years old. However, it is better to let your pension amount build up for you to have more money to spend during retirement. You should contribute optimally and allow your pension to build up until you retire.

The above guide summarises UK pension basics. Understanding the types of pensions and your choices among other information is important when you want to make better decisions for your retirement. Planning for the future early can help you avoid short-term loan problems which are common in the UK today. To learn more about pensions, you can seek financial advice from FCA-registered financial advisers like https://www.moneyadviceservice.org.uk who offer free retirement planning advice.

Sham UK Payday Loan Companies Con Vulnerable Borrowers £3.5 m Yearly

UK watchdogs have launched an investigation involving over 200 lenders in an effort to nab a large network of fraudsters that has been targeting vulnerable borrowers in the UK.

One such borrower, Peter Elliot aged 75 was conned £200 as he tried to hunt for a £1000 loan to go for a Christmas trip.

According to a Sunday People investigation, bogus payday loan companies in the UK are targeting the elderly and vulnerable conning them approximately £3.5 Million a Year.

According to the probe, the conmen offer short-term loans to old and desperate people but demand upfront payment (to act as insurance) before issuing the loan. The cons simply pocket the upfront payment without issuing any loan leaving their victims hundreds of pounds poorer. They have concealed addresses hosted abroad and bearing details cloned from respectable institutions operating in the UK.

One popular scam involves asking unsuspecting victims to purchase iTunes vouchers and send the redemption code as insurance.

Peter Elliot was a victim of the iTunes Voucher scam. The scammers promised him a £1000 loan if he bought a £200 iTunes voucher as insurance for the loan. The crooks use the voucher codes to purchase goods or sell the codes online. Peter Elliot, a dad of six, was targeted as he was looking for a short-term loan to go and visit friends during Christmas.

He handed over iTunes vouchers worth over £200 but got nothing in return. The retiree from Mexborough, Doncaster couldn’t believe he had been scammed. The scammers were so friendly and charming he couldn’t believe they conned people. Elliot admitted to feeling stupid after he was conned and blames it on being vulnerable.

In April 2018, the FCA issued an alert on loan fraud stating unsuspecting borrowers were falling for fee scams amounting to £3.5million per year. The regulator claimed incidences of fraud had increased by 44% since 2016. In 2017 alone, there were more than 4,700 loan fee swindles reported to Action Fraud.

227 enquires have been launched to investigate fraudulent lenders since 2015. According to an Action Fraud spokesman, any person required to pay upfront fees to access loans or credit services is at risk of falling prey to loan fee fraudsters. Research shows that loan fee scammers target financially vulnerable individuals who are desperate to get loans.

Research also shows that most loan fee fraud victims are 38 and above with low incomes, low credit ratings and limited access to typical credit.

Action Fraud assesses all loan fee fraud reports received and in most cases, takes action against entities breaching the watchdog’s rules.

Precautions to take

According to Resolver.co.uk expert, Martyn James, scammers emerge everywhere when money is tight. According to Martyn James, it is easier to con a person who is desperate for money because they are willing to do more.

James advices borrowers to sick to FCA regulated firms since it is easy to launch a complaint via the financial ombudsman if the regulated firm you are dealing with fails to keep their end of the deal. It is crucial to note that there are some FCA-regulated financial services firms which ask for upfront fees (approximately £50) before offering credit broking facilities. So, not all firms which ask for upfront fees are fraudulent. It is up to a borrower to choose the firm they want to deal with although; it is advisable to avoid paying upfront fees.

In case you find yourself a victim of loan fee scams, you should act immediately. If you have transferred money via your bank, call your bank immediately and request for a recall of the funds. If you have already bought vouchers, contact the firm which supplies the voucher immediately and request that the code is suspended or cancelled and claim a refund. If the firm refuses to cancel the code, launch a complaint against the firm immediately.

Loan related fraud must be acted upon immediately if you wish to get a favourable outcome. Even if you have already been conned, the least you can do is launch a complaint. Notifying the relevant authority can save someone else from a similar fraudulent scheme. It can also help apprehend the fraudsters. It is not advisable to accept and move on although most victims of fraud don’t report to avoid embarrassment.

FCA Warning: Senseless Housing Policy Fueling High-cost Credit Rip-off

FCA boss Andrew Bailey has called out ministers for “forcing” tenants to take costly loans. According to Bailey, the social housing policy offering tenants unfurnished council homes has pushed many Brits to take high-cost loans. Bailey doesn’t see sense in offering tenants homes with no essential furnishing.

In a recent speech, The FCA Chief Executive hinted that social housing was driving tenants to take expensive debt to buy washing machines, cookers, and other household goods at three to four times the actual cost of the goods. Bailey doesn’t see sense in creating a good social housing system without providing essential fittings and furnishings. He also hinted that the FCA might fail to extend the payday loan cap to cover rent-to-own goods and doorstep lenders.

As an alternative, Bailey stated that the FCA was examining a wide range of approaches to dealing with the harm experienced by borrowers using these products. The FCA will elaborate on its views in June 2018. Bailey insists that the regulator will not necessarily use the same approaches to regulate different markets. In his speech, Bailey affirmed that the FCA is aware of the problems facing Britain’s poorest households depending on rent-to-own firms like PerfectHome and BrightHouse.

PerfectHomes is among the rent-to-own firms guilty of charging Britons exorbitant interest fees for household goods.

Brits who use high-cost credit pay more than twice the loan amount in interest and additional costs like insurance. In some cases, the cost can be five times the loan amount according to investigations by UK newspaper, The Sun.

These findings have prompted The Sun to launch a campaign meant to stop credit rip-off. The Sun is pushing for payday loan regulation to be extended to other high-cost loans. The payday loan cap has proved to be very effective according to Citizens Advice statistics which show a 50% reduction in problematic payday loans.

The FCA seems to be shifting focus on public awareness rather than cap policies given Mr. Bailey commented on the need for charities to focus on educating the public on the options available for borrowers struggling to get by.

In an interview with The Sun, Citizens Advice C.E.O., Gillian Guy stated that the FCA needs to do more to protect vulnerable Brits from falling into debt. According to her, giving vulnerable borrowers alternative credit options doesn’t help everyone or replace the urgent need for more borrower protections especially for doorstep and rent-to-own loan customers.

Landlords should be part of the solution

Sara Williams from popular money blog, Debt Camel, believes landlords can contribute to the solution by offering tenants a chance to purchase some household goods like washing machines at discounted prices or with affordable repayments. Williams recognises the possibility of doorstep and rent-to-own loans becoming difficult to manage in cases of defaults which is why she stresses on the importance of the FCA stepping in to cap total repayments when borrowers face repayment problems.

Williams insists on the need for the regulator to give lenders better guidelines i.e., on affordability to ensure those who get loans are capable of repaying them.

The C.E.O. of Joseph Rowntree Foundations, Campbell Robb shares similar sentiments. Robb sees it as unethical for low-income earners to be exploited by high-cost lenders stating that this is how people are trapped in poverty. He sees the need for more to be done to make affordable credit accessible given the UK has experienced long periods of low wages, frozen benefits and rising prices, factors which are landing many into poverty.

The Sun campaign

The Sun is demanding an end to credit rip-off. The newspaper’s demands for rent-to-own credit include; repayable costs to be capped to twice the item list prices. The Sun is also calling for a ban on sales staff incentives and discounts for existing clients to discourage them from taking more credit. Credit companies should also publish examples highlighting all costs.

For doorstep lending, The Sun wants stricter affordability checks and a cap on total fees and interest paid to match the payday loan cap, i.e., cost of loan should never exceed the amount borrowed. The Sun is also calling for a ban on discounts offered to existing doorstep loan borrowers in an attempt to lure them to take more credit.

Ministers Set Aside £800,000 for Hunting Down Illegal Loan Sharks

UK Ministers have pumped £800,000 into efforts aimed at cracking down on illegal loan sharks out to exploit the most vulnerable borrowers. Rogue lenders capitalising on desperate borrowers are going to face a fresh stringent crackdown. £100,000 of the money set aside was seized from dodgy firms. The £800k will be spent on efforts aimed at encouraging vulnerable borrowers to join credit unions instead of considering high-cost credit options.

A record £5.6 million will be availed to Illegal Money Lending Teams in the UK to fight unscrupulous lenders who target poor and desperate borrowers. The money is meant to help troubled borrowers get out of debt and stay away from lenders offering loans at ridiculously high interest rates.

An estimated 300,000 British households are indebted to illegal lenders. According to Treasury’s Economic Secretary, John Glen, “high-interest lenders are lowlife crooks who take advantage of the most vulnerable. The 300,000 Britons indebted to these illegal lenders must know we are on their side. This is why we are spending more to support the victims and fight the loan sharks.”

The news has been received positively by many including The Sun which already has a campaign pushing for a ceiling on the total cost of high-cost credit offered via rent-to-own products and doorstep loans.

In 2017, 7 million British households used high-cost credit like doorstep loans and rent-to-own products. Ministers have called on an extension of the payday loans cap to many other types of high-cost credit including credit cards.

Stella Creasy has been on record accusing high-cost lenders of “preying” on Britons who survive on insecure incomes. In a recent statement, she pleaded with ministers to borrow from the payday loan cap lessons and apply a similar cap to other loan products stating that Britain is drowning in debt.

The latest statistics indicate that there have been 380 prosecutions against illegal lenders since the IMLT (Illegal Money Lending Teams) was formed in 2004. The IMLT has written off 73 million pounds of illegal debt saving 28,000 poor borrowers from the jaws of loan sharks.

According to Peter Tutton, StepChange Debt Charity’s Head of Policy, the move by the ministers is welcome. In a recent statement, Tutton stated that the crackdown on illegal loan sharks needs to extend to the entire high-cost credit market to ease the harm experienced by many British households forced to take loans to survive. While reacting to the new efforts aimed at boosting the IMLT’s mandate, Tutton stated it is time for the UK government to seek creative and sustainable alternatives to help vulnerable households.

Why is it important to stop loan/credit rip-off

According to The Sun, no borrower should be forced to pay twice as much as they borrowed or more regardless of the type of loan product they are taking. Paying interest that is equal or more than the borrower amount is unethical in any standard.

This thinking is what inspired UK newspaper The Sun to launch a campaign pushing for a cap on the cost of doorstep loans and rent-to-own loans. The Sun is calling for a cap similar to that set on payday loans in 2015 where the total cost of loans can never exceed the loan amount.

Since the payday loan cap came into effect in the UK, the number of payday loan borrowers with unmanageable payday loan debt has decreased by over 50% according to  Citizens Advice which offers free, independent and confidential financial advice to anyone in need.

People earning the lowest incomes and living in the most poverty-stricken places are paying the steepest price for loans. Doorstep and rent-to-own loan lenders target individuals whose income isn’t enough to cover all the basic monthly household expenses. These high-cost loans are extended to individuals who have problems paying for utility bills and rent among other essential bills. The loans are also extended to borrowers who want to buy household goods like furniture.

Although the loans seem helpful, they attract exorbitant interest rates amounting to 1,500% in some cases. It is scandalous for anyone to have to borrow money for subsistence and then be forced to pay three times the loan amount.

With the IMLT funded, there is enough momentum to deal with all high-cost lenders in the UK conclusively.

The FCA is Preparing For Cryptocurrencies Adoption

Traditional financial institutions in the UK and most countries in the world haven’t been very supportive of cryptocurrencies in the past several years. However, 2018 has seen a widespread “change of heart”. Institutions that were thought to be against cryptocurrency adoption and integration are now softening their stand.

The FCA is one of those institutions that have begun making significant steps towards positive cryptocurrency regulation. In March 2018, The FCA, in conjunction with the Bank of England launched a cryptocurrency taskforce aimed at regulating and fostering the rapidly expanding sector. The regulator also launched a fintech sandbox meant to boost fintech development by attracting tech companies from all over the world.

According to the FCA’s 2018/2019 business plan, [1] the regulator will give a detailed report on cryptocurrencies late 2018. However, the FCA has already released a guideline for financial institutions interested in launching cryptocurrency derivative offerings.

There has been a longstanding apathetic attitude about Bitcoin among other Cryptocurrencies from traditional financial institutions like the BOE (Bank of England).

BOE governor, Mark Carney has been on record condemning Bitcoin in an address he made in February 2018 at Regent University. [2] In his remarks, Carney stated that Bitcoin had failed miserably as a store of value and medium of exchange.

Some renowned economists have also been on record saying it was unlikely that traditional financial institutions would “warm up” to Cryptocurrencies. One such economist is John Van Reenen, Professor of Economics at MIT.

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However, the latest move by the FCA suggests otherwise. There is a strong indication that the regulator is taking steps that will see England become the most attractive destination for Blockchain start-ups and tech companies. [3]

Volatility has been the primary concern about Cryptocurrencies globally. However, these concerns seem to be reduced currently given the interest generated by the sector in the past year. The FCA seems to be following in the footsteps of American exchange operators. The CBOE (Chicago Board Options Exchange) and the CME (Chicago Mercantile Exchange) were the 1st to float Bitcoin Future contracts. The move boosted Bitcoin’s price to peak at $20,000 a week later before a price correction.

This wouldn’t have been possible if the CFTC hadn’t authorised the move to launch cryptocurrency futures options. The CFTC has gone further and promised regulatory guidelines which are expected to boost cryptocurrency ICOs and Blockchain technology.

Cryptocurrency trading options

Similarly, the FCA has acknowledged demand for cryptocurrency derivatives in the UK. [4] The regulator has issued a statement to companies launching cryptocurrency derivatives. Although there is no cryptocurrency regulation in the UK currency, the FCA requires firms interested in offering contracts for differences, future and crypto options to follow the existing FCA regulations.

Blockchain

Since cryptocurrencies appear to be an unstoppable force that still raises suspicion among traditional financial players, it is difficult to predict how the pending cryptocurrency review will unfold. However, the FCA is likely to focus on lucrative Blockchain technology applications.

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Legislators such as Matt Hancock have already been on record predicting an unmatched impact of the technology in the future. In recent remarks, Hancock highlighted how the British government has already set aside 10 million pounds to fund different Blockchain projects on energy and voting systems among other projects.

In his remarks, Hancock stated that the cryptocurrency task force will create an approach that matches the need for growth and innovation while managing the risks presented by the sector.

According to Nigel Green, Founder and C.E.O. of Financial consultancy firm deVere Group, the growth of cryptocurrencies in the recent past can only be expected to soar over the next 10 years as more businesses adopt the main cryptocurrencies into their activities to meet growing customer demands.

Green expects the FCA, being one of the most respected and influential financial regulators globally to be at the forefront of shaping as well as defining cryptocurrency policies for regulators globally. He also expects the FCA to define the thinking behind cryptocurrencies since most leading economies in the world are already paying close attention to the cryptocurrency market.

If the FCA follows the CFTC and SEC move, support for cryptocurrencies in the UK and Europe at large would surge. Positive news from the FCA would give the cryptocurrency market a much-needed boost. The regulator has come a long way from issuing cryptocurrency related warnings to investors to showing signs of adoption.