City of London Law Society send Letter to the Treasury regarding implications of the decision in matter of Fons HF (in liquidation)

Original news

A letter to the Treasury from the City of London Law Society (CLLS) asks for clarification on the meaning of a loan agreement, and whether it falls within the meaning of debenture, following a recent Court of Appeal case which has caused uncertainty in the law and is causing confusion in the loan market. The CLLS is seeking clarification that HM Treasury is not treating loan agreements as debentures, and that these activities are not intended to be regulated activities.  For full letter see City of London Law Society letter


The decision in Fons HF (in Liquidation) and another v Pillar Securitisation S.a.r.l and another in the Court of Appeal on 20 March 2014 has very significant implications for what falls within the regulated investment of a ‘contract that creates or acknowledges indebtedness'.

The letter points out that the implication, if this is correct, is that loan agreements, secondary loans, servicing structured finance transactions as in a securitisation transaction, could all become regulated activities under the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544.

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