Who the hell is Ethica Resolve — and is it ethical?

When “Jack” opened his post this week, he found two letters from Trethowans solicitors demanding a combined £55,945.44.

The sums related to payments made more than a decade ago, between 2012 and 2014, when Jack was barely into adulthood and working through a contractor arrangement operated by IQ Contracts.

Jack is now 34.

Over the intervening years, he recalls receiving sporadic correspondence from various parties. Mostly, he says, it went “in the drawer — or in the bin”.

But there was something new about the latest demands. A company called Ethica Resolve Limited had entered the story.

Trethowans’ letters identify West 28th Street Limited as the party to which Felicitas Solutions allegedly assigned the relevant creditor rights in September 2022. But they describe Ethica Resolve as West 28th Street’s “appointed servicer”, with Trethowans acting on Ethica’s instructions. Jack had never heard of them.

Apparently, neither had quite a few other contractors.

“Here we go again”

Over on the ContractorUK forums, where the West 28th Street saga has been tracked for years, users began reporting a new wave of correspondence.

For others, the reaction was less amused. Another newly registered poster said they were already struggling with their mental health and that the renewed demand was the last thing they needed.

Forum posts are, of course, anecdotal, and we have not independently established the circumstances of every poster. But the sudden appearance of multiple reports is consistent with what other sources have told us: Ethica appears to be a new player in an extremely old dispute. So who are they?

Meet Ethica

Ethica Resolve Limited was incorporated in England in August 2019. Its website presents something rather warmer and fuzzier than the traditional image of debt collection.

Ethica talks about “financial wellness”, “rehabilitation,” and helping customers become debt-free. Its stated philosophy is that debtors — or “customers”, in Ethica-speak — should be treated fairly and helped towards financial stability. The company says its approach to “rehabilitation and recovery” sets it apart.

Its pitch to businesses is somewhat less cuddly: Ethica offers a means of turning non-performing debt into recovered assets and producing returns from historically bad debt. Nothing inherently contradictory there. A debt business can attempt to collect money while treating debtors well.

But when we started looking more closely at Ethica’s website, things got a little strange.

The 8,000 employees

Ethica’s website proudly tells visitors: “Our nearly 8,000 committed staff members are ready to help.” Which would make Ethica a very substantial employer indeed.

Its public corporate footprint appears rather more modest. Ethica files micro-company accounts at Companies House. Third-party corporate-information provider Endole categorises it as a micro business and has reported a dramatically smaller employee count in its financial data. Endole also lists a mobile telephone number as a company contact, while Ethica’s own website provides a separate 0333 number.

We have asked Ethica how many people it actually employs and how the claim of “nearly 8,000 committed staff members” should be understood.

That isn’t the only slightly peculiar thing about the website. At the time of writing, its business pages displayed:

alongside an apparently rather more precise: 97.6 Customer Satisfaction.

Under the zero statistics appears the sentence: “Our team have been running well about 10 years and keep going.”

We have asked Ethica for the methodology behind the 97.6 customer-satisfaction figure.

We have also asked whether the people pictured on pages discussing its team are actually Ethica employees.

Addresses, emails, and an identity crisis

There are other signs that Ethica’s website may not have received the same degree of attention as its branding. Different parts of the site have continued to display different company addresses following a registered-office change. The website itself operates on a .co.uk domain while contact details elsewhere direct users to email addresses on ethicaresolve.com.

Again, none of this establishes wrongdoing. Businesses move offices. They own multiple domains. Websites contain old copy and broken templates.

But these details matter rather more when the business behind the website has suddenly appeared in correspondence seeking tens of thousands of pounds from people who may never previously have heard its name. And the inconsistencies extend beyond web design.

Who owns the alleged debts?

Ethica’s public materials repeatedly describe a business model in which it purchases non-performing debt portfolios.

Its FAQ tells recipients: “We have purchased your debt from a creditor and are now the legal owner.”

Its privacy material similarly describes Ethica receiving customer information after successfully acquiring a loan portfolio and taking on rights previously held by an original lender.

But that isn’t the arrangement described in Jack’s Trethowans letters. According to those demands, West 28th Street is the assignee. Ethica is its appointed servicer. That distinction could be important.

A source who has been closely involved in examining the ownership of these alleged contractor loans reviewed Jack’s redacted Trethowans paperwork for us. Their interpretation is that the letter appears to confirm that Ethica is acting as West 28th Street’s agent, administering the alleged loans on West’s behalf, rather than having acquired them itself.

Our source also noted Ethica’s FCA authorisation. While stressing that the documents do not establish why Ethica was appointed:

That is currently a hypothesis, not an established fact, and we have put the question directly to Ethica.

We have asked when it was appointed by West 28th Street, whether its regulatory status played any role in that decision, how many contractor accounts it is now servicing and the aggregate value of those accounts.

The missing bit in the middle

Our source also identified another important limitation in the new demands. Trethowans refers to the alleged 2022 assignment from Felicitas Solutions to West 28th Street. What it doesn’t set out is the earlier chain by which Felicitas itself acquired the creditor rights it subsequently purported to assign.

Our source cautioned against reading too much into that omission at this stage. This is a demand letter, they pointed out, not evidence filed in contested court proceedings. But it is a question that has followed these alleged loans around for years:

Was Jack actually borrowing money?

There is an equally important distinction on the other side of the equation. Jack remembers IQ as a contractor remuneration arrangement. That does not, by itself, establish that he never legally entered into a loan. Our source made precisely this point after reviewing his case. There is, they said, a: “considerable difference between not understanding the nature or consequences of a loan arrangement at 19 and genuinely never having agreed to one.”

Jack’s new schedules describe numerous individual payments from 2012 onwards as advances. Some were made only days or weeks apart. But his recollection is not of repeatedly approaching a lender to borrow money. It is of being paid through a contractor arrangement marketed to him as a tax-efficient alternative to operating through his own limited company.

We have now also seen a contemporaneous IQ Contractors employment contract belonging to another contractor. It expressly describes an employment relationship and remuneration for assignments. In the material we have reviewed so far, we have not identified wording explaining that the contractor’s remuneration was being provided as a series of loans which could ultimately be called in for repayment.

That is not Jack’s contract and it does not establish what he personally agreed to. Nor does it exclude the possibility that separate loan documentation existed. It does, however, make one question increasingly important: Where are the original loan agreements?

Interestingly, the latest Trethowans correspondence tells recipients that copies of their loan agreements can be obtained through a client gateway. We intend to see what emerges.

“Helping” people out of debt

And this brings us back to Ethica. There is something inherently peculiar about the language used throughout its consumer website when viewed alongside these cases. Ethica talks about helping customers “get out of debt”.

Its FAQs largely proceed from the premise that the debt being discussed exists. If somebody cannot afford to pay, the emphasis moves towards affordability and repayment arrangements. Its published terms contain a section headed: “No Refund for Voluntary Payments”

That raises an obvious question in the context of disputed historic liabilities: what happens if somebody makes a payment following one of these demands and it is subsequently established that the money wasn’t legally due? We’ve asked.

We’ve also asked what due diligence Ethica undertook before agreeing to service these accounts; how it deals with contractors who dispute that the payments were ever genuinely repayable loans; where it obtained contractors’ personal information; and whether information concerning disputed accounts is or could be supplied to credit-reference agencies.

Are they ethical?

Perhaps that’s an unfair question. After all, the company didn’t choose the name Ethica accidentally. Its entire proposition rests upon the idea that debt recovery can be done differently: ethically, sensitively, and with concern for the financial wellbeing of the people on the receiving end. So it seems reasonable to measure the company against the standards it has chosen for itself.

If people are suddenly receiving demands for tens of thousands of pounds relating to contractor arrangements they entered more than a decade ago, what safeguards has Ethica put in place before those letters land on their doormats? What evidence has it examined? What happens when the alleged debtor says: I don’t owe this? Why has Ethica entered this particular story now?

And, perhaps most basically of all:

We have sent Ethica Resolve a detailed request for comment and will include its response in full or in substance when received.