ENF 10.9 Statutory background: the FSA's power to apply for orders against debt avoidance

Under section 375 of the Act (Provisions against debt avoidance: FSA's right to apply for an order), the FSA may apply to the court, under section 423 of the 1986 Act or article 367 of the 1989 Order, for an order where a transaction is entered into at an undervalue and where:

1. (1)

   at the time the transaction was entered into, the debtor was carrying on a regulated activity (whether or not in contravention of the general prohibition); and

2. (2)

   a victim of the transaction is, or was, party to an agreement entered into with the debtor, the making and performance of which constituted or was part of a regulated activity carried on by the debtor.

The FSA's application is to be treated as made on behalf of every victim of the transaction. Under section 423 of the 1986 Act or article 367 of the 1989 Order, the court may make such order as it thinks fit to restore the position to what it would have been if the transaction had not been entered into and to protect the interests of persons who are victims of the transaction.