Bank error with personal loans

Sheff97

Hi,

I was wondering whether anybody could offer any advice for this situation. It's a long post (so sorry!) but there's a fair amount of history.

I signed a loan agreement on 15/1/2002 for an amount of £15,000 with Natwest. Interest was 5%pa. The repayment term was 10 years.

The terms of the agreement were:

1. Loan drawn 1/3/02;
2. Payment holiday to 1/3/03;
3. Interest only payments of £196.80 per quarter from 1/3/03;
4. Monthly repayments of £253.67 (capital and interest) from 1/3/06 to end of period;
5. Total amount payable £20,626.33.

Inbetween setting up the loan and repayments becoming due, I opened a private banking account. At that stage, the bank instructed me that it would be necessary to arrange a standing order for the repayments to go from my private account into my current account, where the same would then be taken out to service the loan.

I was telephoned by the bank on 8/9/2010 saying that there had not been any repayments taken and asking for my suggestions for servicing this loan. I have not committed to anything at this stage. They told me that "ideally" they want to repay the loan and they do not appear able to locate the original loan agreement.

Evidently, if there had not been any payments at all, the right to claim them from me would be statute barred. I happen to a personal injury lawyer but have no experience or training in consumer credit/banking/commercial matters but understand the operation of limitation periods.

Upon checking, my loan account shows £13,000 outstanding. Clearly this is less than the total amount of the loan but far more than should be left only 2 years prior to the end of the repayment term. I have also noted that there is a monthly standing order of £196.80 from my private account to the current account. This, I am aware, has been in place for at least the 5 years. I believed this to be servicing the loan. Nobody has previously raised this or made any demands.

It seems therefore that, at some point, either the bank ceased collecting the money or somebody within the bank was mis-appropriating it. The current account has an agreed overdraft limit of £2,000 and is still overdrawn. I find it difficult to see how after so many years of paying the monthly amount.

The bank is attempting to work out the true position but frankly I am wary about the accuracy of their investigations i.e. can they reliably determine what of the £13K is interest, which is capital, where all the monthly payments have gone etc. I have a lot of business with them and they will be keen to keep me.

I suppose what I am asking is how to approach them; I have reserved my position as to liability/limitation and said that in the event that there are no legal arguments, due to the concern and disappointment and likely effect on my future outgoings, I would want to write off the interest presently owing, re-negotiate the amount due and the period of re-payment. My thinking behind this is that the bank would wish to recover something but that unpicking this mess could be costly, time consuming and may lose them a valued customer.

Does it seem likely this loan would be written off? If not, that it can be re-negotiated? And if so, what a good pitch to them would be.

Thanks for any help/suggestions.