business loan illegal

brendon

It doesn't matter whether the money was paid into a business account or a personal account. All that matters is who the contract is between, and whether the loan is personally secured by you. Either way, you need to get professional advice. These issues should have been dealt with when the company was wound up.

antrobus

JasX wrote: »

Is there any legal requirement for the banks to be 'responsible'? ....

Not yet. The new rules on responsible lending for mortgages come into effect on the 24th April. And then these days almost evey lender claims to engage in 'responsible lending'. Even Wonga.:)

DaveTheMus wrote: »

If a consumer goes to a bank and gets stitched up by the bank they have lots of protection because consumers are naive and are easily victimised, they need to be protected.

If a businessman goes to the bank and gets stitched up there is very little protection because a businessman should carry out proper due-diligence and to be honest should have known better.

Whether the bank were irresponsible is irrelevant, they may well have been but it was a relationship between two commercial entities and, as long as no laws were broken, irresponsibility can be the order of the day.

You have no ombudsman to turn to because you are entirely responsible for your decisions, even if the advice you were given was useless and counter-productive.

Not quite accurate.

The Lending Code applies equally well to consumers and micro-enterprises. The Financial Ombudsman will deal with complaints from micro-enterprises.

http://www.lendingstandardsboard.org.uk/docs/Micro-enterprise%20guide_singlesfinal.pdf

If the OP forgets any ideas about the loan being illegal, the invented business, or the loss of tax relief, he might have the basis for a complaint against the bank, which he could take to FOS. I don't know, because much depends on the detail of exactly what was done, when, and why.

SnooksNJ

robin3425 wrote: »

Out of interest this is from the Lloyds website today re applying for a business account


Before you apply you will need to have the following information available:

• Contact details for you and your business.
• For each named person on the account we'll need their full name, date of birth, nationality and home address for the past 3 years.
• Your business set up costs.
• The expected turnover of the business in the next 12 months.
• If you do not hold a personal account with Lloyds Bank, all parties will need to provide proof of identity and evidence of their address.

When you apply you will need to confirm the following:

• You are a sole trader, partner, or director
• You are aged 18 or over
• You require the account for business use

Still think it was ok? when there were
No set up costs
No expected turnover
Not for business use.


Look at it another way should the bank have lent me money via an invented business that had none of the above in the certain knowledge that I was then just going to give it as a gift to a privately owned Limited Company? In law it makes no difference that I was director of that Company it was an entity in it's own right.
Remember it is the invented business that has the debt

Obtaining a loan using an invented business sounds like fraud to me so I would probably be seeking the advice of a good criminal lawyer instead of an internet forum.

antrobus

SnooksNJ wrote: »

Obtaining a loan using an invented business sounds like fraud to me so I would probably be seeking the advice of a good criminal lawyer instead of an internet forum.

Given that the OP is actually paying back this loan, I doubt that very much.

SnooksNJ

antrobus wrote: »

Given that the OP is actually paying back this loan, I doubt that very much.

But the OP is asking to get out of paying through some irresponsible lending claim. Which could open a can of worms.

antrobus

SnooksNJ wrote: »

But the OP is asking to get out of paying through some irresponsible lending claim. Which could open a can of worms.

No.

The OP is not at risk of criminal prosecution.

somethingcorporate

PeacefulWaters wrote: »

I borrowed stupidly. The bank lent stupidly.

Are the bank silly? (translated: can I get the debt written off?)

Answer: It's your problem regardless of the bank being silly.

Response: Get upset due to not liking the answer.

Is that about it?

:rotfl: How many times a week do we see this?

robin3425

Thank you Antrobus, at last someone addressing the questions.
For the record I am not seeking to have the loans cancelled.
What I am seeking is an explanation from the bank in regard to the reasoning behind their actions. After that we will just see where it goes
As I see it there were three other options.
1 That the bank could agree to lend the money to me personally via my current account using security on my property.
2 That the bank could agree to lend the money to me personally by way of further borrowing on my mortgage which would obviously be secured on my property
3 That they could refuse further lending.


What they chose to do was to open a new business account and lend to that business, this again is secured on my property.


I have tried but I cannot find a logical reason for this, the only possible thing that I can come up with is that the way it was done must have been more beneficial to the managers.
I have no idea what commission if any the managers would have got or what targets they were set but as business managers they could not directly deal with personal loans, They also could not directly deal with mortgages. They were however quite at liberty to liaise with the relevant people as all borrowing including the mortgage was in-house. I repeat what the liquidator of the Company said when I explained all this to him, it was simply "Why"
If anyone else has another idea I'd be glad to hear it.


Bear in mind that the opening of the business account is not without cost. I estimate that I have paid at least £1500 in services charges on that business account when it is used solely to receive the loan payments from me personally and then forward them to the loan account. I cannot close the business account as the loan is inextricably linked to it so I must continue for another 9 years to pay the service charges.
Further borrowing on the mortgage would have been cheaper over the same term and that applies equally to any loan on my pre-existing personal account.


As for the loss of tax relief on the interest, I freely admit that if either of the other options were taken then I still would not be able to gain that but that probably is an issue to take up with the accountant.
I know that in reality there is not a great deal of difference between a personal account and a business account but the banks conditions on opening a business account are that it must be used for business purposes. I think it stretches things a bit to say that the business account was used for business purposes in that it's raison d'etre was to facilitate a personal gift to the Ltd Company. The loans were only made on the condition that existing Company borrowing was cleared and were transferred immediately to that Company.
My view is that the managers for whatever reason appear to have put their interests above mine. I would like to know that reason and whether it can be considered correct at any level.

robin3425

Suggestions for Somethingcorporate If you don't like reading these posts the answer is simple: Stop reading them but if you really find that you need to then, As my old mum used to say if you've got nothing useful to say then say nothing.

AndyT678

IMO your "invented" company sounds a lot like a Special Purpose Vehice http://en.wikipedia.org/wiki/Special_purpose_entity. Having no turnover is not a problem.

Why was it done like that? God and former bank manager alone know. Maybe you're right that the branch wanted to hit a business lending target or something. Doesn't make it wrong / illegal / unenforcable.