If a lender has no signed agreement from a customer, is the debt enforceable?

Tom_R

Hi,

Theoretical question.... honestly ;-)

Let's say a "friend" of mine. A REALLY GOOD FRIEND OF MINE, applied for a personal loan with a big lender in mid-January and the funds were paid (c.£16k) in to that person's account a few days later. That money was promptly spent on what the loan was taken out for in the first place...

Ok. Now fast forward to today (Feb 20th) and no direct debit payment has been taken from my friend's account.

So, he rings up the lender in question today and asks why they've yet to take any money from his account. They tell him that they have yet to receive any signed paperwork back from my friend. As such, the loan in question is actually still in application status, hence why they haven't paid out.
In fact, that particular application has now expired, so a if my friend wants the money they applied for then they will have to re-apply for it.

So... my "friend" plays dumb and says, "ok, I'll look in to this and come back to you!"

He has had the money, clearly. And spent it.
But as far as the lender is concerned they haven't paid out. And even if they could demonstrate that they have, by their own admission they aren't actually in possession of any signed agreement.

So, where does this leave my very, very good friend in terms of the loan being enforceable?

He's a good guy. He doesn't want to break any laws or jeopardize his immaculate credit rating and so on.

InsideInsurance

Yes its still enforceable, there were changes in the CCA a good few years ago that removed the requirement for a physically signed credit agreement plus the lender only needs to be able to regenerate the agreement as it was at the time not actually produce the one sent to/ received back from the consumer

Its belts and braces that lenders still ask for wet signatures in many cases

DCFC79

Lol the immaculate credit rating means nothing.

Nasqueron

Bail-outs were not free tax payer money by the way, loans have to be paid back and shares in banks like Lloyds and RBS can be sold at a profit for the tax-payer

Tom_R

Yes, I googled that just now (the change in the loophole re lenders no longer having to produce an ORIGINAL agreement) but my understanding from what i read was that they still had to produce a COPY of an agreement, as a minimum compliance with the consumer credit act.

Source: EDIT (won't let me post links as new user - but google "moneywise, legal loophole partially closed, cut your debts")

But if the lender in question is stating they have no agreement of any kind. And claim to have not even paid out, where does that leave my best buddy?

Foxy-Stoat_3

Tom_R wrote: »

where does that leave my best buddy?

In £16,000 worth of debt.

Tom_R

Foxy-Stoat wrote: »

In £16,000 worth of debt.

Amusing, granted.

And my friend has no issue with that if it transpires to be the case. That was, of course, the original plan!

Pedantry aside, are you basing this on your knowledge of financial compliance regulations or your opinion?

Foxy-Stoat_3

Tom_R wrote: »

Pedantry aside, are you basing this on your knowledge of financial compliance regulations or your opinion?

Just opinion of a reasonable person, like most folk on here.

Tom_R

Fair enough.

Can anybody shed anything more legally minded and binding than personal opinion, though, please? Either way. perhaps with some precedent or source?

I would have thought that for any lender to legally recall any debt, then at teh very least they would have to provide proof of an agreement. Whatever that may be.

I wouldn't think that an unreasonable assumption/opinion either.

Just trying to get proper clarity here.

stator

Suggestion: Use the money you would have paid against the loan into a savings account. Whilst they faff about getting themselves in order you collect the interest.
When they eventually come calling you just pay back what you owe. If they don't send you an annual statement they won't be entitled to charge you any interest.

Foxy-Stoat_3

Tom_R wrote: »

He has had the money, clearly. And spent it.

Too late !