Uneneforceable & Voidable loans

As you are probably aware, my presence on the loans board has increased substantially over the last few weeks and have been been posting regulalry about something that has been kindly brought to my attention by another MSE poster and the company that he works for.

As the title of the post suggests, it has been recognised that there are laws within this country that have been implemented to protect people from unscrupulous lenders and their unscrupulous lending practices. Martin has been made aware of these issues and is currently investigating so please be aware that there should be some form of response within the next few weeks to this but wanted to put a post up here for people to find all the information that I have and to refer to it in one place rather than over several different posts.

First of all, if you have currently or previously had any of the following types of accounts then there have been issues identified as having issues with the contracts and agreements running them:

- Secured loans prior to 2005
- Car loans that PPI or Gap insurance
- Consolidation Loans with PPI
- Home improvement loans with PPI
- All mortgages prior to 1998 that were arranged through brokers/advisers
- Some mortgages between 1998 and 2005 which have been arranged through brokers/advisers.
- Northern Rock together mortgages up to 2005 where the unsecured amount is under 25000
- Northern Rock together mortgages with no limit on dates where unsecured amount is over 25000.

If you have or had any of these agreements, there is a strong possibility that the contract was either unenforceable or voidable and you may be able to take action. REMEMBER - The agreement does not have to be live today, it could have been one that you have had historically.

Unenforceable loans:

If your loan is deemed to be unenforceable, it basically means that the loan no longer exists until it can be proven otherwise. Often unenforceable loans are the result of incorrectly completed credit agreements. "Wilson V Secretary of state" was a case that outlined this fact. The lady had pawned her car as security for a loan of £6900. The loan was not repaid and the client went to court to challenge the un-enforceability of the loan she had been given. With an initial loss and a subsequent appeal, it was deemed that the Consumer Credit Act 1974 had been written with a view of protecting the financially unaware. The result was that the lady ended up with her car back and all the repayments made being returned to her. The lender in this case had effectively lost £6900 as a punishment for not following the rules under which their loans were regulated.


Voidable loans:

When you take a loan out, usually the agreement will be that you will have been lent a specific amount and you will pay this back with a set amount of interest on top of this. Where an agreement becomes voidable, the lender loses the right to charge any interest on the amount lent and the the debt becomes just that. So whether it be a current debt or an old debt, the lender has to take what payments you have made and reduce your debt by that amount, which can result in your debt being reduced, no debt existing or you receiving money back for the overpaid amount.

So what makes an agreement voidable? Normally it will be the payment of secret commissions and the fact that where something like PPI or GAP insurance has been taken out, upto certain dates, lenders did not disclose the financial arrangement that they had with the insurers and or the brokers. A case of "Wilson and another V Hurstanger Ltd" will prove this if you read section 39.


Repossession:

In the early 1990's, this country experienced roughly 200,000 repossessions. Due to some of the issues found in the cases mentioned above, I have learnt that it has been recognised that any of these 200,000 properties that had mortgages on them arranged by an adviser or broker, it is possible that the homes of these people were taken illegally due to the fact that the loan was wrong to start with.

The law, I believe, allows any successful claims of this type to claim in compensation from the lender the lost value in asset so effectively, once the loan has been audited and voided to work out what the "real" debt was then this is set against what you have paid already and then they wee what your property would have been worth in todays money and calculate the compensation due.

All I refer to today relates to current or old agreements that you, your friends or family may have had. As a consumer site, I believe that this topic should comfortably sit as an acceptable discussion and that support should be given to those people who want to see lenders lending responsibly and more importantly, within the law. The law recognised that techniques could be put in place to "dupe" the borrower into making uninformed decisions and sought to protect people like you and I. Lenders have decided (whether intentional or not) to ignore these protections put in place and now will be the time where people will see this and hopefully take action.

Taking Action:

The rules of this forum do not permit me to advertise any one company and Martin himself has stated that he likes to see people doing this for themselves. This is fine when you are arguing with banks where their loss probably equates to less than a half weeks wage for some of the directors of these lenders.

When you could be looking at more serious amounts of money for the bank, you will understand why they would rather pay some legal eagle £00's per hour to keep you at arms length for as long as possible. It is with this reason where I believe you have to ask yourself, is the satisfaction of doing this yourself going to happen or would it be easier to find a company to do it for free who have their own legal eagles paid an equal amount to ensure that the playing fields are level?

Martin is very cautious towards using third parties and he hopefully will be looking at the company that I have been made aware of so PLEASE DO NOT TAKE THIS POST AS AN ENDORSEMENT FROM MARTIN because he has yet to reach a decision on how he would like to go about dealing with these issues, if he wants to at all. He has not said that I cannot talk to you all about this so equally it is at a point of where I am putting the information up there for you to take or leave.

I, however, hope it is taken as I believe it could help a lot of people with their debts and also bring back some quality of life to those who have been most vulnerable and effected by the unlawful acts of these lenders.

Anyway, I am more than happy to answer any questions that you may have but as you may recall, my point to this post was to provide the information in one place where you can refer to should you need it.
I am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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Replies

  • marshallkamarshallka Forumite
    14.6K Posts
    what happens if you have settled the loan.:confused:

    Also shouldn't the FOS look into this for us all after all it is a finance issue.

    I think looking at my SAR request from Firstplus that there is a piece of paper called commission details and then there is 850.00 under the advance column. Could this be commission paid for something we did not know about.
  • marshallkamarshallka Forumite
    14.6K Posts
    Another question here. How far back does the agreement have to be. If you had a repossession then surely there is nothing you can do.
  • homer_j_3homer_j_3 Forumite
    3.3K Posts
    If you have settled the loan, you can still claim.

    The Financial Ombudsman Service is a body that was set up to provide independent adjudication where complaints arose from lenders and companies that were regulated by the FSA etc.

    The FOS are not there to review law, they are there to put consumers back into the position of where they should have been had the error not have happened.

    These issues are querying the legality of the contracts and a court of law would be required should the lenders disagree with these arguments. The FOS does not have these powers.

    With regards to repossessions, there is nothing that can be done to get the house back but there is compensation to be had. So lets imagine you owned a house that was worth 30k in 1990 and it was repo'd. Put that in a house price calculator and that will give you an idea of todays value. If it is deemed that the original contract was voidable, then a court will have to do a recalculation on the original debt as a voidable contract and then compensate for the loss in value of asset that has been taken illegally.

    There is a 6 year time limit but that is from the time you become aware of it so there is no time issues here.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • homer_j_3homer_j_3 Forumite
    3.3K Posts
    Just to keep this handy for new people who are finding the benefit of this wonderful forum.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • treliactreliac Forumite
    4.5K Posts
    Thanks homer_j. I have been persuaded of the wisdom of following this up by both you and the other poster you have made reference to.

    I have submitted a claim relating to my original mortgage loan contract as the company you are also referring to have agreed they are likely to be able to challenge its validity. And this is with only a total cost to me of £10.

    I had been vaguely aware of what the company was doing for quite a while but you have really spelled the situation out. If the outcome is as you suggest, the floodgates ought to open !
    :T

    It would be great to keep it live on the Mortgages & Endowments board too?
  • homer_j_3homer_j_3 Forumite
    3.3K Posts
    I am pleased that you have made the decision to look further into this. I believe that it will not be long before the floodgates do open.

    There has been mention of directors of companies looking on here and I am sure that these issues will be being looked at by their legal eagles. I believe 1 company has set a large pot of money to one side for all of this because they realise that the game is now up.

    I do keep the mortgage board upto date where people comment on it but a lot of them are like I WAS - you should pay back what you owe kind of attitude with no consideration for what the law actually states.

    I like to help consumers and consumers are what make these boards. I will keep digging away on here, ensuring people know their full options..

    Thanks for the support.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • I agree, that if when the loan was taken out it was a level playing field, then pay back the money. But if like my loan (i think) the playing field has large rocks and boulders, i'll stop the analogy now! I was completely lied and cheated to, and felt powerless to do anything about it, you need to use what you can to fight back. If the documents are legally watertight then no problems, if they aren't then the companied deserve it for being underhand.

    At a time when I was vulnerable I was cheated, I admit I got myself there, but I was taken advantage of. I'm fighting.
  • homer_j_3homer_j_3 Forumite
    3.3K Posts
    Analogies are fun.

    Lenders are seen as respectable organisations that are authorised by a government body so they must be respectable and lawful in their operations.

    I can see why people are blinded by marketing.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • lozyeateslozyeates Forumite
    7 Posts
    Hi

    Reading this thread with great interest. Is there a limit money wise i.e. does the loan have to be over/under a certain amount for this to apply?
  • petermb_2petermb_2 Forumite
    1.6K Posts
    Only the legal limits. A regulated agreement will be between £5000 and £25,000.

    The problem with this is that the laws governing legal actions dictates that a claim must be a minimum of £5000 to utilise the Fast Track legal service, the means allowing a service to be provided without cost to the client. In other words the costs incurred in running your claim can be levied to the lender in addition to your claim amount, hence you keep 100% of the full claim amount.

    This is the only mechanism available that allows the client to receive a free service. There are now a number of service providers out there claiming to seek compensation on mortgage and loan accounts but they either charge at the beginning or at the end or if you are really lucky they charge at both the front and the back. Nice!
    I am a former Broker, former IFA and former compliance officer, for my sins.

    However, I have since seen the light.
This discussion has been closed.
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