Is this bank loan irregular,unusual or commonplace - very concerned

dusty199

I hope someone out there can offer advice regarding this query.

My husband has been trying to obtain a copy of a 2 yr old loan application from a large high street bank but without success. They state they are "unable to obtain a copy due to the age of the account." However, they were able to provide him with a copy of the Agreement of the same age (which he already had in his possession.) The Agreement was signed by him, the loan Application was neither signed by nor seen by my husband. A further letter to the bank once again asking them for a copy of the loan application resulted in a 5 line response, stating that it is "unobtainable due to the age of the account as we only retain this information for 12 months." I am aware that such information is retained in archive for 6 or 7 years.

This is the background: In January 2006 a friend of 20+ years standing approached my husband asking him to act as guarantor for a loan of just under £3,000 to pay for a training course. His credit rating was against him but he believed this course would help his career. In spite of this he offered to repay the loan within the 12 months before interest would become due. Agreeing to this and wanting to help out a friend in trouble, my husband went ahead. The "paperwork" the bank sent to my husband was an Agreement to repay this money, no guarantor paperwork was sent and no loan application form for signature either.

Believing everything was as it should be, my husband signed the Agreement and returned it to the bank. The "friend" has not repaid the loan and my husband, feeling totally let down, and feeling responsible, repaid the loan before interest became due. The bank did not acknowledge the loan had been paid although my husband had asked for this.

On my looking into this loan arrangement it turns out to be a Fixed Sum Loan Agreement regulated by the Consumer Credit Act 1974. The bank had set up a Buy Now Pay Later xxxxx Ltd account in my husband's name - this was to benefit the company which was offering the training course to his "friend." My husband now realises that he was not a guarantor for anything and got trapped into something which did not benefit him but cost him dearly. This "friend" admitted to not completing the course - we doubt whether he ever commenced the course, he has now gone to ground.

Is such a lopsided banking arrangement usual and commonplace or highly irregular if not illegal? A bank which has never had my husband as a customer, knows nothing about him, his circumstances or his age - he is nearly 70 and retired - set an account up in his name without asking for any form of ID or proof of address - then provides funding to a third party to enable them to offer a £3,000 course to someone else and refuses to provide any evidence of how the loan was provided, who applied for it or who signed the application.

I feel something is very wrong here. Could some knowledgeable person out there help please. Many thanks.

jonesMUFCforever

First thing here if the bank did not tell your husband to get independent legal advice if he has signed any guarantee documentation the loan is unenforceable.

From what you have written though it seems that he signed a loan agreement which was in his own name. The application is irrelevant as the courts only decide on the loan agreement under the CCA.

I have to be honest if he signed something not knowing fully what he signed then he has to take responsibility for his own action. He should have sought advice if he was unsure.

I am unable to comment on the ID side - they may have done this electronically or through electoral roll search but I suggest that your husband goes and see CAB or a local Law centre with all his paperwork to see if anything can be salvaged.

dusty199

Thank you for that response.

I understand the points you are making, but I cannot understand how loans can be issued so casually to benefit a third party's prospective customer without much more information being provided by the bank. We do need to know how this arrangement was put in place and require far more clarity, openess and co-operation from this bank. Their unwillingness to provide a copy of the original loan application, which certainly was not signed by my husband, while still making him responsible for the loan and apparently managing to cut corners in doing so - for that is what it looks like - does cause us great concern. We feel we have been hoodwinked and seriously misled by the bank in this matter. I do not believe the copy of the loan application is "unobtainable" at all - the bank is being obstructive possibly because their priority was to sell this loan to a third party where I suspect much business had previously and was still, forthcoming. Sorry if I sound cynical about this but I do suspect the bank's motives in withholding important paperwork - paperwork which my husband paid for. It surely cannot be correct for any bank to behave in such a cavalier manner, however pressurised staff may be to hit lending targets, and then, when difficult questions are asked, wash their hands of the matter.

This bank issues a credit to a Company offering a course to my husband's "friend." The loan was passed on to my husband. No loan application was submitted to my husband, only an Agreement to repay the loan made out to this Course provider. The bank must have known all of this, certainly the course provider would have known this. Yet a loan was issued to someone who was unconnected with either the bank or the course provider. Surely this is highly irregular and worthy of investigation?

jonesMUFCforever

I'm sorry but the crux of the matter is that he DID sign the loan agreement.
It is no use saying NOW that the loan was issued to someone who was unconnected with either the bank or course provider.

I don't suppose you have anything in writing from the ''friend'' to confirm that he would repay?

standupguy

As far as the bank are concerned - are they of the opinion that there is only one party to this agreement ie your husband?

If so, it looks like your friend has given all of your husbands details to the bank in the first place in order to obtain credit - if this is the case this could be considered fraudulent on the friends part.

However your husband was aware that this was happening albeit as a guarantor rather than a main customer.

If this is the case, your friend has duped the bank and your husband but it might be unwise to take this any further as your husband may be seen as being implicated by his knowledge of the arrangement.

You would have a claim against the friend but as you say, he is long gone.

It may be wiser to move on and put this down to experience

dusty199

Thank you for the responses. I have gone through the file in more detail and it would appear that the bank may well have acted in good faith but the company providing this course may not have disclosed the facts of the loan arrangement to the bank. Somehow the loan company used my husband's details - whether these originated from the friend or my husband I cannot establish and my husband cannot remember. The "friend" suggested the loan repayment amounts and the number of payments to clear the loan in an e-mail and later when he was experiencing difficulties apologised in a hand written letter but suggested that an expected commission payment would make up the shortfall - nothing was forthcoming.

Now my question changes to wonder how a company which was offering a service to a "friend" who couldn't pay for it, was nonetheless able to put my husband's name down as the person responsible for paying for it while not receiving a benefit. Is this normal commercial practice? Unfortunately, my husband agreed to the arrangement without querying anything or believing he would be so badly betrayed. If the course was never completed or maybe never commenced, where does that leave him? Does he have any case against the course provider or is the money gone for good? I realise of course that the principal culprit in all of this is his erstwhile "friend" but do wonder how he managed it.

standupguy

I am wondering if the course provider colluded with the friend?

This is more common in the world of used cars where a customer will admit to a car dealer that he cannot get credit in his own name and then a rogue dealer may suggest he puts the car finance in another persons name who can get credit and tell the creditworthy person that they will be a guarantor?

This is not commercial practice it is really fraudulent.

However it still goes back to your husband having some knowledge of this?

It may be worth meeting the course provider and establishing how your Husbands name was used?

I am thinking the course provider must have had a consumer credit licence to propose customers to financial institutions - it may be worth seeing if this is the case and seeing a copy and getting the licence number - usually displayed on premises.

You could always suggest that you might have to question or make a complaint regarding the suitability of this course provider holding a credit licence with the Office of Fair Trading - and this suggestion might help focus his mind on coming to a settlement with you?

dusty199

Thank you Standupguy for your very perceptive response. You have got it in one. I suspect there was collusion and certainly the “friend” did present his case to my husband by asking my husband to act as a guarantor for him as the “friend’s” credit rating was unfavourable. The paperwork, when it did arrive, made no mention of guarantor status, but my husband believed everything was above board. He was dealing with a high street bank after all not a disreputable loan shark.

There was no mention of the “friend’s” name in any of the correspondence my husband received and the course provider, a Limited Company, knew they were offering a course costing almost £3,000 to someone who could not pay for it but were happy to pass the cost of this on to someone who was not present at the negotiations and who was never going to benefit from the arrangement, the the bank may well not have been aware of this dodgy arrangement, or at any rate I do hope not. There was quite a bit of pressure placed on my husband at the time by the "friend's" phone calls to our home asking if the form had been received - it had not arrived - and then the friend arranging for another one to be sent out - the first one never did arrive. The "friends" silence since has been deafening. Phone calls have not been returned, letters not responded to except to inform us that he no longer is contactable by phone. We do not even know if he is still at the address we have for him or whether he has done a runner from there also.

The course provider as you say, must have a consumer credit licence otherwise the bank would probably not have become involved. The paperwork my husband received was from a particular bank offering financial services as their main business. This bank is owned by one of the large high street clearing banks.

The Credit Agreement has the name of the lending bank’s Financial Services arm on the top. The Retailer Name on the form shows the Company name (the course provider) The retailer reference has our post code. Unfortunately, I do not think my husband really believed his "friend" would leave him to deal with the consequences alone, he is sick at heart and feels so betrayed. I feel very angry that such a dirty trick could have been played on him by someone he thought of as a friend down on his luck and assisted in the arrangement by a company looking for business by whatever means.

I am grateful for your suggestions regarding the enquiries we could make regarding the provider’s credit licence and the OFT and these will be pursued.

The only question remaining is whether there was ever a formal loan application completed, if so who signed it and which organisation issued it – the bank or the course provider.

Renewed thanks for your very helpful comments.

sdooley

It looks like the friend defrauded both the bank and your husband. Unfortunately however one fraud victim does not get priority over another just because the other has 'deep pockets'. By repaying the bank, they are likely to argue (quite convincingly) that your husband acknowledged the loan.

Another difficulty with pursuing the bank is your husband's difficulty recalling exactly what he agreed with the bank and the friend. For obvious reasons, people who actually commit or collude in fraud often say they cannot recall various key events - this is not the case here but the bank don't know that. Your husband needs to get his story straight and be completely honest and open - at least with you to start with.

Your husband should take his 'friend' to the small claims court. Things 'not being in writing' don't stop them being legal agreements. There will be a flow of money and a judge is unlikely to accept the only argument the 'friend' might make - that this was a gift - given the loan arrangement. Even if you only get £1,000 back from the friend, it will cut your losses, and many people get taken for a lot more than £3,000.

Sorry this has happened and sorry can't be more helpful.

dusty199

Thank you sdooley for your comments. The family have suggested the small claims court or to see a solicitor briefly for advice. He is unwilling to throw any more money at it and that is understandable. Bearing in mind the fraud, or deception, or misrepresentation seems to lie with the course provider - I do not think the bank could have known the full story having read through the paperwork thoroughly over the last few days. This has been a very salutory lesson for my husband to learn, nevertheless I personally do think we need to take the matter further if only to establish whether there was fraud. I would hate to think that this sort of dodgy arrangement can be foisted on others as this appears to have been. The course provider should be held to account and prevented from trying that trick on anyone else. As for the "friend," another letter has just been sent by recorded post, but none of us are holding our breath that it will do a scrap of good.

churchrat

hi
re your q about the husband not recieving the benfit whilst paying for the course. I do not think that this is unusaul--many of my sons friends, having finished, uni are on further courses which are paid for by family, usualy not living at the same address.
goodluck--I am sure that your husband must feel very confused and upset by these events.