High Court provides boost for creditors pursuing debts
The High Court has ruled that creditors can still enforce debts even if the original loan or credit agreement is no longer available.
The case involved several major UK banks and their customers. It arose because under the Consumer Credit Act 1974, lenders must supply the borrower with a copy of the credit agreement within 12 days if asked to do so.
Some debtors have tried to use this requirement as a way of stopping debts being enforced when the creditor was unable to supply a copy of the original agreement.
Now Judge David Waksman has ruled that it is acceptable for the creditor to merely supply a reconstituted copy of the original loan agreement. Judge Waksman said: "The debtor has a legitimate interest in seeing a copy of the agreement he signed, not in the sense of proof of execution but as information."
However, he then went on to say: "The absence of a copy of a signed executed agreement is no evidence that such an agreement was not made."
If the original loan agreement was not available it would be acceptable to provide a reconstituted version. This could be drawn up from other data held by the creditor but must include the name and address of the debtor as it was at the time when the agreement was made. "A creditor can satisfy its duty by providing a reconstituted version of the executed agreement which may be from sources other than the actual signed agreement itself."
This did not mean that a creditor could simply invent a loan agreement retrospectively to comply with the law. "It must - of necessity - be based upon records held as to the debtor and the agreement he made."
"That a creditor needs to take care when providing the copy is highlighted by the fact that it is implicit in its duty that it is an 'honest and accurate' copy."
Please contact Louise Nichol if you would like more information.
