- Tailored Business Loans, Mis-Selling and ’Unfair Relationships’ under section 140 of the Consumer Credit Act 1974 (Promontoria v Jeavons)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: His Honour Judge Gore QC has provided significant clarity in relation to the Tailored Business Loans issued by Clydesdale Bank from the early 2000s. The judge applied guidance found in Deutsche Bank (Suisse) SA v Khan & Ors as to the factors that will be considered in determining the nature of relationships formed between lenders and debtors under such loan agreements. The ruling found fairness in the lender/borrower relationship within the meaning of section 140A of the Consumer Credit Act 1974 (CCA 1974). It also set a high threshold for establishing unfairness, as the judge found no evidence to show that the defendants were the kind of borrowers that were ’financially so unsophisticated as to have put the lender on inquiry‘. This, along with the consequences of unfairness being described as ’draconian‘, set the probability of a claim succeeding under CCA 1974, s 140A very low. Written by Kirsten Fleming, associate at Addleshaw Goddard LLP.
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