The appellant borrowed a sum from the respondent under a fixed sum credit agreement. A broker administration fee had been advanced to facilitate the loan. The agreement recorded the ‘Amount of Credit’ net of the fee, and the ‘Total Amount Financed’ included the fee. The borrower said the agreement was unenforceable for mis-stating the amount of credit by not including the charge for credit.
Held: The borrower’s appeal failed. Since under section 9(4) ‘an item entering into the total charge for credit shall not be treated as credit even though time is allowed for its payment.’ The fee was indisputably part of the total charge for credit and must accordingly be excluded from the amount of credit. The fact that interest was charged on the fee did not change this: ‘Section 9(4) does not prohibit the charging of interest. If the fee itself was part of the total charge for credit, it seems to us to follow that interest on that fee was also part of the total charge for credit and not therefore to be treated as credit.’
Lord Hope, Deputy President, Lord Walker, Lord Brown, Lord Mance, Lord Clarke
[2010] UKSC 32, UKSC 2009/0217, [2010] Bus LR 1396, [2010] 1 WLR 1819, [2010] 4 All ER 277, [2011] 1 All ER (Comm) 164
SC, Bailii, Bailii Summary, SC Summary
Consumer Credit Act 1974
England and Wales
Citing:
Cited – Wilson v First County Trust Ltd (1) CA 3-Nov-2000
The administrative charges for entering into a loan were not to be included in the loan, but rather as an item entering into the total charge for credit. To hold otherwise went against accounting practice, would disguise the cost of the loan, and . .
Appeal from – Southern Pacific Personal Loans Ltd v Walker and Another CA 12-Nov-2009
The bank appealed against an order that a consumer credit agreement was unenforceable for failing to meet the requirements. The amount of credit figure had been calculated to include the deferred obligation to pay the broker’s fee.
Held: The . .
Cited – Wilson v Robertsons (London) Ltd. ChD 5-Jul-2005
The parties entered into pawnbroking arrangements. In order to get around the consequences of the 1974 Act, the agreements were antedated.
Held: The court would not allow parties to contract out of the 1974 Act. Also, by including a document . .
Cited – Watchtower Investments Ltd v Payne and Another CA 20-Jul-2001
The mortgagor borrowed funds against the charge, and part of the condition of the loan was that any arrears on the first charge must be discharged. The total amount of the loan was calculated to include sufficient to discharge the arrears on the . .
Lists of cited by and citing cases may be incomplete.
Consumer, Banking
Leading Case
Updated: 31 October 2021; Ref: scu.420386